NewBase 26 December 2023 Energy News issue - 1684 by Khaled Al Awadi_compressed.pdf

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NewBase Energy News 26 December 2023 No. 1684 Senior Editor Eng. Khaled Al Awadi
NewBase for discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
EWEC expands advanced energy modelling and forecasting
capacity with Energy Exemplar
WAM
Emirates Water and Electricity Company (EWEC) has signed a Memorandum of Understanding
(MoU) with Energy Exemplar, a global optimisation-based market simulation software provider for
the energy and water sectors.
The parties will explore opportunities to expand EWEC's advanced modelling capacity and bring
Energy Exemplar's state-of-the-art, cloud-based platform modelling capabilities to the Middle East.
The MoU was signed by Othman Al Ali, Chief Executive Officer of EWEC, and David Wilson, Chief
Executive Officer of Energy Exemplar, in the presence of representatives from both organisations.
Al Ali said that forecasting and modelling the impact of such rapid decarbonisation is crucial to
achieving Abu Dhabi and the UAE's sustainability and net-zero goals.
"This partnership with Energy Exemplar will expand our already advanced techno-economic
modelling capabilities through the integration of a scalable, cloud-based platform that further
ww.linkedin.com/in/khaled-al-awadi-80201019/

strengthens our integrated system planning, particularly when factoring in future-facing energy
innovations," he added.
Wilson, in turn, stated, "EWEC has in the last years built an advanced and globally leading modelling
capability on our PLEXOS modelling platform. Having EWEC leverage our latest cloud-based
technologies will enable them to accelerate the speed of their energy transition plans while
simultaneously limiting execution risks. Together, we look forward to supporting the UAE's
realisation of a sustainable future."
The agreement will see EWEC and Energy Exemplar deploy a Proof of Concept (PoC), overseen
by a joint Technical Steering Team, to demonstrate how EWEC's existing and future modelling
requirements can be augmented. Using advanced and unified modelling systems supports EWEC's
mission to realise the Abu Dhabi and UAE governments' vision for a sustainable and net zero future.
As a simulation platform, PLEXOS allows users to analyse and predict long- and short-term energy
market performances based on the data fed into the system. As a single, unified energy modelling
and forecasting platform, PLEXOS analyses zonal and nodal energy models ranging from long-term
investment planning to medium-term operational planning and down to short-term, hourly, and intra-
hourly market simulations.

Angola leaves OPEC, Claims no desire to further cuts
Reuters + NewBase
Angola said on Thursday it would leave OPEC while Group has sought in recent months to rally
support for further output cuts to prop up oil prices.
Angola's oil minister Diamantino Azevedo said the Organization of the Petroleum Exporting
Countries no longer served the country's interests. It joins other mid-sized producers Ecuador and
Qatar, which have left OPEC in the last decade.
"We feel that ... Angola currently gains nothing by remaining in the organisation and, in defense of
its interests, decided to leave," Azevedo was quoted as saying in a presidency statement.
Oil prices fell by nearly 2% as analysts said the departure raised questions about OPEC's unity.
"Prices fell on concern of the unity of OPEC+ as a group, but there is no indication that more
heavyweights within the alliance intend to follow the path of Angola," UBS analyst Giovanni
Staunovo said
Angola, which joined OPEC in 2007, produces about 1.1 million barrels of oil per day, compared
with 28 million bpd for the whole group. OPEC did not immediately reply to a request for comment.
Three delegates from the group who spoke on condition of anonymity said Angola's decision to
leave came a surprise.
The country has been unable to produce enough oil to meet its OPEC quota since 2019.
It has struggled to reverse falling output since hitting a peak of 2 million bpd in 2008 and expects to
maintain current production into 2024, a senior government official said in October.
Last month, Azevedo's office protested against a decision by OPEC to cut its production quota for
2024, which could have curtailed any ability it might have to increase ouut.

