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No Refuge for Oil

Osama Rizvi



Of-late the monotonous oscillation of oil prices is making it difficult for writers and analysts to get any sense out of this whimsical trend. After the Vienna Oil deal in November 2016 and after the 21st January meeting between oil producers the oil prices have been moving up and down in the $50-$60 band.

Ever since the Kingdom of Saudi Arabia refused to play its part as a swing producer (in 2014) the oil markets turned topsy-turvy. What followed was an influx of extra oil which created a glut so huge that it is now proving almost difficult to flush it out. Despite 91% compliance from the oil producers vis-à-vis the oil deal the prices seems to be stuck in the aforesaid band. As noted many times the issue is that of the US Shale producers. This represents a perfect Catch-22 situation where the investors may find themselves dizzy by the vicious circle triggered whenever there is a cut in production. A production cut is all what everyone wants, yes, but after the production cut, due a mix of slight change in fundamentals and a huge alteration in speculations and sentiments, the oil prices start to move up. This is also a good omen. The next event, however, thwarts the rising hopes and prices as the US Shale producers-most of whom had stopped producing given the difference of cost of production- get back at the oil fields. When this happens, the supply-supposed to go down by the cut in production- once again starts to swell. And we, after making merry go rounds once again stand where we started from. Now-a-days, this is exactly what is happening: The oil prices every now and then rally up as the oil producers are fully complying with the November deal, but the Shale producers getting back at the derricks is a cause of continuous consternation. Last Friday Baker & Hughes reported a 17 rig increase in US oil rigs, making the total number at 583. Oil rigs have increased by 106 after the November oil deal. Many of the oil companies are back at their projects. BP signed a flurry of oil exploration deals and expects to increase the oil production, almost 800,000 bpd by the end of decade.

What, then, is the panacea? I am afraid there is none. The markets have to wait. Patience is the key here. If the OPEC and NOPEC producers remain true to the Vienna Deal-which is only for the first six months of the current year- it can still take a year or half for the oil glut to drain gradually. But a very relevant condition for this drainage to eventuate is Demand and it looks waning. China’s economy is not very promising. This price cap may, in future, effect the compliance of the oil producers as they do not see any potential effect of the deal.

There is a possibility: As Mr. Fereydoun, head of Vienna Energy Centre, said to me few weeks back that the OPEC should now try to bring the US shale producers on the table as well. But given their reduction in cost of production due to greater adaptability by the virtue of better technologies, it seems hardly possible. But in the long run, if US exercises far-sightedness, its willingness to cooperate with OPEC and other producers like Russia will only help create a better and stable oil market. The need for which is dire!

Independent Economic Analyst, Writer and Editor. Contributes columns to different newspapers. He is a columnist for, where he analyzes Crude Oil and markets. Also a sub-editor of an online business magazine and a Guest Editor in Modern Diplomacy. His interests range from Economic history to Classical literature.

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Boosting Energy Access through Parliamentary Action

MD Staff



Belgian Parliamentarian, Andries Gryffroy, shares his views on enabling energy access through pro-renewables policy making

Parliamentarians from around the world will gather next week in Geneva, Switzerland, for the 138th Assembly of the Inter-Parliamentary Union (IPU), an international organisation of 178 Member Parliaments. While the institution has been around since the 19th century, this year’s meeting will – for the first time – discuss a resolution focused on deploying clean, affordable and sustainable forms of energy, which is recognised as a key pillar of the global sustainable development agenda.

According to the International Renewable Energy Agency (IRENA), one of the global custodians of the Sustainable Development Goal (SDG) 7 indicators, off-grid renewable energy may serve around six million households worldwide – helping change the lives of approximately 30 million people. A further 120 million people currently without grid access, use solar lights.

Andries Gryffroy, Member of the Flemish Parliament, speaks at the 2018 IRENA Legislators Forum

To address this issue, a new resolution called ‘Engaging the private sector in implementing the SDGs, especially on renewable energy’ has been proposed by Mr. Andries Gryffroy, Member of the Flemish Parliament, IPU focal point and spokesperson on energy for his party, N-VA , together with his co-rapporteur, Mr. Duong Quoc Anh, member of parliament from Vietnam, in consultation with IRENA.

Though non-binding, IPU resolutions are drafted and adopted by parliaments around the world, distributed at the United Nations, and have the potential to influence national legislation. This new and yet-to-be-adopted renewable energy-focused resolution identifies what parliaments can do to maximize engagement around SDG 7 — ensuring access to affordable, reliable, sustainable and modern energy for all.

