Friday, April 26, 2024

Regular columns for Energy Connects

Dear readers, really excited to share the news that yours truly will now be writing regular opinion columns for global news and analysis platform Energy Connects. The portal, which is a part of the dmgevents portfolio, provides access to an engaged global audience that incorporates the entire energy value chain from oil and gas to wind, solar, utilities, hydrogen and nuclear companies. 

The first of the Oilholic's missives is already online here. Do give it a read, and feedback is welcome as always. Looking forward to offering more thoughts and analysis via Energy Connects on a regular basis from hereon. 

More musings to follow soon. Keep reading, keep it here, keep it 'crude'! 

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© Gaurav Sharma 2024. 

Wednesday, April 10, 2024

Revisiting 'EcoStruxure' At Schneider Electric's Innovation Summit

Earlier this month the Oilholic had the pleasure of attending a Schneider Electric event after a gap of nearly six years - the company's Innovation Summit in Paris, France. 

A lot has happened since this blogger last attended a Schneider event. The inimitable Jean-Pascal Tricoire has moved on from being CEO to the Chairman of the company, with former AVEVA boss Peter Herweck now in the boss' chair. 

But one constant has been the company's relentless development and marketing of its Industrial Internet of Things (IIoT) architecture - EcoStruxure - conceived to deliver "smart" automation and digitization solutions within the energy sphere for a plethora of industrial, manufacturing and processing clients. 

So it was a pleasure to receive two use case demonstrations of how the product suite is being applied and has evolved since the turn of the decade. For this blogger, the company's EcoStruxure Automation Expert, a software-centric industrial automation system, and EcoStruxure Hybrid Distributed Control System  (formerly branded as PlantStruxure PES), a single automation system to engineer, operate, and maintain a plant's entire infrastructure, stood out amidst a sea of solutions and myriad use cases. 

These were use cases for a "sustainable, productive and market-agile" future that the company envisions for the wider industrial and manufacturing complex, according to CEO Herweck, who in his keynote, noted that: "Being more electrical, being more digital, means being more efficient."

And "Digital + Electric = A Sustainable Future" was the simple equation put forward by Herweck for a world facing the complex issue of managing carbon emissions. 

Here's a Forbes report summing up Herweck's comments in Paris. It was also revealed at the Innovation Summit that Schneider Electric was driving up its R&D spend from 5.4% to around 8% of headline revenue. The company is also practicing what it preaches by converting key facilities into the very sort of "smart factories" it is recommending to the world, something the Oilholic intends to revisit later down the year.  

Elsewhere, your truly also got to grips with a number of fascinating home energy management software solutions and applications alongside battery inverters (used as a way to control flow of electricity in residential properties) and allied smart home concepts. 

Commercial power management software and hardware, grid operations software, artificial intelligence (AI) powered monitoring systems, datacenter cooling systems, and electric vehicle (EV) charging infrastructure displays and demos at the exhibition floor completed an interesting and informative visit. 

Or a glimpse of a digitized and electrified horizon, as the company's C-Suites and public relations executives will tell you! And on that note, its time to say goodbye. More musings to follow soon. Keep reading, keep it here, keep it 'crude'! 

Additional note 25.04.24: Here's yours truly's recently published interview with Barbara Frei, Executive Vice President, Industrial Automation at Schneider Electric following a meeting in Paris. 

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© Gaurav Sharma 2024. Photo I: A Schneider Electric EcoStruxure display at the company's Innovation Summit in Paris, France. Photo II: Schneider Electric CEO Peter Herweck delivering his keynote. Photo III: Sustainability message dominated proceedings, Apr 3-4, 2024. © Gaurav Sharma 2024.

Friday, March 29, 2024

All missives from CERAWeek 2024

With CERAWeek 2024, organised by S&P Global, drawing to a close last week, the Oilholic marked a fascinating and engaging week for the energy markets with a number of pieces for Forbes as well as daily blog posts. 

Here are the Forbes pieces:

  • Aramco Investing ‘Big Time’ In Renewables But CEO Slams ‘Fantasy’ Of Phasing Out Oil And Gas, March 18, 2024.
  • Oil Is Nearing 5-Month Highs And Its Not Just About Supply Fears, March 18, 2024.
  • What Will Oil Demand Look Like In 10 Years And When Might A ‘Peak’ Occur?, March 20, 2024.
  • Why Bill Gates Reckons Houston May Become The ‘Silicon Valley Of Energy’, March 24, 2024.
  • Global LNG Market: Sliding Prices In 2024, Rising Opportunities By 2030?, March 27, 2024.
  • Energy Transition: Challenge Of Financing And Investing In A $6 Trillion Megatrend, March 28, 2024.
All blog entries for each CERAWeek day may be found here

And that's a wrap. More musings to follow soon. Keep reading, keep it here, keep it 'crude'! 

