UK announces last throw of the dice for new gas plants: A proposed package of energy market reforms has been announced by the UK government with a strong emphasis on the need for new gas power plants to bolster the country’s energy supply. As UK efforts to bring online a new generation of nuclear reactors continue to flounder, combined with the Conservative government’s lackluster record on building out new generation from renewables, in an election year prime minister Rishi Sunak has emphasized the need for the addition of 5,000 megawatts (MW) of new gas-fired capacity to provide back-up for renewables and avoid the “genuine prospect of blackouts.” While the new plan includes the aim to increase the UK’s renewable energy capacity by almost threefold by 2035 to between 140,000 MW and 174,000 MW, a range of analysts blame wasted opportunities for the new gas plant focus. “Due to policy failures over the last parliament,” commented E3G’s Juliet Phillips, “the government has missed opportunities to build out the full offshore-wind pipeline, to make gains in energy efficiency, or address clunky network connection times — all factors that mean new gas plants have been announced.” In the decarbonization context, the new gas plant plans also come with no detail on carbon capture and storage (CCS). The UK announcements have coincided with a new report from Carbon Tracker that argues that the government’s existing CCS strategy, backed with £20 billion (US$25 billion) in public funding, is in disarray, particularly for gas plants. (BBC, The Guardian, The Guardian, Business Green, Carbon Tracker)

Comprehensive study captures the shocking extent of methane emissions at U.S. oil and gas sites: A new study published in the scientific journal Nature, and based on approximately one million aerial site measurements, has found that U.S. oil and gas operations are releasing three times more methane emissions than are recorded in official estimates by the U.S. Environmental Protection Agency. Conducted over six regions across the country, the research detected the biggest leaks in the Permian Basin region. However, because more than half of these emissions were picked up at only around 1% of the nation’s oil and gas sites, reducing the problem quickly could be straightforward, according to the study’s lead author. In total, monitoring flights covered 52% of U.S. oil wells and 29% of gas production and delivery system sites over a decade. The study put the annual climate damage cost of the detected emissions at US$9.3 billion, with the annual lost revenue for companies from the leaking methane estimated at US$1 billion. (Nature, Associated Press)

New analysis — Japan’s largest LNG buyers face a surplus problem in new turn towards trading: A new report from the Institute for Energy Economics and Financial Analysis (IEEFA) sheds light on the rapidly evolving LNG market dynamics taking place in Japan, which for decades was the world’s top importer of the fuel. Declining domestic demand for LNG in recent years due to an uptick in nuclear and renewable energy, long-term energy and climate targets, and demographic shifts, the report points out, mean that Japan’s largest utilities, signed up to a range of long-term import contracts, are likely to face an over-contracted position of around 11 million tonnes per year (mtpa) of LNG for the remainder of this decade. As a result, and backed by policy guidance from the key Ministry of Economy, Trade and Industry, LNG importing utilities such as JERA and Tokyo Gas are increasingly turning to LNG trading with a focus on southeast Asian markets amid the policy goal of establishing an LNG value chain across the region. This shift into LNG trading by Japan in order to offload excess contracted supply will coincide with a post-2025 glut in global LNG supply and a likely fall in spot market prices. Such a scenario, the report warns, is likely to result in plunging margins on LNG resales for Japan’s utilities, unless they can negotiate cancelation clauses on contracted volumes, which may also prove to be costly. (IEEFA [Pdf])

Another batch of controversial Projects of Common Interest gets the greenlight in Europe: A plenary vote in the European Parliament has backed public funding access and accelerated permitting support for a slate of 166 cross-border energy infrastructure projects officially known as the EU’s 6th Projects of Common Interest (PCI) list. This final vote had stoked controversy owing to the presence of more than 60 large hydrogen projects, put forward by member states in tandem with the bloc’s transmission systems operators, many of which will initially involve the transportation of gas-based hydrogen. Alongside a number of projects designed to stimulate the creation of a CSS market in the EU, the EastMed and Melita TransGas pipelines were also given the PCI greenlight by members of the European Parliament. These two gas pipelines were controversially included on the 6th PCI list despite the introduction of a new regulation underpinning this and future PCI lists that explicitly rules out gas projects. All 166 projects can now proceed to apply for EU public funding and other benefits provided by PCI status. (Food & Water Action Europe, Climate Action Network Europe)