Disagreements over African output quotas had earlier been in part the cause of a delay to a meeting
of the wider OPEC+ oil producer group.
Oil and gas exports are Angola's economic lifeblood, accounting for around 90% of total exports,
an over-reliance the government has been seeking to reduce after it was hit hard by the COVID-19
pandemic and lower global fuel prices.
Several oil majors and independents operate in the southern African nation, including
TotalEnergies (TTEF.PA), Chevron (CVX.N), ExxonMobil (XOM.N) and Azule Energy, a 50/50
venture between Eni and BP (BP.L).

China’s fuel oil & Crude imports, bunker exports fall in November
Reuters + NewBase
China’s fuel oil imports fell in November after rebounding in October,while exports for bunkering
also fell, customs data showed on Wednesday. Imports totalled 1.21 million tons in November, down
33% from October and 17% lower from November last year, General Administration of Customs
data showed.
The imports included purchases under ordinary trade, which are subject to import duty and
consumption tax, as well as imports into bonded storage.
Volumes rebounded in October as independent refiners re-emerged to source fuel oil to use
asrefinery feedstock, but retreated in November due to the high inventory levels, industry sources
said.
But fuel oil imports have shown signs of picking up again in December, as the Chinese government
granted an additional 3 million metric tons of fuel oil import quotas in late November. “Buyers rush
to fulfil the fresh additional three million (tons) quota till the end of the year,” said Emril Jamil, senior
analyst for crude and fuel oil at LSEG Oil Research.
China’s December fuel oil inflows have exceeded November’s, Jamil added. Meanwhile, China’s
exports of low sulphur marine fuel, measured mostly by sales from bonded storage for vessels
plying international routes, totalled 1.31 million tons in November, down 6% from October, though
up 6% from a year earlier.
Marine fuel sales have also trended lower at other key global bunker hubs, including Singapore and
the UAE’s Fujairah.
China’s imports of Russian crude oil increase in November
Russia remained China’s top oil supplier in November despite elevated prices for Russian crude,
data showed on Wednesday, as Saudi supply cuts continue. China’s imports from Russia, including
supplies via pipelines and seaborne shipments, totalled 9 million metric tons, or 2.19 million barrels
per day (bpd) last month, according to data from the General Administration of Customs.

Russian shipments rose 9% from October’s 2.01 million bpd, reversing monthly declines in October
and September, and were up 15.2% from a year earlier. Russian crude imports for the first 11
months of 2023 were up 22.2%, the data showed.
Shipments from Saudi Arabia totalled 6.61 million tons, or 1.61 million bpd, down 0.2% from a year
earlier.
Saudi Arabia previously raised prices for its Arab Light crude from July to November for Asian
refiners. The trend prompted some Chinese refiners to reduce their Saudi shipments and shop
elsewhere for cheaper cargoes in the spot market.
Riyadh’s unilateral 1 million bpd output cuts are to continue to the end of the year, with Moscow
also having pledged to extend export cuts of 300,000 bpd until the end of the year.
These cuts were extended and deepened at the November meeting of the Organization of
Petroleum Exporting Countries and its allies (OPEC+). Saudi Arabia announced it would roll over
its cut into the first quarter of next year, while Russia said it would deepen its cut to 500,000 bpd.
Sanctioned Russian crude continued to attract a premium in November, as Chinese refiners
compete with those in India to secure shipments and the Group of Seven’s $60 price cap struggles
to maintain effectiveness as alternative shipping and insurance options multiply.
ESPO crude shipments for November delivery were priced at a premium of around $0.50 per barrel
to the ICE Brent benchmark, versus a $1 premium for October delivery cargoes and an $8.50
discount for shipments delivered in March, according to trading sources.
Chinese refiners use intermediary traders to handle the shipping and insurance of Russian crude to
avoid violating Western sanctions over the Ukraine war.

