NewBase July 15-2022 Energy News issue - 1528 by Khaled Al Awadi.pdf

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NewBase Energy News 20 June 2022 No. 1524 Senior Editor Eng. Khaed Al Awadi
NewBase for discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Shunned in Europe, Russian Fuel Is Flooding to the Middle East
Bloomberg + NewBase
 Arrivals hit a record in June and may climb higher in July
 More European Union sanctions are set to kick in next year
Russia’s huge exports of diesel and other fuel products that are being shunned by many in Europe
are fast heading to a new destination: the Middle East.
Flows to the Middle East from Russia have risen every month since February, when the war in
Ukraine began. They hit 155,000 barrels a day in June, according to Vortexa Ltd. data compiled by
Bloomberg. By contrast, Europe’s imports slid 30% in the period.
While shipments into the Middle East aren’t new, the flows show how the war is upending long-
established trade routes and creating opportunities for traders. The US has already banned Russian
petroleum fuels and many European firms are self-sanctioning. The European Union and UK are
set to prohibit seaborne imports from Russia.
Up and Up
Middle East imports of oil products from Russia keep on rising
Vortexa data, compiled by Bloomberg
Figures are for oil products arriving into the Middle East from Russian ports; does not
include any Russian-made fuel departing from ports outside the country

“When we approach the end of the year, the flow may get bigger,” said Jonathan Leitch, an oil
analyst at Turner, Mason & Co., referring to diesel-type fuels. It’s likely that sovereign shipping
insurance, primarily from Russia, will be made available to cover such shipments of oil products, he
said.
Most of the Middle East’s imports from Russia are of fuel oil -- a leftover from the refining process
and often used in power generation and shipping. They also include gasoline, jet and diesel-type
fuels, as well as lesser-known products, Vortexa data show.
Middle East oil-product imports from Russia last month reached the highest since at least the start
of 2016. Well over a third went to the oil-trading and storage hub of Fujairah.
Tracking what happens to Russian-origin fuel once it’s discharged at Fujairah isn’t easy, according
to Koen Wessels, senior oil products analyst at Energy Aspects Ltd. After going into a tank, it can
be mixed with other oil, making it hard to trace the Russian molecules, he said.
Wessels said it’s likely that Russian flows to the Middle East will continue for now. But he says they’ll
probably eventually slow because of future shipping insurance-related restrictions, as Russia will
then be mostly dependent on its own fleet to move cargoes.
Middle East imports from Russia are on pace to surpass June’s record, with arrivals exceeding
220,000 barrels a day for July 1-11, Vortexa data show.
Still, they amount to a fraction of Russia’s total oil-product exports. They’re also far from making up
for the drop in Europe’s imports from the country, which were down more than half a million barrels
a day between February and June.
Looking ahead, the unsanctioned trade in diesel-type fuel will involve Russian cargoes going to the
Middle East Gulf for discharge there, and then another ship taking diesel made in the Middle East
to Europe, Leitch said.
“But there will also be gray areas where probably the same product can be moved that way,” he
said.

U.S. solar prices soared over 8% in 2nd Q-2022 -report
Reuters + NewBase
U.S. solar energy prices rose 8.1% in the second quarter as projects were stalled by a Commerce
Department investigation into tariffs on products from Southeast Asia and soaring input costs,
according to a report published late on Wednesday.
The increase during the period contributed to a whopping 29.7% rise in the combined price of wind
and solar contracts, known as power purchase agreements (PPAs), from the previous year,
according to a quarterly index by L evelTen Energy that tracks renewable energy deals.
Solar PPA prices are 25.7% higher than last year.
Economic, logistical and labor market disruptions during the coronavirus pandemic have worsened
since the Russian invasion of Ukraine, reversing a decade of cost declines for the renewable energy
sector.
Wind contract costs were up 2.5% during the quarter, and are up 33.7% from a year ago. Wind
prices in the Southwest Power Pool soared 16% during the quarter as a lack of transmission
capacity has hampered development. The grid operator serves some of the windiest areas in the
nation, including Nebraska and parts of Oklahoma and Texas.

