MonitorsPublished on Mar 30, 2023
Energy News Monitor | Volume XIX, Issue 38

Quick Notes

Oil geopolitics: Revisiting petrodollar recycling  


Global economic growth and prosperity in the last two centuries were fuelled largely by fossil fuels (coal, oil and natural gas). Oil in particular became fuel for defending national security, promoting economic activity and sustaining global trade after the first world war. Academic narratives such as ‘peak oil’ and ‘energy security’ originating from industrialised nations that saw disruption to oil supply as a key source of national security and economic risk, imposed a premium on oil prices. This resulted in surplus revenues for oil-exporting countries, particularly those in the Persian Gulf (“Gulf”). These surpluses were ‘externalised’ by industrialised nations through ‘petrodollar recycling.’  The changes in geo-political alignments between oil-producing and consuming nations are likely to have a significant impact on petrodollar recycling in the short term.

Petrodollar Recycling

Economic growth characterised by an increase in the demand for oil and the consequent high oil prices not only benefited oil export revenue dependent economies in the Gulf but also other affluent nations particularly the United States (US) that appropriated oil rents by various means. Petrodollar recycling, as it came to be known, is essentially the flow of petroleum revenue denominated in dollars from oil-exporting countries to the rest of the world. Broadly there were two channels through which the petrodollars were recycled.

One was the absorption channel through which petrodollars were spent to finance domestic consumption and investment, thus increasing the demand for the import of goods and services. The other was the capital account channel through which petrodollars not spent on imports were saved in foreign assets held abroad, resulting in capital account outflow. These assets were held by central banks as part of their international reserves or by institutional funds of oil-exporting countries. Petrodollar recycling generally refers to the capital account channel.

The origin of petrodollar recycling is traced back to the post-war Bretton Woods agreements of 1944 that made the US dollar the sole reserve currency of the World. This meant that all oil contracts had to be priced in US dollars. In 1945, a meeting between the US President and the King of Saudi Arabia strengthened the relationship between the two countries and added momentum to American oil investments in Saudi Arabia.  In 1971, the US President ended dollar convertibility to gold to address the looming problem of gold run and the domestic problem of inflation. The resulting devaluation of the dollar hurt the revenues of oil exporters in the Gulf region while the cost of imports increased.

The oil embargoes that were initiated in 1973 by Gulf oil exporters reversed the situation as oil prices quadrupled in a matter of months. This resulted in what would become the first taste of windfall rents for oil exporters in the Gulf region.

The accumulation of dollars by oil exporters was an unexpected development and it was a matter of serious concern for the US. In 1974, Saudi Arabia agreed to use American dollars for paying for US contracts as per the US Saudi Arabian Joint Commission on Economic Cooperation which essentially formalised ‘petrodollar’ recycling. The so -called ‘petrodollar’ thus became the de facto replacement for the pre-1971 gold standard as it offered a reason for the rest of the world to hold dollars. This neutralised the use of crude oil prices as an economic weapon. In addition, the ‘petrodollar’ became a means to finance the widening trade deficit of the US. In 2022, Saudi Arabia, the UAE, Kuwait and Iraq were among key creditors to the US with over US$ 271 billion in treasury security holdings.

Weapons Trade

The surplus rents of oil exporters in the Gulf region also found their way back into industrialised economies through weapons trade. As per the ‘Nixon doctrine’, The US supply of tools and experts to friendly states including those in the Gulf combined with low-cost troops from client states was the best way to secure western economic interests.  Economists in the US saw the purchase of weapons by oil exporting economies as a way to reduce petrodollar surpluses circulating in short-term capital markets of the World. In 1976, the then deputy assistant secretary of defence for material acquisition told the US Congress that arms sales helped the US maintain the viability of the declining military industrial base, reduced procurement costs and improved the US balance of payments status. Payments for arms delivered (not including construction, training and services) are estimated to account for 4.5-7 percent of total US export earnings since the late 1960s.

This was in contrast to the US arms export policy before the 1950s when 95 percent of the arms were provided as foreign aid.  By the 1980s, the share of arms exported as foreign aid had fallen to 45 percent and by 2000 to less than 25 percent. In the 1970s, when the link between the dollar and oil strengthened, the defence industry in the US was subject to privatisation and internationalisation.  Since then, the flow of oil into the US and the flow of weapons into the Gulf region became an important part of the US economy. Countries in the Gulf region became the largest importers of arms and defence equipment. In 1974, Saudi Arabia’s import of arms and defence equipment was worth US$2.6 billion whereas between 1985 and 1992 it increased ten times to US$25.4 billion.