Imports from Malaysia, used as a trans-shipment point for sanctioned cargoes from Iran and
Venezuela, fell month-on-month to 3.92 million tons, or 950,000 bpd in November, as the
independent refiners who primarily buy these cargoes scaled back imports because of lower profit
margins.
Still, Malaysian volumes year-to-date are up 66.5% from the same period in 2022.
China reported no official shipments of Venezuelan crude in November despite an easing of U.S.
sanctions on Caracas in October following a deal between the Maduro administration and its political
opposition.
In spite of geopolitical tensions between Beijing and Washington, increased U.S. crude output
means that China continues to import higher quantities of U.S. oil. China in November imported
1.06 million tons of American crude, with year-to-date volumes up 82.4%.
China oil output growth to slow in 2024 as supply harder to extract
China’s surging oil production growth in recent years, the result of a concerted investment push, is
expected to ease in 2024 as falling output from mature fields requires state oil companies to tap
more challenging shale and ultra-deep reserves.
While China is the world’s biggest crude importer, it was also the world’s sixth-largest crude oil
producer last year, according to the EI Statistical Review of World Energy,with heavy investment
helping to reverse a significant decline between 2015 and 2018.

Production for 2023 at around 4.18 million barrels per day (bpd) remains below the 2015 record of
4.3 million bpd, but Goldman Sachs said that the upside surprise of China’s output trails only the
higher-than-expected production this year from the U.S., Iran and Russia.
For next year, analysts and agencies are divided on the outlook, with forecasts ranging from a drop
in output by as much as 31,000 bpd or increase of up to 60,000 bpd, a growth slowdown that is
likely to increase China’s import dependency.
“The majority of China’s oil fields are in a mature phase, facing natural production declines, (while)
the scarcity of substantial new discoveries poses a challenge to sustaining long-term production
growth at current rates,” said Rystad Energy analyst Lin Chen.
After a 12% drop in output between 2015 and 2018, national oil companies Sinopec Corp 0386.HK,
PetroChina 0857.HK and CNOOC Ltd 0883.HK ploughed cash into increased recovery at existing
fields and exploration of new ones amid Beijing’s push for greater energy security.
Since 2018, domestic oil output has grown an average of 2% per year. “The Chinese majors have
been working at maximum capacity to grow production,” led by CNOOC, said Yu Baihui, analyst at
S&P Global Commodity Insights.
BOOMING BOHAI
China’s production from offshore fields totalled 58 million metric tons in 2022, equal to 1.16 million
bpd and accounting for 60% of the country’s total production increase, according to the National
Energy Administration (NEA), centred on the Bohai basin off China’s east coast, including the
Bozhong 19-6 and Kenli 10-2 fields.

Offshore specialist CNOOC, the primary Bohai company, has boosted output from the region by
22% between 2018 and 2022.
On land, the state producers are developing shale assets and deep reserves, much of it in the west,
including Sinopec’s development of one of the world’s deepest reserves in the Tarim basin of the
Xinjiang region.
China’s annual shale oil production exceeded 3 million tons in 2022, nearly quadrupling from 2018,
the NEA said.
‘HIGH-HANGING FRUIT’
However, the technical difficulty of exploring such wells means that China’s oil production is unlikely
to sustain growth.
“The new fields tend to fall into two camps: challenging, deep and remote new fields onshore, and
new marginal discoveries offshore, primarily by CNOOC,” said Angus Rodgers, head of Asia -Pacific
upstream analysis at Wood Mackenzie.
The consultancy forecasts domestic production to fall by 0.8% to 3.94 million bpd next year, with a
slow decline in the following years. However, Rystad forecasts a 1% increase from 2023 to 4.22
million bpd next year, though they are less optimistic of growth after 2024.
The International Energy Agency (IEA) expects production to rise by 1.4% to 4.36 million bpd.
Chinese state oil companies are now pushed to chase “high-hanging fruit”, said Woodmac’s
Rodgers, such as PetroChina’s Qingcheng shale oilfield in the Ordos basin.
PetroChina estimates that there are some 7.3 billion barrels of oil in place at Qingcheng, but high
costs mean that only a small portion of this is currently commercially viable, Woodmac said.