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© Gaurav Sharma 2024. 

Friday, March 22, 2024

CERAWeek Day IV & V: Tech-enabled methane emissions monitoring

The Oilholic writes this blog while taking in a view of Downtown Houston's Discovery Green from the Hilton's fourth floor glass windows with CERAWeek 2024 having concluded. There were loads of interesting deliberations, panels and debates aplenty on day(s) IV and V. 

Alongside these, several emerging energy and cleantech technologies were showcased. But if yours truly were to pick one out for 2024 - then it was perhaps the delivery of near real-time methane monitoring services from high-altitude balloons and satellites that stood out. 

For context, the scientific community is united in its belief that methane is a more potent greenhouse gas than CO2. According to the Environmental Defense Fund, methane has more than 80 times the warming power of the latter over the first 20 years after it reaches the atmosphere. 

So in order to tackle it, the technologists and energy sector players are coming together with effective monitoring being a key pillar of this drive. Over the course of the week, CERAWeek delegates heard how ExxonMobil is collaborating with Scepter and Amazon Web Services (AWS) on near real-time methane monitoring via satellites and high-altitude balloons and satellites.  

According to ExxonMobil, this collaboration has the potential to "redefine methane detection and mitigation efforts" and will contribute to broader satellite-based emission reduction efforts. Such moves will do wonders in terms of improving global methane detection and quantification.  

It was heartening to note at CERAWeek that the ExxonMobil, Scepter and AWS partnership is just one of the many methane monitoring and mitigation initiatives. Industry peer Chevron, and pipeline operator Williams are also among those making similar moves. 

Williams for its part said it had launched two satellites to detect methane leaks, and the company's CEO Chad Zamarin said he was in favour of round-the-clock methane monitoring. It gives one absolute confidence that emissions tech is booming. 

Elsewhere, Bill Gates was in the CERAWeek House talking cleantech too and representing his two energy companies –  Breakthrough Energy, which is accelerating sustainable energy solutions and pursuing innovations in the reduction of greenhouse gas emissions; and TerraPower, which acts as a technology design and development engineering company for nuclear reactors.

Much to the delight of America's oil and gas capital over a business luncheon, Gates told CERAWeek Houston has the potential to become the Silicon Valley of energy and a dominant hub in the global energy transition.

Finally, over 8,100 delegates attended CERAWeek 2024. The tally caps 9,400 when counting staff, vendors, etc. The figure broke the previous record of over 7,200 delegates at CERAWeek 2023. The delegates hailed from over 80 countries who listened to some 1,400 speakers. And on that note, its time to say goodbye to H-Town and board the flight back home to London. More musings to follow soon. Keep reading, keep it here, keep it 'crude'! 

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© Gaurav Sharma 2024. Photo: Discovery Green and Downtown Houston, Texas, US © Gaurav Sharma, March 2024. 

Wednesday, March 20, 2024

CERAWeek Day III: On peak oil demand & more

As the end of day III of CERAWeek nears, for the Oilholic one panel session stood out in particular - Oil Demand: How will it look in a decade? This emotive and extremely polarizing subject turned hot late last year after the International Energy Agency issued a forecast predicting a peaking of oil demand in the 2030s. 

Naturally, OPEC blasted the IEA and said demand would continue to grow for many, many years. It also offered a bullish scenario of 116 million barrels per day in global oil demand by 2045. 

If the Oilholic were to offer his tuppence, oil will indeed continue to be a major part of the energy landscape not just for many years, but many decades. The stark reality of the matter is that no one can say for sure when oil demand will peak whether it is the IEA or OPEC. 

But kudos for the CERAWeek panelists to have at least tried. They included names familiar to the readers of this blog - Joseph McMonigle, Secretary General of International Energy Forum and Jeff Currie, a former Goldman Sachs partner and Chief Strategy Officer of Energy Pathways at Carlyle. 

Both were joined by Fred Forthuber, President of Oxy Energy Services, and Arjun Murti, Partner, Energy Macro and Policy at Veriten, and another former Goldman Sachs executive. The discussion was as lively as it gets. Here's the Oilholic's full report on the goings-on of the panel via Forbes

The panel followed a related quip by Shaikh Nawaf al-Sabah, CEO of Kuwait Petroleum Company, earlier in the day's proceedings. He told delegates that global energy demand will increase faster than the population growth rates through to 2050. "That means that we're going to require more energy intensity for the population in the world."

KPC's answer - why of course - increase its production capacity to 4 million bpd by 2035 from its current level of 3 million bpd. 

