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Middle East opening taps despite UN declaration of ‘climate emergency’

Arab oil and gas producers not buying into global warning and UN “climate emergency”

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Less than two weeks following the UN “Climate Ambition Summit” held virtually on December 12, Saudi Arabia announced the discovery of four new oil and gas fields.

“State-run oil giant Saudi Aramco is working to determine the exact size and resource volume of the new finds,” Prince Abdulaziz bin Salman said in a statement carried by the official Saudi Press Agency.

The fields, if productive, will boost Aramco’s plans to increase its maximum sustained crude production capacity from the current 12 million b/d to 13 million b/d, as well as its aim of developing its gas resources to free up more oil for export instead of burning it for power generation, reported S&P Global.

Speaking at the summit, UN Secretary-General Antonio Guterres called upon world leaders to declare a “climate emergency

“Five years after Paris we are still not going in the right direction… If we don’t change course, we may be headed for a catastrophic temperature rise of more than 3 degrees this century… That is why today I call on all leaders world wide to declare a state of climate emergency in their countries, until carbon neutrality is reached,” he said.

He posed the question: “Can anybody still deny we are facing a dramatic emergency”?

The question highlights a wide gulf between Western policy positions on climate change and net-zero emissions goals, and oil and gas producers in the Middle East.

Hydrocarbon revenues, the largest single component of GDP for most countries in the Middle East, have been severely impacted by the sharp decline in oil and gas prices and sales as a result of the global COVID-19 pandemic response.

This puts Arab producers at odds with UN Agenda 2030.

The new Saudi discoveries will boost the country’s plans to increase its maximum sustained crude production capacity from the current 12 million b/d to 13 million b/d as well as developing its gas resources to free up more oil for export instead of burning it for power generation, reported Forbes.

CEO Sultan Al Jaber of the ADNOC, one of the leading national oil companies in the Gulf region, said that the Abu Dhabi company is “leaving no stone unturned in unblocking value from our abundant hydrocarbon resources”.

Policy makers of a number of Western countries that have announced ambitious zero-emission reduction goals by 2050 have focused on converting the coronavirus pandemic crisis into an “opportunity” for a “great reset”.

Wall Street agrees.

Big money is turning its back on companies that aren’t conforming to one simple idea…sustainability – and it is fueling one of the biggest transfers of capital the world has ever seen. In fact, within a year, 77 per cent of institutional investors will stop buying into companies that aren’t, in some way, sustainable, said Oilprice.com.

We still need oil and gas, however.

According to energy consultancy Wood Mackenzie, only about half the supply needed to 2040 is available from producing fields, “the rest requires new capital investment”.

Given the recent collapse in upstream oil and gas investments, the International Energy Forum in a recent report pointed out that if upstream investments in oil and gas exploration and production do not increase by 25% annually over the next 3 years, we face a supply shock of “historic proportions.”

Ken Grafton is the Western Standards Ottawa Bureau Chief. He can be reached at kgrafton@westernstandardonline.com

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2 Comments

2 Comments

  1. Vlad Lashing

    January 4, 2021 at 1:09 pm

    HAHA is it warming or cooling? They cant decide. Cold year? OMG ice age!!! Warm year – the ice caps will be gone! oh wait, Gore said Ice caps would be gone by 9 years ago … cried wolf.

  2. Guest

    January 4, 2021 at 4:58 am

    LOL, you didn’t expect the middle east to follow United Nations agendas did you?

    State-run oil giant Saudi Aramco supplies Eastern Canada with it’s crude oil. Prime Minister Trudeau is so two faced that he scoffs at the suggestion Saudi crude be turned away. Climate change for Trudeau is subjective, but oil provinces pay the carbon taxes & Saudi Arabia well they get off scott free here in Canadian waters.

    The United Nations Climate Agendas are subjective to how much money you have & where the lax climate change countries can say screw you “we pump what we want”.

    The United Nations Climate Emergency is a joke on the whole world & Trudeau is a court jester.

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Energy

IEA recognizes Canadian oil industry as the environmental world leader

In 2018, oil and gas companies also invested $3.6 billion in environmental protection initiatives, recognized by the IEA as by far the largest environmental protection spend of any industry in the country.  

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Canada is doing great but should take measures to continue its reputation as a preferred oil and gas supplier on the global market, says the International Energy Agency.

IEA Executive Director Fatih Birol is a big advocate for net zero targets, but still recognizes the reliance on oil and gas that will persist into the future.

He said he prefers oil supply to come from “good partners” like Canada, he told a press conference.

“Canada has been a cornerstone of global energy markets, a reliable partner for years,” said Birol.

“We will still need oil and gas for years to come… I prefer oil is produced by countries … like Canada (that) want to reduce the emissions of oil and gas.” 

The same IEA report included recommendations for Canada to incentivise moves away from oil production, yet the director still recognizes Canada’s contribution to the global market.

World oil consumption returned to pre-pandemic levels and natural gas demand surpassed levels pre-COVID-19 last year, according to IEA data.

Yet Canada only supplies 6% of the current world market.

Consumption of both oil and gas is expected to continue rising even as more renewable energy sources come online. 

A Russian-caused natural gas crisis in Europe has many looking to Canada as a great alternative.

“The world needs reliable partners,” said Birol, of the European situation.  