Andries Gryffroy, outlined the magnitude of the energy access challenge, ahead of the meeting. “Today, about 1.1 billion people lack access to energy powered by the grid. Unhealthy wood stoves, hazardous kerosene lanterns, loud and environmentally unfriendly gas and diesel generators are being used instead. These forms of energy are costly and labour intensive, yet, in remote areas, it is not financially viable to develop high voltage distribution networks. Installing small windmills, or solar systems in villages or homes, represents a sound alternative to more conventional sources of energy.”

Drawing attention to the potential of off-grid and mini-grid renewable energy projects (including small-scale electricity generators converting power from renewable energy sources) for contributing to the implementation of SDG 7 in developing countries, the resolution encourages parliaments to facilitate, and account for, the risk management needs of small local project developers. It advocates for the establishment of enabling legal frameworks, and for incentivising public-private partnerships to speed up the transition towards a more sustainable system of energy production and consumption.

“Access to finance remains the issue even though such projects represent a relatively small investment,” Gryffroy points out. “Investors are less attracted by those projects because they have limited visibility on the financial risks. The cost of assessing an off-grid project’s viability is also higher than for larger projects. Therefore, one needs reassurances, such as a clear and long term agreement on price of electricity. Projects can also be facilitated when investors have obtained the expressed support both from the government and the local population.” He adds that, “establishing an enabling environment to accelerate the deployment of sustainable off-grid energy solutions, will require a collective effort. Being a member of the Flemish Parliament and of the Senate, I am regularly in contact with various stakeholders, which is of crucial importance to undertake any legislative work.”

The draft resolution, which will be debated throughout next week’s IPU meetings, and submitted for adoption to the IPU Assembly, represents a unique opportunity for parliamentarians to act decisively. “Ultimately,” says Andries Gryffroy, “legislators must seize the opportunity to act now.”

Source: IRENA

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Sustainable energy at affordable prices precondition for prospering economies in OSCE region and beyond

MD Staff



Lukáš Parízek, State Secretary of the Ministry of Foreign and European Affairs of Slovakia, speaking at the opening meeting of the Mediterranean Contact Group, Vienna, 19 March 2018. (OSCE/Salko Agovic)

Energy security, the protection of critical energy infrastructure, the development and integration of renewable energy and the best use of digitalization for energy security were the focus of the OSCE Mediterranean Contact Group meeting held today in Vienna.

Today’s discussion was the first conducted under the 2018 Slovak Chairmanship of the Mediterranean Contact Group. Participants highlighted that sustainable and reliable energy at affordable prices is the precondition for prospering economies and peace and security throughout the OSCE region and its Mediterranean partner countries (Algeria, Egypt, Israel, Jordan, Morocco and Tunisia).

„Secure, affordable and available energy is vital for national and regional economies across the OSCE region and beyond – a major driver for today’s policymaking and an important part of the 2030 Sustainable Development Agenda,” said the Slovak State Secretary of the Foreign and European Affairs Ministry and Special Representative for 2019 OSCE Chairmanship, Lukáš Parízek.

“Governments need to provide their citizens with affordable energy, at the same time meeting the growing energy demand by the industries, while making them more energy efficient and sustainable,” said Parízek. “Investing in new and more resilient energy infrastructure is crucial. Improved energy connectivity and co-operation in securing the energy supply, transit and demand chains can lead to a better future.”

Participants noted that there is hardly any domain other than energy in which the indivisibility of Euro-Mediterranean security is more consequential for the stability of states and the well-being of the people.

Representative of Italy’s OSCE Chairmanship and Chairperson of the Permanent Council Alessandro Azzoni said that Italy commends Slovakia’s decision to engage with Mediterranean Partners to foster co-operation in the energy domain. “Countries on both shores of the Mediterranean, and thus all OSCE participating States, stand to gain from increased energy security in the Euro-Mediterranean region.”

Azzoni recalled that while Italy was chairing the Mediterranean Contact Group in 2017, it launched the “OSCE GEMS Award for young green entrepreneurs in the Mediterranean region making a social impact”.  “The GEMS Award is a clear example of our efforts to promote co-operation between the OSCE and Mediterranean partners on issues including energy security,” he said.

Recent challenges such as blackouts caused by an increased amount of extreme weather conditions, terrorist and cyber-attacks on physical and digital infrastructure and a changing energy mix were also discussed.

“One of the central energy security challenges of today is how to effectively protect critical energy networks from existing and emerging security threats such as natural and man-made disasters and terrorist cyberattacks,” said the Co-ordinator of OSCE Economic and Environmental Activities, Vuk Žugić. “We stand ready to provide a platform to exchange best practices and build capacity, effectively addressing these issues.”

