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NewBase Energy News 03 July 2023 No. 1635 Senior Editor Eng. Khaed Al Awadi
NewBase for discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
UAE set to add 571MW biomass capacity in waste-to-energy push
Zawyah + NewBase
The UAE, which has the largest biomass capacity in the region, is expected to develop its waste-
to-energy (WtE) sector as part of the Middle East push into the nascent renewables sector.
According to a report by research firm BMI, six out of eight WtE projects in their key projects data
(KPD) are located in the UAE, with a total capacity of 571 megawatts (MW). The report said these
developments are supported by the government’s target to stop 75% of its waste going to landfills.
One project, the Sharjah Waste to Energy plant, located in the UAE, has generated enough
electricity to power 2,000 houses over its first year, with the added benefit of diverting 90% of
Sharjah's, waste whilst reducing landfill emissions.
"With the UAE hosting COP28 this year, the market is focusing efforts on reducing emissions, with
waste-to-energy plants as a key component of this. We expect this adds upside risks to our UAE,
and MENA, forecasts."
BMI has increased its forecast for biomass capacity in the MENA region to 659MW by 2031 from
the last year's forecast of 231MW. MENA’s increased capacity is because of large WtE projects
worth 400MW in the UAE, as well as a smaller 30MW project in Egypt.
ww.linkedin.com/in/khaled-al-awadi-80201019/
MENA region is expected to hit total capacity of 659MW by 2031
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The report noted that at a global level, biomass capacity will grow by about 31.4GW from end-2022
to 2032, with over 65% of the growth expected to be in Asian markets.
Mainland China will continue to lead the expansion of the biomass power sector over the coming
years, with a net capacity growth of 6.9GW from end-2022 to 2032, accounting for more than half
of Asia’s biomass capacity growth.
Bioenergy, which includes both biomass and biofuels used in the heating, transport and power
sectors, is a significant renewables component for India’s energy sector, making up 88% of its total
renewable energy supply in 2019, according to IEA.
BMI said India will overtake Germany in 2032 to become the 4th largest biomass market globally,
driven by government support and a huge agricultural sector.
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India: Reliance and bp start production from KG D6 block
Bp.com
Reliance Industries Limited (RIL) and bp have confirmed the commencement of production from
the MJ field, following testing and commissioning activities. The MJ field represents the last of three
major new deepwater developments the RIL-bp consortium have brought into production in block
KG D6 off the east coast of India.
The start of gas and condensate production from
the MJ field follows the start-up of the R-Cluster
field in December 2020 and Satellite Cluster in
April 2021. All three developments utilise the
existing hub infrastructure for the block.
Together, the three fields are expected to produce
around 30 million standard cubic metres of gas a
day (1 billion cubic feet a day) when MJ field
reaches peak production. This is expected to
account for around one third of India’s current
domestic gas production and meet approximately
15% of India’s demand.
Mukesh Ambani, chairman and managing director
of Reliance Industries Limited said: “We continue to
be proud of our partnership with bp that combines our expertise in commissioning complex projects
under some of the most challenging environments in the last few years. Alongside the other KG D6
fields, the MJ development truly supports the ‘Make in India’ and ‘Energy vision’ laid out by the
Government of India.”
bp chief executive Bernard Looney added: “By safely bringing these new developments onstream,
RIL and bp are making an important contribution to meeting India’s demand for secure supplies of
gas. Our close strategic partnership with RIL now stretches back over 15 years and we are proud
of how it continues to deepen – in gas, retail, aviation fuels and sustainable mobility solutions.
Together we are helping to meet India’s growing energy needs, bringing the best of each partner to
create real value.”
Discovered in 2013 and sanctioned in 2019, the MJ field is located in water depths of up to 1,200
metres about 30 kilometres from the existing onshore terminal at Gadimoga on the east coast of
India.
MJ is a high Pressure and high Temperature (HPHT), gas & condensate field. The field will produce
from eight wells and reach a peak gas production of around 12 MMSCMD gas and 25,000 barrels
of condensate per day.
The development includes a new Floating Production, Storage and Offloading (FPSO) vessel – the
‘Ruby’ – to process and separate the condensate, gas, water, and impurities, before sending the
gas onshore for sale. Condensate is stored on the FPSO before being offloaded to shuttle tankers
for supply to Indian refineries.
RIL is the operator of the KG D6 block with a 66.67% participating interest and bp holds a 33.33%
participating interest.
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Saudi petchem unit Awards Maire Tecnimont $2bn EPC work
TradeArabia News Service
Maire Tecnimont, a leading Italian contractor in the energy sector, has announced that two of its
integrated E&C solutions units - Tecnimont and Tecnimont Arabia - have been awarded two lump-
sum turn-key EPC contracts related to a petrochemical expansion at the Satorp Refinery in the
Kingdom of Saudi Arabia.
The Satorp petrochemical facility is a joint
venture between Saudi oil giant Aramco and
French multi-energy company TotalEnergies
that will enable conversion of internally
produced refinery off-gases and naphtha, as
well as ethane and natural gasoline, into
higher value chemicals.
The contracts, which are worth $2 billion, relate to the execution of two packages of the complex,
namely the “Derivatives Units” package – which includes a butadiene extraction unit, an olefin
extraction unit, a methyl tert-butyl ether unit, a butadiene selective hydrogenation unit, a 2nd stage
pygas hydrogenation unit and benzene & toluene extraction unit – and the “High Density
Polyethylene (HDPE) & Logistic Area” package, which includes two polyethylene units and the
relevant product logistic facilities.
The project scope includes complete
engineering services, equipment and
material supply, construction activities,
pre-commissioning, and commissioning
and the entire work will be completed in
four years.
On the contract win, Maire Group CEO
Alessandro Bernini said: "We are
extremely proud of having been
selected by Saudi Aramco and
TotalEnergies for this major initiative. It
is a further recognition of Tecnimont’s
world-class capabilities to execute complex projects in complex environments, as well as our
undisputed leadership in downstream petrochemicals."
"These awards will provide a significant addition to our already large €8-billion backlog, increasing
revenues visibility in the short- and medium-term. It is also for these reasons, and in a context of
continued robust demand, that we keep investing in talent, with almost 600 new engineers added
year to date," stated Bernini.
With this contract win, the group’s year-to-date order intake has risen to over €2.6 billion (including
approximately €200 million related to the contract for a fertilizer plant in Egypt, subject to successful
execution of the client’s financing package).
Considering the important commercial prospects in the coming months, a very strong second half
is expected, which will provide a solid driver to the Group’s growth this year and beyond, he added.
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UK: Centrica bolsters UK’s energy security by doubling Rough
storage capacity
Source: Centrica
Following further engineering work and investment, Centrica has announced increased gas storage
capacity at Rough, the UK’s largest gas storage facility.
The facility, which is 18 miles off the coast of East Yorkshire, stopped storing gas in 2017 but was
re-opened for gas storage in October 2022. Rough now provides half of the UK’s total gas storage.