LevelTen said it was too soon to say whether U.S. President Joe Biden's decision in early June to
waive tariffs on solar panels from the four Asian nations involved in the probe for two years would
alleviate some of the cost pressure.
In a survey of 50 developers conducted by the firm, nearly a third said they needed further
assurances that tariffs would not be applied retroactively if the Commerce Department implements
them following the two year pause.
The higher cost of wind and solar contracts for corporate and utility buyers has tracked that of
wholesale electricity prices, which are tied to the rising cost of natural gas, LevelTen said.

US: Equinor acquires energy storage developer in the US
Source: Equinor
Equinor has signed an agreement to buy a 100% stake in the US based battery storage developer
East Point Energy. The acquisition supports Equinor’s ambition to be a leading company in the
energy transition and provides a platform for broadening its energy offerings in the US.
The privately owned East Point Energy is headquartered in Charlottesville, Virginia and has a 4.1
GW current pipeline of early to mid-stage battery storage projects focused on the US East Coast.
Additional growth potential beyond the current pipeline has been identified.
Equinor acquires energy storage developer in the US, (Photo: East Point Energy LLC)
'The acquisition of East Point Energy represents Equinor’s entry into
the US power market through flexible assets. It will enable Equinor to
further unlock the potential we see in the renewables space in the US,
capturing value from volatility in the power markets and providing
reliable services to the grid,' says Olav Kolbeinstveit, senior vice
president for power and markets within Renewables at Equinor.
Battery storage will play an important role in the energy transition as the world increases its share
of intermittent renewable power.
Battery storage is key to enabling further penetration of renewables, can contribute to stabilizing
power markets and improve the security of supply. The acquisition will provide us with attractive
investment opportunities, and the projects will contribute to lifting the return on our renewable
portfolio while at the same time lowering the portfolio risk.

Equinor sees a strong opportunity to create a profitable business by deploying battery storage
assets in selected power markets. This is based on the flexible nature of the assets and Equinor’s
advanced trading capabilities through the wholly-owned energy trading house Danske
Commodities.
The acquisition of East Point Energy is another step in this direction following the 2021 investment
in Noriker Power Limited, a leading battery storage developer in the United Kingdom. The
acquisition also further diversifies Equinor’s energy offerings in the US, strengthening our role as a
reliable supplier of energy. Adding flexible battery storage will complement Equinor’s portfolio of
offshore wind, upstream oil and gas and growing opportunities in the hydrogen and CCS space.
East Point Energy has a competent team, that since 2018, has matured and divested a number of
high-quality, ready-to-build battery storage projects in the US energy market. East Point Energy will
become a subsidiary of Equinor with its team continuing to develop the business, as well as adding
capabilities to own and operate energy storage projects in the near future.
'We look forward to working together with East Point Energy to build a portfolio of battery storage
assets in the US. This strengthens and diversifies our existing renewable energy offerings in the
US, which includes substantial offshore wind projects Empire Wind and Beacon Wind,' says Siri
Espedal Kindem, senior vice president for Equinor Renewables US.
'On behalf of the East Point Energy team, I am excited to welcome Equinor as the new owner. We
look forward to a long and successful relationship developing, owning and operating energy storage
projects in the US,' says Andrew Foukal, CEO of East Point Energy.
The transaction agreements were signed on 9 July and the transaction is planned to be completed
in Q3 2022.
Equinor in the US
Equinor has had a presence in
the US since 1987 and is
developing a broad energy
portfolio. We are active in the
Gulf of Mexico as the 5th
largest producer of oil & gas.
We also produce natural gas
and natural gas liquids onshore
from the Marcellus/Utica
formations in the Appalachian
Basins. We have the ambition
to develop low-carbon value
chains around hydrogen and
carbon capture and storage in
the Appalachian region.
Within renewables, Equinor is one of the largest offshore wind developers in the US, operating two
lease areas, Empire Wind and Beacon Wind. We are actively developing three projects: Empire
Wind 1, Empire Wind 2, and Beacon Wind 1.
Once completed, these projects will produce enough electricity to power about 2 million New York
homes.