During periods of high oil prices, oil exporters from the Gulf and elsewhere also loaned a part of their foreign currency reserves to the IMF (International Monetary Fund) to finance the balance of payment needs of a number of oil-importing countries, a system that recycled oil rents through developing countries. Developing countries that were assisted by the IMF were often required to adopt policies that sought to open up their economies to western goods and services as well as western policies.

In the period between 2001 and 2011, oil prices were relatively high and consequently, oil exporters in the Gulf enjoyed windfall oil rents. Cumulative revenues exceeded US$12 trillion of which 67 percent was spent on the import of goods and 12 percent on service imports. Of the remaining oil revenue, about 5 percent (US$100 billion) went towards foreign worker’s remittances and 15 percent was invested in foreign assets. Arms imports by countries in the Gulf region increased by 86 percent between 2007-11 and 2012-16 while the increase for Saudi Arabia alone was 212 percent. The US arms exports grew by 14 percent between 2013-17 and 2018-22 and its share of total global arms exports rose from 33 percent to 40 percent. A total of 41 percent of US arms exports went to the Gulf region in 2018-22, down from 49 percent in 2013-17. Four Gulf states were among the top 10 importers of US arms in 2018-22. Saudi Arabia, Qatar, Kuwait and the UAE (United Arab Emirates) which were in the top 10 export destinations for US arms accounted for nearly 35 percent of US arms exports.

Excessive oil rents that accrued to oil producers during periods of high oil prices precipitated an imbalance in World trade that was skewed against large oil importing developing countries with a trade deficit such as India. Though the US also had a huge trade deficit, its ability to print dollars to finance imports put it at a significant advantage over countries such as India that had to borrow to finance oil imports. Circulation of the oil rents around the world through trade in goods and services (including trade in arms) or through capital markets externalised the imbalance between oil importers and oil exporters. Oil-importing developing countries such as India paid a high price in restoring balance.


In the short to medium term, the threat to petrodollar recycling is likely to come from changes in geo-political preferences of oil-exporting and importing countries. In 2022, Saudi Arabia said it was considering trading its oil with China in the yuan.  At Davos in January 2023, The Finance Minister of Saudi Arabia said that the country is willing to trade in not just the yuan, but also a variety of other currencies. India, Pakistan, Iraq and UAE have struck deals with Russia and China to pay for oil or other commodities in their various respective local currencies. This may galvanise a more decentralised global monetary system away from the dollar. In the longer term, policies to contain climate change will limit or even eliminate oil production and make the petrodollar system redundant.

Source: BP Statistical Review of World Energy 2022

Monthly News Commentary: Coal

Coal Imports Expected to Soar in Summer



India plans to use an emergency law to force power plants that run on imported coal to maximise output. Many Indian coal-fired plants, including those owned by Adani Power and Tata Power in India’s western Gujarat state, have not operated at full capacity in recent years because they have found it difficult to compete with power generated from cheap domestic coal. India expects its power plants to burn about 8 percent more coal in the financial year ending March 2024, with increased economic activity and erratic weather to continue to boost growth in demand for power.

Adani Group is offering shipments of coal at a discount, a sign the embattled conglomerate may be seeking to sell cargoes quickly as its liquidity position comes under increased scrutiny. The group’s traders are offering to sell several coal shipments from Australia and Indonesia at discounts of about 4 percent relative to Asia’s price benchmarks.

Punjab is all set to face a double whammy — of blending imported coal with Indian coal, and transportation of coal from Odisha via rail-ship-rail (R-S-R) mode — leading to a 20 percent escalation in generation cost, said All India Power Engineers’ Federation (AIPEF). The Union government had decided that Indian coal required blending with imported coal by 6 percent by weight, because of a likely coal shortage in summer, and the use of R-S-R mode for transporting coal from Mahanadi and Talcher coalfields in Odisha to Punjab via Mundra in Gujarat.