See, again the thing here is (as asserted earlier by yours truly), if the various forecasters can't even agree on what demand growth will be like at the end of 2024 (with the IEA predicting 1.3 million bpd and OPEC predicting 2.25 million bpd) - how can they predict for sure what the approaching horizon may look like in 2030! And on that note, it's time to say goodbye. More musings to follow soon. Keep reading, keep it here, keep it 'crude'! 

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© Gaurav Sharma 2024. Photo: CERAWeek 2024 panel on - Oil Demand: How will it look in a decade? © Gaurav Sharma, March 2024. 

Tuesday, March 19, 2024

CERAWeek Day II: OPEC ministerial no shows & more

The Oilholic writes this blog well towards the end of the second day of CERAWeek with no sign of any OPEC ministers or the Secretary General of the producers' group. This is in stark contrast to previous years

However, many of the bosses of their state-owned oil and gas companies are here in fine voice, most notably, Amin Nasser, CEO of Aramco, Nawaf Al-Sabah, CEO of Kuwait Petroleum Corporation, and Mele Kyari, CEO of Nigerian National Petroleum Company. 

One notable absentee among their ranks was Sultan Al Jaber - the President of COP28, UAE Special Envoy for Climate Change and Minister of Industry and Advanced Technology and Managing Director and - Group CEO of ADNOC.

However, he did appear virtually to receive the CERAWeek Leadership Award recognizing his leadership at COP28 to deliver the UAE Consensus for a global agreement on a sustainable energy future.

"I am deeply honored to accept the CERAWeek Leadership Award for the UAE Consensus," Al Jaber said upon receiving the award. "In a world too often held back by conflict, the UAE Consensus brought nations together to take a giant step forward for climate progress. 

"Multilateralism overcame geopolitics to produce an unprecedented agreement to produce a fair, orderly and responsible energy transition. In short, COP28 was a success because of its full inclusivity. Everyone had a seat at the table, everyone was invited to contribute, and everyone did contribute."

Meanwhile, Mike Wirth, CEO of Chevron, appeared at CERAWeek to express his "surprise" when ExxonMobil moved to arbitration over Guyana. Wirth also flagged his company's ongoing geothermal pilot program. Murray Auchincloss, CEO of BP, chose to big up his upstream business, while Ryan Lance, CEO of ConocoPhilips, said the wave of upstream oil and gas M&A "is not done yet". 

That wave saw $234 billion worth of deals in 2023. Additionally, and quite interestingly, Lance seemed to suggest that US oil production will likely rise from its current level of 13 million barrels per day to 14 million bpd before it plateaus. 


Well that's a wrap for day for the second day of CERAWeek. The Oilholic leaves you with a glimpse above of a scramble for the escalators for a break after the plenaries conclude. Now these ones are to the right of the ballroom exit. If only some good folks had gone far left they'd find the escalators there quite empty and reach their lunches and coffees a tad quicker :) Keep reading, keep it here, keep it 'crude'! 

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© Gaurav Sharma 2024. Photo I: CERAWeek 2024 logo in Houston, US. Photo II: Crowded escalators at CERAWeek 2024 © Gaurav Sharma, March 2024. 

Monday, March 18, 2024

CERAWeek Day I: Aramco sets its stall in Houston

The Oilholic is back in town for CERAWeek 2024 and the first day has been pretty interesting. Key moments included - Aramco's CEO Amin Nasser wanting the world to ditch "fantasy" economics of phasing out oil and gas (full report for Forbes here) and Shell's CEO Wael Sawan telling delegates there is way more politicisation of oil and gas than is necessary. 

Sawan also took the opportunity to stress that Shell sees LNG as a massive opportunity. "We're heading for a multidimensional energy mix of the future. While we are stabilizing our oil business, we are actively growing our LNG business."

He added that the energy major was a "huge" believer in the LNG market's potential and sees demand rising "by 50% from current levels." 

Elsewhere, ExxonMobil CEO Darren Woods said he was not trying to scupper Chevron's acquisition of Hess. Rather his sole objective in its dispute with Chevron was to establish its own rights over Hess' lucrative assets in Guyana. 

Elsewhere, former United States Energy Secretary, and now Founder & CEO of Energy Futures Initiative Ernest Moniz summed up the most significant accomplishments of COP28. CERAWeek's video of the session here is a good one to listen to. 

Other notable speakers on Day I included Jean Paul Prates, CEO of Petrobras, Meg O'Neill, CEO of Woodside Energy, Jack Fusco, CEO of Cheniere Energy and Torbjörn Törnqvist, Chairman of Gunvor. 

