Death knell for gas sounded in landmark IEA report: This year’s World Energy Outlook (WEO), the annual report on global energy pathways published by the International Energy Agency, mainstreams the 1.5°C pathway which the IEA presented in May this year. By doing so in its flagship energy prospectus which is pored over by governments, companies, and investors, the IEA has sent a clear signal that there can be no turning back from ending fossil fuel finance and expansion beyond existing oil and gas fields and coal mines. The WEO reiterates the IEA’s analysis that there is no justification for new oil and gas fields – as of now – anywhere in the world. The 386-page report contains a steep downward revision in IEA projections for future gas demand, concluding that if countries meet their already announced climate pledges, then global gas demand will peak as early as 2025 and then start falling. For LNG, most of the 200 billion cubic metres of LNG projects currently under construction will not recover their costs, with resulting stranded capital estimated by the IEA at US$75 billion. (World Energy Outlook 2021, Oil Change International, Climate Home News)

US-backed Kosovo-North Macedonia gas pipeline shelved: The Government of Kosovo has decided to rechannel US$200 million from the US Millennium Challenge Corporation (MCC), previously lined up to fund a gas interconnector from Kosovo to North Macedonia, towards decarbonisation projects involving energy efficiency measures and increased battery storage capacity. MCC had been invested in the pipeline project for the last few years, including the funding of pre-feasibility studies. Announcing the decision, Minister of Economy Artane Rizvanolli, said: “Kosovo needs more information to be sure that the construction of gas infrastructure is the best option for our energy transition.” Supply gas for the project was planned to come from Greece and North Macedonia via the Trans Adriatic Pipeline. A new energy sector strategy for the Balkan country, due in early 2022, is expected to make clear the future of the pipeline as well as other potential gas infrastructure. (KOHA [Albanian], Balkan Green Energy News)

Groningen closure confirmed but Dutch government under fire for gas extraction plans: Newly announced plans by Stef Blok, the Dutch Minister of Economic Affairs and Climate Policy, to approve gas drilling in the Ternaard field under the Wadden Sea, a UNESCO heritage site and protected area, are being challenged both within the Netherlands and by the International Union for the Conservation of Nature. Blok maintains that the licence for NAM – a joint venture between Shell and ExxonMobil – to drill up to 7.5 billion cubic metres from Ternaard cannot be revoked as impact assessments show no damage to the natural environment would result, although the sea bed may drop by a ‘limited amount’. The estimated CO2 emissions of the venture are approximately 15 million tonnes. The plans emerged just prior to the Dutch government’s confirmation that the large Groningen field, operated by NAM, will mostly stop producing next year due to protests over seismic risks in the region from gas extraction. (DutchNews, Oil Change International, Reuters) 

Finance billions fueling Arctic crisis: Major commercial banks have ploughed $US314 billion into the leading companies behind new Arctic oil and gas projects between 2016 and 2020, according to Reclaim Finance.  Arctic expansionist companies, such as ConocoPhillips, Gazprom and TotalEnergies, are set to increase oil and gas production in the vulnerable region by 20% over the next five years, and are being further backed by major investors with holdings totalling US$272 billion. This huge level of financial support is continuing despite the introduction of a range of policies aimed at restricting finance for projects in the region. Yet four out of eight banks which implemented an Arctic policy before 2020 – BNP Paribas, Société Générale, Natixis, and HSBC – have since gone on to increase their financing to Arctic expansionists. Ahead of COP26 next month, a newly published policy paper from the European Commission is pledging to aim for “a multilateral legal obligation not to allow any further hydrocarbon reserve development in the Arctic or contiguous regions”. (Reclaim Finance [Pdf], Bloomberg, The Guardian, European Commission)  

North Sea disputes intensify ahead of COP26: With only a few weeks to go before the start of COP26 in Glasgow, legal and regulatory battles over the exploitation of North Sea hydrocarbons have been coming to the boil. The future of the hotly disputed Cambo field remains in limbo after a legal challenge by Friends of the Earth Scotland and Uplift forced the UK government to concede that it has the powers to stop the development of Cambo. Scottish actor and former Doctor Who star Peter Capaldi has described prime minister Boris Johnson’s backing for Cambo as “unscientific and potentially disastrous”. Greenpeace intends to launch an appeal after losing its case in Scotland’s Court of Session challenging the UK government’s decision to permit BP to drill the Vorlich field. The verdict arrived despite the fact that in 2018 the government failed to consider the climate impact of burning the extracted fossil fuels. The UK’s Offshore Petroleum Regulator for Environment and Decommissioning has also rejected Shell’s environmental plans to develop the 4.85 million cubic metres per day Jackdaw gas field, though the company now intends to propose changes to its plans. (The National, The Guardian, BBC, Upstream)