Canada is the fourth-largest producer of oil and natural gas in the world and home to the third-largest oil reserves.

“This creates employment for Canadians and secure and reliable oil and gas for both domestic and global markets,” the IEA said.  

The IEA recommends that remaining competitive in global oil and gas markets requires further emission reductions, to ensure the sector remains a major driver of the Canadian economy beyond 2050.

Emission reduction has already been steadily implemented in Canada, analysts praised the oil and gas industry’s “strong track record” of reducing emissions intensity.

The oilsands by have decreased emissions by 32% since 1990 and further reductions of up to 27% are expected by 2030. 

Canadian oil and gas companies spend an average of $1 billion per year on clean energy technology, in addition to billions in environmental protection.  

In 2018, oil and gas companies also invested $3.6 billion in environmental protection initiatives, recognized by the IEA as the largest environmental protection spend of any industry in the country.  

“Canadian oil and natural gas producers are leveraging their improving environmental, social and governance performance and Canada’s stringent environmental regulations to build a global competitive advantage.”

Ewa Sudyk is a reporter with the Western Standard
esudyk@westernstandardonline.com

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Energy

Oil price jump prompts additional $6 billion in investments

Oilsand investments alone are expected to increase to $11.6 billion in 2022, a 33% jump.

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The largest oil and gas industry group in Canada says it’s expecting $32.8 billion in oil patch spending this year, a 22% jump from last year.

Canadian Association of Petroleum Producers (CAPP) says the increased investment will help capitalize on the surge in crude oil prices, the growth will amount to an additional $6 billion this year.

Oilsand investments alone are expected to increase to $11.6 billion in 2022, a 33% jump.

As of Friday, the price of West Texas intermediate crude oil today is $87.05.

Tim McMillan, president of the CAPP, said the seven-year high price of oil doesn’t mean bad news, as companies are recording record cash flows and investment remains well below what it was in the boom years.

For example, in 2014 the Canadian industry captured 10% of total global upstream natural gas and oil investment, and the oil patch received record investment at $81 billion.

“Today we’re at $32 billion, and we’re only capturing about 6% of global investment,” said McMillan.

“We’ve lost ground to other oil and gas producers, which I think is problematic for a lot of reasons … and it leaves billions of dollars of investment that is going somewhere else, and not to Canada.”

Alberta is expected to be the leader among provinces in overall oil and gas capital spending, with upstream investment expected to increase 24% to $24.5 billion in 2022.

Over 80% of the industry’s new capital spending this year will be focused in Alberta, representing an additional $4.8 billion of investment into the province compared with 2021, according to CAPP.

Investment increase is also excepted in British Colombia, Saskatchewan and offshore production.

This means major recovery for the industry, as 2020 was harsh with global demand crashing and oil prices collapsing.

Global investment is on the down turn, as potential investors are discouraged by Canada’s history of cancelled pipeline projects, regulatory hurdles and negative government policy signals.

McMillan explained many now see Canada as a “difficult place to invest.”

“Rapid demand growth for oil and natural gas globally and strengthening commodity prices mean there is opportunity for Canada’s industry for decades to come,” said McMillan.

“To ensure a true recovery takes hold in Canada, government at all levels along with the industry must work together to create an environment where the natural gas and oil industry can thrive and attract investment back to Canada.”

Ewa Sudyk is a reporter with the Western Standard
esudyk@westernstandardonline.com

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Energy

Energy report tells feds to incentivize moves away from oil

The IEA calls for the Canadian government to creating transparent changes to the oil and gas industry but incentivizing technology changes and creating emergency oil stocks.

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A new report says Canada should further invest in clean in electricity and that our country is already among the cleanest energy production in the world.

The International Energy Analysis (IEA) came out with a report outlining recommendations for Canada’s energy future, including balanced decarbonization across the country.

That means higher coordination between federal, provincial and territorial levels to set clear targets for energy efficiency in buildings, transport and industry sectors.

The IEA calls for the Canadian government to create transparent changes to the oil and gas industry but incentivizing technology changes and creating emergency oil stocks.

Canada’s electricity system is one of the cleanest globally according to the IEA report, as 80% of supply is from non-emitting sources such as hydropower and nuclear power.

“Canada’s wealth of clean electricity and its innovative spirit can help drive a secure and affordable transformation of its energy system and help realize its ambitious goals,” said IEA Executive Director Fatih Birol.

“Equally important, Canada’s efforts to reduce emissions — of both carbon dioxide and methane — from its oil and gas production can help ensure its continued place as a reliable supplier of energy to the world.”

The report follows Environmental Minister Steven Guildbeault’s announcement for Canada to be ready to eliminate fossil fuels in 18 months, with zero-emission cars and stricter methane regulations.

Conservative leader Erin O’Toole expressed concern on Twitter with the zero emission plans, calling attention to the need to invest in the oil sector rather than turn away from it.

Energy makes up over 10% of Canada’s GDP, being a major source of capital investment, export revenue and jobs, making the net-zero goals both a challenge and opportunity.

Since the last IEA review in 2015, Canada has made international and domestic commitments dedicated to transforming the energy sector, including a target to cut greenhouse gas emissions by 40‑45% by 2030.

Canada is also a part of the United Nations zero-emission 2050 target that involves over 130 countries worldwide.

Ewa Sudyk is a reporter with the Western Standard.
esudyk@westernstandardonline.com

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