Oxford Institute for Energy Studies

Oxford Institute for Energy Studies latest China Energy Monthly https://lnkd.in/eSsii7PR Focus piece looks at the implications of Trump's elections for China's energy 💠  Trump’s re-election is a mixed bag for China 💠  His protectionist trade posture and transactional approach to foreign policy could weak US alliances and global standing, presenting opportunities for China 💠  But the threat of tariffs poses substantial risks for the economy 💠  Still, the view has been for quite some time that US-China relations are unlikely to improve materially, regardless of the next US President 💠  Beijing’s initial response was cordial, congratulating the incoming President 💠  Now, they wait and see who Trump appoints for key positions and his first policy moves. 💠  There are open questions around tariffs, the end of the war in Ukraine, tightening sanctions on Iran, a potential repeal of the Inflation Reduction Act (IRA) and the US’s willingness to remain part of the UNFCCC COP process 💠  Answers to these will only gradually become clear, but for now, there are two key questions: How does Trump’s re-election impact Beijing’s thinking about its economic stimulus and what does it mean for energy policy and demand? #china #chinaenergy #uselections #oil #gas #power #renewables #coal #electricvehicles

New Oxford Institute for Energy Studies Research Paper offers a detailed Review of Hydrogen Leakage along the Supply Chain as well as Environmental Impact, Mitigation, and Recommendations for Sustainable Deployment.   👉 Link to Research Paper: https://lnkd.in/e3nvrmKn Key points:   💠 Environmental Impact of Hydrogen Leakage: Hydrogen leakage can indirectly contribute to climate change by prolonging methane's atmospheric lifetime, catalyzing stratospheric ozone destruction, and increasing tropospheric ozone levels, reducing hydrogen's overall environmental benefits. Proper control of leakage allows hydrogen to immediately reduce emissions and minimize the climate impacts of the emission-intensive technologies it would replace, while poor management could result in increased greenhouse effects and delay climate benefits by up to 50 years.   💠 Challenges in Hydrogen Containment: Hydrogen's small molecular size, high diffusivity, and tendency to cause material embrittlement make containment difficult. These factors lead to increased leakage risks throughout production, storage, transportation, and end-use.   💠 Supply Chain Vulnerabilities and Failure Points: Hydrogen leakage risks are present at each stage of the supply chain. Production processes such as electrolysis and steam methane reforming, storage systems (particularly cryogenic and high-pressure containment), and transportation via pipelines, compressed gas, or liquid hydrogen all pose leakage challenges. Key failure points include joints, valves, compressors, and seals, which are vulnerable due to hydrogen's small molecular size and the conditions required for its effective containment. A comprehensive mitigation approach must include optimized containment, robust infrastructure design, careful material selection, and regular inspections and maintenance to minimize risks.   💠 Policy and Economic Considerations for Leakage Mitigation: Currently, there is minimal focus on hydrogen leakage in existing policy and regulatory support, which poses a significant barrier to addressing its environmental impact. Effective regulatory standards are necessary to minimize hydrogen leakage. Governments and regulatory bodies must establish stringent containment and detection protocols, with incentives for adopting low-leakage technologies to support hydrogen's role in achieving Net-Zero emissions.   💠 Mitigation Strategies: The future of hydrogen leakage mitigation lies in continuous R&D to develop new materials, enhance leak detection systems, and promote real-time monitoring. Strategic investments and policy support will be essential to prevent losses and maximize the environmental and economic advantages of hydrogen as a clean energy carrier. #hydrogen #hydrogenleakage #HydrogenLeakageAcrosstheSupplyChain #ClimateEffectsofHydrogenLeakage #HowHydrogenLeaks #RecommendationsforMitigatingHydrogenLeakage

