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Shale growth, Geopolitical tensions and Re-balancing

Osama Rizvi



It has been a wild ride for oil prices. November 4th, 2017, prime minister of Lebanon Mr. Hariri resigns, at night missiles from rebel occupied Yemen can be seen hurtling across the sky of Kingdom of Saudi Arabia. What begins next has been widely covered by all the major media outlets.

From being termed as a ‘power grab’ to a ‘political purge’ the brusque wave of accountability has scalped all the big guns of the country. Arrests of Prince Alwaleed bin Talal and head of National Guard Miteb bin Abdullah, supposed to be the top contender in the candidature for the Kingship, were quite appalling.

Besides the diplomatic and political comeuppances of these actions, its effect on oil prices was glaring as well. Gaining more than 20 percent in four weeks oil prices crossed $64 a barrel, the highest since 2014 crisis. The gains were further supported by tensions in Iraq and certainty regarding the extension of Vienna accord when the oil producers will meet on 30th November, 2017. Also, in the background was the promising picture of recent inventory withdraws and falling rig count. The oil price rally was the reflection of positive sentiments and high hopes of oil markets and investors as they enjoyed this temporary rally and deemed it as a precursor to the coming stability in the market- a hasty and unfounded conclusion.

That some of the observers were bedazzled by the bright prospective of the oil markets hence ignoring the other side of the equation is completely natural but not logical. I have talked, in my previous article, of the vicious circle (and we all know what that is) which is triggered by an uptick in price translating into a surge in US shale production subsequently hindering an sustainable oil rally which in turn results into a fall in prices. A sort of euthanasia.  It is also important here to slightly touch upon the two factors that can bring in the required ‘sustainability’ factor in these rallies that, now and again, burst forth but fall short of forming any new, higher and permanent floor to prices. One is demand, the second is a reduction in supply by the oil producers (note that production cuts are different from freezing production, which is in place).


This takes us to, what has been termed, a bearish report published by International Energy Agency (IEA) this month. The IEA has lowered its demand forecast by 50,000 bpd and 190,000 bpd for 2017 and 2018 respectively. The report also posited that oil markets might be oversupplied in the fourth quarter of 2017 raising concerns amidst investors. This report is antithetical to what OPEC published last week injecting optimism through mentioning high levels of conformity and touting the total 151,000 bpd reduction in output in the month of October. Other important points include the addition of 1.4 mbpd of oil supply by U.S. shale next year which will easily offset the effects of Vienna accord.

The bearishness doesn’t end here. An article in Bloomberg, torches upon the long-term prospects of U.S. and thereof oil prices. “By 2025, the growth in American oil production will equal that achieved by Saudi Arabia at the height of its expansion, and increases in natural gas will surpass those of the former Soviet Union”, the article said.

The article further goes on to quote Mr. Fatih Birol, IEA Executive Director that “The United States will be the undisputed leader of global oil and gas markets for decades to come”. The price estimate for 2025 in the World Energy Outlook report was changed from $101 previously to $83 and from $125 to $111 for 2040.

In the short-term, however, tensions between Riyadh and Tehran can escalate resulting in a sharp spike in oil prices. But that will be, once again, an ephemeral one. For a substantial rise in oil prices and for markets to re-balance in the true sense, as mentioned earlier, only either by an increase in demand and/or deeper cuts. For the former, even if it happens, we will have to wait and see. The latter might not happen. An extension, yes, but once again—will that be enough?

For now, expect the vicious circle, to play its part every time you see a rally that is not based on a change in fundamentals.

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.


Global energy demand grew by 2.1% in 2017- carbon emissions rose for the first time since 2014

MD Staff



Global energy demand rose by 2.1% in 2017, more than twice the previous year’s rate, boosted by strong global economic growth, with oil, gas and coal meeting most of the increase in demand for energy, and renewables seeing impressive gains.

Over 70% of global energy demand growth was met by oil, natural gas and coal, while renewables accounted for almost all of the rest. Improvements in energy efficiency slowed down last year. As a result of these trends, global energy-related carbon dioxide emissions increased by 1.4% in 2017, after three years of remaining flat.

But carbon emissions, which reached a historical high of 32.5 gigatonnes in 2017, did not rise everywhere. While most major economies saw a rise, others – the United States, the United Kingdom, Mexico and Japan – experienced declines. The biggest drop in emissions came from the United States, driven by higher renewables deployment.

These findings are part of the International Energy Agency’s newest resource – the Global Energy and CO2 Status Report, 2017 – released online today, which provides an up-to-date snapshot of recent trends and developments across all fuels.

“The robust global economy pushed up energy demand last year, which was mostly met by fossil fuels, while renewables made impressive strides,” said Dr Fatih Birol, the IEA’s Executive Director. “The significant growth in global energy-related carbon dioxide emissions in 2017 tells us that current efforts to combat climate change are far from sufficient. For example, there has been a dramatic slowdown in the rate of improvement in global energy efficiency as policy makers have put less focus in this area.”