Chinese gas demand growth in 2024 dependent on economic growth and prices, says industry: A range of Chinese energy analysts are predicting that, with global gas prices relatively deflated for now, this year is likely to see an increase in the country’s gas demand of around 6% accompanied by a growth in LNG and pipeline import volumes, though everything hinges on overall economic performance. Beijing has set a 5% GDP growth target for 2024, which is expected to be challenging. The Economics and Technology Research Institute (ETRI) think tank of China National Petroleum Corporation is predicting a 6.1% year on year growth in demand to 415.7 billion cubic meters contingent on prices remaining low and the economy performing strongly. This is matched by a 6% demand growth forecast by China National Offshore Oil Corporation, the country’s biggest LNG importer. ETRI estimates that the planned addition of 6,000 MW of new gas plant capacity this year will see the power sector provide the strongest boost to gas demand, though competition with the hydropower sector over the summer months may prove to be a drag on these projections. (Energy Intelligence) 

North Sea producer countries slammed for climate inaction: A new benchmarking analysis from the campaign and research group Oil Change International (OCI) demonstrates how none of the five North Sea countries — Norway, UK, the Netherlands, Germany, and Denmark — are on track to meet the 1.5-degree warming limit set by the Paris Agreement or the COP28 decision to transition away from fossil fuels. On eleven measures, including the ending of licensing for oil and gas and a Paris-aligned date for ending production, the countries are almost universally failing to fulfill their commitments, the new report finds. OCI picked out Norway and the UK in particular for criticism, noting that without an urgent change in their “lagging oil and gas policies,” the two countries are set to rank amongst the world’s top 20 developers of new oil and gas fields over the next two and a half decades. On current and planned exploration and extraction trends, the report calculates, the region as a whole could end up responsible for over 10 billion tonnes of new carbon pollution, equivalent to almost 25 years of annual UK emissions at current levels. (Oil Change International, Oil Change International [pdf]) 

The Gas Graph


Via Proximo Intelligence, borrowing volume for U.S. LNG projects has increased by more than 500% between 2020 and 2023. With excess supply of global LNG expected from 2025, the U.S. government’s pause on LNG exports permitting should provide lenders with insights on whether to continue elevated levels of support for projects that so far have limited long-term contracts tied up.

Argentina: State-owned oil and gas company YPF and its project partner, Malaysia’s Petronas, have postponed the final investment decision — a delay of a year — for the first phase of a multibillion-dollar LNG export facility in Bahía Blanca.

Canada: Confidential documents reveal that British Columbia Hydro and Power Authority is pushing for a new CA$3 billion (US$2.2 billion) transmission line, which will power the LNG and other industries in the province, to be exempted from an environmental assessment. 

Cyprus: Representatives from the Chinese-led consortium responsible for constructing the stalled import terminal at Vasiliko are expected to visit the Mediterranean island this week for crunch talks about the project’s future. 

Mozambique: As a key element in an economic program with the International Monetary Fund, the national council of ministers approved a decree for new sovereign wealth fund legislation that is intended to ensure transparency and governance over the management of an estimated US$91.7 billion in revenues from LNG exports in the coming decades. 

Slovakia: Bratislava has initiated discussions with neighbors Austria and Hungary aimed at maintaining some transit of Russian gas through Ukraine beyond the end of 2024.

U.S.: Industry efforts to get round a ban on traditional fracking in the state of New York, by introducing carbon dioxide into the controversial extraction technique, have been thwarted by the passing of a bill in the New York State Assembly. 

Top Danish financial institution takes another big step out of oil and gas: Danske Bank, Denmark’s largest bank, has announced new commitments for its asset management activities that will see it reduce its exposure to coal, oil, and gas from 1,900 companies to just 170. This latest policy move comes a year on from Danske’s decision to end financing and refinancing for companies engaged in activities related to oil and gas expansion. The bank’s asset management arm holds more than US$150 billion in assets and, in a statement, it said that 85% of those assets would now be subject to “strict fossil fuel investment criteria” as a result of the new measures, which are to be phased in over the coming years. Those companies Danske will continue to invest in fall under two criteria. Either companies “aligning towards” a net-zero pathway, which will be subject to time-bound engagement, or those that are already aligned to net-zero, with progress towards achieving this to be continuously monitored by the bank. (Danske Bank [Pdf], Danske Bank, BankTrack) 