New Oxford Institute for Energy Studies Podcast discusses what drives international gas prices in competitive markets  👉 Link to podcast: https://lnkd.in/eSUSACSb  In this latest OIES podcast James Henderson talks to Mike Fulwood about his latest paper on global gas prices. This is based on a recent OIES paper: https://lnkd.in/ez2krC57 Key points from paper: 💠 Market for internationally traded gas has now globalized 💠 Volume of flexible LNG has increased sharply since 2016 and was instrumental in diversion of LNG cargoes to Europe following loss of Russian pipeline gas in 2022 💠 Pricing of LNG has also changed significantly since 2016 with traditional oil indexed long-term contracts now accounting for marginally over half of all LNG trade in 2023 as spot and hub pricing has risen sharply 💠 In a globalized market the gas price drivers are increasingly complex 💠 Concept of a “cost stack” where the costs of various sources of gas and LNG supply to a market can be stacked with the highest cost supply “setting” the price was always dubious at best as it missed other “alternative” sources such as fuel-switching and efficiencies; concept falls down completely where gas prices are determined in a global market. 💠 Fundamentals of supply and demand remain the key drivers, but that does not mean that price equals marginal cost which is only true in a perfectly competitive market 💠 Marginal cost of supply remains an important influence on the price but in recent history the actual spot prices have been at, or even below, the short-run marginal cost, and a year or two later, at or well above the long-run marginal cost 💠Other factors, which can be broadly defined as “competing prices”, also can materially impact gas prices, as well as the relative tightness of the market 💠 Europe has relied heavily on Russian pipeline gas and it could be said that Europe was “hooked” on Russian gas, but it was never cheap 💠 Price of oil-indexed gas from Russia was largely significantly higher than hub priced gas in Europe and even when Gazprom moved to hub pricing, this meant the price was the same not lower. In the European market, we are all price takers. 💠 Criticism by some politicians and commentators that the TTF price was “no longer representative” in 2022, as prices rose sharply to very high levels, and well above other LNG and hub prices was shown to be ill-informed 💠 Dramatic loss of Russian pipeline gas resulted in congested infrastructure, especially in Northwest Europe and, in congested markets, differentials widened. Once the congestion was alleviated, differentials returned to normal levels 💠 Response to these extraordinary events was that the flexible liquid trading market worked extremely well in diverting volumes and reducing demand, however painful this may have been  #gas #lng #gaspricing #gasprices

New Oxford Institute for Energy Studies Podcast discusses what drives international gas prices in competitive markets. 👉 Link to podcast: https://lnkd.in/eSUSACSb 👉 Link to related research paper: https://lnkd.in/ez2krC57 🎙️ In this latest OIES podcast, brought to you by the Gas Programme, James Henderson talks to Mike Fulwood about his latest paper on global gas prices. 🎙️ The podcast starts with a brief discussion about the history of gas pricing and the globalisation of the gas market, highlighting the vital role played by LNG in joining up what was previously a series of regional markets. 🎙️ The podcast then examines four common fallacies associated with gas prices recently – the cost stack fallacy, the marginal price fallacy, the Europe hooked on Russian gas fallacy and finally the fallacy that the TTF market was broken in 2022 because of the record price spike. 🎙️ In addressing these fallacies Mike outlines his multi-dimensional framework for analysing the value of gas and relates it both to the recent history of gas prices but also to the outlook for the next few years. All of our podcasts are also available on #Spotify and #AppleMusic #Gas #LNG #market #Price #Russia

Dr Katja Yafimava has been interviewed by Bloomberg about continued Russian gas flows to Austria following suspension of deliveries to OMV. 👉 Link to article: https://lnkd.in/eTUpP9ry Key points: 💠 Russian gas continues to flow into Austria despite suspension of deliveries under OMV’s Gazprom contract. 💠 This gas could be sold by anyone who (unlike OMV) is still receiving gas from Gazprom under contracts and, in turn, anyone could buy it (including OMV). 💠 While this arrangement could continue in the future, supply would be exposed to spot price fluctuations compared to purchases under contract. 