The country’s coal production increased by 12.94 per cent to 89.96 MT in January 2023. The country’s coal output stood at 79.65 MT in the corresponding month of the previous fiscal. As per provisional data from the coal ministry, CIL registered a production growth of 11.44 percent in January, whereas SCCL and captive mines, and others posted a growth of 13.93 percent and 22.89 percent, respectively. Of the top 37 coal-producing mines, production of 28 was more than 100 percent, while the output of three mines stood between 80 and 100 percent during the last month. At the same time, coal despatch increased by 8.54 percent to 81.91 MT last month compared to 75.47 MT in January last fiscal. The government said that it has set a coal production target of more than one billion tonnes for the next financial year. Of the said target, CIL has been given the task to produce 780 MT of coal, followed by 75 MT for Singareni Collieries Company Ltd (SCCL) and 162 MT for captive and commercial mines. A total of 290 mines are operational in CIL out of which 97 mines produce more than one MT per year. For all 97 such coal mines, issues of land acquisition, forest clearance, environment clearance, rail connectivity and road connectivity have been discussed and timelines fixed. CIL produced 622 MT of coal during FY22 and 513 MT have been produced so far in the current financial year. It is expected that CIL will surpass the target of 700 MT fixed for the current fiscal and accordingly will achieve 780 MT for the year 2023-24. CIL accounts for over 80 percent of domestic coal production.

MCL, a subsidiary of CIL, aims to achieve approximately 190 MT of dry fuel production in the current fiscal. This will be 13.09 percent more than 168 MT production recorded in 2021-22 by MCL. MCL said that the production target for 2022-23 was 176 MT, however the company is 21 percent ahead of the target, and expects to reach 190 MT by end of this fiscal. MCL has kept a target of 190 MT for coal despatch for 2022-23. In the next financial year (2023-24), MCL has kept a projection of 200 MT for coal despatch. Out of this, 80 percent is expected to be for the power sector. The company is of the view that with the government aiming to encourage commercial coal mining, it would enhance MCL’s supplies.

The Ministry of Coal urged coal companies to identify and remove production bottlenecks to further increase dry fuel production. So far in this financial year, 92.3 million tonnes (MT) of coal has been produced from 54 operational coal blocks (allocated blocks). Coal offtake by Coal India Ltd  (CIL) has also achieved 100 percent of the target, with a 5.5 percent growth over last year.

Punjab government is mulling to sell surplus coal generated from its captive mine in Jharkhand to private power producers. Such a move will help reduce the cost of electricity for people in the state. The state government is of the view that industry players, especially in the manufacturing sector, who are looking to set up a base in north India should look at Punjab.

Coal Block Auctions

A total of 99 bids for 36 coal mines were received by the coal ministry for the sixth round and second attempt of the fifth round of commercial coal block auctions, whichhad launched on 3 November 2022. For the sixth round, two or more bids were received for 25 coal mines, a single bid for seven mines, and 10 bids for four mines in the second attempt of the fifth round. This is the biggest response received for commercial coal mine auctions that were launched by the Prime Minister on 18 June 2020.

Environmental Governance 

CIL arm Mahanadi Coalfields Ltd (MCL) has introduced drone technology in coal mines for environmental monitoring, volume measurement and photogrammetric mapping of mines for digitalisation of the mining process. The technology has been introduced through the launch of a web-based portal ‘VIHANGAM’ along with a drone and ground control system. This pilot project is currently operational at Bhubaneswari and Lingaraj opencast mines of Talcher Coalfields in Odisha. Besides deploying state-of-art technology to further enhance record coal production, MCL has also stepped up the use of the latest equipment to further increase safety standards. It has recently introduced a robotic nozzle water sprayer in its coal stockyard. The companies operating in the coal sector use robot-assisted firefighting and dust suppression advanced technology to carry out difficult and dangerous jobs. Engaged in coal mining activities in Sundergarh, Jharsuguda and Angul districts of Odisha, Mahanadi Coalfields contributes more than 20 percent of the total coal produced in the country. Coal India accounts for over 80 percent of the domestic coal output.

CIL intends to produce sand using overburdened rocks lying at its various coal mines and the operation of five such sand plants is likely to commence by next year, the government said. Under the ‘overburden (OB) rocks-to-manufactured sand’ initiative, CIL facilitates the processing of waste overburden at its open-cast mines. Out of the five proposed plants, Ballarpur Plant of Western Coalfields Ltd (WCL) is expected to commence sand production by May. Four plants — one each in WCL, South Eastern Coalfields Ltd (SECL), Bharat Coking Coal Ltd (BCCL) and Central Coalfields Ltd (CCL)– are under different stages of the tendering process.