As panel discussions gathered pace, CERAWeek's Agora technology and innovation program also got underway, duly visited by yours truly during the second half of the day. 

Emerging cleantech and breakthrough applications of artificial intelligence appeared to be all the rage here with loads of chatter in open forum events being held in "pods." And of course, where there are pods, there have to be hubs! 

One such hub was Agora's Climate Hub, where the Oilholic attended the "Weathering the change" session late in the day, and received some interesting perspectives on the links between climate change and extreme events, albeit with some familiar soundbites. 

And the first day of CERAWeek also saw the oil price spike to near-five month highs as Ukrainian attacks on Russian refineries spooked the markets. After hours, Brent went as high as $87 per barrel, and here's why the Oilholic believes the $85 support level has been broken (for now). Well, that's all for the moment folks, more musings to follow soon. Keep reading, keep it here, keep it 'crude'! 

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© Gaurav Sharma 2024. Photo I: Amin Nasser, Chief Executive Officer of Aramco & Wael Sawan, Chief Executive Officer of  Shell. Photo II: Climate Hub at CERAWeek's Agora program © Gaurav Sharma, March 2024. 

Sunday, March 17, 2024

Heading to CERAWeek with oil north of $85/bbl


Brent crude oil is lurking north of $85 per barrel as the Oilholic heads down south (from London) to Houston for CERAWeek 2024. The current level would make it a 4-month high. It's what two geopolitical variables and tight inventories can 'crudely' do. More musings to follow from H-Town soon folks. Looking forward to it, meeting old friends, making new ones (and news ones too!). Keep reading, keep it here, keep it 'crude'! 

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© Gaurav Sharma 2024.

Friday, March 15, 2024

Chat on software-led sustainability with AVEVA's CEO

Earlier this month, The Oilholic had the pleasure of visiting industrial software firm AVEVA's London office for a long overdue meeting with its Chief Executive Officer Caspar Herzberg.

Theme(s) of the riveting discussion, which extended way beyond the time allocated, touched on the proliferation of AI, IIoT, digital twin tech, big data and predictive analytics in the energy industry. 

All have been exponentially deployed in recent years by major energy operators conscious of their carbon footprint. Many have done so in partnership with AVEVA and the pace of adoption is only going to accelerate. 

The top 20 oil and gas companies by market capitalisation have all pledged to achieve net zero by 2050, as well as eliminate routine gas flaring by 2030, and are incrementally turning to tech solutions that AVEVA and its competitors are happy to provide. 

Herzberg told The Oilholic: "The energy majors have rapidly come around to the viewpoint that optimisation enabled by software serves the purpose(s) of improving their throughput and operating margins, reducing downtime as well as lowering their carbon footprint. 

"I also think most energy majors are now subject to significant societal pressure to lower their carbon footprint. This pressure is only going to increase. And every summer it will be ever more pressing, especially in liberal democracies where citizens are free to express their opinion and see climate change as a key concern."

It is here that the true potential of "connected solutions" may indeed be realized by the energy sector (and beyond) driven by continually improving corporate efficiencies and returns in tandem. "I would say that connected software makes things that are already possible, quicker, and frees people up to deal with more pressing issues in the value chain, rather than routine, but time-consuming tasks."

"Ultimately, AI, IIoT, digital twins, big data and analytics are all purposeful tools but at their inner core is data centricity – essentially, talking hold of data and getting value out of it."

The possibilities are infinite for the energy firms both large and small, Herzberg said. AI driven carbon capture, physics-based simulation, predictive asset optimization, streamlining processes for a green hydrogen future, making the power grid more resilient and reducing refinery or plant downtime are just some of the use cases, the AVEVA boss noted, while personally and very kindly showing yours truly a simulation on an absolutely ginormous screen. 

Away from exclusive snippets for this blog, do read The Oilholic's interview with Herzberg for Forbes here. It offers a much wider perspective on AVEVA and Herzberg's strategy for the business in the energy sector and beyond, and the company's very vocal stance on improving process efficiencies in the wider industrial world's march to a low-to-zero carbon future. Well, that's all for the moment folks, more musings to follow soon. Keep reading, keep it here, keep it 'crude'! 

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© Gaurav Sharma 2024. Photo: Gaurav Sharma with Caspar Herzberg, Chief Executive Officer of AVEVA© AVEVA, March 2024. 

Thursday, March 14, 2024

Onsite with Coolbrook and its 'electric factory' pilot

Last week the Oilholic headed out for a rather unique site visit to the Brightlands Chemelot Campus - an innovation hub in Geleen, The Netherlands - where cleantech firm Coolbrook is running a pilot project premised on the idea of an 'electric factory.' 