Malaysia: Samsung Engineering wins USD 680 million EPCC
contract from Shell for a gas plant in Malaysia .. Source: Samsung Engineering
Samsung Engineering, one of the world’s leading Engineering, Procurement, Construction and
Project Management (EPC&PM) companies, has received an Engineering, Procurement,
Construction and Commissioning (EPCC) USD 680 million contract from Sarawak Shell Berhad
(SSB), for its OGP (Onshore Gas Plant for Rosmari Marjoram) project in Bintulu, Sarawak, Malaysia.
The project will be executed in two phases; a limited scope prior to SSB obtaining its FID for the
Rosmari Marjoram project; with all of the remaining scope to be executed after SSB obtains FID.
The OGP plant will have the capacity to process up to 800 million cubic feet of gas per day. Samsung
Engineering will execute the OGP project on an EPCC (engineering, procurement, construction and
commissioning) basis. The OGP project’s RFSU (Ready for Start-up) is expected to be
accomplished by the end of 2025.
Samsung Engineering was able to receive this contract after competing and successfully emerging
as the successful bidder from the dual Front End Engineering and Design (FEED).
Samsung Engineering has a proven track record in executing gas projects in Malaysia and is
currently executing the Sarawak Methanol Project and developing the H2biscus Green
Hydrogen/Ammonia project in Sarawak.
Sungan Choi, President and CEO of Samsung Engineering said, 'Track record, regional expertise
as well as sustainable investment in Sarawak, combined with our strategy to participate from FEED
stage and rollover to execute a total solution in EPCC, proved to be the right strategy, so that Shell
entrusted us with their OGP project in Sarawak. We’re gratified and honored to deliver a modern,
sophisticated and premium Onshore Gas Plant for Shell in Sarawak.'
Samsung Engineering is further looking into discovering new business opportunities by
accumulating experience in the gas market and further will continue securing additional experiences
in executing a FEED to EPC conversion projects. Additionally, Samsung Engineering will look to
grow its future participation in additional FEED as well as EPC projects in Malaysia. Samsung
Engineering is prepared to become a 'Beyond EPC, Green Solution Provider' for a better future.

Indonesia set to boost coal output to fill Russia supply gap
Reuters + NewBase
Indonesia, the world's biggest exporter of coal used in power plants, will be able to increase output
to help meet demand from countries that have lost supplies from Russia, its energy minister said on
Wednesday.
Energy and Mineral Resources Minister Arifin Tasrif said countries, which he declined to name, had
asked Indonesia for coal in the wake of sanctions on Russia for its invasion of Ukraine, which
Moscow calls a "special military operation".
"We will help every country who are short of this kind of material as much as we can," Tasrif said
during an interview with Reuters on the sidelines of the Sydney Energy Forum hosted by the
Australian government and the International Energy Agency.
Indonesia's target for coal
output this year is 663
million tonnes. The minister
did not say by how much
that target might be raised.
"We have the resources. If
we look at the balance, we
have to increase our
production," he said,
adding that miners are
obliged to reserve 25% for
the domestic market.
While Europe was short on
coal, Indonesian coal
"probably doesn't meet
their specification," Tasrif
said, while adding that
buyers could possibly
adjust their combustion
systems.
"In case the situation is very
urgent, especially entering
the winter season at the
end of the year, we don't
want to let people suffer
without coal. We have to do
something on both sides." The conference in Sydney was focused on energy security and finding
ways to accelerate the transition to carbon neutral.
Indonesia sees carbon capture and storage (CCS) as an important way to help meet goals for net
zero emissions and plans to issue carbon credits for CCS projects, Tasrif said.
He said Indonesia would issue its first carbon credits for other types of projects "very soon".
There are already three CCS pilot projects in Indonesia, with oil and gas giants like BP and
ExxonMobil Corp studying CCS opportunities, and the government is looking for ways to capture
carbon from other industries to be sequestered offshore in depleted oil and gas fields.