Centrica bolsters UK’s energy security by doubling Rough storage capacity
At the time of reopening Rough for gas storage it was able to store approx. 30 billion cubic feet (bcf)
of gas for UK homes and businesses. Further investment in the facility means Rough will now be
able to store up to 54 bcf of gas, boosting the UK’s energy resilience for the coming winter – this
would provide the equivalent volume of gas to heat 2.4 million homes over winter.
The UK has diverse gas supplies with connections with Norway and other European countries and
3 LNG import terminals. However, it still has some of the lowest levels of gas storage in Europe at
12 days average or 7.5 peak winter days, compared to Germany at 89 days, France at 103 days
and the Netherlands at 123 days.
Rough will help keep prices down for consumers by balancing the UK’s gas market, injecting gas
into the facility when there is excess supply and putting that gas back into the UK’s gas network
when customers need it most, keeping prices lower at that point of peak demand. The additional
capacity means Rough can store up to 6 days of average UK gas use.
Centrica’s long-term ambition is to turn the Rough gas field into the largest long duration low carbon
energy storage facility in the world, capable of storing both natural gas and hydrogen.
Centrica Group Chief Executive, Chris O’Shea, said 'The resilience of the UK’s energy system
needs to be substantially improved. We are delighted to play our part by further expanding the UK’s
gas storage capacity. Rough is not a silver bullet for energy security, but it plays a critical role in
increasing capacity and supply confidence over the winter months.
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Rough can help our energy system by storing natural gas when there is a surplus and producing
this gas when the country needs it during cold snaps and peak demand.
'We stand ready to invest £2 billion to repurpose the Rough field into the world’s biggest methane
and hydrogen storage facility, bolstering the UK’s energy security, delivering a net zero electricity
system by 2035, creating 5,000 skilled jobs and decarbonising the UK’s industrial clusters by 2040.
But to do this we need the right regulatory support framework.
This world class North Sea asset has the potential to help the UK economy return to a position of
being a net exporter of energy once again.'
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NewBase July 03 -2023 Khaled Al Awadi
NewBase for discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Oil prices range-bound amid tighter supply, slow demand fears
Reuters + NewBase
Oil prices were roughly unchanged on Monday as concerns about global macroeconomic
headwinds and possible further interest rate hikes from the U.S. Federal Reserve offset forecasts
of tighter supplies amid OPEC+ cuts.
Brent crude futures were last up 4 cents to $75.45 a barrel by 0404 GMT after settling up 0.8% on
Friday. U.S. West Texas Intermediate crude was at $70.67 a barrel, up 3 cents, after closing 1.1%
higher in the previous session.
Brent fell for the fourth straight quarter by the end of June while WTI notched a second quarterly
drop as the world's top two economies, the U.S. and China, lost speed in the second quarter.
Fears of a further slowdown hurting fuel demand grew after data on Friday showed U.S. inflation
still outpacing the central bank's 2% target and stoked expectations it would hike interest rates
again.
Oil price special
coverage
 China factory activity growth slowed in June - Caixin PMI
 OPEC output dips in June ahead of Saudi cut - survey
 U.S. buys 3.2 million barrels of oil for SPR
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"Hawkish commentary on rates continues to raise concerns of the demand outlook weighing on
prices," National Australia Bank analysts said in a note. Higher interest rates could strengthen the
greenback, making commodities more expensive for holders of other currencies, and also dampen
oil demand.
Economists and analysts have lowered their Brent price forecasts to average at $83.03 a barrel in
2023, in the June Reuters oil poll.
Factory activity growth in China, the world's largest crude importer, also slowed in June as
sentiment and recruitment cooled on the back of sluggish market conditions, according to the
Caixin/S&P Global private sector survey.
Still, some analysts expect supplies to tighten and push prices higher in the second half after top
exporter Saudi Arabia pledged an extra 1 million barrels per day output cut in July, while the U.S. is
gradually replenishing its Strategic Petroleum Reserve.
"OPEC+'s multi-output-cuts have kept oil prices above key levels, which may see a further
production reduction by the cartel to keep the crude market's stability," said Tina Teng, an analyst
at CMC Markets.
However, the latest Reuters survey showed OPEC oil output has fallen only slightly in June as
increases in Iraq and Nigeria limited the impact of cutbacks by others. Investors are looking ahead
to a conference later this week hosted by the Organization of the Petroleum Exporting Countries
(OPEC) for supply cues.
U.S. oil rigs fell by one to 545 last week, their lowest level since April 2022, while gas rigs fell six to
124, their lowest since February 2022, Baker Hughes data showed. U.S. crude output fell in April
to 12.615 million barrels per day (bpd), its lowest since February, the U.S. Energy Information
Administration said on Friday.
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Russia’s rusty oil tanker fleet sets sail with newer ships
Bloomberg
An armada of tankers ferrying sanctioned oil around the globe is starting to get younger, bucking a
months-long trend of using the world’s oldest and most dangerous vessels.
Shortly after President Vladimir Putin’s invasion of Ukraine early last year, hundreds of aging tankers
were snapped up by a cohort of faceless traders, intermediaries and investors to keep Russian oil
flowing. By some estimates, the purchases, which added to vessels that were already transporting
crude for Venezuela and Iran, created a more than 900-strong dark fleet.
Now, the average age of the ships being purchased is declining, according to data from
VesselsValue Ltd., a researcher of shipping deals. Two industry executives said that clampdowns
in Asia were likely catalysts for the shift, following a spate of detentions in recent months over safety
issues.
China, one of the top consumers of Russian and Iranian oil, recently ramped up checks on older
tankers at the key port of Qingdao, forcing some to wait more than a month to unload their cargo.
Anxiety over aging ships was heightened when a 26-year old vessel exploded off Malaysia in May.
Singapore has also detained tankers for failing safety inspections at a record clip in recent months.
Newer vessels, provided they are well maintained, should help to allay fears by some importers
over their seaworthiness, though the fleet remains awash with vintage ships.
Demolition delay
The specifics of dark fleet tankers vary. Often, though, they are older vessels without industry-
standard insurance or other western services, and owners that are tough to trace. Ships are near
or over 20, an age at which vessels would typically be scrapped.
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Certain countries take a hard view on older ships. In addition to the Chinese checks, India moved
to ban vessels older than 25 years of age from entering its ports earlier this year.
“Some shipowners are getting more comfortable with handling restricted crude such as Russian
flows, as they see that this trade is here to stay,” said Anoop Singh, global head of shipping research
at Oil Brokerage Ltd. “They’re now more willing to invest in younger ships that’ll meet wider industry
standards for longer.”
When buying for the Russia trade first emerged, it made sense to purchase the oldest vessels
available. Those ships are the cheapest, and operating without western services enabled them to
bypass many of the sanctions in place on oil exports, including a $60-a-barrel price cap on Russian
crude that was imposed by the Group of Seven.
The surge in demand for ships has extended the lifespan for many. Not a single large crude tanker
has been scrapped for seven months, something that hasn’t happened since at least the mid-1970s,
according to Clarkson Research Services Ltd., a unit of the world’s largest shipbroker.
Tankers are also spending more time in transit. The pool of buyers for Russian crude has shrunk
since the war, meaning cargoes that used to be hauled just a couple of days along the Baltic Sea
now travel for weeks to get to China and India.