MEPs’ vote leaves door open for further EU gas support: Members of the European parliament’s industry, research and energy committee have thrown the gas industry a lifeline in the ongoing revision process of the EU’s trans-European energy (TEN-E) infrastructure regulation. A revised and updated TEN-E proposal from the European Commission, which had removed existing special status for all gas projects, was amended by MEPs to firstly continue the subsidising of gas pipelines with EU public funding until the end of 2027 if the energy is mixed with an unspecified amount of hydrogen. In addition, gas pipelines and storage facilities will continue to be eligible to receive ‘project of common interest’ (PCI) status which can boost their chances of being realised, although MEPs ruled out further access to EU money for PCI gas projects. To pass the revised TEN-E regulation into law, the European Parliament is now negotiating its position with the European Commission and national energy ministers, with a conclusion expected before the end of the year. (Global Witness, The Guardian)

Central Europe: Four transmission system operators from Germany, Czech Republic, Slovakia and Ukraine have signed a memorandum of understanding to consider repurposing a European gas pipeline and help create a blue and green ‘hydrogen highway’ across the region.

Denmark: Construction costs for the Danish section of the Baltic Pipe have risen by 135 million euros to 1.1 billion euros, according to the national transmission operator Energinet, principally due to a halt in the pipeline’s construction while its impacts on protected mice and bat species are being reassessed.

Germany: A rail logistics company has successfully completed initial trials on behalf of the utility Uniper to transport LNG by rail in specialised, thermally insulated tank cars.
 
International: A further 24 countries, including Canada, France, Germany, and Japan, have signed on to the EU-US ‘Global Methane Pledge’. This takes the number of participating nations to 33, with the partnership now covering 60% of global GDP and 30% of global methane emissions across the energy, agriculture, and waste sectors.

Luxembourg: National energy minister Claude Turmes has called on the EU in its upcoming gas directive to curb “the extreme speculative behaviour of some traders” which he believes is contributing to the severe price spikes being seen in European gas markets. 

Norway: The incoming minority coalition government composed of the Labour Party and Centre Party has announced that Norway will continue to explore for oil and gas over the next four years. Responding to the tight supply conditions in European gas markets, state-controlled Equinor also said it had received permits to increase production by 1 billion cubic metres per year at both of its existing Oseberg and Troll gas fields.  

Romania: National president Klaus Iohannis is backing a plan for state-owned Romgaz to exploit the Neptun Deep gas field in partnership with OMV Petrom once negotiations have been concluded with ExxonMobil which intends to sell its 50% stake in the Black Sea project.

Ukraine: European Commission President Ursula von der Leyen pledged during an October 12 summit with Ukrainian President Volodymyr Zelenskyy to secure gas supply to Ukraine, saying the EU was “exploring different scenarios” and would “work closely with Ukraine to increase gas supply capacity coming from EU member states.” 

The Gas Graph


(via Ember)

Rating agency warns oil and gas industry is vulnerable to weak, long-term demand scenario: An assessment by Moody’s Investors Service has found that “most” independent exploration and production (E&P) companies as well as integrated oil and gas companies face material and increasing exposure to the transition to a low carbon future. James Leaton, Senior Vice President at Moody's, warned of the “daunting challenges” companies in the sector now face as they will have to adopt “capital-intensive diversification of their business to adapt to shifts in the energy system, and strategic cost management to ensure the economic viability of current and future assets”. Moody’s applied its carbon transition assessment framework to 65 independent E&P producers and 34 integrated oil & gas companies globally, finding the E&P companies to be most exposed overall to risk, while integrated O&G companies are performing only marginally better. (Moody’s Investors Service)

TotalEnergies, Gazprom and Vitol announce major LNG investments: While still thought to be at least a year away from being able to restart construction of its troubled US$20 billion Mozambique LNG project, French supermajor TotalEnergies has unveiled a new ‘energy transition’ strategy with LNG at its core. The company foresees its LNG production increasing by 30% by 2025. Accompanying this growth will be efforts to reduce methane emissions by 20% across its LNG chain by 2030. TotalEnergies claimed it is “fully engaged” to realise its ambition of net zero emissions by 2050. In what is thought to be the biggest ever financing commitment from state coffers, Russia’s finance minister has announced that a US$12 billion credit line will be extended by the Russian National Welfare Fund for the financing in full of a two-train LNG plant and gas-to-polymers processing facility being proposed by Gazprom and the private company Ruzgazdobycha. In 2019 Shell exited the LNG project in St. Petersburg. Meanwhile, the global energy trader Vitol has purchased a share in Liquind GmbH, which is aiming to grow its network of LNG filling stations serving the trucking industry in Germany. (Upstream, Upstream, Global Energy Monitor, Natural Gas Intelligence)

