G7 leaders to target Russian energy, trade in new sanctions steps: Sources
Leaders of the Group of Seven (G7) nations plan to tighten sanctions on Russia at their summit in Japan this week, with steps aimed at energy and exports aiding Moscow’s war effort, said officials with direct knowledge of the discussions. New measures announced by the leaders during the May 19-21 meetings will target sanctions evasion involving third countries, and seek to undermine Russia’s future energy production and curb trade that supports Russia’s military, the people said. Separately, U.S. officials also expect G7 members will agree to adjust their approach to sanctions so that, at least for certain categories of goods, all exports are automatically banned unless they are on a list of approved items. The Biden administration has previously pushed G7 allies to reverse the group’s sanctions approach, which today allows all goods to be sold to Russia unless they are explicitly blacklisted. That change could make it harder for Moscow to find gaps in the sanctions regime. While the allies have not agreed to apply the more-restrictive approach broadly, U.S. officials expect that in the most sensitive areas for Russia’s military G7 members will adopt a presumption that exports are banned unless they are on a designated list. The exact areas where these new rules would apply are still being discussed. “You should expect to see, in a handful of spaces, particularly relating to Russia’s defense industrial base, that change in presumption happen,” said a U.S. official who declined to be named. The precise language of the G7 leaders’ joint declarations is still subject to negotiation and adjustment before it is released during the summit. The G7 comprises the United States, Japan, Canada, France, Germany, Italy and the United Kingdom. The G7 leaders’ action on Russia comes as Ukraine’s Western allies hunt for new ways to tighten already restrictive sanctions on Russia, from export controls to visa restrictions and an oil price cap, which have put pressure on Russian President Vladimir Putin but not halted the full-scale invasion that started over a year ago. Some U.S. allies have resisted the idea of banning trade broadly and then issuing category-by-category exemptions. The European Union, for instance, has its own approach and is also currently negotiating its 11th package of sanctions since Russia invaded Ukraine, with the bulk focused on people and countries circumventing existing trade restrictions. “The sometimes-discussed approach of ‘we ban everything first and allow exceptions’ will not work in our view,” said one top German government official. “We want to be very, very precise and we want to avoid unintended side effects.” Meanwhile, any change in language, including language specifying that certain trade is banned unless specifically exempted, by the G7 leaders may not necessarily lead to more bans immediately or indeed any change in Russia’s posture. “At least on day one, that change in presumption doesn’t change the substance of what’s allowed, but it matters for the long-term trajectory of where we’re going and the restrictiveness of the overall regime,” the U.S. official said. Ukraine, backed by Western arms and cash, is expected to launch major counter-offensive operations in the coming weeks to try to recapture tracts of its east and south from Russian forces. Ukrainian President Volodymyr Zelenskiy has been in Europe this week for meetings with Pope Francis as well as with leaders from France, Italy and Germany. He is expected to address G7 leaders, either virtually or in-person, during their summit in Hiroshima, the officials said. Former Russian President Dmitry Medvedev said last month a G7 move to ban exports to the country would cause Moscow to terminate a Black Sea grain deal that enables vital exports of grain from Ukraine. Food security in the aftermath of the war is also expected to be a major topic at the G7.
Oil Prices Sink As Economic Concerns Continue To Dominate Markets
Crude oil started trade this week with a decline, based on Asian trade data from earlier in the day, as traders’ worry about the state of the global economy trumped any expectations of tight supply. At the time of writing Brent was trading at below $74 per barrel and West Texas Intermediate had slipped below $70 per barrel as fears of a possible U.S. debt default continue to run high while Congress remains locked in negotiations over the debt ceiling. Legislators need to agree on a higher debt ceiling as soon as possible because the state’s coffers will run out by June 1st, according to Treasury Secretary Janet Yellen. This is not the first time Congress is taking its time agreeing to higher debt limits and it is not the first time various officials are sounding the default alarm. The current debt ceiling of the United States is $31.4 trillion. Democrats and the White House want this raised without any conditions but Republicans insist on some spending cuts in order to agree to the raise. “With the uneven re-opening in China and concerns that the U.S is facing a growth slowdown at a time when the X-date for the debt ceiling is rapidly approaching, topped off by a rally in the U.S dollar, market sentiment towards crude oil will remain tepid at best,” IG analyst Tony Sycamore told Reuters. “Sentiment in the oil market remains negative with an uncertain demand outlook and concerns over the US debt ceiling,” Warren Patterson, head of commodities strategy for ING Groep, told Bloomberg. “The market will likely be looking out for any potential demand revisions in the IEA’s monthly market report.” Since the start of the year, oil has lost some 13%, according to Bloomberg, and traders have accumulated the largest short position on the commodity since July 2021.