The Mediterranean Contact Group meeting brought together a number of experts to share perspectives on energy security from both sides of the Mediterranean, with a focus on the growing role of technology.

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Energy is at the heart of the sustainable development agenda to 2030

Dr Fatih Birol



Three years ago, all countries of the world adopted 17 ambitious policy goals to end poverty, protect the planet, promote gender equality, or ensure prosperity, as part of the United Nations Sustainable Development Agenda, and vowed to achieve specific targets by 2030.

Energy is at the heart of many of these Sustainable Development Goals – from expanding access to electricity, to improving clean cooking fuels, from reducing wasteful energy subsidies to curbing deadly air pollution that each year prematurely kills millions around the world. One of these goals – commonly known as SDG 7 – aims to ensure access to affordable, reliable, sustainable and modern energy for all by the end of the next decade.

All these topics are fundamental to the work of the International Energy Agency. As the world’s leading energy authority, the IEA has unmatched analytical capabilities based on its unique data collection, technological network, research, and policy recommendations, which we put in the service of understanding the energy system. As I have often said – in the world of energy, data always wins.

The adoption of energy specific sustainable development goals was a milestone in moving the world towards a more sustainable and equitable system. The IEA continues to support this critical goal with unbiased data and projections. This has long been a personal and professional priority for me. Fifteen years ago, we recognized this basic fact when we first compiled data for electricity access and mapped out a scenario for delivering universal electricity access by 2030 in the World Energy Outlook, the IEA’s benchmark publication.

As a result, the IEA has been tracking country-by-country progress on energy access (SDG 7.1) on an annual basis since 2002. As the world’s most authoritative source of energy statistics, the IEA is also the lead custodian agency for reporting progress towards substantially increasing the share of renewables in the global energy mix (SDG 7.2) and doubling the global rate of improvement in energy efficiency (SDG 7.3).

The United Nations will have the first in-depth review of SDG 7 goals at the High-level Political Forum on Sustainable Development organized in New York, in July this year. This will be a good time to assess where we stand with our global energy goals, where existing national policies are taking us, and how to steer the global energy system towards a more sustainable path. To assist this critical process, the IEA has decided to create a new online resource to centralize all of our data and scenario projections in support of the 2030 Agenda.

It is clear that the energy sector must be at the heart of efforts to lead the world on a more sustainable pathway. But our data and analysis show that the current and planned policies fall well short of achieving our critical energy-related sustainable development objectives.

There has been tremendous progress in delivering universal electricity access (SDG 7.1.1) in Asia and parts of sub-Saharan Africa, with the number of people without access declining to 1.1 billion in 2016, from 1.7 billion in 2000. But on the basis of current progress, more than 670 million people are still projected to be without electricity access in 2030. Much work remains to be done in this field.

The picture is even dimmer when it comes to access to clean and modern cooking facilities (SDG 7.1.2). About 2.8 billion people rely on polluting biomass, coal and kerosene to cook their daily meals, a number which has not changed since 2000. Without greater ambition, 2.3 billion will still remain without clean cooking access in 2030, with grave health, environmental and social consequences.

The share of modern renewables in global final energy consumption (SDG 7.2) has been growing steadily in the past decades, reaching nearly 10% in 2015. However, to achieve a truly sustainable energy system, this share needs to more than double to 21% by 2030. But while wind and solar deployment has accelerated, thanks to falling costs and policy support in many parts of the world, this goal is still out of reach under current policies.

Finally, 2015 was an impressive year for energy efficiency (SDG 7.3), with global energy intensity falling by 2.8%, the fastest annual improvement since 1990. However, the average improvement between 2000 and 2015 of 2.2% still falls short of the 2.6% target needed to achieve the SDG target, and the 3.4% annual improvement needed to meet more ambitious long-term climate objectives.

Tracking progress towards these goals is only one aspect of our sustainable development work. Through our new Sustainable Development Scenario, introduced in 2017, we also seek to map an integrated path for achieving critical global goals in the next three decades: delivering universal energy access by 2030, an early peak in carbon emissions (SDG 13), and reducing deadly air pollution (SDG 3). One of the main finding of this new scenario is that these three goals are not incompatible. Indeed, our analysis shows they can successfully be met together.

But there is an urgent need for action on all fronts, especially on renewables and energy efficiency, which are key for delivering on all three goals – energy access, climate mitigation and lower air pollution. The IEA is committed to keep leading this agenda, and stepping up efforts to support the clean energy transition. We will do so with our unparalleled data, unbiased analysis, and our determined policy support to help move the world towards delivering the 2030 Agenda.

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