US unveils clean hydrogen plan, nuclear power role uncertain
Timothy Gardner, Reuters News
The U.S. proposed rules on Friday for how energy companies can access billions of dollars in tax
credits for producing low-carbon hydrogen using new clean energy sources but left thorny issues,
such as how nuclear power could benefit, uncertain.
The credit will be based on the lifecycle greenhouse gas emissions from the power source used in
hydrogen production, and ranges from 60 cents to $3 per kilogram, the Treasury Department said
in the 128-page proposal.
"The 45V clean energy hydrogen production tax credit is an important part of our strategy to unlock
private investment across sectors to build a clean energy economy and tackle the climate crisis,"
John Podesta, a White House climate adviser, told reporters in a call.
To get the credit, hydrogen producers would have to prove they have used clean electricity built
within three years that a hydrogen plant went into service.
That has concerned nuclear power producers looking to produce hydrogen using their virtually
emissions-free electricity. Existing nuclear power is featured in three of the seven hydrogen hubs
the Energy Department is supporting with billions of dollars in public funding. But building new
nuclear power is costly and fraught with delays.
Business groups including the Chamber of Commerce have slammed new clean energy
requirements, saying it will slow down the build-out of a hydrogen economy.
Renewable energy backers and many environmental groups say it is necessary to keep carbon-
emitting fossil fuel from powering hydrogen production The Biden administration believes that low
carbon hydrogen can fight climate change by fueling heavy industry such as aluminum, cement and
steel and long-haul transportation.

The credits were outlined last year in President Joe Biden's signature climate law, the Inflation
Reduction Act, and are part of the administration's plan to put the country on a path to producing 50
million metric tons of the fuel by 2050.
Streams of clean hydrogen can be produced with electrolyzers powered by wind and solar power,
nuclear, or natural gas with carbon capture, that split water into hydrogen and oxygen.
Today the vast majority of hydrogen is produced with fossil fuels with unabated emissions, at a
fraction of the cost of clean hydrogen.
The proposal also says the clean power must also have been sourced from the same region as the
hydrogen producer. And the clean power must also have been generated about the same time that
the hydrogen was produced, though under the proposal, this would be measured on an annual, not
an hourly, basis until 2028.
'SURRENDER LEADERSHIP' ON NUCLEAR
Operators of nuclear power say the credit is necessary to produce hydrogen and help keep plants
open. A senior U.S. official said there are potential pathways for nuclear power to get the credit,
including upgrading or relicensing plants, or showing how producing hydrogen would help them
avoid shutting plants.
The proposed rule will undergo
60 days of comment and
public hearings before being
finalized with input from
nuclear and other power
generators.
The proposal asks the nuclear
industry and other low carbon
power generators for input on
which pathways would help it
the most. The proposal
contains a carve-out for
nuclear that allows a
percentage of a company's
power generation to go into
clean hydrogen, but the
administration needs more
information from the industry,
a senior official told reporters
on the call.
Constellation, the largest U.S.
nuclear power operator which hopes to build a $900 million hydrogen production facility at an Illinois
plant, slammed the proposal as delaying action and that it would not allow a path to the full credit.
"If finalized, America will surrender hydrogen and deep decarbonization leadership to China and
Europe, both of which have policies that smartly utilize their existing nuclear plants to make
hydrogen and speed decarbonization," Constellation said in a statement.
The proposal also suggests ways that natural gas emitted from landfills, called renewable natural
gas, and gas emitted from oil drilling could be captured and used for hydrogen production.

NewBase December 26 -2023 Khaled Al Awadi
NewBase for discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Oil little gains as investors eye Middle East tensions, US rate cut
Reuters + NewBase
Oil prices were little changed on Tuesday as investors focused on geopolitical tensions in the Middle
East and optimism the U.S. Federal Reserve would soon start cutting interest rates, lifting global
economic growth and fuel demand.
Brent crude futures fell 26 cents, or 0.3%, to $79.13 a barrel by 0115 GMT while U.S. West Texas
Intermediate crude was at $73.59 a barrel, up 3 cents.
Both benchmarks notched gains of about 3% last week after Houthi attacks on ships disrupted
global shipping and trade, adding to tensions in the Middle East as the Israel-Gaza conflict waged
on.
Denmark's Maersk (MAERSKb.CO) said on Sunday it was preparing to resume shipping operations
in the Red Sea and the Gulf of Aden, citing the deployment of a U.S.-led military operation designed
to ensure the safety of commerce in the area.
Oil price special
coverage
Trade is thin as some markets are still closed for the Boxing Day public holiday.