Mubadala Petroleum’s Andaman acreage to benefit from new
gas discovery in Indonesia … source: Munbadala
Abu Dhabi-based Mubadala Petroleum said a 390-foot gas column has been discovered following
the drilling of the Timpan-1 expl oration well 150 kilometres offshore North Sumatra in Indonesia.
The findings in the high net to gross fine-grained sandstone reservoir are a strong signal that the
adjacent Andaman I and South Andaman fields, in which Mubadala Petroleum holds an 80 per cent
participating interest, will also include material underexplored resources, Mubadala Petroleum said
in a statement on Wednesday.
Mubadala Petroleum reached a milestone of 500,000 barrels of oil equivalent a day in June 2022.
Abu Dhabi-based Mubadala Petroleum said a 390-foot gas column has been discovered following
the drilling of the Timpan-1 exploration well 150 kilometres offshore North Sumatra in Indonesia.
The findings in the high net to gross fine-grained sandstone reservoir are a strong signal that the
adjacent Andaman I and South Andaman fields, in which Mubadala Petroleum holds an 80 per cent
participating interest, will also include material underexplored resources, Mubadala Petroleum said
in a statement on Wednesday.
“With demand for gas increasing across the South-East Asia region, this discovery not only
supports our gas-biased strategy but has the potential to help meet energy demand in this dynamic
and fast-growing market,” said Mansoor Al Hamed, chief executive of Mubadala Petroleum.
Mubadala Petroleum, a unit of Abu Dhabi’s strategic investment arm Mubadala Investment
Company, has a gas-weighted portfolio with assets and operations spanning 11 countries, primarily
in the Middle East and North Africa region, Russia and South-East Asia.
The company's total production reached 500,000 barrels of oil equivalent a day in June as it
continues to expand its operations on the back of new strategic investments.

Mubadala Petroleum has continued to expand its operations over the past 12 months. It bought a
22 per cent stake in the Eastern Mediterranean’s Tamar field from Israel’s Delek Drilling, which was
renamed NewMed Energy last year. The deal was valued at more than $1 billion.
The Timpan-1 well, operated by Harbour Energy, which conducted the drilling campaign and holds
a 40 per cent stake in the field, discovered a good gas quality column with the well test reaching a
rate of 27 million standard cubic feet of gas per day and 1,884 barrels per day of condensate,
according to the statement.
Mubadala Petroleum is the largest net acreage holder in the area, having secured the core of the
underexplored proven basin in the Andaman region.
The positive outcome from the Timpan-1 discovery will “support de-risking multi trillion cubic feet
prospects and provide a foundation for future organic growth in line with the company’s gas-biased
strategy”, it said.

Europe Is Frying in Devastating Heat, Yet Is Burning More Coal
Bloomberg + NewBase
Southern France was slammed by a heat wave so intense in June that Celine Imart
was forced to harvest rapeseed in the middle of the night to avoid searing hot tractors
from sparking fires in her fields. Farmers elsewhere had reported crackling dry crops
spontaneously catching fire after coming into contact with the heat from harvesters.
Record-high temperatures had brought the earliest-ever heat wave across large
sections of France, as well as to Spain and parts of Italy. For Imart, a 39-year-old
sixth-generation farmer near Toulouse, the dry weather so early in the year meant the
harvest of durum-wheat, the variety used to make pasta, was finished two weeks
earlier than usual and yielded 30% below normal.
“From one day to another, it passed from too much rain to too dry,” Imart said, adding
that the phenomenon accelerated the development of crops. “We see it in our farm
— the time of the harvest is earlier and earlier each year, advancing all the time.”
Now, Europe is bracing for a new heat wave, with temperatures in parts of France
flirting with 40 degrees Celsius (104 degrees Fahrenheit) this week and next. In
London the thermometer may hit 35°C next week and may go even higher elsewhere
in southern England. Seville, in the south of Spain, is expected to touch highs of about
45°C this week.
Waves of blistering heat and severe droughts are emerging as weather phenomena
— made worse by global warming — that will overwhelm large swathes of Europe