That’s pushed benchmark oil tanker earnings to around $100,000 a day on two occasions since
the war broke out, compared with an average of $23,000 a day since 2017. Further purchases of
younger ships boost the chances of rates returning to the higher level as it trims the supply of
ships for conventional trades.
There is a strong safety rationale for the move to newer vessels. In May, an aging tanker was
found to have more than 20 defects during an inspection in China. And a lot of the older tankers
that can serve the trade have also already been acquired.
“The pot of old bangers is running dry so it’s a natural progression that newer ships will be taken,”
said Halvor Ellefsen, a tanker broker at Fearnleys Shipbrokers UK Ltd. “If it continues, it will mean
a tighter regular tanker market, but also a more certain supply of oil from sanctioned countries.”
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NewBase Specual Coverage
The Energy world –July-03 -2023
CLEAN ENERGY
Where Did All That Russian Gas Go?
Cut adrift from Europe, its biggest customer, the gas sector needs to find new markets. A $6.6 billion
fall in state revenues from the industry points to the economic cost of the war in Ukraine.
Bloomberg News
Much of Russia’s existing gas export infrastructure points West. Unfortunately for Moscow, most of
its gas customers are now to its East and a lot of the infrastructure it needs to supply them is yet to
be built. This mismatch of pipelines and customers — which is likely to take years to resolve —
forms part of a bigger question triggered by Moscow’s assault on Ukraine. The war has cut Russia
adrift from Europe, its biggest gas export market. So what has Russia — which has the largest
reserves in the world — done with all that spare gas?
A gas drilling rig on the Gazprom PJSC Chayandinskoye oil, gas and condensate field, a resource base for the Power
of Siberia gas pipeline in 2021. ….. Photographer: Andrey Rudakov/Bloomberg
In 2021, Russia pumped about 150 billion cubic meters of pipeline gas to Europe — more than
enough to satisfy the combined annual consumption of Germany, France and Austria. Europe
represented two-thirds of the country’s gas exports including flows of liquified natural gas. Since the
Ukraine invasion severely dented that trade Moscow has sought new markets, expanded others
and committed to provide gas to parts of Russia not yet on the domestic network.
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Russian Pipeline Gas Shifts West to East
Source: Bloomberg calculations based on data from Gazprom, Ukrtransgaz, and the Russian government
Note: Daily flow data to Turkey via TurkStream and Blue Stream are not available. TurkStream flow
data only represent daily flows to Europe. Ukraine numbers based on transit agreement, not total
capacity of its gas network.
Even with these efforts, Russia has no customers for about 90 billion cubic meters of pipeline gas,
the estimated drop in flows to Europe last year, adding to the pressure on its heavily sanctioned
economy.
A more than 50% fall in gas prices this year has further squeezed earnings. Oil and gas together
contributed more than a third of Russia’s pre-war budget revenues. And while oil has kept flowing,
the Russian gas industry has been at the center of a whirlwind that has slashed gas revenues for
the state and the country’s biggest producer Gazprom PJSC.
Gas production fell more than 13% in the first five months of the year compared to the same period
in 2022. Gazprom, which exported the pipeline gas that went to Europe, accounts for the majority
of that drop. Had it not been for Novatek PJSC, Russia’s largest LNG producer, which kept its
production flat and Rosneft PJSC, which pumped additional supplies to the domestic market, the
fall would have been more severe.
European leaders accused Moscow of weaponizing gas flows at the start of the war by using
pretexts for halting supplies to punish countries backing Ukraine. As a result, prices surged and
Europe filled its storage sites last summer with the most expensive gas the region had ever seen,
partly the result of the capping of flows from the Nord Stream pipeline system which was
subsequently damaged by blasts and shut indefinitely last September.
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A mild winter helped Europe swerve a deep energy crisis, but for Moscow, replacing Europe has
not been as easy. Gas revenues fell almost 45% between January and May compared to the same
period in 2022 to 710 billion rubles ($8.3 billion), according to finance ministry data.
Gas Revenues
Russian budget proceeds from gas taxes fell amid lower exports to Europe
Source: Russia's Finance Ministry
NOTE: Revenues from mineral extraction tax in October-December 2022 were boosted by a
temporary windfall tax of 416 billion rubles per month on Gazprom. The company will also pay an
additional 50 billion rubles per month in MET in the period 2023-2025
“When countries come under sanctions, there is initially a period where they struggle to adapt to the
new situation,” said Peter Tertzakian, managing director of ARC Financial, a veteran energy
investor referring to the impact of the broader sanctions on the sector. “However, the harder the
sanctions, the more creative a country typically gets in terms of figuring out how to overcome them.”
Russia has accelerated its pivot to China. Earlier this year President Vladimir Putin declared that
the development of gas production, processing and shipment facilities in the east of Russia, close
to the border with China, has a “truly strategic importance”. Yet a visit by China’s President Xi
Jinping to Moscow in March failed to produce an immediate commitment from Beijing to buy more
Russian gas.
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A visit by China’s President Xi Jinping to Moscow in March failed to produce an immediate
commitment from Beijing to buy more Russian gas.
The Kremlin’s switch to China will require new pipelines to be built to supplement the Power of
Siberia link, which began operating in December 2019. Shipments to China are just a fraction of
those that flowed to Europe before the war, but they have grown and are expected to rise by 42%
this year to 22 billion cubic meters before increasing to 38 billion cubic meters a year by 2025,
enough to satisfy the annual consumption of France.
Ahead of the invasion of Ukraine, Gazprom signed a second supply deal with China, under which
the energy company will deliver a further 10 billion cubic meters of gas annually over 25 years via
a second pipeline known as the Far Eastern route, which is yet to be built.
Talks over the so-called Power of Siberia 2 project — which would double Russian gas flows to
China to almost 100 billion cubic meters — have been “at final stage” for months, according to
Moscow. Even if a deal is agreed by the end of 2023, it would take at least five years to build the
pipeline, underscoring how difficult it is for Moscow to replace Europe overnight.
“China seems to be under no time pressure to negotiate,” said Vitaly Yermakov, senior research
fellow at The Oxford Institute for Energy Studies. “While Russia is sitting on a time bomb, facing a
potential sharp reduction in gas export volumes.”
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The Gazprom Power of Siberia gas transmission line between the Kovyktinskoye and Chayandinskoye gas fields near
Irkutsk, in 2021.
While some in the market believe a partial resumption in flows to Europe is possible, the reality is
that at some stage the European Union was going to turn its back on Russian gas. But, most thought
the trigger would be the EU’s net-zero target of 2050 for greenhouse gas emissions, rather than
military adventurism, and that they would have more time to adapt.
“Even if the war is to end tomorrow, if there is a regime change in Russia — and it is back in the
framework of international law — Russia has violated the trust of businesses and governments in
Europe,” said Kateryna Filippenko, director for global gas research at Wood Mackenzie Ltd. “It will
take time to rebuild that trust, and to come back to any sort of additional volumes.”
Selling Gas Door-to-Door
Some countries like the UK and the Baltic states banned Russian gas outright, including LNG, and
more governments in the region called on companies to reduce reliance on it. But a total embargo
on gas flows from Russia has so far been politically unpalatable in the EU.