New Oxford Institute for Energy Studies Energy Comment takes stock of Germany’s clean hydrogen ambitions.   👉 Link to OIES Energy Comment: https://lnkd.in/ewHiD2Pf Key points:   💠 Germany has long harboured ambitions to become a clean hydrogen economy trailblazer — it sees hydrogen as key for decarbonising its industrial juggernauts as well as power generation, transport and other sectors.   💠 The country has made progress towards these ambitions this year, with the launch of innovative support schemes bankrolled by large funding pots, tailwinds for initiatives drawn up in previous years and the green light for construction of a country-wide hydrogen network.   💠 2024 has also been a year of delays and setbacks that have called into question whether ambitious targets for the end of this decade can be realised.   💠 Germany now faces an uncertain future with regard to its leadership, after the coalition between the SPD, FDP and Greens party collapsed in early November. While a major change in course is unlikely, the coalition’s breakdown has left the hydrogen sector worried that policy progress could stall until after a new government is formed.   💠 As 2024 draws to a close and with a government change on the horizon, this OIES Energy Comment takes stock of Germany’s clean hydrogen ambitions. Across four areas — consumption, domestic production, imports and infrastructure — it examines the progress made, how the different initiatives are intended to play out, and where key challenges lie or new ones have emerged.   #Hydrogen #GreenHydrogen #Germany #Decarbonization

See below post by Oxford Institute for Energy Studies Gas Programme for a webinar on the European Gas Market Winter Outlook 2024/25. https://lnkd.in/eFUBy2vC

New Oxford Institute for Energy Studies Energy Insight looks at the European Gas Market Supply & Demand and the 2024/25 Winter Outlook 👉 Link to OIES Energy Insight: https://lnkd.in/gh2PkhAT Some key points: 💠 Any surge in demand or curtailment of production or imports will most likely be met primarily by additional storage withdrawals and secondarily by higher prices attracting additional LNG cargoes with the consequence being the need for greater volumes of net storage injections in summer 2025 💠 On the supply side risk of a tighter market is driven by limited amount of potential extra supply available from production and pipeline imports 💠 If European demand surges beyond the potential upside from pipeline imports European price escalation could attract additional LNG cargoes 💠 Key issues are not the global availability of LNG nor is it the availability of European regasification capacity, but how far European buyers need to move up the price curve to secure additional spot cargoes 💠  On the demand side Europe is on its way for another small decline in 2024 as a whole (-2 per cent) 💠 The outlook for winter 2024/25 is a year-on-year gas demand increase of about 10 Bcm driven by colder temperatures, but overall, well within normal seasonal fluctuations for the region 💠 Any risks on the demand side are largely weather driven: temperature and wind availability 💠Cold snaps could test the resilience of the system if they coincide with other market tighteners like the end to Ukraine transit 💠 Another uncertainty comes from the growing exposure to wind generation in the power sector for which gas plants remain the main source of back-up in Europe 💠 The key outcome of the scenario used based on the supply and demand assumptions and using storage as the balancing item is that Europe could draw 57.3 Bcm from storage between 1 November and 31 March thus ending the winter with stocks of 43.7 Bcm 💠 That would imply a 17 Bcm year-on-year increase in net storage injections between 1 April and 1 November 2025 to get stocks back to 100 Bcm, or a 21 Bcm increase to get stocks back to full capacity (105 Bcm) 💠 Given the lack of upside from non-LNG supply, that additional volume for storage replenishment will need to come from a global LNG market that is already tight, is likely to see only marginal supply growth over the next six months and could see continued growth in non-European LNG demand #gasdemand #europe #lng #gasprices #pipelinegas #gasstorage