this summer. Spain and Portugal are suffering the driest conditions in more than a
millennium; Italy’s longest river Po is at its lowest level in 70 years, while sections of
the Rhine River, western Europe’s most important waterway, haven’t been this low at
this time of year in at least 15 years. Crops are wilting and power plants are being
forced to shut down, threatening an inflation-weary region with a further boost in food
and energy prices.
As European governments facing reduced Russian gas supplies bolster energy
stockpiles by burning more coal, planning new liquefied natural gas terminals and
extending gas pipeline networks — effectively backpedaling on decarbonization —
the extreme weather is a grim reminder of the dangers of delaying climate action. It
shows that efforts to hang on to the status quo are not an option.
“We have followed a rationale in the fight against climate change which is that we will
always find ways to keep going with business as usual and that the global economy
doesn’t need to change,” said Olivia Lazard, a visiting scholar at Carnegie Europe
focusing on the geopolitics of climate. “Year 2022 is the year when this myth is
debunked because we’re going to face so many compound shocks.”
Europe had begun to concretely address climate change. The continent with the most
ambitious green agenda unveiled a plan in July last year to achieve its goal to cut
planet-warming emissions by 55% by 2030 from 1990 levels. Under the Green Deal,
the bloc earmarked at least 1 trillion euros ($1 trillion) over 10 years in sustainable
investments, allocated a third of its budget for the next half-decade to green projects
and asked members to lay out at least 37% of the more-than 700 billion-euro
pandemic-recovery package on spending that supports climate goals.

But those ambitions relied on gas piped from Russia to keep economies humming
along while waiting for investments in renewables, electric cars and green
technologies to cut emissions from heavy industry. Russia’s war in Ukraine has
thrown that project askew, sending Europe quickly to dirtier fuels. Germany is
delaying the retirement of some coal- and oil-fired power plants; the Dutch are lifting
a cap on power from coal; Austria is reviving a shuttered coal power station and
France is preparing a coal plant as a reserve for the winter. Several countries are also
investing in terminals to import LNG and pipelines to connect them to existing
networks — infrastructure that will last decades.
That means Europe will likely have to put in place more stringent emissions
restrictions later this decade to make its targets.
Meanwhile, it’s the extreme weather events engulfing large parts of the region that
have the attention of governments, which are being forced into calamity mode.
“Emergency support and response alone are not enough,” says Maros Sefcovic, a
vice-president of the EU commission, the bloc’s executive arm. “Climate adaptation,
disaster risk reduction and disaster preparedness are paramount.”
Italy this month declared a state of emergency in five northern regions affected by
one of the country’s worst droughts. Water levels for the Po river, the main source of
irrigation for crops for those regions, are 80% lower than normal. Several months
without rains and an earlier-than-usual halt in flows from melting snow in the western
Alps have made large sections of the river bed visible — so much so that a German
tank from World War II resurfaced recently.
The Italian farmers’ association Coldiretti says the first half of this year was the hottest
on record, with 45% less rain than normal. The drought will mean the loss of at least
a third of the seasonal harvest of key crops of rice, corn and forage, with estimated
damages of as much as 3 billion euros, it said.
Many Italian towns, including Verona in the north, have ordered citizens not to use
water for non-domestic purposes during the day — for their gardens, for instance. In
the Dolomites mountain range in northeastern Italy record high temperatures this
month sent a glacial ice shelf crashing from the top of the Marmolada mountain, killing
11 people.
“This is a drama that was unpredictable but is for sure linked to climate change,”
Prime Minister Mario Draghi noted, speaking from the nearby city of Canazei.