Yes indeed, you read that one correctly dear readers - an 'electric factory' concept that could in the fullness of time lead us to re-imagine the industrial complex and substantially lower the carbon footprint of heavy industries and petrochemical plants. 

To make sense of it all, the company's CEO Joonas Rauramo kindly agreed to explain the process and take this blogger around. The idea is to substitute heat sources / furnaces in use at heavy industries currently running on fossil fuels with an electrical power source. 

For that Rauramo and Coolbrook have come up with the company's patented RotoDynamic technology - which uses a rotating device powered by electricity to generate heat without burning anything. "So basically air or for that matter a large range of gaseous substances / inert gasses go in where a high-speed 0.8 MW electric motor accelerates them with mounted rotating blades. Subsequent deceleration leads to the generation of a shock wave that converts kinetic energy to thermal energy," Rauramo explained. 

The heat generation is in milliseconds and is not transferred from outside through a surface, rather volumertically inside the gas. And we are talking temperatures of up to 1700 C. Now the Oilholic knows the questions on many of your lips - does it really work and did this blogger get to look under the hood of the machine? The firm answer to both questions is yes. 

While photography was not permitted in certain areas of the project, The Oilholic was given full access to view and examine both the project set-up as well as its key components, and interview a range of personnel working onsite. It's doubtful a company would open its doors to your truly and provide this level of access if it had to something hide, or was still faking it till it made it. 

Furthermore, the test pilot has already achieved temperatures of around 1000 C. Project research and development is constantly independently verified (and monitored both onsite and remotely), several universities including Cambridge, Oxford and Ghent are involved, while Swiss industrial giant ABB is the technical partner on the project. Finally, the commercial launch appears to be on the horizon early in 2025. 

Now just re-imagine old versus the new industrial energy chain as illustrated by Coolbrook below (click to enlarge):

Makes you think about the immense possibilities it offers for lowering the global industrial complex's carbon footprint if the electricity that's powering the machine comes from renewable sources as well. 

Coolbrook's RotoDynamic has two modes - one a heating only machine and the other a reactor aimed at the petrochemical industry wherein the technology can be deployed not just for heating but cracking hydrocarbons as well. The kit can be fitted on both greenfield as well as brownfield sites. 

Coolbrook has identified over 40 uses cases but the most obvious ones would be cement, iron, steel, glass, chemicals and petrochemicals. The company's modeling points to a reduction of 2 billion tonnes in CO2 emissions annually if traditional heat sources are substituted by its technology. 

Of course, the transition will not be easy and there are other low to zero carbon techniques being explored. Rauramo was quick to assert that what Coolbrook is attempting is "50% more efficient" than hydrogen predicated alternatives and is "cheaper too." 

Total budget for Coolbrook's pilot project aimed at creating a "new industrial era" is in the region of $13.1 million. Should the commercial launch proceed as planned in 2025, that would be the result of 14 years of hard work since the company was founded in Finland in 2011.

Scaling up is the name of the game. In that respect, there has been considerable interest in Coolbrook's technology from the likes of ArcelorMittal, Shell, Ineos, Sabic, JSW, Linde, Braskem, Cemex and its longstanding partner ABB. The industrial heating market itself is estimated to be worth more that $1.1 trillion. 

Coolbrook doesn't yet have direct competition for a product like its own, as The Oilholic noted in his feature on the company for a recent Forbes article that's available here.

As for those in the industry looking at RotoDynamic from an outside-in perspective, The Oilholic observed quite a few tangible benefits. 

Process efficiency is an obvious one and comes in many forms ranging from lower energy bills and a carbon footprint to potentially higher plant throughput. The compact size of Coolbrook's offering is also an attractive one. So, by this blogger's reckoning, for say a petrochemical plant, we're talking roughly one-tenth the space needed for the company's reactor kit versus a traditional reactor. 

Capex and opex considerations matter hugely and the product is yet to hit the commercial world. But should the RotoDynamic technology meet its full potential, capex and opex will likely be competitive near-term, and could be way lower over the medium-term. 

Once Coolbrook scales up as a company post-launch, the initial deployment costs for the industry would also likely be calibrated lower and long-term ROI much higher. All-in-all a very interesting company (and its operating sphere) to watch out for. With those final thoughts, it's time take your leave. More musings to follow later this month. Keep reading, keep it here, keep it 'crude'! 

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© Gaurav Sharma 2024. Photos: Gaurav Sharma with Joonas Rauramo, CEO of Coolbrook at the company's RotoDynamic Technology Test Pilot at Brightlands Chemelot Campus, Geleen, The Netherlands. Illustration: Coolbrook's demonstration of the 'old' versus 'new' energy chain for the global industrial complex© Jenni Schumacher / Coolbrook, March 2024. 