Shell and other majors launch the Methane Guiding Principles: An opinion article in mid-September by Maarten Wetselaar, Shell’s director for integrated gas, renewables and energy solutions, announced the launch of the Methane Guiding Principles, an industry-led framework containing five sets of recommendations designed to “address and cut methane emissions throughout the oil and gas industry”. While specific emissions reduction targets are conspicuously absent, the new principles call for mandatory EU rules on methane across the entire gas value chain, including – significantly – imports from abroad. The European Commission is expected to publish proposals on new EU methane rules before the end of this year. How these rules will apply to imports, in particular high methane content US gas, has been the subject of some speculation. (EurActiv, Methane Guiding Principles) 

Oil and gas divestment providing opportunities for hedge funds: Bloomberg reports that banks are ditching more than just the coal sector and are now starting to reject financing for upstream oil and gas projects, despite having in place far fewer finance policy restrictions for oil and gas than for coal. However, the slack, according to the Financial Times, is increasingly being taken up by hedge funds in the US and UK. These entities are “quietly” feeding off the general mainstream finance sector shift away from fossil fuels, which is being led by environmentally minded institutional investors. (Bloomberg, Financial Times [paywall])

World’s biggest LNG cargoes trader hit by margin calls: The Geneva-based commodity trader Gunvor has been fending off a reported US$1 billion in margin calls as a result of extreme pricing turbulence in global gas markets. The company has taken up strong positions in gas trading in recent years, including this summer the purchasing of sales contracts with yet to be sanctioned LNG export terminals in the US. The margin calls – demands for extra cash to cover contracted liabilities – on Gunvor’s gas and LNG trading in the last few months are reported to have been paid, and the company is said to have more than US$3 billion of excess liquidity to cover its remaining exposure to gas market trades. (Financial Times [paywall], World Oil) 

Standard Chartered boss rules out disengagement with fossil fuels: Bill Winters, the CEO of London-headquartered Standard Chartered, has reacted to a new, climate-related shareholder resolution delivered to the bank by publicly insisting: “The day that banks are completely disengaged from the fossil-fuel industry will be the day that there’s no more fossil fuels.” Standard Chartered remains a major financier of coal, oil and gas globally – especially in Southeast Asian markets – despite pledging to reach net-zero carbon emissions from its operations by 2030, and from its financing by 2050. Market Forces and Friends Provident Foundation have co-filed the resolution which urges the global bank to end its “misaligned financing of fossil fuels.” Despite having little physical brand presence in the UK, Standard Chartered is best known for its sponsorship since 2010 of Liverpool Football Club, including its ‘Futuremaker’ collaboration and its adorning of the club’s iconic Anfield stadium with marketing slogans such as ‘Empowering the next generation’. (Bloomberg, Standard Chartered, Fossil Banks, No Thanks [Tweet])

Gas in Spain: Oversupplied and Overcompensated, Institute for Energy Economics and Financial Analysis, September 2021. (Pdf)
 
This 32-page report analyses how the shareholders of Enagás, Spain’s monopoly gas transmission company, have been profiting over the last 20 years from underutilised natural gas infrastructure at the expense of consumers who continue to face some of the highest gas prices in Europe, despite declining rates of gas demand in Spain since 2008. 
 
Stepping on the Gas: How Poland risks locking itself into gas dependency, Ember, September 2021.

Based on the Polish Energy Policy until 2040 which foresees the biggest gas expansion in Europe, this analysis considers how feasible these plans are, and identifies that 70% of Poland’s gas capacity additions are for electricity alone despite the increasing availability of lower-cost alternatives such as renewables.

Curtailing Methane Emissions from Fossil Fuel Operations: Pathways to a 75% cut by 2030, International Energy Agency, October 2021. (Pdf)

This 56-page report outlines how, in order to have at least an even chance of keeping global warming below 1.5°C, the fossil fuel sector must achieve a 75% percent reduction of methane emissions from 2020 levels by 2030, and that almost half of methane emissions from oil and gas operations can be eliminated with measures that have no net cost.

Soaring fossil gas costs responsible for EU electricity price increase, Ember, October 2021. 

With a spotlight on Italy, the Netherlands and Spain, the three EU member states to have been hit hardest by this year’s fuel price shocks, this analysis shows that gas is to blame for soaring electricity prices around Europe, and not EU climate policy.