Other key findings of the report for 2017 include:

  • – Oil demand grew by 1.6%, more than twice the average annual rate seen over the past decade, driven by the transport sector (in particular a growing share of SUVs and trucks in major economies) as well as rising petrochemical demand.
  • – Natural gas consumption grew 3%, the most of all fossil fuels, with China alone accounting for nearly a third of this growth, and the buildings and industry sectors contributing to 80% of the increase in global demand.
  • – Coal demand rose about 1%, reversing declines over the previous two years, driven by an increase in coal-fired electricity generation mostly in Asia.
  • – Renewables had the highest growth rate of any fuel, meeting a quarter of world energy demand growth, as renewables-based electricity generation rose 6.3%, driven by expansion of wind, solar and hydropower.
  • – Electricity generation increased by 3.1%, significantly faster than overall energy demand, and India and China together accounting for 70% of the global increase.
  • – Energy efficiency improvements slowed significantly, with global energy intensity improving by only 1.7% in 2017 compared with 2.3% on average over the last three years, caused by an apparent slowdown in efficiency policy coverage and stringency and lower energy prices.
  • – Fossil fuels accounted for 81% of total energy demand in 2017, a level that has remained stable for more than three decades.

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Forum held in Kigali on increasing access to sustainable energy in East Africa

MD Staff



The Sustainable Energy Forum for East Africa took place between 19 and 21 March 2018 in Kigali, Rwanda. Over 400 high-level representatives from government, business, civil society and international organizations came together to discuss how to increase access to sustainable energy in East African countries.

Three days of discussions focused on the actions needed to scale up sustainable energy development in the region.

“There is need to work together with partners and identify key areas for development of the sustainable energy in the  region as part of our  efforts of  fulfilling the pledge made in the 2030 Agenda for Sustainable Development and the associated Sustainable Development Goals’, said James Musoni, Rwanda’s Minister of Infrastructure.

While the various sessions showcased a diverse set of country experiences in sustainable energy, from scaling up access to electricity to clean cooking fuels, there was a general agreement on the need for new policies and enhanced financing for renewable energy sources and energy efficiency worldwide. To meet these goals, a combination of public and private, and domestic and international resources will be required. Engaging all relevant stakeholders is critical to stimulating progress in the energy transition and achieving the global energy goals.

Rachel Kyte, Special Representative to the UN Secretary-General and CEO, Sustainable Energy for All, said: “There is a lot of good happening in East Africa’s energy transition. However, progress is not at the speed or scale we need to ensure that we don’t leave anyone behind. Continued strong political leadership is crucial to achieve energy productivity across economies, accelerate progress on access to electricity and clean fuels for cooking, and to further increase the share of renewable energy in the mix. East Africa has abundant renewable resources and business ingenuity, and can attract financing. With disciplined leadership and greater ambition, it can deliver an energy future for everyone.”

Another topic highlighted by participants was the relationship between energy and gender. There was a general understanding that the different needs for men and women should be taken into account in sustainable energy programmes and policies in order to increase their effectiveness.

Three reports produced by the United Nations Industrial Development Organization (UNIDO) were released in support of the activities conducted at the Forum. The first study reflects on the main barriers to, and achievements of gender equality in the energy sector in the EAC. Another provides an inventory of ongoing and planned initiatives of sustainable city development across the region. The third study examines clean cooking fuels in the EAC.

Tareq Emtairah, Director of Energy, UNIDO, said “it is important to recognize the vast renewable energy potential in the EAC Partner states. Exploiting these locally available renewable energy resources is a great way to address major challenges such as poverty, energy security, industrial development and environment.”

The Sustainable Energy Forum for East Africa was organized by the East African Centre for Renewable Energy and Energy Efficiency (EACREEE) in collaboration with UNIDO, the EAC Secretariat, the Austrian Development Agency (ADA), Sustainable Energy For All (SEforALL), and the Ministry of Infrastructure of the Republic of Rwanda (MININFRA), and is hosted by the Government of Rwanda.

It was the first of a series of events that will take place in 2018 with the aim of increasing progress on Sustainable Development Goal 7, which focuses on the global effort to ensure access to affordable, reliable, sustainable and modern energy for all.

“Renewable energy and energy efficiency technologies and interventions should be deployed to address global challenges such as population growth and migrations, urban development, climate change mitigation and adaptation, poverty, social, political, health and gender inequalities. Let us double our efforts and keep the momentum high,” said Jesca Eriyo, EAC Deputy Secretary General in charge of Finance and Administration.

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Energy has a role to play in achieving universal access to clean water and sanitation

Molly A. Walton



The world has a water problem. More than 2.1 billion people drink contaminated water.  More than half the global population – about 4.5 billion people – lack access to proper sanitation services. More than a third of the global population is affected by water scarcity, and 80% of wastewater is discharged untreated, adding to already problematic levels of water pollution.

These statistics make for uncomfortable reading but energy can be part of the solution.

The linkages between water and energy are increasingly recognised across businesses, governments and the public – and have been a major area of analysis in the World Energy Outlook. Thinking about water and energy in an integrated way is essential if the world is to reach the United Nations’ Sustainable Development Goals (SDGs) on water: to ensure the availability and sustainable management of water and sanitation for all.