The Commission for Air Quality Management (CAQM) has asked the Centre-run CIL to stop the supply and sale of coal to industrial units and other commercial organisations, except thermal power plants, in the National Capital Region. The direction comes given the ban on the use of coal and other unapproved fuels in Delhi-NCR which came into effect on 1 January. However, the use of low-sulphur coal in thermal power plants is allowed. Haryana and Uttar Pradesh have been asked to ensure that companies of CIL do not supply or allot coal to the suppliers, stockists and agents of the Centre-owned coal producer, the CAQM said. The commission has also asked industries and entities, including stockists, traders and dealers, to discontinue coal supply, except for thermal power plants, in Delhi-NCR. It said that 84 industrial units not operating on approved fuels in the NCR areas of Haryana, Uttar Pradesh and Rajasthan closed down their operations temporarily or permanently on their own. Since 1 October, only 21 industrial units have been found using highly polluting unapproved fuels like coal and furnace oil and have subsequently been shut down.


The power ministry has asked the Punjab power utility PSPCL to start lifting 15-20 percent of its domestic coal requirement through rail-ship-rail mode, while highlighting that the transport of dry fuel would be cheaper than the import of coal. The ministry in a letter to Punjab State Power Corporation Ltd (PSPCL) stated that the transport of fossil fuel using the rail-ship-rail (RSR) mode is, although costlier than all rail routes, it is cheaper than importing coal. The ministry asked PSPCL to start lifting 15-20 percent of its domestic coal requirement via rail-ship-rail mode with at least one-two rakes per day from Talcher mines of MCL. The ministry asked the utility to transport coal from mines in the eastern part of the country to the coal-based power plants situated in the northern and western part of the nation by using Rail-Ship-Rail mode.

Rest of the World


At least two vessels carrying Australian coal have arrived in China for the first time since an unofficial ban on imports was introduced more than two years ago, and several more are on the way, ship tracking data showed. The cargoes are being closely monitored by coal traders as they are keen to see how smooth Chinese customs procedures will be. China, in a partial easing of the import ban, granted permission to just four central-government-owned firms to bring in Australian coal. The coal could be sent to Guoneng Taishan utility, owned by China Energy Investment Corp, data showed. Coal importers can discharge their cargo at ports first and then apply for customs clearance. But a growing coal inventory at Chinese ports, especially those in the north, is leaving limited space for new supplies, meaning buyers face a growing risk of demurrage if the customs process is drawn out. Coal stocks at major ports in northern China reached 34.65 MT, the highest level in six months, China Coal Transportation and Distribution Association data showed.

While China’s energy transition continues to build momentum–highlighted by sectoral peaking plans and supercharged national and provincial ambition on renewables rapid scaleup–unfortunately, dependency on carbon-intensive fossil fuels are set to stay for the immediate future. Current climate policies including efforts like the Powering Past Coal Alliance will not add up to a global coal exit, a new study shows. Moreover, carbon pricing and coal mining phase-out would be effective policies. The coalition may grow as member states work to modernise their electricity sectors, but it may also lead to a rebound in coal use globally. In 2020-2021, China began toning down its outlook on coal, highlighted by President Xi Jinping when he announced that China will strictly control coal consumption until 2025 and start to gradually phase it down thereafter. By the end of 2021, however, China had seemingly completely reneged on this strategy to focus on shoring up coal (and other fossil fuels) supply off the back of energy security and shortage concerns. Further, the simulation showed that the Alliance only manages to boost solar and wind energy expansion if China decides to phase out coal.

Rest of Asia Pacific 

Thermal coal imports into China, Japan and South Korea – three of the world’s largest coal users – hit their highest combined total in 16 months in December as the North Asian manufacturing powerhouses primed their economies for growth in 2023. Economic momentum in these countries – which collectively accounted for nearly half of all thermal coal imports in 2021 – was subdued in 2022 as China’s strict zero-COVID measures stifled industrial activity across the world’s largest manufacturing base. Combined thermal coal imports by the three countries totalled 43 MT in December 2022, the highest monthly tally since August 2021, ship-tracking data from Kpler shows. In turn, that collective climb in coal use is set to generate a swell in combined coal emissions from China, Japan and South Korea, which together accounted for 36 percent of global carbon dioxide emissions from energy use in 2021, according to the BP Statistical Review of World Energy.