Still, the speed with which western European markets adapted to the reduction in Russian pipeline
gas hit Gazprom particularly hard. Production was cut by 20% in 2022 to 412.6 billion cubic meters,
the lowest in at least 15 years. And its net income attributable to shareholders fell more than 41%
to 1.23 trillion rubles.
Turkey has traditionally been among Gazprom’s top three buyers. Russian pipeline gas exports to
the country reached almost 27 billion cubic meters in 2021 up from 16.4 billion in 2020, according
to the most recent Gazprom data.
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Russia is now seeking to leverage that relationship to use Turkey to transit exports to Europe.
President Recep Tayyip Erdogan, who has positioned himself as a mediator between Russia and
Ukraine, has welcomed Putin’s idea to create a trading hub in Turkey, where Moscow’s gas could
be marketed, but the details remain vague.
The TurkStream natural gas pipeline operated by Gastrans, a joint venture of Srbijagas JP and
Gazprom PJSC, at the gas supply landing site in Zajecar, Serbia, in 2020.
Gazprom has already shared its concept plans for the creation of the hub with Ankara. The company
has also intensified talks with some former Soviet republics. It signed a supply contract with
Uzbekistan in June and is discussing with Azerbaijan and Turkmenistan opportunities to work
together.
Talks with Kazakhstan appear further advanced with the two sides signing a cooperation agreement
at the start of 2023 that could boost imports of Russian gas but also lead to the construction of new
pipelines to transit the fuel to China.
All of these options — the Turkish trading hub, new markets in central Asia and additional pipelines
to China — require significant political wrangling to progress, leaving Russia with limited choices in
the short term of what to do with its spare gas.
Production falls suggest that much of it is staying in the ground.
Tapping Down
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or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavors have been used to ensure the accuracy of the information contained in this
publication. However, no warranty is given to the accuracy of its content. Page 17
Russia's gas output fell as the nation capped pipeline flows to Europe
Source: Industry data
Note: Production doesn't include flared volumes and technical gas losses, which are also excluded
in historic gas-output calculations by the Energy Ministry
Yet exports of Russian LNG are booming, albeit from a very low base, accounting for 12% of total
LNG imports into western Europe this year. France, Belgium and Spain imported record volumes
from Russia in 2022, a fact European officials are starting to pay close attention to.
The Netherlands and Spain are both taking steps to ban imports of LNG from Russia, but the region
as a whole is unlikely to stop purchasing the super-chilled fuel from Moscow any time soon.
Moscow wants to triple LNG production by the end of the decade, and it could use spare pipeline
capacity after the drop in flows to Europe to reach the goal. Novatek wants to connect a proposed
LNG facility in Murmansk to Gazprom’s gas network, in a move that could allow the company to
liquefy gas that would previously have been piped to Europe.
Swiss-based MET International used to trade Russian pipeline gas. Along with other traders it now
relies on global deals for LNG to plug the gaps in Europe’s gas needs, a task Gyorgy Vargha, MET’s
chief executive, described as “enormous.”
“The type of relationship is different, you suddenly have to be in touch with global traders, Asian
utilities, American and African companies,” said Vargha. “This is a major shift for energy buyers all
over Europe.”
Copyright © 2023 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,
or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavors have been used to ensure the accuracy of the information contained in this
publication. However, no warranty is given to the accuracy of its content. Page 18
LNG tanker Rudolf Samoylovich at the dock of the Montoir-de-Bretagne LNG Terminal near Saint-
Nazaire, in France, in 2022.
Keeping the Home Fire Burning
Russia was already expanding the domestic gas network before the war began. The process is
being accelerated across Russia’s vast territories to boost demand and support production. Putin
said last year that “wherever is possible, gas, either pipeline or liquefied, must reach a
consumer.” The ambition is to raise the domestic rate of access to the fuel to 83% by 2030 from
73% last year.
To achieve that, the gas industry will need to connect homes like that of Alexandra and Anatoly
Alikov, who live in a village in the Leningrad region. In January the couple received a visit from
Dmitry Medvedev, ex-president and Putin’s deputy in the Russian Security Council. Over tea and
buns — all carefully captured by state TV — Medvedev revealed the reason for his visit: the cottage
had just been added to the gas network, 15 years after it was built.
“There are smiles on the faces of people who have just received gas, we’ve just seen it,” Medvedev
told the television cameras. “You can ‘tell the difference’, as they say,” he added, seemingly
mocking European households that had been forced to replace Russian gas.
Propaganda aside, Russia and its gas industry are likely to be feeling “the difference” for years to
come.
Copyright © 2023 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,
or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavors have been used to ensure the accuracy of the information contained in this
publication. However, no warranty is given to the accuracy of its content. Page 19
NewBase Energy News 03-July 2023 - Issue No. 1635 call on +971504822502, UAE
The Editor:” Khaled Al Awadi” Your partner in Energy Services
NewBase energy news is produced Twice a week and sponsored by Hawk Energy Service – Dubai, UAE.
For additional free subscriptions, please email us.
About: Khaled Malallah Al Awadi,
Energy Consultant
MS & BS Mechanical Engineering (HON), USA
Emarat member since 1990
ASME member since 1995
Hawk Energy member 2010
www.linkedin.com/in/khaled-al-awadi-38b995b
Mobile: +971504822502
khdmohd@hawkenergy.net or khdmohd@hotmail.com
Khaled Al Awadi is a UAE National with over 30 years of experience in the Oil & Gas
sector. Has Mechanical Engineering BSc. & MSc. Degrees from leading U.S.
Universities. Currently working as self leading external Energy consultant for the
GCC area via many leading Energy Services companies. Khaled is the Founder of
the NewBase Energy news articles issues, Khaled is an international consultant,
advisor, ecopreneur and journalist with expertise in Gas & Oil pipeline Networks,
waste management, waste-to-energy, renewable energy, environment protection
and sustainable development. His geographical areas of focus include Middle East,
Africa and Asia. Khaled has successfully accomplished a wide range of projects in
the areas of Gas & Oil with extensive works on Gas Pipeline Network Facilities & gas
compressor stations. Executed projects in the designing & constructing of gas pipelines, gas metering &
regulating stations and in the engineering of gas/oil supply routes.
Has drafted & finalized many contracts/agreements in products sale, transportation, operation &
maintenance agreements. Along with many MOUs & JVs for organizations & governments authorities.
Currently dealing for biomass energy, biogas, waste-to-energy, recycling and waste management. He has
participated in numerous conferences and workshops as chairman, session chair, keynote speaker and
panelist.
Khaled is the Editor-in-Chief of NewBase Energy News and is a professional environmental writer with over
1400 popular articles to his credit. He is proactively engaged in creating mass awareness on renewable
energy, waste management, plant Automation IA and environmental sustainability in different parts of the
world. Khaled has become a reference for many of the Oil & Gas Conferences and for many Energy program
broadcasted internationally, via GCC leading satellite Channels. Khaled can be reached at any time, see
contact details above.