Oil Majors Are Succeeding In Securing More Gas From The Middle East
TotalEnergies, along with Italy’s Eni and the UK’s BP and Shell, have been at the vanguard of securing new oil and gas supplies for Europe to substitute for lost energy supplies from Russia since its invasion of Ukraine in February 2022. The focus of these efforts has been on liquefied natural gas (LNG), as it can be bought and transported quickly and does not require the time- and capital-intensive build out of infrastructure needed to move gas supplies through pipelines. In this sense, LNG was, and remains, the emergency energy of the new global oil market order, as analysed in my new book on the subject. The French oil and gas giant continues to secure such new supplies and to cement the presence of European energy firms in the Middle East, as evidenced again by two key developments in recent days. The first of these is a three-year US$1-1.2 billion LNG supply agreement, beginning this year, made with the Abu Dhabi National Oil Company (ADNOC). ADNOC Gas’s chief executive officer, Ahmed Alebri, accurately summed up the broader significance of the deal, saying that it represented part of a long-term strategic partnership with TotalEnergies. In these wider terms, the seven-emirate UAE (of which Abu Dhabi remains the key energy source), had been earmarked by the U.S. and its allies as a key future energy, economic, and political partner prior to the Russian invasion of Ukraine. This was evidenced by its being the first country to sign a ‘relationship normalisation’ deal with Israel on 13 August 2020. These deals were a key part of the U.S.’s response to the expansion of Chinese and Russian influence in the Middle East after Washington had unilaterally withdrawn from the Joint Comprehensive Plan of Action (JCPOA, or colloquially ‘the nuclear deal’) with Iran in May 2018, as also analysed in my new book. In the aftermath of this withdrawal, Israel had become increasingly sure that Iran was no longer ‘years’ away from being able to create a nuclear weapon but rather just ‘weeks’ away – around three weeks away, to be exact. Those around the then-U.S. President, Donald Trump knew that any escalation by Israel against Iran could be a catalyst for a broader conflict across the entire Middle East. This could eventually draw China and Russia into the conflict, in direct opposition to the U.S., and was a conflict scenario in war planning on all sides that almost inevitably led to global nuclear war. The U.S. intention for the UAE in the relationship normalisation deals plan was for it not just to act as a beacon for other Arab countries to sign such deals but also for it to be used for Washington’s new global oil market model for Middle Eastern countries allied to the West. Firstly, the U.S. would ensure massive investment into such countries by its big oil firms, which would require increased on-the-ground presence of U.S. personnel in them to safeguard the assets. Secondly, the oil and gas from such countries would find a very willing end-buyer for all their energy in India, which was to be used as the substitute big global oil and gas bid to China in this model. India perfectly fitted the requirements in this context, as also analysed in my new book on the new global oil market order. The country’s role as the U.S.’s counterpoint to China in the Asia-Pacific region, led by its economic development and the corollary growth in its demand for oil and gas, was further underlined by data released in the first quarter of 2021 by the International Energy Agency (IEA). This showed that India would make up the biggest share of energy demand growth – at 25 percent – over the next two decades, as it overtook the European Union as the world’s third-biggest energy consumer by 2030. Additionally, around the same time as the U.S. was pushing its new global oil market order strategy, a clash between China and India (on 15 June 2020) in the disputed territory of the Galwan Valley in the Himalayas reflected a much greater change in the core relationship between the two countries than the relatively small number of casualties might have implied. It marked a new push back strategy from India against China’s policy of seeking to increase its economic and military alliances from Asia through the Middle East and into Southern Europe, in line with its multi-layered multi-generational ‘One Belt, One Road’ (OBOR) power-grab project. It seemed to the U.S. that India was ready to pursue more aggressively its own ‘Neighbourhood First’ policy as an alternative to China’s OBOR initiative. The tie-up between Abu Dhabi and India was to provide a showcase for this new U.S. strategy to fightback against growing Chinese and Russian influence in the region. At the time, ADNOC’s chief executive officer, Sultan al-Jaber, stated that he looked forward to exploring partnerships with even more Indian companies across the energy giant’s hydrocarbon value chain. He added that he wanted this to include expanding the commercial scale and scope of India’s vitally-important strategic petroleum reserves (SPR) partnership. This was in line with the crucial