Australia’s most populous state is set to require coal miners to reserve up to 10 percent of production for the domestic market, as part of a national move to cap soaring energy prices. Australia’s Labor government led by Prime Minister Anthony Albanese in December passed legislation to cap natural gas prices for one year, and secured agreements from the coal-producing states of New South Wales (NSW) and Queensland to cap the price of coal sold to power plants. NSW Treasurer Matt Kean said the state would require those coal miners that do not currently sell into the domestic market to reserve between 7 percent and 10 percent of their output for domestic use. The new arrangement would ensure a fairer sharing of the burden among coal companies as part of the federal government’s push to drive down energy prices, he said. Thai firm Banpu’s Centennial Coal and Peabody Corp are the main suppliers of coal to power plants in the state. Other major coal miners in the state include BHP Group, Glencore Plc, Whitehaven Coal, Yancoal and New Hope Corp, which concentrate on exports.

Africa & Middle East

Coal exports from South Africa’s Richards Bay Coal Terminal (RBCT) hit their lowest level since 1993 last year, at 50.35 MT, reflecting a lack of trains to carry coal from mines to port. However, exports to Europe from Africa’s largest coal export facility showed a more than six-fold increase to 14.3 MT from 2.3 MT in 2021, RBCT said, as European countries scrambled to secure alternatives to Russian supply. RBCT, owned by 13 coal mining companies including Thungela, Exxaro Resources, Seriti Resources, and Glencore’s South African subsidiary, has been operating far below its annual export capacity of 91 MT of coal. The terminal, which can only accept coal via train, saw an average of 18 trains a day in 2022, against a capacity of 32 a day. As South Africa’s rail service deteriorated, some coal miners last year opted to truck their product to the port instead.

South Africa’s Sasol reported a 25 percent decline in coal exports during the first half of its financial year due to rail logistics problems as well as safety and operational stoppages at its mines. In a production update, Sasol reported a 4 percent decline in coal output to 15.2 MT for the six months to 31 December, with only 900,000 tonnes being shipped for export, compared to 1.2 MT in its first half of the previous year.


European coal-fuelled power generation climbed last year as countries scrambled to replace Russian gas, but the increase was smaller than feared as renewable energy helped to plug the gap. As a result, coal power’s share of the EU (European Union) electricity generation rose by 1.5 percentage points in 2022, to account for 16 percent of annual generation, think-tank Ember said in a report. Outright coal generation in the EU increased by 7 percent, or 28 terawatt hours (TWh), in 2022, pushing up power sector CO2 (carbon dioxide) emissions by nearly 4 percent.

News Highlights: 15 – 21 February 2023

National: Oil

HPCL to start Barmer oil refinery and petchem complex in January

21 February: Hindustan Petroleum Corp Ltd (HPCL) plans to start its 9 million tonnes (MT) a year Barmer refinery and petrochemical project in Rajasthan state by January 2024, Oil Minister Hardeep Singh Puri said. India, the third biggest oil importer, is expanding its refining capacity to meet the rising demand for fuel and petrochemicals to power economic expansion. India’s per capita petrochemical consumption is about a third of the global average. He said the project, which covers 4,800 acres, would produce 2.4 MT a year of petrochemicals and cut the annual petrochemical import bill by INR 260 billion (US$3.14 billion). The Barmer refinery and petrochemical project will produce gasoline and gas oil for retail sales and will use naphtha, liquefied petroleum gas and kerosene as feedstock to make petrochemicals. HPCL’s head of refineries, S Bharathan, said his company would look at importing oil from the Middle East to start the project, which will also process 1.5 MT a year of locally produced oil. The Barmer complex, executed by HPCL Rajasthan Refinery Ltd, could double capacity to 18 MT a year, he said.