Tuesday, March 05, 2024

Quickfire visit to the Economist Sustainability Week

Earlier this morning, The Oilholic had the pleasure of attending Economist Impact's 9th Annual Sustainability Week in London, albeit briefly, given commitments elsewhere in what is turning out to be a very hectic March. 

In a day packed with interesting sessions, three of which this blogger found time to attend, the expected conjecture was that there aren't any viable commercial models to leave things as they are in a world facing climate change. So, should you buy that supposition, the next inevitable question is how to finance the energy transition? To this end, an afternoon session - Financing net zero: assessing and accelerating green finance - really stood out. 

Some of the profound discussion slants included - how are companies building on the progress of previous years and what strategies are they implementing to boost the deployment of green finance further? What kinds of green investment funds are helping to "finance an inclusive climate transition"?

The panel included Heather Buchanan, Chief Executive and Co-founder, Bankers for Net Zero, Nicki Harrison, Director, Sustainable Finance, Europe, Environmental Defense Fund Europe, Evelina Olago, Managing Director of Client and Strategy, Just Climate, and, of course, The Economist's very own global energy and climate innovation editor Vijay Vaitheeswaran. 

There was plenty of interesting chatter among the panellists about asset managers making informed decisions based on data, predictive analytics, IIoT, and all the rest, as well as genuinely linking transition finance to greener pathways, including green bonds and equity investments. 

But all is not plain sailing, and quite frankly no one expects it to be so. For starters corporate balance sheets are stretched. We are in a high interest rate climate, and will likely remain so near-term. Both will trigger caution when it comes investing petrodollars towards green causes. Private equity players - typically keen backers of viable cleantech forays - are also holding back given the uncertain climate.

However, products and services aimed at decarbonisation continue to strengthen, said the panellists. But they also made one key observation that chimes with market intel obtained by the Oilholic - the anti-ESG backlash (or movement if you wish) has indeed had a chilling effect of late on financing greener initiatives. 

That is particularly true in the US in an election year that is going to be a rematch between incumbent Joe Biden and the man he ousted from the White House - Donald Trump. Therefore, a lot may depend on the post-November discourse, and a possible Trump presidency could materially alter the green finance landscape both in the US and abroad. 

And on that thought, it's time to say goodbye. There are two energy site visits coming up plus the little matter of CERAWeek in Houston. So more musings to follow soon. Keep reading, keep it here, keep it 'crude'! 

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© Gaurav Sharma 2024. Photo: Panel on financing net zero: assessing and accelerating green finance, at the Economist Impact Sustainability Week in London, UK on March 5, 2024. © Gaurav Sharma 2024. 

Monday, March 04, 2024

OEG Energy site visit & a 'crude' chat with its boss

Last week The Oilholic headed to sunny Scotland for a very interesting visit to one of OEG Energy's industrial sites in Aberdeen, with none other than its Chief Executive John Heiton. 

The scene of the walkabout was the global mission critical offshore logistics group's state-of-the-art Cairnrobin chemical plant.

This impressive six acre site, just south of Aberdeen's city centre, serves as OEG's storage, servicing and processing hub for a wide range of chemicals and aviation fuel on behalf of a veritable-who's-who of the energy business. It was fascinating to observe the place, its personnel, their processes and top-notch North Sea standard protocols on safe and secure handling of their operational tanks. 

The site visit was followed by a long overdue conversation with Heiton about how he is reshaping OEG along two offshore business silos under one group umbrella - traditional offshore energy and renewables. As it appears, after three years of painstaking work and over a dozen acquisitions, in 2023 the company managed the milestone of a near 50%/50% split in revenue between its traditional and renewables units. 

Heiton described it as the inexorable direction of travel for OEG, with double-digit growth expected for OEG's renewables business over the near-term, and solid single-digit growth for traditional energy boosted by operations in emerging oil and gas extraction hubs like Guyana and Suriname, and established ones in Africa and the Middle East. 

The OEG boss - who's company has its footprints in over 60 global locations - also said he'd encountered the same hike in shipping rates between Asia and Europe via the Red Sea as the readers of this blog (and The Oilholic's sources in Singapore) report, i.e. an uptick of 300% to 350% since November! 

That's when attacks by Yemen's Iran-backed Houthi rebels began on international energy and commercial shipping in the key maritime artery. 

"However, shipping rates from Australia to China have also gone up and there are no security issues there! So while some of the cost hike (since November) is related to the troubles in the Red Sea, shipping lines may also be using it as an excuse," Heiton said. 