position that ADNOC was given in being the only overseas company allowed at that stage to hold and store India’s SPR. Additionally positive for the U.S. plan was that India’s government at that stage approved a proposal that would allow ADNOC to export oil from the SPR if there was no domestic demand for it. These plans came screeching to a halt from the U.S. side when around Christmas 2021 intelligence officers discovered that China had been building its own secret military facility in and around the UAE port of Khalifa. Based on classified satellite imagery and human intelligence data, US officials stated that China has been working to establish ‘a military foothold in the UAE’. At almost exactly the same time, the U.S. also discovered that Saudi Arabia was manufacturing its own ballistic missiles, again with the help of China. In short, China was increasing
Harnesing 10% of coal bed methane reserves can cut India’s energy import bill by $2 billion: Experts
India can cut its energy imports bill by USD 2 billion if the nation harnesses 10 per cent of the coal bed methane reserves of 2,600 billion cubic meters, said experts. This assumes significance in view India’s coal production clocking record high during the last fiscal year and plans afoot to increase it further. The experts believe that the industry’s collective efforts in utilising Coal Bed Methane (CBM) can help the country save over USD 2 billion on imports bill in near future. India has an estimated Coal Bed Methane Reserve of 2600 billion cubic metres, they say. “India touched a record-high growth in coal production of more than 778.19 million tonne, posting record growth in coal production in the year 2022-23. “Plan is to increase the production to over one billion tonne by 2025-26. Therefore, we collectively must tap and utilise Coal Bed Methane which in turn would help reduce emissions and also boost India’s energy security. Even if the industry can tap about 10 per cent of the reserves we can save over $2 billion by cutting on oil imports,” Dr J.S Sharma, Head of International Centre for Climate and Sustainability Action Foundation (ICCSA), told PTI. Sharma said the savings would be more if we are able to tap more CBM reserves. Through ICSSA we have been making attempts in creating awareness about the potential of Methane and have conducted workshops for Oil & Gas, Agriculture & Lives to VK
Iran becomes world’s top oil pipeline developer: report
Based on the report, the Iranian Oil Ministry is also among the world’s top oil pipeline developers. According to new data from Global Energy Monitor, Africa, and West Asia are home to 49 percent of all oil transmission pipelines under construction globally at a cost of $25.3 billion. The 2023 annual survey of data in the Global Oil Infrastructure Tracker shows that these regions together are building 4,400 kilometers (km) of crude oil transmission pipelines at an estimated capital expenditure of $14.4 billion. An additional 10,800 km are proposed in these regions at an estimated cost of $59.8 billion. Globally, there are 9,100 km of oil transmission pipelines under construction and an additional 21,900 km of proposed pipelines. These pipelines in development are estimated to cost $131.9 billion in capital expenditure. The total 31,000 km of oil pipelines in development globally represents an increase of nearly 30 percent from this time last year. The leading five countries in terms of in-development pipelines (proposed and under construction) are Iran, the United States, India, Iraq, and Tanzania. The top five parent companies developing oil pipelines are state-owned enterprises and private companies, including Iran’s Oil Ministry, the China National Petroleum Corporation, Iraq’s Ministry of Oil, India’s Numaligarh Refinery Limited, and France’s TotalEnergies. The longest pipeline projects under construction are the 1,950-km Niger–Benin Oil Pipeline and the Paradip Numaligarh Crude Pipeline (PNCPL) in India, both slated to start operating in 2024. Canada is home to the third-largest pipeline project under construction, the 980-km Trans Mountain Expansion (TMX), expected to start in 2023 as an expansion to the existing Trans Mountain Oil Pipeline.
Mahanagar Gas Ltd. Signs MoU with Baidyanath LNG to scale up LNG Network
Mahanagar Gas Limited (MGL), one of the largest city gas distribution companies in India, and Baidyanath LNG signed a Memorandum of Understanding today to enable the development of LNG station network across various strategic locations. This is expected to fast-track the development of the supply side ecosystem, aiding long haul transport segment to switch to cleaner fuel. Commenting on the association, Ashu Shinghal, Managing Director, Mahanagar Gas Limited said, “We are pleased to enter into this arrangement with BLNG for development of LNG infrastructure across strategic locations. Both parties have their own set of skills and capabilities which can be harnessed to offer seamless solutions to the customers. MGL has always played a constructive role in the development of an environment which can facilitate faster adoption of cleaner fuel.