Copyright © 2023 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,
or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavors have been used to ensure the accuracy of the information contained in this
publication. However, no warranty is given to the accuracy of its content. Page 20
Copyright © 2023 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,
or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavors have been used to ensure the accuracy of the information contained in this
publication. However, no warranty is given to the accuracy of its content. Page 21

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NewBase 03 July-2023 Energy News issue - 1635 by Khaled Al Awadi.pdf

  • 1. Copyright © 2023 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavors have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 1 NewBase Energy News 03 July 2023 No. 1635 Senior Editor Eng. Khaed Al Awadi NewBase for discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE UAE set to add 571MW biomass capacity in waste-to-energy push Zawyah + NewBase The UAE, which has the largest biomass capacity in the region, is expected to develop its waste- to-energy (WtE) sector as part of the Middle East push into the nascent renewables sector. According to a report by research firm BMI, six out of eight WtE projects in their key projects data (KPD) are located in the UAE, with a total capacity of 571 megawatts (MW). The report said these developments are supported by the government’s target to stop 75% of its waste going to landfills. One project, the Sharjah Waste to Energy plant, located in the UAE, has generated enough electricity to power 2,000 houses over its first year, with the added benefit of diverting 90% of Sharjah's, waste whilst reducing landfill emissions. "With the UAE hosting COP28 this year, the market is focusing efforts on reducing emissions, with waste-to-energy plants as a key component of this. We expect this adds upside risks to our UAE, and MENA, forecasts." BMI has increased its forecast for biomass capacity in the MENA region to 659MW by 2031 from the last year's forecast of 231MW. MENA’s increased capacity is because of large WtE projects worth 400MW in the UAE, as well as a smaller 30MW project in Egypt. ww.linkedin.com/in/khaled-al-awadi-80201019/ MENA region is expected to hit total capacity of 659MW by 2031
  • 2. Copyright © 2023 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavors have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 2 The report noted that at a global level, biomass capacity will grow by about 31.4GW from end-2022 to 2032, with over 65% of the growth expected to be in Asian markets. Mainland China will continue to lead the expansion of the biomass power sector over the coming years, with a net capacity growth of 6.9GW from end-2022 to 2032, accounting for more than half of Asia’s biomass capacity growth. Bioenergy, which includes both biomass and biofuels used in the heating, transport and power sectors, is a significant renewables component for India’s energy sector, making up 88% of its total renewable energy supply in 2019, according to IEA. BMI said India will overtake Germany in 2032 to become the 4th largest biomass market globally, driven by government support and a huge agricultural sector.
  • 3. Copyright © 2023 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavors have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 3 India: Reliance and bp start production from KG D6 block Bp.com Reliance Industries Limited (RIL) and bp have confirmed the commencement of production from the MJ field, following testing and commissioning activities. The MJ field represents the last of three major new deepwater developments the RIL-bp consortium have brought into production in block KG D6 off the east coast of India. The start of gas and condensate production from the MJ field follows the start-up of the R-Cluster field in December 2020 and Satellite Cluster in April 2021. All three developments utilise the existing hub infrastructure for the block. Together, the three fields are expected to produce around 30 million standard cubic metres of gas a day (1 billion cubic feet a day) when MJ field reaches peak production. This is expected to account for around one third of India’s current domestic gas production and meet approximately 15% of India’s demand. Mukesh Ambani, chairman and managing director of Reliance Industries Limited said: “We continue to be proud of our partnership with bp that combines our expertise in commissioning complex projects under some of the most challenging environments in the last few years. Alongside the other KG D6 fields, the MJ development truly supports the ‘Make in India’ and ‘Energy vision’ laid out by the Government of India.” bp chief executive Bernard Looney added: “By safely bringing these new developments onstream, RIL and bp are making an important contribution to meeting India’s demand for secure supplies of gas. Our close strategic partnership with RIL now stretches back over 15 years and we are proud of how it continues to deepen – in gas, retail, aviation fuels and sustainable mobility solutions. Together we are helping to meet India’s growing energy needs, bringing the best of each partner to create real value.” Discovered in 2013 and sanctioned in 2019, the MJ field is located in water depths of up to 1,200 metres about 30 kilometres from the existing onshore terminal at Gadimoga on the east coast of India. MJ is a high Pressure and high Temperature (HPHT), gas & condensate field. The field will produce from eight wells and reach a peak gas production of around 12 MMSCMD gas and 25,000 barrels of condensate per day. The development includes a new Floating Production, Storage and Offloading (FPSO) vessel – the ‘Ruby’ – to process and separate the condensate, gas, water, and impurities, before sending the gas onshore for sale. Condensate is stored on the FPSO before being offloaded to shuttle tankers for supply to Indian refineries. RIL is the operator of the KG D6 block with a 66.67% participating interest and bp holds a 33.33% participating interest.
  • 4. Copyright © 2023 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavors have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 4 Saudi petchem unit Awards Maire Tecnimont $2bn EPC work TradeArabia News Service Maire Tecnimont, a leading Italian contractor in the energy sector, has announced that two of its integrated E&C solutions units - Tecnimont and Tecnimont Arabia - have been awarded two lump- sum turn-key EPC contracts related to a petrochemical expansion at the Satorp Refinery in the Kingdom of Saudi Arabia. The Satorp petrochemical facility is a joint venture between Saudi oil giant Aramco and French multi-energy company TotalEnergies that will enable conversion of internally produced refinery off-gases and naphtha, as well as ethane and natural gasoline, into higher value chemicals. The contracts, which are worth $2 billion, relate to the execution of two packages of the complex, namely the “Derivatives Units” package – which includes a butadiene extraction unit, an olefin extraction unit, a methyl tert-butyl ether unit, a butadiene selective hydrogenation unit, a 2nd stage pygas hydrogenation unit and benzene & toluene extraction unit – and the “High Density Polyethylene (HDPE) & Logistic Area” package, which includes two polyethylene units and the relevant product logistic facilities. The project scope includes complete engineering services, equipment and material supply, construction activities, pre-commissioning, and commissioning and the entire work will be completed in four years. On the contract win, Maire Group CEO Alessandro Bernini said: "We are extremely proud of having been selected by Saudi Aramco and TotalEnergies for this major initiative. It is a further recognition of Tecnimont’s world-class capabilities to execute complex projects in complex environments, as well as our undisputed leadership in downstream petrochemicals." "These awards will provide a significant addition to our already large €8-billion backlog, increasing revenues visibility in the short- and medium-term. It is also for these reasons, and in a context of continued robust demand, that we keep investing in talent, with almost 600 new engineers added year to date," stated Bernini. With this contract win, the group’s year-to-date order intake has risen to over €2.6 billion (including approximately €200 million related to the contract for a fertilizer plant in Egypt, subject to successful execution of the client’s financing package). Considering the important commercial prospects in the coming months, a very strong second half is expected, which will provide a solid driver to the Group’s growth this year and beyond, he added.