The connection works in both directions. The energy sector accounts for roughly 10% of total water withdrawals and 3% of total water consumption worldwide. Water is essential to almost all aspects of energy supply, from electricity generation to oil supply and biofuels cultivation. Energy is also required for water treatment and to move water to where it is needed; in a first-of-a-kind global assessment, the World Energy Outlook found that, on aggregate, the energy consumption in the water sector globally is roughly equal to that of Australia today, mostly in the form of electricity but also diesel used for irrigation pumps and gas in desalination plants.

With both water and energy needs set to increase, the inter-dependencies between energy and water will intensify. Our analysis finds that the amount of water consumed in the energy sector (i.e. withdrawn but not returned to a source) could rise by almost 60% to 2040. The amount of energy used in the water sector is projected to more than double over the same period.

This challenge will be especially acute in developing countries. This is where energy demand is rising fastest, with developing countries in Asia accounting for two-thirds of the growth in projected consumption. This is also where water demand is likely to grow rapidly for agriculture as well as supply to industry, power generation and households, including those getting access to reliable clean water and sanitation for the first time. This growth will lead to higher levels of wastewater that must be collected and treated, and will require that water supply is available when and where it is needed. As such, how the water-energy nexus is managed is critical, as it has significant implications for economic and social development and the achievement of the UN SDGs, especially SDG 6 on water.

Technology is opening up new ways to manage the potential strains on both the energy and water sides, with creative solutions that leapfrog those used in the past. For example, building new wastewater capacity that capitalizes on energy efficiency and energy recovery opportunities being pioneered by utilities in the European Union and the United States could help temper the associated rise in energy demand from providing sanitation for all and reducing the amount of untreated wastewater (SDG Target 6.2 and 6.3). In some cases, achieving these targets could even produce energy:  WEO analysis found that utilizing the energy embedded in wastewater alone can meet more than half of the electricity required at a wastewater treatment plant.

Summary of SDG 6: Ensure availability and sustainable management of water and sanitation for all

6.1: Universal and equitable access to safe and affordable drinking water for all

6.2: Universal access to adequate and equitable sanitation and hygiene for all and end open defecation, paying special attention to the needs of women and girls

6.3: Improve water quality by reducing pollution, halve the proportion of untreated wastewater and substantially increase recycling and safe reuse globally

6.4: Increase water-use efficiency across all sectors, ensure sustainable withdrawals and supply for freshwater to address water scarcity and lower number of people suffering from water scarcity

6.5: Implement Integrated Water Resource Management at all levels

6.6: Protect and restore water-related ecosystems

6 A/B: Expand international cooperation and capacity-building support to developing countries and strengthen participation by local communities

Source: United Nations,

Smart project designs and technology solutions can also help to reduce the water needs of the energy sector (thereby helping to achieve SDG Target 6.4). The availability of water is an increasingly important measure for assessing the physical, economic and environmental viability of energy projects, and the energy sector is turning to alternative water sources and water recycling to help reduce freshwater constraints. There is also significant scope to lower water use by improving the efficiency of the power plant fleet and deploying more advanced cooling systems for thermal generation.

Moreover the achievement of other energy-related SDGs, including  taking urgent action on climate change (SDG 13) and providing energy for all (SDG 7), will depend on understanding the integrated nature of water and energy.

Moving to a low-carbon energy future does not necessarily reduce water requirements. The more a decarbonisation pathway relies on biofuels production, the deployment of concentrating solar power, carbon capture or nuclear power, the more water it consumes. If not properly managed, this means that a lower carbon pathway could exacerbate water stress or be limited by it.

Many who lack access to energy also lack clean water, opening up an opportunity to provide vital services to those most in need, provided these connections are properly managed. Pairing renewable decentralised energy systems (off-grid systems and mini-grids) with filtration technologies can provide both accesses to electricity and safe drinking water (Target 6.1).  Similarly, linking a toilet with an anaerobic digester can produce biogas for cooking and lighting.  Replacing diesel powered generators with renewables, such as solar PV, to power water pumps can help lower energy costs. However, if not properly managed, this could lead to the inefficient use of water, as was the case in the agricultural sector in India.

As such, the IEA’s new Sustainable Development Scenario, which presents an integrated approach to achieving the main energy-related SDG targets on climate change, air quality and access to modern energy, will add a water dimension to this analysis this year. The aim is to assess what the implications of ensuring clean water and sanitation for all are for the energy sector, and what policymakers need to do to hit multiple goals with an integrated and coherent policy approach.

The WEO’s work on water as part of the Sustainable Development Scenario will be part of WEO-2018, to be released on 13 November, 2018. For more on the WEO’s work on the water-energy nexus, visit

The IEA’s Experts’ Group on R&D Priority-Setting and Evaluation (EGRD) will host a workshop on Addressing the Energy-Water Nexus through R&D Planning and Policies on 28-29 May, 2018.


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