National: Gas

India’s GAIL explores up to 26 percent equity stake in US LNG projects

17 February: India’s largest gas distributor GAIL (India) Ltd is looking to buy an equity stake of up to 26 percent in a liquefied natural gas (LNG) liquefaction plant or project in the United States (US). GAIL had run into supply disruptions last year after Russia-owned Gazprom Marketing and Trading (GMTS) failed to deliver some LNG cargoes, following western sanctions on Moscow over its invasion of Ukraine. The company is, either directly or through its affiliates, “exploring the opportunity” to buy equity from an existing or post-commissioning of a proposed LNG liquefaction plant or project in the US. The LNG supply contract period may be extended further by 5 or 10 years on a mutual basis, and supplies are to commence tentatively from the last quarter of 2026. The last date for interested companies to submit their bids to GAIL is 10 March, the document said. GAIL had signed a 20-year deal with GMTS in 2012 for annual purchases of an average of 2.5 million tonnes (MT) of LNG.

National: Coal

CRPF to have an aggressive role to control, monitor illegal coal mining in Meghalaya: HC

15 February: The Meghalaya High Court (HC) said the CRPF can have a more aggressive role to control and monitor the illegal mining and transportation of coal in the hill State. The HC directed the Meghalaya Government to indicate the number of central armed police force personnel it requires to effectively monitor and check illegal mining and transportation of coal in the State. The NGT had in 2014 issued a blanket ban on mining and transportation of coal using traditional rat hole methods for lack of safety for the miners and concerns for the environment. Transportation of coal already mined before 2014 and the illegal coal dumps seized by the State was, however, allowed from 2017 with strict conditions and monitoring.

National: Power

Haryana reduced electricity transmission losses to 13.43 percent: CM

16 February: Haryana Chief Minister (CM) Manohar Lal Khattar said the government has succeeded in reducing the electricity distribution and transmission losses to 13.43 percent, which was 25 to 30 percent during the rule of previous governments. Giving relief to the consumers, the government has not made any change in the electricity rates, he said. The state has more than 76 lakh consumers of all categories. The CM said it has been a great example of power management that despite the less availability of electricity many times the government provided electricity to the consumers. The CM said in 2022-2023 in category — INR 2 per unit was charged from zero to 50 units, while INR 2.50 was charged from 51 to 100 units.

Sri Lanka, India to sign power grid linking pact within two months

15 February: Sri Lanka and India will sign a pact to link their power grids and start negotiations on an upgraded trade agreement within two months, as the island nation seeks a way out of its worst economic crisis in decades. India has provided some US$4 billion in assistance to its southern neighbour since the crisis hit early last year, but Sri Lanka is now seeking to enhance trade and investments as it moves to close a US$2.9 billion loan from the International Monetary Fund.

National: Non-Fossil Fuels/ Climate Change Trends

Northern India’s first nuclear plant to come up in Haryana’s Gorakhpur: Singh

18 February: North India’s first nuclear power plant is coming up in Gorakhpur, Haryana, about 150 km north of the national capital, Union Minister Jitendra Singh said. He said that during Prime Minister Narendra Modi’s regime, one of the major achievements would be the installation of nuclear/ atomic energy plants in other parts of the country, which were earlier confined mostly to the southern states like Tamil Nadu and Andhra Pradesh or in the west in Maharashtra. He said that this was keeping in line with focus on increasing India’s nuclear capacity. He said that a bulk approval of the installation of 10 nuclear reactors came under the Modi government.

India to blacklist renewable firms for missing project deadlines

16 February: India will exclude renewable power companies from government contracts for between three and five years if they do not meet project completion deadlines, as the country looks to speed up green power projects. The blacklisting will be for a period of three to five years. So far India has not blacklisted any company from renewable energy generation contracts for delays, but the government order said the blacklisting was following  the government’s General Financial Rules and would apply to all tenders. India needs to install more than 40 gigawatt (GW) of capacity annually – about 2.5 times the rate of addition in 2022 – to achieve its commitment to increase its non-fossil fuel capacity to 500 GW by 2030. The country had set a target to achieve 175 GW in renewable energy capacity by 2022 but failed to meet that objective. Green energy capacity currently stands at 121.55 GW, government data show. Big hydro projects make up 46.85 GW of the total while nuclear makes up 6.78 GW of the total capacity of 411.65 GW including thermal, the data show.

International: Oil

Oil output cuts so far decided only for March: Russia’s Deputy PM

21 February: A 500,000 barrel per day (bpd) cut to Russian oil production announced will apply only to March output for now, Deputy Prime Minister (PM) Alexander Novak said. The cut will be made from January output levels, he said. He has said production stood at 9.8 million-9.9 million bpd. A European Union ban on purchases of Russian oil products from 5 February and price caps on oil and oil products are complicating Moscow’s efforts to sell its oil globally.