Shipping firms had suspended the passage of vessels through the Red Sea that connects with the
Suez Canal, which handles about 12% of world trade, and imposed surcharges for re-routing ships.
Separately, Iran denied on Monday a U.S. claim that a drone launched from Iran had struck a
chemical tanker in the Indian ocean.
The Pentagon said at the weekend that the Liberia-flagged, Japanese-owned and Netherlands-
operated Chem Pluto ship was hit 200 nautical miles (370 km) off the coast of India.
Oil prices were also buoyed by expectations the Fed would cut interest rates next year after U.S.
data released on Friday showed by some key measures inflation was now at or below the central
bank's 2% target.
Lower interest rates cut consumer borrowing costs, which can boost economic growth and demand
for oil.
From $82 to near $100 and back:
How Brent crude moved in 2023 over OPEC+ cuts and more
Crude oil benchmark Brent futures has moved sideways in the last one year – between January to
December 2023, majorly due to the supply cuts announced by the Organisation of Petroleum
Exporting Countries and its allies (OPEC+) as well as the Israel-Hamas war. Oil majors including
Saudi Arabia and Russia have since then defended the oil production cuts as a precautionary
measure, aimed at the ‘stability of the oil market’.
Among other reasons, a stronger US dollar and the spike in US bond yields in the last few months
have also dictated the movement of crude oil prices. However, the latest meeting by OPEC+ turned
out to be disappointing for the uptrend of prices as investors saw limited impact of the supply cuts
on oil markets.
What’s been the movement of crude oil prices in 2023?
-The Group of Seven (G7) industrialized countries in 2022 imposed a price cap of $60 per barrel on
Russian oil shipments in response to Russia’s invasion of Ukraine. Following this, crude prices
remained volatile going into January 2023 and Brent crude hovered around $82 per barrel during
the month.
-In April 2023, OPEC+ announced oil production cuts of around 1.16 million barrels per day (bpd)
in a surprise decision. The shock cut, led by Saudi Arabia, immediately drove crude oil prices 8 per
cent higher to $83.95 a barrel, which at the time – was the highest rise in more than a year. The
voluntary cuts started from May 2023 and were put in place to last until the end of the year.
-OPEC+ met for its scheduled oil output policy decision in June 2023 and announced that it will
reduce overall production targets from 2024 by a further total of 1.4 million bpd. OPEC nations
produce around 30 per cent of the world’s crude oil. Saudi Arabia is the largest oil producer within
the cartel, producing more than 10 million bpd. OPEC+ pumps around 40 per cent of the world’s
crude.
-However, Saudi Arabia, OPEC cartel’s dominant member, announced that it will alone make deep
production cuts of 1 million bpd starting from July, as part of a broader output-limiting OPEC+ deal
as the group faces flagging oil prices and a looming supply glut. The rest of the OPEC producers
then had agreed to extend earlier cuts in supply through the end of 2024.
-A month later, Russia joined Saudi to announce an extra oil export curb of 300,000 bpd. In
September, Saudi Arabia and Russia together announced that will extend with the oil supply curbs

of more than 1.3 million bpd till the end of the year. The production cuts first announced by the oil
majors in July led to a sharp surge in international crude prices – reaching almost one-year high
levels.
-By the end of September 2023, crude oil prices had risen 30 per cent in three months, with Brent
staring at the $100/bbl-mark, over the supply cuts by the oil producing majors. US West Texas
Intermediate crude (WTI) rose 29 per cent and Brent futures surged 27 per cent between July-
September.
-As oil futures inched closer to $100 a barrel, many investors took profits on the rally given ongoing
macroeconomic concerns. Crude prices going above $100 per barrel mark brings inflationary
pressures on global economy and will compel central banks to raise interest rates all over again.
-In October 2023, the Israel-Hamas war drove crude oil prices between 3-6 per cent, however, the
momentum could not be sustained as global demand concerns outweighed the impact of supply
cuts. Since then, Brent has come down to an average of $80/bbl-mark and is expected to hover
between $80-$85/bbl.
-In its November 30 policy meeting, the OPEC+ recently agreed to a combined 2.2 million barrels
per day (bpd) in output cuts for the first quarter of next year. The market has been concerned,
however, that some members may not adhere to their commitments. Oil prices have since tickled
lower as investors see limited impact of the supply cuts on markets.
-However, Brent has now started an uptrend in the last few sessions amid jitters over global trade
disruption and geopolitical tensions in the Middle East following attacks on ships by Yemen’s Iran-
aligned Houthi forces in the Red Sea. Analysts see crude prices touching around $89-90 per barrel
by the end of 2023 over Middle East tensions.
Crude price outlook for 2024
For oil markets, an extended period of elevated crude prices hastened investment and activity
outside of OPEC+, with production growth accelerating robustly, particularly in the United States,
creating an unclear future for supply cuts within OPEC+.
Kurt Barrow, Head of Oil Markets, S&P Global Commodity Insights, said, “Strong non-OPEC+
supply growth and slowing oil demand growth have led OPEC+ to curtail output and support prices.
While this tactic has achieved some success, maintaining discipline among member countries may
be difficult in 2024 as the loss of market share continues and non-OPEC+ volumes increase.
OPEC+’s ability to follow through on voluntary production cuts will be key to crude pricing over the
next year.”