The Iberian Peninsula in southwestern Europe — comprising Spain and Portugal —
is suffering the driest conditions of the last 1,200 years, according to a study in Nature
Geoscience. The drought is caused by the expansion of a persistent high pressure
system over the Atlantic, known as the Azores High, which blocks wet weather fronts.
Higher carbon emissions have made such systems larger and more frequent, keeping
rain away from the peninsula. The study’s authors expect it will continue to expand
as greenhouse gas levels in the atmosphere rise.
Signs of drought are visible everywhere in Spain, but specially along the Guadalquivir
river basin, which flows through the southern region of Andalucia. The river is flowing
at just 28% of its capacity. Water levels on reservoirs along the 660-kilometer (410
miles) river are so low that old human settlements are emerging. In Iznajar,
Andalucia's biggest reservoir, archaeologists found neolithic tools and ancient
structures like grain mills dating from Roman times.
While water restrictions have not been ordered for the wider population, some towns
have started to implement them anyway. In Aguadulce, near Sevilla, authorities have
cut water supply at night. Further north, some towns have not filled public swimming
pools, while others are seeing muddy water in taps. Cities like Madrid and Barcelona
are creating networks of “climate refuges,” where people can cool off on hot days.
“What we are seeing are the impacts of ongoing climate change,” said Piero Lionello,
a professor of atmospheric physics and oceanography at Universita del Salento in
Italy. “Unless mitigation efforts are very successful in the next few decades, what we
are observing now is a very small fraction of what will happen in the future.”
Already, food and energy security have been dented. The European Commission has
slashed its 2022 soft-wheat crop estimate to 125 million tons, down 5 million tons from
a prior estimate. Coming on top of Russia’s blockade of Black Sea exports from
Ukraine — one of the world’s biggest exporters of wheat, corn and sunflower oil —
the cuts in European production do little to alleviate the shortages that have sent food
prices to record highs and raised fears of escalating global hunger.
The dry conditions are also disrupting power generation. In Italy, water levels at
hydroelectric plant reservoirs have halved, leaving the country more reliant on dirtier
natural gas. Even that source of energy isn’t protected from the drought. Already three
gas plants in northern Italy have shut down because of low supplies of water from the
Po river, needed to create steam that can spin turbines.

In France, hydropower output dropped 22% in the first half from a year earlier, data
from power-transmission operator RTE shows. Power giant Electricite de France SA
said it may have to reduce output at some of its nuclear plants during the summer as
the lack of rain reduces the amount of river water available for cooling the reactors.
“Droughts are the most difficult climate event to adapt to because they accumulate
over many months,” said Bob Ward, policy director at the London School of
Economics’ Grantham Research Institute on Climate change. “We’re going to have
to think about more radical solutions.”
Scientists say slashing greenhouse gas emissions is the only way to slow the pace
of global warming. The window of opportunity to act before things become
catastrophic is closing, according to a major report this year by the United Nations’
Intergovernmental Panel on Climate Change.
“We need to work better
with nature, taking an
agroecological approach to
agriculture and increasing
the use of trees into the
landscape, which can
provide lots of benefits for
resilience to drought,” said
Delphine Deryng, a lead
author of the report. “It
takes time, and in the short
term it is quite challenging
economically.”
And while drought is one of
climate change’s most
complex challenges, not all
is lost, says Universita del
Salento’s Lionello.
Governments can put in
place water-saving
measures, build reservoirs, desalination plants, improve the efficiency of water usage
and recycle it.
“The bad news is that water shortages will be an issue in the future, but the good
news is that this is one of the sectors where adaptation can be more successful,” he
said. “We now know much more than a century or than 30 years ago and we have
lots of new technical capabilities, so if we get this right we have the potential for even
improving living standards.”

NewBase July 14 -2022 Khaled Al Awadi
NewBase for discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Oil prices tumble $4 ahead of potential large U.S. rate hike
Reuters + NewBase
Oil prices fell more than $4 on Thursday as investors focused on the prospect of a large U.S. rate
hike later this month that could stem inflation but at the same time hit oil demand.
Brent crude futures for September fell by $4.11 to $95.546 a barrel by 15.07 GMT and were on track
to finish a third session in a row below $100.
U.S. West Texas Intermediate crude for August delivery was at $91.34 a barrel, down $4.96.
Oil price special
coverage