Equinor to sell Bahamas oil terminal to Estonia’s Liwathon Group

21 February: Equinor has agreed to sell its South Riding Point oil terminal in the Bahamas to Estonian logistics and investment company Liwathon Group, the Norwegian oil and gas producer said. A 2019 hurricane damaged the 6.8 million barrels capacity terminal, causing an oil spill that affected a nearby forest as well as the site. Equinor said testing of the groundwater outside the terminal, following clean-up operations, had shown no sign of hydrocarbon deposits. Liwathon, formerly called AS Vopak, operates four oil liquid terminals in Estonia with a total storage capacity of 6.7 million barrels.

Oil rises 1 percent on China demand hopes and supply concerns

20 February: Oil prices rose over 1 percent, buoyed by optimism over Chinese demand, continued production curbs by major producers and Russia’s plans to rein in supply. Brent crude settled up US$1.07, or 1.3 percent, at US$84.07 a barrel. US (United States) West Texas Intermediate crude (WTI) for March, which expires, last rose 85 cents, or 1.1 percent, at US$77.19. Volumes were muted because of a US market holiday for Presidents’ Day. Both crude benchmarks settled US$2 lower for a decline of about 4 percent after the US reported higher crude and gasoline inventories. Analysts expect China’s oil imports to hit a record high in 2023 to meet increased demand for transportation fuel and as new refineries come on stream.

Guyana aims to reclaim, offer 20 percent of Exxon oil block

17 February: Guyana Vice President Bharrat Jagdeo said the country plans to take back 20 percent of the giant Stabroek oil block has been responsible for a series of massive discoveries from a consortium led by Exxon Mobil Corp, and remarket it by next year. More than 11 billion barrels of oil and gas have been found to date in the 6.6 million acre (26,800 sq km) block. The group’s contract allows Guyana to reclaim unexplored portions this year, he said. Guyana is pursuing a multi-pronged strategy to lessen the consortium’s grip on the country’s oil resources, he said, and spur new oil production. The US-Chinese group produces 380,000 barrels of oil and gas per day from two projects within the Stabroek block, and expects to increase output to 1.2 million barrels by 2027. The least-developed country in South America expects to collect US$1.63 billion in oil royalties and fees this year. One year ago, he said Guyana wanted to recruit state-controlled oil companies to develop new fields. The decision to reclaim existing Exxon blocks signals urgency to speed development.

International: Gas

Greece concludes 2D seismic surveys in gas exploration off Crete

20 February: Greece has concluded two-dimensional (2D) seismic surveys for two offshore blocks off the island of Crete, under its renewed drive to identify potential gas reserves, the state-owned energy resources company said. Greece, which views gas as a transition fuel as it ramps up renewables, has produced small quantities of oil in the past and has attempted to explore its hydrocarbon potential. A shift to green energy and lack of political will had stalled its exploration plans. But the war in Ukraine last year prompted Athens to speed up exploration in six onshore and offshore blocks, aiming to get a first idea of potential gas reserves later this year. Under Hellenic Hydrocarbons and Energy Resources Management Company (HEREMA)’s gas exploration plan, the next stage will be the collection of more enhanced 3D seismic data which will determine whether the operators will conduct a test drilling. Past seismic data had indicated the existence of structures similar to recent gas discoveries in Egypt and Cyprus.

US LNG producers poised to leapfrog rivals with three new projects

16 February: At least three proposed United States (US) liquefied natural gas (LNG) export plants have likely found enough customers to receive financial approvals this year, developments that would make the country the world’s largest LNG exporter for years to come. After a dearth of plant approvals last decade, developers have secured dozens of long-term contracts to finance new multibillion-dollar LNG plants. The pace of approvals has accelerated as Europe has shifted away from Russian gas since Moscow’s invasion of Ukraine. The United States (US) was long an importer of LNG, but natural gas discoveries and production from the shale revolution flipped the country into an LNG exporter in 2016. US LNG exports hit 10.6 billion cubic feet per day (bcfd) in 2022, making the country the second biggest LNG exporter behind Australia.