  • 5. Copyright © 2023 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavors have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 5 UK: Centrica bolsters UK’s energy security by doubling Rough storage capacity Source: Centrica Following further engineering work and investment, Centrica has announced increased gas storage capacity at Rough, the UK’s largest gas storage facility. The facility, which is 18 miles off the coast of East Yorkshire, stopped storing gas in 2017 but was re-opened for gas storage in October 2022. Rough now provides half of the UK’s total gas storage. Centrica bolsters UK’s energy security by doubling Rough storage capacity At the time of reopening Rough for gas storage it was able to store approx. 30 billion cubic feet (bcf) of gas for UK homes and businesses. Further investment in the facility means Rough will now be able to store up to 54 bcf of gas, boosting the UK’s energy resilience for the coming winter – this would provide the equivalent volume of gas to heat 2.4 million homes over winter. The UK has diverse gas supplies with connections with Norway and other European countries and 3 LNG import terminals. However, it still has some of the lowest levels of gas storage in Europe at 12 days average or 7.5 peak winter days, compared to Germany at 89 days, France at 103 days and the Netherlands at 123 days. Rough will help keep prices down for consumers by balancing the UK’s gas market, injecting gas into the facility when there is excess supply and putting that gas back into the UK’s gas network when customers need it most, keeping prices lower at that point of peak demand. The additional capacity means Rough can store up to 6 days of average UK gas use. Centrica’s long-term ambition is to turn the Rough gas field into the largest long duration low carbon energy storage facility in the world, capable of storing both natural gas and hydrogen. Centrica Group Chief Executive, Chris O’Shea, said 'The resilience of the UK’s energy system needs to be substantially improved. We are delighted to play our part by further expanding the UK’s gas storage capacity. Rough is not a silver bullet for energy security, but it plays a critical role in increasing capacity and supply confidence over the winter months.
  • 6. Copyright © 2023 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavors have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 6 Rough can help our energy system by storing natural gas when there is a surplus and producing this gas when the country needs it during cold snaps and peak demand. 'We stand ready to invest £2 billion to repurpose the Rough field into the world’s biggest methane and hydrogen storage facility, bolstering the UK’s energy security, delivering a net zero electricity system by 2035, creating 5,000 skilled jobs and decarbonising the UK’s industrial clusters by 2040. But to do this we need the right regulatory support framework. This world class North Sea asset has the potential to help the UK economy return to a position of being a net exporter of energy once again.'
  • 7. Copyright © 2023 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavors have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 7 NewBase July 03 -2023 Khaled Al Awadi NewBase for discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE Oil prices range-bound amid tighter supply, slow demand fears Reuters + NewBase Oil prices were roughly unchanged on Monday as concerns about global macroeconomic headwinds and possible further interest rate hikes from the U.S. Federal Reserve offset forecasts of tighter supplies amid OPEC+ cuts. Brent crude futures were last up 4 cents to $75.45 a barrel by 0404 GMT after settling up 0.8% on Friday. U.S. West Texas Intermediate crude was at $70.67 a barrel, up 3 cents, after closing 1.1% higher in the previous session. Brent fell for the fourth straight quarter by the end of June while WTI notched a second quarterly drop as the world's top two economies, the U.S. and China, lost speed in the second quarter. Fears of a further slowdown hurting fuel demand grew after data on Friday showed U.S. inflation still outpacing the central bank's 2% target and stoked expectations it would hike interest rates again. Oil price special coverage  China factory activity growth slowed in June - Caixin PMI  OPEC output dips in June ahead of Saudi cut - survey  U.S. buys 3.2 million barrels of oil for SPR
  • 8. Copyright © 2023 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavors have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 8 "Hawkish commentary on rates continues to raise concerns of the demand outlook weighing on prices," National Australia Bank analysts said in a note. Higher interest rates could strengthen the greenback, making commodities more expensive for holders of other currencies, and also dampen oil demand. Economists and analysts have lowered their Brent price forecasts to average at $83.03 a barrel in 2023, in the June Reuters oil poll. Factory activity growth in China, the world's largest crude importer, also slowed in June as sentiment and recruitment cooled on the back of sluggish market conditions, according to the Caixin/S&P Global private sector survey. Still, some analysts expect supplies to tighten and push prices higher in the second half after top exporter Saudi Arabia pledged an extra 1 million barrels per day output cut in July, while the U.S. is gradually replenishing its Strategic Petroleum Reserve. "OPEC+'s multi-output-cuts have kept oil prices above key levels, which may see a further production reduction by the cartel to keep the crude market's stability," said Tina Teng, an analyst at CMC Markets. However, the latest Reuters survey showed OPEC oil output has fallen only slightly in June as increases in Iraq and Nigeria limited the impact of cutbacks by others. Investors are looking ahead to a conference later this week hosted by the Organization of the Petroleum Exporting Countries (OPEC) for supply cues. U.S. oil rigs fell by one to 545 last week, their lowest level since April 2022, while gas rigs fell six to 124, their lowest since February 2022, Baker Hughes data showed. U.S. crude output fell in April to 12.615 million barrels per day (bpd), its lowest since February, the U.S. Energy Information Administration said on Friday.
  • 9. Copyright © 2023 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavors have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 9 Russia’s rusty oil tanker fleet sets sail with newer ships Bloomberg An armada of tankers ferrying sanctioned oil around the globe is starting to get younger, bucking a months-long trend of using the world’s oldest and most dangerous vessels. Shortly after President Vladimir Putin’s invasion of Ukraine early last year, hundreds of aging tankers were snapped up by a cohort of faceless traders, intermediaries and investors to keep Russian oil flowing. By some estimates, the purchases, which added to vessels that were already transporting crude for Venezuela and Iran, created a more than 900-strong dark fleet. Now, the average age of the ships being purchased is declining, according to data from VesselsValue Ltd., a researcher of shipping deals. Two industry executives said that clampdowns in Asia were likely catalysts for the shift, following a spate of detentions in recent months over safety issues. China, one of the top consumers of Russian and Iranian oil, recently ramped up checks on older tankers at the key port of Qingdao, forcing some to wait more than a month to unload their cargo. Anxiety over aging ships was heightened when a 26-year old vessel exploded off Malaysia in May. Singapore has also detained tankers for failing safety inspections at a record clip in recent months. Newer vessels, provided they are well maintained, should help to allay fears by some importers over their seaworthiness, though the fleet remains awash with vintage ships. Demolition delay The specifics of dark fleet tankers vary. Often, though, they are older vessels without industry- standard insurance or other western services, and owners that are tough to trace. Ships are near or over 20, an age at which vessels would typically be scrapped.
