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U.S. LNG exports up by 272% as EU and U.S. host High-Level B2B Energy Forum

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U.S. liquefied natural gas exports up by 272% as EU and U.S. host High-Level Business-to-Business Energy Forum.

In their Joint Statement of 25 July 2018 in Washington D.C., President Juncker and President Trump agreed to strengthen EU-U.S. strategic cooperation with respect to energy. They came in particular to an understanding on the benefits of expanded exports of U.S. liquefied natural gas (LNG) to the EU gas market.

Since the first cargo in April 2016 U.S. LNG exports to the EU have been increasing substantially and have seen a steep rise after President Trump and President Juncker’s meeting in July 2018 increasing by 272%. As a result, March 2019 recorded the highest volume ever of EU-U.S. trade in LNG with more than 1.4 billion cubic metres.

Today, top energy business executives from both sides of the Atlantic meet in Brussels to discuss further ways to enhance LNG trade, the role that competitively-priced U.S.-LNG can play on the EU market and the growing opportunities for using LNG in the transport sector. This High-Level Energy Forum, opened by EU Commissioner for Climate Action and Energy Miguel Arias Cañete and U.S. Secretary of Energy Rick Perry, gives American and European businesses the opportunity to chart further actions to fully harvest commercial opportunities in the LNG trade. These will range from new infrastructure for upstream development, liquefaction and re-gasification to pipeline network distribution as well as new business models and financial instruments in a changing market. It also provides U.S. and European decision-makers from companies in the LNG sector with match-making and deal-making opportunities.

The gathering, which is a clear signal of the strengthened of EU-U.S. cooperation in the field of energy, provided a further occasion for EU Commissioner Miguel Arias Cañete to meet with the U.S. Secretary of Energy Rick Perry and discuss broader aspects of EU-US energy relations.

Speaking after the meeting, Commissioner for Energy and Climate Miguel Arias Cañete said: “Energy security is one of the key success stories of our transatlantic cooperation and one where we both have a keen mutual interest. It is therefore our common objective to further deepen our energy cooperation. Natural gas will remain an important component of the EU’s energy mix in the near future as we move towards cleaner sources of energy. Given our heavy dependence on imports, U.S. liquefied natural gas, if priced competitively, could play an increasing and strategic role in EU gas supply.”

U.S. Secretary of Energy Rick Perry said: “Today’s discussion follows on last July’s joint statement by President Trump and President Juncker on strengthening our strategic energy partnership. We share a history of transatlantic cooperation, through good times and bad, and together we promote our heritage of freedom. The strength of this relationship can particularly be seen in energy. When it comes to natural gas, we each have what the other needs to derive tremendous mutual benefit from advancing our energy relationship.”

Increased imports of U.S. LNG contribute to the EU’s goal of diversification of energy supply. Competitive, fluid and stable, the EU gas market is the second biggest single gas market in the world after the U.S.

European gas imports are projected to increase in the years to come as its domestic production is decreasing, while demand is projected to remain at a comparable level as gas has been identified as an important transition fuel in the EU’s efforts to decarbonise its economy.

Development of liquefied natural gas capacities in the EU

The EU has well-developed liquefied natural gas import capacities, with about 150 billion cubic meters currently spare. At the same time, given their strategic importance for diversification and supply security, current capacities are being expanded and new capacities are being developed. Most recent developments include:

The signature of a grant agreement between the Polish government and the Polskie LNG company for the extension of the Liquefied Natural Gas (LNG) terminal in Świnoujście, in north-western Poland on the Baltic Sea coast, on 24 April. The EU invested almost €128 million from the European Regional Development Fund in extending this terminal, this comes on top of €224 million already invested under the previous funding period.

The final investment decision of the LNG terminal on the island of Krk in Croatia in January 2019. The EU has contributed with a total of €124 million(including €108 million for the terminal and €16 million for the evacuation pipeline).

The EU is also supporting capacity developments in Greece, Spain, Ireland, Sweden and Cyprus, a detailed table is available online. The EU estimates that by 2022 all Member States (but Malta and Cyprus) will have access to three sources of gas and 23 Member States will have access to the global LNG market.

Increase of LNG Imports from the U.S.

Since July 2018, cumulative EU imports of liquefied natural gas from the U.S. have increased by 272%.With a share of 12.6% of EU-LNG imports in 2019 so far, the U.S. is Europe’s third biggest supplier of LNG, while Europe has emerged the primary destination of the U.S. LNG in January to February this year ahead of Asia. The European Union is ready to facilitate more imports of liquefied natural gas from the U.S., if the market conditions are right and prices competitive. This will allow U.S. exporters to further strengthen their position on European markets whilst contributing to the EU’s objectives of security of supply and diversification.

Current figures show that:

In the nine months since the 25 July 2018 Joint Statement, cumulative EU imports of U.S. LNG are up by 272% relative to the period beforehand, a total of 10.4 billion cubic meters (bcm).

In terms of the EU’s total imports of LNG, the U.S. share was 13.4% over the last six months, compared to 2.3% before the Joint Statement.