US drillers cut oil and gas rigs for second week in a row – Baker Hughes
U.S. energy firms this week cut the number of oil and natural gas rigs operating for a second week
in a row for the first time since mid November, energy services firm Baker Hughes BKR.O said in
its closely followed report on Thursday.
The oil and gas rig count, an early indicator of future output, fell by three to 620 in the week to Dec.
21, the lowest since mid November. Baker Hughes said that put the total rig count down 159 rigs,
or 20%, below this time last year.
Baker Hughes said U.S. oil rigs fell by three to 498 this week, their lowest since mid November,
while gas rigs rose by one to 120, their highest since mid September. Baker Hughes released the
report one day ahead of its usual Friday schedule due to the upcoming Christmas holiday weekend.
Data provider Enverus, which publishes its own rig count data, said drillers added one rig in the
week ended Dec. 20, boosting the total to 676. The overall count, however, remained down about
3% in the last month and down about 22% year-over-year.
U.S. oil futures CLc1 were down about 7% so far this year after gaining 7% in 2022. U.S. gas futures
NGc1, meanwhile, have plunged about 42% so far this year after rising about 20% last year.
Despite lower prices and lower rigs in operation, U.S. oil and gas output was on track to hit record
highs in 2023 and 2024 as firms complete work on already drilled wells.
The total number of drilled but uncompleted (DUC) wells remaining dropped to a record low of 4,415
in November, according to federal energy data going back to December 2013.

NewBase Specual Coverage
The Energy world –December 26 -2023
CLEAN ENERGY
China’s petrochemical surge is driving global oil demand growth
Ciarán Healy, Oil Market AnalystCommentary —
The global petrochemical industry – essential to the production of clothing, tyres, detergents,
fertilisers, and countless other everyday products – is currently going through a momentous period
of transition. Driving this change is a towering wave of new petrochemical plants, most notably in
China. This is shifting oil demand to the country as it increases production of plastics and synthetic
fibres, while generating increasingly cutthroat competition among those that previously dominated
the market.
The speed and scale of the expansion of China’s petrochemical sector dwarfs any historical
precedent, roughly doubling the pace of earlier capacity additions in the Middle East and United
States. Between 2019 and 2024, China is set to add as much production capacity for ethylene and
propylene – the two most important petrochemical building blocks – as presently exists in Europe,
Japan and Korea combined.
The structural transformation of the petrochemical industry has been reshaping global patterns of
oil consumption. Global oil use in 2023 has decisively surpassed pre-Covid levels, rising to 1 million
barrels per day (mb/d) above where it stood in 2019.
However, this is largely being driven by petrochemical demand and is especially concentrated in
China. In 2023, demand for petrochemical feedstocks such as naphtha, liquefied petroleum gas
(LPG) and ethane in the country will average 1.7 mb/d more than in 2019.
Were it not for the sector’s rapid growth, total oil consumption would remain comfortably short of the
pre-pandemic mark.