Both contracts hit lows on Thursday which were below the Feb. 23 close, the day before Russia
invaded Ukraine, with Brent reaching its lowest since Feb. 21.
Oil prices have tumbled in the past two weeks on recession concerns despite a drop in crude and
refined products exports from Russia amid Western sanctions and supply disruption in Libya.
"Clearly, focus is now on the demand side of the oil equation. Yesterday's weekly EIA (U.S. Energy
Information Administration) report showed sizeable builds in product inventories," Tamas Varga,
analyst at PVM Oil Associates, said.
"Collateral damage of growing fears of inflation is the strong dollar, which is also bearish for oil
prices. Interestingly, physical markets are still strong but the change in sentiment of financial
investors is currently the dominant driving force."
The U.S. Federal Reserve is seen ramping up its battle with 40-year high inflation with a supersized
100 basis points rate hike this month after a grim inflation report showed price pressures
accelerating. The Fed policy meeting is schedule for July 26-27.
The Fed rate hike is expected to follow a similar surprise move by the Bank of Canada on
Wednesday.
Investors also flocked to the dollar, often seen as a safe haven asset. The dollar index hit a 20-year
high on Wednesday, which makes oil purchases more expensive for non-U.S. buyers.
In Europe, signals were also bearish for demand with the European Commission cutting its
economic growth forecast and raising the expected inflation rate to 7.6%.
Worries of COVID-19 curbs in multiple Chinese cities to rein in new cases of a highly infectious
subvariant have also kept a lid on oil prices.
China's daily crude oil imports in June sank to their lowest since July 2018, as refiners anticipated
lockdown measures to curb demand, customs data showed on Wednesday.
Data from the U.S. Energy Information Administration also point to slackening demand, with product
supplied slumping to 18.7 million barrels per day, the lowest since June 2021. Crude inventories
rose, bolstered by another big release from strategic reserves.
U.S. President Joe Biden will on Friday fly to Saudi Arabia, where he will attend a summit of Gulf
allies and call for them to pump more oil.
However, spare capacity at the Organization of the Petroleum Exporting Countries is running low,
with most of the producers pumping at maximum capacity, and it is unclear how much extra Saudi
Arabia can bring into the market quickly.

NewBase Special Coverage
The Energy world –July -15 -2022
Global Supply Chains of EV Batteries
Source : IEA
Batteries typically accounts for 30% to 40% of the value of an electric vehicles (EV), and the race
to net zero will focus attention on the security of supply of the critical minerals and metals needed
to manufacture them.
Electric car sales continued to break records in 2021,testing the resilience of battery supply chains
Few areas in the world of clean energy are as dynamic as EV markets. In 2021, EV sales broke
new records, with nearly 10% of global car sales being electric, four times their market share in
2019.
Public and private spending on EVs doubled relative to 2020. More and more countries have
pledged to phase out ICEs or have ambitious electrification targets. Five times more EV models
were available in 2021 relative to 2015, and most major carmakers are announcing plans to further
accelerate electrification of their fleets.
China accounted for half of the growth of the EV market in 2021. More vehicles were sold in China
in 2021 (3.3 million) than in the entire world in 2020. Sales in Europe continued to grow robustly (up
65% to 2.3 million) after the 2020 boom, and they increased in the United States as well (to 630
000) after two years of decline. The first quarter of 2022 showed similar sales trends.
Today’s battery and minerals supply chains revolve around China
China produces three-quarters of all lithium-ion batteries and is home to 70% of production capacity
for cathodes and 85% for anodes (both are key components of batteries). Over half of lithium, cobalt
and graphite processing and refining capacity is located in China.