The new issue of Oxford Institute for Energy Studies Oil Monthly, including our latest short-term oil market #outlook to 2025, is now available. 👉 Link: https://lnkd.in/dT4k2_rX 🔹 We have lowered our #Brent #price #forecast by $1.1/b to $81/b in 2024 and $0.8/b to $76/b in 2025. Concerns over global oil demand focusing on the deceleration of Chinese demand continue to drive weak market sentiment. This prompted us to reduce our 4Q24 price forecast by $4.6/b to $75/b. The ongoing global stock draws however, both for crude and products, amid the latest postponement of the OPEC+ planned output hike for December and improved compliance from laggard producers are expected to provide support to 1Q25 prices pushing Brent in the mid- to high-$70s in line with last month’s forecast. For the year as a whole, we expect a lower market surplus than most projections, supporting prices in the $70/b and $80/b range. #Uncertainty, however, remains heightened in 2025. 🔹 We forecast a 650 kb/d #oil #market deficit in 2024 and a 270 kb/d surplus in 2025. Downward revisions to non-OECD demand actuals, mainly for #China, have prompted us to reduce the previously projected deficit in 2024 by 220 kb/d. That said, assuming a gradual unwinding of the OPEC+ 2.2 mb/d voluntary cuts on a monthly basis between January and December 2025 we have reduced the expected surplus in 2025 by 100 kb/d. 🔹 Our global oil #demand #growth forecast is revised lower to 1.1 mb/d in 2024, and it is unchanged at 1.3 mb/d in 2025. China’s slowdown underpins the overall 2024 downgrade, with Chinese oil demand growth downgraded to 200 kb/d from 360 kb/d forecast last month. Accordingly, total non-OECD demand is forecast to grow by 1.1 mb/d in 2024 and 1.2 mb/d in 2025. OECD demand is forecast to grow marginally this year and to expand by 110 kb/d in 2025, unchanged from last month. 🔹 Global oil #supply growth is reduced to 310 kb/d in 2024 and 2.2 mb/d in 2025. Our forecast downgrades reflect the extension of the #OPEC+ voluntary cuts until the end of the year amid improved compliance from laggard producers in recent months. This has prompted us to lower OPEC+ #crude growth to -1.2 mb/d in 2024 and 1 mb/d in 2025. Our outlook for non-OPEC+ crude and other liquids supply is unchanged at 1.5 mb/d in 2024 and is slightly lifted to 1.2 mb/d in 2025. #energy #energyresearch #oott

New Oxford Institute for Energy Studies Energy Insight outlooks European Gas Market Supply and Demand for winter 2024-2025. 👉Link to Energy Insight:  https://lnkd.in/gh2PkhAT Key points: 💠 After two years of mild European winters, the 2024/25 season is set to be chillier as La Niña takes hold, bringing with it colder, wetter and stormier conditions across Europe’s key gas demand zones. 💠 Despite a third year of overall contraction in gas demand in the EU-27 plus UK, we expect gas demand over the winter months to rise 10 Bcm year-on-year, as colder temperatures drive space heating and power demand, with short-term gas demand volatility exacerbated by the need to cover renewables intermittency. 💠 On the supply side, Europe’s domestic gas production continues to slide, pulled back by falling UK output. 💠 Meanwhile, pipeline imports from Norway, North Africa and Azerbaijan are nearly topped out and remaining Russian transit gas via Ukraine is expected to halt at the end of December, leaving a shortfall to be filled by higher LNG imports. 💠 Given that global LNG balances are tight, Europe will have to pay a premium to draw additional cargoes, a fresh driver for higher prices over the winter months. 💠 In this context of potentially higher and more volatile demand and limited upside flexibility in supply, storage represents the most responsive source of short-term supply over the winter. 💠 However, EU-27 stocks in mid-November are already 8 Bcm lower year-on-year, and winter withdrawals are also likely to be higher year-on-year. This implies a significant year-on-year increase in storage injections in summer 2025, with the increased volumes for injection sourced from a relatively global LNG market. This is the main reason why price curves through summer 2025 are robust and only soften when the new wave of LNG starts to make itself felt late in the year. #Europe #NaturalGas #Russia #LNG #Norway #Algeria #Azerbaijan #GasStorage