Growth in regional petrochemicals capacity, 2019-2024
Rising production in China is shifting global trade patterns
As China’s petrochemical sector expands, demand for feedstocks derived from oil is shifting to the
country from other longstanding petrochemical centres. It is also significantly affecting global
markets for the products made from petrochemicals, such as plastics, synthetic fibres and their
intermediates.
China has long been the world’s largest polymer and synthetic fibre importer, accounting for the
equivalent of almost 3 mb/d in feedstock terms, or 3% of global oil consumption, in 2019 and 2020.
Now, its previous suppliers are under pressure after recent increases in Chinese production, in
particular during 2023.
Petrochemical activity and related oil demand fell in other regions, including the Middle East and
the rest of Asia. Shipments of intermediate and final petrochemical products declined by almost
30% from these parts of the world during the first nine months of 2023 compared with the same
period in 2019.
European petrochemical producers are not themselves major exporters to East Asia, but the
reorganisation of trade has severely impacted the region. Operating rates appear to be
unsustainably low, with many plants struggling to break even. Deliveries of naphtha, transformed
into ethylene and propylene by European steam crackers, have fallen by almost 30% since 2021 to
levels not seen since the mid-1970s.
Shipments of intermediate and finished petrochemical products to Europe from the Middle East and
East Asia, excluding China, have risen slightly – but, in part due to weak local demand for plastics,
Europe does not appear able to absorb the additional supply. Production across all these regions
has slowed, although declines in Europe have been the largest.

Growth in regional demand for oil-based petrochemical feedstocks since 2019
Higher US supply is helping meet Chinese demand
In striking contrast, US producers have substantially increased exports of petrochemical feedstocks,
intermediates and polymers. This includes flows to both China and Europe from the expanded
American steam cracker fleet, which has been another increasingly disruptive force in global
markets. Soaring domestic availability of ethane and propane, the most important US feedstocks,
has outpaced increases in consumption, keeping processing margins strong and supporting rising
exports. Ethane used in US plants now accounts for more than 2% of global oil demand, doubling
over the past decade.
The advantages of this burgeoning feedstock supply have helped US producers expand their global
market share. Huge volumes of US ethane and propane have poured into China since the
pandemic, approaching three-quarters of the nation’s imports of these products and meeting more
than one-third of the increase in China’s overall feedstock demand compared with 2019.
This trend is mirrored in US exporters’ growing dependence on China’s appetite for ethane and
propane. More than three-quarters of the 2019-23 increase in these shipments has gone to China.
This symbiosis between the largest global source of demand growth – China – and the largest global
source of supply growth – the United States – has enabled the petrochemical sectors in both
countries to flourish in a way that would not otherwise have been possible.
The magnitude of the surge in petrochemical activity risks masking major shifts in global oil markets
that have already begun to take hold. These structural changes have brought a peak in global oil
demand into view this decade, according to analysis in the IEA’s medium-term Oil 2023 report and
the latest World Energy Outlook.
One consequence of the growing role of petrochemicals is that carbon dioxide (CO2) emissions from
oil will likely peak before overall demand. Petrochemical products are not primarily used as fuels,
which means they are not a large source of direct emissions, though they can result in other
environmental problems.
Despite marked growth in the world’s economy and population, global oil demand excluding
petrochemical feedstocks remains lower than in 2019 and has grown little since 2017. Personal
mobility and industrial activity now exceed pre-pandemic levels, but this is outweighed by strong

improvements in the energy efficiency of engines, surging sales of electric vehicles and behavioural
changes like more widespread teleworking.
IEA projections show that global road fuel use is set to decline from 2025. Total oil consumption by
advanced economies is already nearly 10% below 2007 levels and shows no sign of recovering,
even to its 2019 mark. Oil use is also expected to plateau before 2030 in China, long the driving
force of rising global demand, with economic growth slowing and becoming less reliant on
infrastructure and heavy industry.
These changes are set to bring an overall peak in global oil demand this decade despite growing
demand for petrochemicals – which, while substantial, is not expected to alter the broader direction
of travel.

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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.

NewBase 26 December 2023 Energy News issue - 1684 by Khaled Al Awadi_compressed.pdf

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NewBase 26 December 2023 Energy News issue - 1684 by Khaled Al Awadi_compressed.pdf