Abu Dhabi’s ADNOC to float 4 percent of gas business

16 February: Abu Dhabi National Oil Company (ADNOC) plans to float 4 percent of its gas business in an initial public offering. The state oil giant decided on ADNOC Gas ahead of the official announcement of the expected IPO. ADNOC was eyeing a valuation of at least US$50 billion for its gas business, which would translate to proceeds from the IPO of roughly US$2 billion. ADNOC is keen on launching the deal ahead of a slowdown in market activity during the Muslim fasting month of Ramadan which begins in late March. The company announced in November it was combining its gas processing arm and its liquefied natural gas (LNG) subsidiary into a single listed entity. ADNOC is sharpening its focus on the gas market as Europe seeks to replace all Russian energy imports as early as mid-2024 after gradual supply cuts since Western sanctions were imposed on the country over its invasion of Ukraine.

South Asia’s LNG import appetite on the radar after price plunge

15 February: Traders of liquefied natural gas (LNG) and climate watchers alike are both on the lookout for signs of a rise in import demand from buyers across South Asia, which until 2022 had been the world’s second-largest market for LNG after North Asia. For LNG traders, more demand from buyers in India, Pakistan and Bangladesh would tighten global LNG supplies, and may support prices that have slumped nearly 70 percent since August on lower consumption in key markets such as Europe and China. In 2022, South Asian imports of LNG dropped by their most on record in response to the steep climb in LNG prices to record highs, ship tracking data from Kpler shows. But with benchmark LNG prices are now sharply off their 2022 peak and forecasted by forward markets to remain relatively flat over the coming year, 2023 may trigger a turnaround in demand for LNG in India and elsewhere across South Asia, with potentially significant repercussions for both gas markets and regional air pollution levels. The 16.5% drop in LNG imports in 2022 from 2021 was the first annual decline in South Asia’s LNG imports since 2013, according to data.

International: Coal

China’s coal prices fall to 1 year-low, clouding demand and import outlook

17 February: China’s thermal coal prices hit their lowest levels in a year on rising inventories as domestic mine production is recovering faster than demand, analysts and traders said. High inventories in the world’s top coal consumer are capping its appetite for imports, pressuring global prices. The slow recovery in China’s coal consumption also points to a gradual rebound in power consumption and growth in the world’s second-biggest economy. Analysts forecast China’s coal demand to grow 2 percent this year on resurgent industry and construction, and to bring an extra appetite for imports, especially high-quality Australian coal after China partially eased a ban on imports from there.

International: Non-Fossil Fuels/ Climate Change Trends

EU countries poised to agree push on fossil fuel phase-out

17 February: European Union (EU) countries are preparing to endorse a diplomatic stance calling for a global phase-out of fossil fuels, as they prepare for this year’s UN climate change talks, a draft document showed. The EU conclusions on climate diplomacy, which member countries’ foreign ministers aim to approve at a meeting on Monday, seek to anchor the bloc’s priorities ahead of COP28, the UN climate summit beginning 30 November in Dubai. Last year’s UN climate summit disappointed some countries for not yielding a deal on phasing down fossil fuel energy. A proposal by India to include this had gained support from more than 80 governments, including EU countries, but was opposed by Saudi Arabia and other oil- and gas-rich countries. The latest EU draft included stronger wording than a previous version, reported by Reuters, which had not explicitly endorsed a “phase-out”. EU diplomats said Germany and Denmark had pushed for more ambitious wording. The draft is still being negotiated, however, and some diplomats said it could be delayed beyond next week because some countries were unhappy with other elements of the text, which covers topics including promoting renewable energy and EU efforts to stop using Russian gas.

Equinor and EnBW to cooperate on German offshore wind power

17 February: Norway’s Equinor and German energy group EnBW plan to jointly develop offshore wind farms in Germany, the two companies announced. Germany, which seeks to cut its reliance on fossil fuel, in November raised its national renewable energy target to 80 percent of power generation by 2030, and aims to accelerate onshore wind installations to over 12 gigawatts (GW) per year by 2025. Germany’s Bundesnetzagentur regulator plans to hold auctions in June and August this year offering energy companies a chance to bid for acreage to build a combined 8.8 GW of offshore wind capacity. EnBW plans for installed renewable energy capacity to account for 50 percent of its generating portfolio by the end of 2025.

This is a weekly publication of the Observer Research Foundation (ORF). It covers current national and international information on energy categorised systematically to add value. The year 2022 is the nineteenth continuous year of publication of the newsletter. The newsletter is registered with the Registrar of News Paper for India under No. DELENG / 2004 / 13485.

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