Europe is responsible for over one-quarter of global EV assembly, but it is home to very little of the
supply chain apart from cobalt processing at 20%. The United States has an even smaller role in
the global EV battery supply chain, with only 10% of EV production and 7% of battery production
capacity.
Korea and Japan have considerable shares of the supply chain downstream of raw material
accessing, particularly in the highly technical production of cathode and anode material. Korea is
responsible for 15% of global cathode material production capacity, while Japan accounts for 14%
of cathode and 11% of anode material production.
Korean and Japanese companies are also involved in the reduction of other battery components
such as separators. Most keep minerals are mined in resource-rich countries such as Australia,
Chile and the Democratic Republic of Congo, and handled by a few major companies.
Governments in Europe and the United States have bold public sector initiatives to develop
domestic battery supply chains, but the majority of the supply chain is likely to remain Chinese
through 2030. For example, 70% of battery production capacity announced for the period to 2030 is in
China.
Battery and minerals supply chains will have to expand ten-fold to meet government EV ambitions
The rapid increase in EV sales during the pandemic tested the resilience of battery supply chains,
and Russia’s war in Ukraine has further exacerbated matters with prices of raw materials such as
cobalt, lithium and nickel surging.
In May 2022, lithium prices were more than seven times higher than in early 2021 due to
unprecedented battery demand and a lack of sufficient investment in new supply capacity.
Meanwhile, Russia supplies 20% of global high purity nickel. Average battery prices fell by 6% to
USD 132 per kilowatt-hour in 2021, a slower decline than the 13% drop the previous year.

If metal prices in 2022 remain as high as in the first quarter, battery packs would become 15% more
expensive than they were in 2021, all else being equal. However, the relative competitiveness of
EVs remains unaffected given the current oil price environment.
Pressure on the supply of critical materials will continue to mount as road transport electrification
expands to meet net zero ambitions. Demand for EV batteries will increase from around 340 GWh
today, to over 3500 GWh by 2030 in the Announced Pledges Scenario (APS).
Cell components and their supply will also have to expand by the same amount. Additional
investments are needed in the short term, particularly in mining, where lead times are much longer
than for other parts of the supply chain – in some cases requiring more than a decade from initial
feasibility studies to production, and then several more years to reach nominal production capacity.
Projected mineral supply until the end of the 2020s is in line with the demand for EV batteries in the
Stated Policies Scenario (STEPS). But the supply of some minerals such as lithium would need to
rise by up to one-third by 2030 to satisfy the pledges and announcements for EV batteries in the
APS.
For example, demand for lithium – the commodity with the largest projected demand-supply gap –
is projected to increase sixfold to 500 kilo tonnes by 2030 in the APS, requiring the equivalent of 50
new average-sized mines.
There are other variables affecting demand for minerals. If current high commodity prices endure,
cathode chemistries could shift towards less mineral-intensive options. For example, lithium iron
phosphate cathode chemistry (LFP) does not require nickel nor cobalt, but comes with a lower
energy density and is therefore better suited for shorter-range vehicles.
LFP share of global EV battery supply has more than doubled since 2020 because of high mineral
prices and technology innovation, primarily driven by an increasing uptake in China. Innovation in
new chemistries, such as manganese rich cathodes or even sodium-ion, could further reduce
pressure on mining. Recycling can also reduce demand for minerals. Although the impact between

now and 2030 is likely to be small, recycling’s contribution to moderating mineral demand is critical
after 2030. In
the Net Zero Emissions by 2050 Scenario (NZE), demand grows even faster, requiring additional
demand-side measures and technology innovation. Today’s corporate and consumer preference
for large car models such as sports utility vehicles (SUVs), which account for half of all electric
models available globally and require larger batteries to travel the same distances, is exerting
additional pressure.
Ensuring secure, resilient and sustainable EV supply chains will be key to accelerating global uptake
Electrifying road transport requires a wide range of raw materials. While all stages of the supply
chain must scale up, extraction and processing are particularly critical due to long lead times.
Governments must leverage private investment in sustainable mining and ensure clear and rapid
permitting procedures to avoid potential supply bottlenecks. Innovation and alternative chemistries
that require smaller quantities of critical minerals, as well as extensive battery recycling, can ease
demand pressure and avoid bottlenecks.
Incentivizing battery “rightsizing” and the adoption of smaller cars can also decrease demand for
critical metals. Governments should strengthen cooperation between producer and consumer
countries to facilitate investment, promote environmentally and socially sustainable practices, and
encourage knowledge sharing.
Governments should ensure traceability of key EV components and monitor progress of ambitious
environmental and social development goals at every stage of battery and EV supply.

NewBase Energy News 15 July 2022 - Issue No. 15128 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.

NewBase July 15-2022 Energy News issue - 1528 by Khaled Al Awadi.pdf

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