  • 10. Copyright © 2023 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavors have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 10 Certain countries take a hard view on older ships. In addition to the Chinese checks, India moved to ban vessels older than 25 years of age from entering its ports earlier this year. “Some shipowners are getting more comfortable with handling restricted crude such as Russian flows, as they see that this trade is here to stay,” said Anoop Singh, global head of shipping research at Oil Brokerage Ltd. “They’re now more willing to invest in younger ships that’ll meet wider industry standards for longer.” When buying for the Russia trade first emerged, it made sense to purchase the oldest vessels available. Those ships are the cheapest, and operating without western services enabled them to bypass many of the sanctions in place on oil exports, including a $60-a-barrel price cap on Russian crude that was imposed by the Group of Seven. The surge in demand for ships has extended the lifespan for many. Not a single large crude tanker has been scrapped for seven months, something that hasn’t happened since at least the mid-1970s, according to Clarkson Research Services Ltd., a unit of the world’s largest shipbroker. Tankers are also spending more time in transit. The pool of buyers for Russian crude has shrunk since the war, meaning cargoes that used to be hauled just a couple of days along the Baltic Sea now travel for weeks to get to China and India. That’s pushed benchmark oil tanker earnings to around $100,000 a day on two occasions since the war broke out, compared with an average of $23,000 a day since 2017. Further purchases of younger ships boost the chances of rates returning to the higher level as it trims the supply of ships for conventional trades. There is a strong safety rationale for the move to newer vessels. In May, an aging tanker was found to have more than 20 defects during an inspection in China. And a lot of the older tankers that can serve the trade have also already been acquired. “The pot of old bangers is running dry so it’s a natural progression that newer ships will be taken,” said Halvor Ellefsen, a tanker broker at Fearnleys Shipbrokers UK Ltd. “If it continues, it will mean a tighter regular tanker market, but also a more certain supply of oil from sanctioned countries.”
  • 11. Copyright © 2023 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavors have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 11 NewBase Specual Coverage The Energy world –July-03 -2023 CLEAN ENERGY Where Did All That Russian Gas Go? Cut adrift from Europe, its biggest customer, the gas sector needs to find new markets. A $6.6 billion fall in state revenues from the industry points to the economic cost of the war in Ukraine. Bloomberg News Much of Russia’s existing gas export infrastructure points West. Unfortunately for Moscow, most of its gas customers are now to its East and a lot of the infrastructure it needs to supply them is yet to be built. This mismatch of pipelines and customers — which is likely to take years to resolve — forms part of a bigger question triggered by Moscow’s assault on Ukraine. The war has cut Russia adrift from Europe, its biggest gas export market. So what has Russia — which has the largest reserves in the world — done with all that spare gas? A gas drilling rig on the Gazprom PJSC Chayandinskoye oil, gas and condensate field, a resource base for the Power of Siberia gas pipeline in 2021. ….. Photographer: Andrey Rudakov/Bloomberg In 2021, Russia pumped about 150 billion cubic meters of pipeline gas to Europe — more than enough to satisfy the combined annual consumption of Germany, France and Austria. Europe represented two-thirds of the country’s gas exports including flows of liquified natural gas. Since the Ukraine invasion severely dented that trade Moscow has sought new markets, expanded others and committed to provide gas to parts of Russia not yet on the domestic network.
  • 12. Copyright © 2023 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavors have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 12 Russian Pipeline Gas Shifts West to East Source: Bloomberg calculations based on data from Gazprom, Ukrtransgaz, and the Russian government Note: Daily flow data to Turkey via TurkStream and Blue Stream are not available. TurkStream flow data only represent daily flows to Europe. Ukraine numbers based on transit agreement, not total capacity of its gas network. Even with these efforts, Russia has no customers for about 90 billion cubic meters of pipeline gas, the estimated drop in flows to Europe last year, adding to the pressure on its heavily sanctioned economy. A more than 50% fall in gas prices this year has further squeezed earnings. Oil and gas together contributed more than a third of Russia’s pre-war budget revenues. And while oil has kept flowing, the Russian gas industry has been at the center of a whirlwind that has slashed gas revenues for the state and the country’s biggest producer Gazprom PJSC. Gas production fell more than 13% in the first five months of the year compared to the same period in 2022. Gazprom, which exported the pipeline gas that went to Europe, accounts for the majority of that drop. Had it not been for Novatek PJSC, Russia’s largest LNG producer, which kept its production flat and Rosneft PJSC, which pumped additional supplies to the domestic market, the fall would have been more severe. European leaders accused Moscow of weaponizing gas flows at the start of the war by using pretexts for halting supplies to punish countries backing Ukraine. As a result, prices surged and Europe filled its storage sites last summer with the most expensive gas the region had ever seen, partly the result of the capping of flows from the Nord Stream pipeline system which was subsequently damaged by blasts and shut indefinitely last September.
  • 13. Copyright © 2023 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavors have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 13 A mild winter helped Europe swerve a deep energy crisis, but for Moscow, replacing Europe has not been as easy. Gas revenues fell almost 45% between January and May compared to the same period in 2022 to 710 billion rubles ($8.3 billion), according to finance ministry data. Gas Revenues Russian budget proceeds from gas taxes fell amid lower exports to Europe Source: Russia's Finance Ministry NOTE: Revenues from mineral extraction tax in October-December 2022 were boosted by a temporary windfall tax of 416 billion rubles per month on Gazprom. The company will also pay an additional 50 billion rubles per month in MET in the period 2023-2025 “When countries come under sanctions, there is initially a period where they struggle to adapt to the new situation,” said Peter Tertzakian, managing director of ARC Financial, a veteran energy investor referring to the impact of the broader sanctions on the sector. “However, the harder the sanctions, the more creative a country typically gets in terms of figuring out how to overcome them.” Russia has accelerated its pivot to China. Earlier this year President Vladimir Putin declared that the development of gas production, processing and shipment facilities in the east of Russia, close to the border with China, has a “truly strategic importance”. Yet a visit by China’s President Xi Jinping to Moscow in March failed to produce an immediate commitment from Beijing to buy more Russian gas.
  • 14. Copyright © 2023 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavors have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 14 A visit by China’s President Xi Jinping to Moscow in March failed to produce an immediate commitment from Beijing to buy more Russian gas. The Kremlin’s switch to China will require new pipelines to be built to supplement the Power of Siberia link, which began operating in December 2019. Shipments to China are just a fraction of those that flowed to Europe before the war, but they have grown and are expected to rise by 42% this year to 22 billion cubic meters before increasing to 38 billion cubic meters a year by 2025, enough to satisfy the annual consumption of France. Ahead of the invasion of Ukraine, Gazprom signed a second supply deal with China, under which the energy company will deliver a further 10 billion cubic meters of gas annually over 25 years via a second pipeline known as the Far Eastern route, which is yet to be built. Talks over the so-called Power of Siberia 2 project — which would double Russian gas flows to China to almost 100 billion cubic meters — have been “at final stage” for months, according to Moscow. Even if a deal is agreed by the end of 2023, it would take at least five years to build the pipeline, underscoring how difficult it is for Moscow to replace Europe overnight. “China seems to be under no time pressure to negotiate,” said Vitaly Yermakov, senior research fellow at The Oxford Institute for Energy Studies. “While Russia is sitting on a time bomb, facing a potential sharp reduction in gas export volumes.”