Woodside and Santos feel more heat from top investors over climate performance: With the annual general meetings (AGMs) of Australia’s big two oil and gas companies — Woodside and Santos — coming up next month, new analysis from the Melbourne-based finance campaign group Market Forces shows that the country’s 30 biggest pension funds have started to reduce their investment exposure to the two firms over the last two years. The findings come as HESTA, a retirement fund for Australia’s health and community service sectors that manages assets worth around A$81 billion (US$54 billion), has called for enhanced climate-related skills to feature among new board-level recruitment at Woodside, in which HESTA holds a 0.7% stake. Woodside continues to plan more expansion of oil and gas extraction while at the same time targeting a 15% reduction in its scope 1 and 2 emissions by 2025 alongside new measures to curb scope 3 pollution. Noting that the funds are “turning their backs on Woodside and Santos as more members demand greater climate action,” the campaign group’s Superannuation Funds Campaigner Brett Morgan called on them to use the upcoming AGMs “to end Santos and Woodside’s oil and gas expansion plans, and divest if these companies fail to step into line.” (Market Forces, Bloomberg)

Aramco lays out gas shift plans: Announcing its annual results for 2023, Saudi Aramco has indicated that, despite a US$40 billion cut in its capital expenditure target for the next four years, it is shifting its upstream investments towards gas. While expansion of oil production is to be paused, the company is aiming to boost its gas production by more than 60% (compared to 2021 levels) by 2030, principally for domestic industrial use as well as for blue hydrogen exports to hoped for markets such as Japan and South Korea. Further expansion into LNG is also planned following the company’s first international investment in the sector in September 2023. CEO Amin Nasser said that there were no plans for Aramco to become an LNG producer but instead to focus on “outside markets for the time being,” including the U.S. (S&P Global, LNG Prime)

Conflict puts US$2 billion Israel gas deal on ice: The on-off deal for Abu Dhabi National Oil Company (ADNOC) and BP to jointly acquire a major stake in the Israeli gas producer NewMed Energy has officially been shelved amid the continuing military and security tensions in the region. NewMed and other observers said there could be a possibility of the approximately US$2 billion deal being revived once the conflict in Gaza was over. Announced in spring 2023, the joint bid for NewMed, which owns a 45% stake in Leviathan and 30% in Aphrodite, two major East Mediterranean fields, had been seen as a way of cementing the normalization of ties between Israel and the United Arab Emirates. Just days prior to the outbreak of hostilities last October, the purchase of NewMed faced a setback when a recommendation from an independent committee for ADNOC and BP to raise their US$2 billion bid by 10–20% was badly received by the companies, according to industry sources. Shares in NewMed fell by as much as 8% on the Tel Aviv stock exchange following this latest announcement. (Bloomberg)

Momentum for two Canadian export terminals: Woodfibre LNG, a joint venture between Pacific Energy Corporation and Enbridge, has secured US$2.1 billion in loans from a range of international commercial banks to go towards the construction of an LNG export facility in British Columbia. The 2.1 mtpa capacity project’s construction was already underway prior to the financial close on the debt financing provided by a string of mostly Canadian and Chinese institutions as well as Deutsche Bank and HSBC. The start year on the delayed project, which has seen overall costs balloon from US$1.2 billion to US$5.1 billion, is now scheduled for 2027, though opposition to the project from some members of the Squamish First Nation remains. Construction of the frontrunner LNG export facility in the Canadian province, the 14 mtpa LNG Canada project, is nearing completion, according to company officials. Commissioning activities are set to begin shortly to allow for the start of commercial operations by mid-2025. (IJGlobal [paywall], GEM.wiki, Oil & Gas Journal)

Government 2035 Commitment Tracker, Beyond Fossil Fuels, March 8, 2024.

This online tool provides details and assessment of commitments made by European governments to end their reliance on burning fossil fuels to produce electricity and make the shift to a fair and sustainable power system based on renewable energy.

The great energy trap: An evaluation of the economic viability of replacing coal with gas in large power plants in Bulgaria, CEE Bankwatch Network and Za Zemiata, March 14, 2024. (Pdf)

This 49-page report shows that ongoing discussion about switching Bulgaria’s coal-fired power plants to gas would turn them into a major financial liability while also being a missed opportunity to expand the country’s generation from renewables.

Global Oil and Gas Extraction Tracker (GOGET): Drilling Deeper, Global Energy Monitor, forthcoming on April 4, 2024. Register here. 

This webinar will present the results of the latest GOGET data update and the global oil and gas extraction trends captured by the research.