On the subject of oil demand growth in 2024, OEG is going with the International Energy Agency's conservative forecast of 1.1 million barrels per day (bpd). "Part of it has to do with operational prudence in going for the lower end of global oil demand growth forecasts, rather than much higher forecasts out there. 

"However, where demand growth goes this year does not materially impact us as a business because a lot of global spare capacity is onshore based. Volume produced by the offshore fields we service doesn't make much of a difference to us as a critical logistics provider. They'd ultimately still require broadly similar levels of outsourced services we provide to the facility/platform in question."

Away from the exclusive snippets for this blog, do read The Oilholic's full interview with Heiton for Forbes here. It offers a much wider perspective on OEG's journey as a company in recent years. That's all for now folks, more blogging to follow later this week. Keep reading, keep it here, keep it 'crude'! 

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© Gaurav Sharma 2024. Photo 1: John Heiton, Chief Executive of OEG Energy (left) with Gaurav Sharma. Photo 2: Specialist storage tanks at OEG Cairnrobin Chemical Plant, Aberdeen, UK, February 2024. 

Sunday, February 18, 2024

Rising shale output & oil's recovery to November levels

At the start of the year there were some doubts whether US shale oil production would remain high, having broken records in 2023 and propelled the States to the top of the global oil production leader-board

But a recent update from the Energy Information Administration (EIA) has gone some way in dispelling those doubts. 

The statistics arm of the US Department of Energy projects that production will likely  go up in March. Key basins are expected to produce around 20,000 more barrels per day (bpd) next month. This implies a total of 9.7 million bpd in shale production - a volume that hasn't been recorded since December last year. 

Conventionally, you'd think an upbeat US production forecast would knock a few dollars off crude prices. However, the market is more or less holding firm, as the Oilholic noted in an earlier blog post. After the profit-taking of last few weeks cooled, the last couple of sessions have seen oil futures return to levels not seen since November. That'd be $83+ per barrel prices for the Brent front-month contract and $79+ per barrel for the WTI.

A combination of OPEC+ cuts, Moscow's recent (and well documented) difficulties in shifting its crude owing to Western sanctions and heightened geopolitical tensions in the Middle East are keeping oil prices at elevated levels. 

However, the Oilholic reckons the price will face resistance at $85 and the upcoming week should be interesting. (And the EIA's next update - in this data series - is on March 18, and next weekly US inventory report is out on February 22). 

Elsewhere, yours truly participated in a panel discussion on TRT World's Round-table program to discuss Italy's overtures to Africa for its energy security needs whilst addressing the thorny issue (or shall we say the political hot potato) of migration. 

One guesses, that in reaching out to African heads of state ahead of the Gas Exporting Countries Forum (GECF)'s next high-level summit in Algeria in March, Italy's Prime Minister Giorgia Meloni has made a strategic and pragmatic move. (The full broadcast is available here)

And finally, remember Uniper? And it's bailout by the German government in 2022 after its options for Russian gas imports ran out? Well its back with a bang, and ready to repay (some of) the bailout money back in phases. That's just as Berlin is seemingly contemplating a share sale to recoup (some of) the money. Here's a full Forbes report. Well that's all for now folks. More soon. Keep reading, keep it here, keep it 'crude'! 

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© Gaurav Sharma 2024. Photo: Oil well in Oman © Shell. 

Wednesday, February 14, 2024

On modest crude price gains and more

In what's coming up to mid-February, oil benchmarks are largely holding on to geopolitical risk gains made since the start of the month. That's after the U.S. response to an attack on its military base in Jordan allegedly by Iranian-backed militia and Israel's rejection of a ceasefire in Gaza.

Of late, Brent futures have found support around $80 per barrel mark but it remains to be seen whether the level will hold. For what its worth, the global proxy benchmark still remains in technical backwardation. It was though bemusing to read a recent Financial Times editorial declaring "The days of $100 oil prices are over" in a rapidly decarbonising world where "demand will continue but potential world supply is likely to peg back the cost." Indeed. 

In fact, it's something yours truly agreed with former BP boss Bob Dudley back in 2017 at the World Petroleum Congress in Istanbul, who if the Oilholic recollects well, was positioning his company to even weather a $30 per barrel oil price. Speaking of CEOs, Occidental's boss Vicki Hollub told Business Insider that oil oversupply may well be keeping prices low, but the situation is about to flip! 