  • 15. Copyright © 2023 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavors have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 15 The Gazprom Power of Siberia gas transmission line between the Kovyktinskoye and Chayandinskoye gas fields near Irkutsk, in 2021. While some in the market believe a partial resumption in flows to Europe is possible, the reality is that at some stage the European Union was going to turn its back on Russian gas. But, most thought the trigger would be the EU’s net-zero target of 2050 for greenhouse gas emissions, rather than military adventurism, and that they would have more time to adapt. “Even if the war is to end tomorrow, if there is a regime change in Russia — and it is back in the framework of international law — Russia has violated the trust of businesses and governments in Europe,” said Kateryna Filippenko, director for global gas research at Wood Mackenzie Ltd. “It will take time to rebuild that trust, and to come back to any sort of additional volumes.” Selling Gas Door-to-Door Some countries like the UK and the Baltic states banned Russian gas outright, including LNG, and more governments in the region called on companies to reduce reliance on it. But a total embargo on gas flows from Russia has so far been politically unpalatable in the EU. Still, the speed with which western European markets adapted to the reduction in Russian pipeline gas hit Gazprom particularly hard. Production was cut by 20% in 2022 to 412.6 billion cubic meters, the lowest in at least 15 years. And its net income attributable to shareholders fell more than 41% to 1.23 trillion rubles. Turkey has traditionally been among Gazprom’s top three buyers. Russian pipeline gas exports to the country reached almost 27 billion cubic meters in 2021 up from 16.4 billion in 2020, according to the most recent Gazprom data.
  • 16. Copyright © 2023 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavors have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 16 Russia is now seeking to leverage that relationship to use Turkey to transit exports to Europe. President Recep Tayyip Erdogan, who has positioned himself as a mediator between Russia and Ukraine, has welcomed Putin’s idea to create a trading hub in Turkey, where Moscow’s gas could be marketed, but the details remain vague. The TurkStream natural gas pipeline operated by Gastrans, a joint venture of Srbijagas JP and Gazprom PJSC, at the gas supply landing site in Zajecar, Serbia, in 2020. Gazprom has already shared its concept plans for the creation of the hub with Ankara. The company has also intensified talks with some former Soviet republics. It signed a supply contract with Uzbekistan in June and is discussing with Azerbaijan and Turkmenistan opportunities to work together. Talks with Kazakhstan appear further advanced with the two sides signing a cooperation agreement at the start of 2023 that could boost imports of Russian gas but also lead to the construction of new pipelines to transit the fuel to China. All of these options — the Turkish trading hub, new markets in central Asia and additional pipelines to China — require significant political wrangling to progress, leaving Russia with limited choices in the short term of what to do with its spare gas. Production falls suggest that much of it is staying in the ground. Tapping Down
  • 17. Copyright © 2023 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavors have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 17 Russia's gas output fell as the nation capped pipeline flows to Europe Source: Industry data Note: Production doesn't include flared volumes and technical gas losses, which are also excluded in historic gas-output calculations by the Energy Ministry Yet exports of Russian LNG are booming, albeit from a very low base, accounting for 12% of total LNG imports into western Europe this year. France, Belgium and Spain imported record volumes from Russia in 2022, a fact European officials are starting to pay close attention to. The Netherlands and Spain are both taking steps to ban imports of LNG from Russia, but the region as a whole is unlikely to stop purchasing the super-chilled fuel from Moscow any time soon. Moscow wants to triple LNG production by the end of the decade, and it could use spare pipeline capacity after the drop in flows to Europe to reach the goal. Novatek wants to connect a proposed LNG facility in Murmansk to Gazprom’s gas network, in a move that could allow the company to liquefy gas that would previously have been piped to Europe. Swiss-based MET International used to trade Russian pipeline gas. Along with other traders it now relies on global deals for LNG to plug the gaps in Europe’s gas needs, a task Gyorgy Vargha, MET’s chief executive, described as “enormous.” “The type of relationship is different, you suddenly have to be in touch with global traders, Asian utilities, American and African companies,” said Vargha. “This is a major shift for energy buyers all over Europe.”
  • 18. Copyright © 2023 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavors have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 18 LNG tanker Rudolf Samoylovich at the dock of the Montoir-de-Bretagne LNG Terminal near Saint- Nazaire, in France, in 2022. Keeping the Home Fire Burning Russia was already expanding the domestic gas network before the war began. The process is being accelerated across Russia’s vast territories to boost demand and support production. Putin said last year that “wherever is possible, gas, either pipeline or liquefied, must reach a consumer.” The ambition is to raise the domestic rate of access to the fuel to 83% by 2030 from 73% last year. To achieve that, the gas industry will need to connect homes like that of Alexandra and Anatoly Alikov, who live in a village in the Leningrad region. In January the couple received a visit from Dmitry Medvedev, ex-president and Putin’s deputy in the Russian Security Council. Over tea and buns — all carefully captured by state TV — Medvedev revealed the reason for his visit: the cottage had just been added to the gas network, 15 years after it was built. “There are smiles on the faces of people who have just received gas, we’ve just seen it,” Medvedev told the television cameras. “You can ‘tell the difference’, as they say,” he added, seemingly mocking European households that had been forced to replace Russian gas. Propaganda aside, Russia and its gas industry are likely to be feeling “the difference” for years to come.
  • 19. Copyright © 2023 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavors have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 19 NewBase Energy News 03-July 2023 - Issue No. 1635 call on +971504822502, UAE The Editor:” Khaled Al Awadi” Your partner in Energy Services NewBase energy news is produced Twice a week and sponsored by Hawk Energy Service – Dubai, UAE. For additional free subscriptions, please email us. About: Khaled Malallah Al Awadi, Energy Consultant MS & BS Mechanical Engineering (HON), USA Emarat member since 1990 ASME member since 1995 Hawk Energy member 2010 www.linkedin.com/in/khaled-al-awadi-38b995b Mobile: +971504822502 khdmohd@hawkenergy.net or khdmohd@hotmail.com Khaled Al Awadi is a UAE National with over 30 years of experience in the Oil & Gas sector. Has Mechanical Engineering BSc. & MSc. Degrees from leading U.S. Universities. Currently working as self leading external Energy consultant for the GCC area via many leading Energy Services companies. Khaled is the Founder of the NewBase Energy news articles issues, Khaled is an international consultant, advisor, ecopreneur and journalist with expertise in Gas & Oil pipeline Networks, waste management, waste-to-energy, renewable energy, environment protection and sustainable development. His geographical areas of focus include Middle East, Africa and Asia. Khaled has successfully accomplished a wide range of projects in the areas of Gas & Oil with extensive works on Gas Pipeline Network Facilities & gas compressor stations. Executed projects in the designing & constructing of gas pipelines, gas metering & regulating stations and in the engineering of gas/oil supply routes. Has drafted & finalized many contracts/agreements in products sale, transportation, operation & maintenance agreements. Along with many MOUs & JVs for organizations & governments authorities. Currently dealing for biomass energy, biogas, waste-to-energy, recycling and waste management. He has participated in numerous conferences and workshops as chairman, session chair, keynote speaker and panelist. Khaled is the Editor-in-Chief of NewBase Energy News and is a professional environmental writer with over 1400 popular articles to his credit. He is proactively engaged in creating mass awareness on renewable energy, waste management, plant Automation IA and environmental sustainability in different parts of the world. Khaled has become a reference for many of the Oil & Gas Conferences and for many Energy program broadcasted internationally, via GCC leading satellite Channels. Khaled can be reached at any time, see contact details above.
  • 20. Copyright © 2023 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavors have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 20
  • 21. Copyright © 2023 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavors have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 21