And of course, Goldman Sachs analysts reckon we may be about to enter a commodities supercycle with a potential for driving oil prices as high as - yup you guessed it - $100 per barrel. Well we shall see, but for now $70-$80 will do, and the Oilholic seriously doubts we'll hit $100 imminently! Elsewhere, oil giant BP hiked its dividend by 10% and accelerated the pace of share buybacks in a bid - by its new CEO Murray Auchincloss - to woo investors

And finally, here is one's take via Forbes on US President Joe Biden's arguably barmy plan to pause the approvals of new LNG export projects for a review. All at a time when his country has become the world's largest LNG exporter! Clever eh? Well that's all for now folks. More market thoughts to follow later in the month. Keep reading, keep it here, keep it 'crude'! 

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© Gaurav Sharma 2024. Photo © Terry McGraw from Pixabay.

Wednesday, January 31, 2024

The mad first month of crude trading year 2024

As the first month of the current oil trading year nears its end, the Oilholic's thoughts on the direction of crude prices hasn't materially altered. We're likely to see prices oscillate in the range of $70 and $85 per barrel in 2024, using Brent as a benchmark. And that's because the bearish bias in wider market fundamentals remains the same in a different trading year, despite all the geopolitical flare-ups we've seen October. We'll touch on those later in this blog. However, admittedly it has been the maddest possible start to trading. 

Feeling the pulse of the market and tepid demand, the Saudis made two profound short- and medium-term decisions. The first came early in the month after Aramco - the Saudi state-owned behemoth - announced a cut to official selling prices (OSPs) for all regions, including lucrative Asian markets, for several crude grades. These included Aramco's flagship Arab Light crude oil. Aramco said cuts in Asia would be as high as $2 per barrel versus the Dubai Oman regional crude benchmark from January levels. 

Prices for Europe would be down by $1.50-$2 per barrel versus Brent January prices, while North American exports would see a drop of $2 per barrel versus the Argus Sour Crude Index (ASCI) used to benchmark U.S. Gulf Coast sour grades. The move weighed on oil prices and seemed like a logical one. 

The Saudis, having voluntarily cut their headline production down to 9 million barrels per day (bpd), want to make sure every single drop of it gets sold in a competitive market receiving plenty of barrels, especially of US light crude. 

The second move came late-January, after Aramco said it was stopping its expansion plans and concentrating on a maximum sustained capacity of 12 million bpd. This immediately generated headlines along the lines of the Saudis acknowledging the end of oil, which, as the Oilholic said via market commentary on several broadcasters, is a load of rubbish. 

Aramco plans to finish the oilfields it has started - namely Berri (250,000 bpd), Dammam (75,000 bpd), Marjan (300,000 bpd) and Zuluf (600,000 bpd). There's only one project cancellation and the company intends to let some other existing fields decline. So with respect, it is nothing more than a pragmatic business move faced with changing medium- to long-term demand in a market the Saudis hope to tap with aplomb for as long as they can.

Away from Saudi moves there were geopolitical flash points aplenty. But none of these managed to move the oil price quite like they used to back when US crude barrels weren't keeping the global markets honest. Following weeks of attacks by Yemen's Iran-backed Houthi rebels on energy and commercial shipping in the Red Sea, the US and UK pounded Houthi positions and infrastructure. The Houthis vowed a response and their sporadic attacks on shipping continued. 

Then on January 28, after over 170 drone and missile attacks on US bases in Syria, Jordan and Iraq since October by Iran-backed proxies in the Middle East, one got through and killed three service personnel. The US' imminent response is to be expected and could mark a dangerous escalation. Where this goes is anybody's guess. But an attack by the US on Iranian soil appears unlikely. (Should it happen, and its hasn't since the 1980s, we could see crude prices around the $90s).

As things stand, crude prices remain range bound. January offered precious little to alter this despite it being one of the most volatile starts to a trading year. Well that's all for now folks. More market thoughts to follow. Keep reading, keep it here, keep it 'crude'! 

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© Gaurav Sharma 2024. Photo: Gaurav Sharma on Asharq Business with Bloomberg TV in January 2024 © Asharq Business with Bloomberg TV.

Saturday, January 20, 2024

Getting going in 2024 after a break!

Greetings folks, the Oilholic is getting going meaningfully in 2024 after last year was marked by sporadic commentary and long pauses in blogging. 

Sincere apologies for that as yours truly was busy juggling his departure from a full-time job at a bank and taking time out for a paternity break for much of the last quarter. All went well in the end and bubb is here safe, sound and healthy! 

Call it a reboot, relaunch or a 'crude' restart - this blog is now going to be bigger and better with your support carrying regular market commentary, details of industry engagements, missives and interviews on energy economics, geopolitics, financials and more. So watch this space! 

And of course, the Oilholic will also continue his broadcast media commentary, energy circuit speaking engagements, and writing for Forbes and many other publications and websites as before! So here's to 2024. Keep reading, keep it here, keep it 'crude'!

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© Gaurav Sharma 2024. Photo © Pixabay