Since early 2016, the EU has received more than 110 LNG cargoes from the U.S. In 2017 Europe represented more than 10% of total U.S. LNG exports, up from 5% in 2016. In the 2018 calendar year, some 11% of US LNG exports went to the EU market. However, in the 9-month period since the Joint Statement (August 2018 – April 2019), this share rises to nearly 30%.

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Strength of IEA-ASEAN energy cooperation highlighted at Ministerial meeting

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IEA Executive Director Fatih Birol spoke today to Energy Ministers from across Southeast Asia about the latest global and regional energy trends, pathways to net zero emissions and the importance of clean energy investment.

He was participating in the seventh annual dialogue between the IEA and Ministers from the Association of Southeast Asian Nations (ASEAN) – the economic bloc comprised of 10 Southeast Asian economies. The meeting was hosted via video link by Brunei Darussalam, which is chairing ASEAN’s 39th annual Ministers on Energy Meeting (AMEM). 

“The IEA remains firmly committed to assisting ASEAN and its member states in developing pathways towards net zero that respect their capacities and capabilities,” Dr Birol told the Ministers. “One of the key messages from the IEA’s Roadmap to Net Zero by 2050 Roadmap is that not all countries are starting the race to net zero from the same place. I have and will continue to underscore the importance of ensuring that a greater share of global clean energy investment is directed towards the emerging and developing economies including in Southeast Asia to unlock new economic growth possibilities and emissions reductions.’’

This year’s ministerial marks the tenth anniversary of IEA-ASEAN energy cooperation, which was established with a Memorandum of Understanding at the 2011 AMEM in Brunei’s capital, Bandar Seri Begawan. The Ministers and Dr Birol welcomed the adoption of a Commemorative Statement on IEA-ASEAN Energy Cooperation. 

The IEA has significantly scaled up its work with ASEAN and its Member States over the past six years. Indonesia and Thailand became IEA Association Countries in 2015, and Singapore did so the following year. In 2019, under Thailand’s Chairmanship, the IEA was named a Strategic Partner of ASEAN.

The IEA is committed to continue working with ASEAN and its Member States on key energy priorities, including energy security, energy efficiency, clean energy, energy investments and decarbonisation. 

“On this, the tenth anniversary of our collaboration, the IEA is more determined than ever to continue to work hand in hand with our partners in the region to help achieve your energy goals,’’ Dr Birol said. “I very much look forward to the next ten years.” 

The ASEAN Chair in 2022 will be held by Cambodia.

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Indonesia’s First Pumped Storage Hydropower Plant to Support Energy Transition

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The World Bank’s Board of Executive Directors today approved a US$380 million loan to develop Indonesia’s first pumped storage hydropower plant, aiming to improve power generation capacity during peak demand, while supporting the country’s energy transition and decarbonization goals.

“The Indonesian government is committed to reduce greenhouse gas emissions through, among others,  development of renewable energy, energy conservation, and use of clean energy technology. Emission reduction in the energy sector will be driven by new and renewable energy generation and application of energy efficiency,” said Arifin Tasrif, Minister of Energy and Mineral Resources of the Republic of Indonesia.

Over 80 percent of the power generated for the Java-Bali grid, which supplies electricity to 70 percent of the country’s population, comes from fossil fuels. A key measure to support Indonesia’s decarbonization agenda is the development of energy storage to enable integration of renewable energy into the grid. Pumped storage hydropower plays a crucial role in this approach.

The financing will support the construction of the Upper Cisokan pumped storage hydropower plant, to be located between Jakarta and Bandung, with an expected capacity of 1,040 MW. The facility will have significant power generation capacity to meet peak demand, provide significant storage capacity to enable a larger penetration of renewable energies and, because of its close location to two large demand centers, will alleviate increasing transmission loads on the grid. As a result, a more environmentally friendly and reliable supply of electricity will benefit consumers in Java and Bali.

“We are excited about this project as it will be the first of its kind for Indonesia. It represents a turning point for Indonesia’s decarbonization pathway. The World Bank will continue to support Indonesia in its efforts to achieve resilient, sustainable, and inclusive development that will benefit the people of Indonesia now and in the future,” said Satu Kahkonen, World Bank Country Director for Indonesia and Timor-Leste.

Pumped storage hydropower makes use of two water reservoirs at different elevations. At times of low electricity demand or when there is abundant generation from clean power sources, such as solar energy, power from the grid is used to pump water to the upper reservoir. Power is generated during peak demand, usually evening hours, as water moves down to the lower reservoir using a turbine, when electricity generation costs are high.

The project will help enhance the system flexibility and efficiency in balancing supply and demand, and therefore improve the reliability and quality of electricity services in Java and Bali. It also aims to support the government to integrate variable renewable energy into the Java-Bali grid, and to do so in an environmentally and socially sustainable manner.

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Iran determined to boost oil exports despite sanctions

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Iranian Oil Minister Javad Oji has said the Islamic Republic is determined to increase its oil exports despite the U.S. sanctions on the country’s oil industry, adding that the use of oil sanctions as a “political tool” would harm the market.

“There is strong will in Iran to increase oil exports despite the unjust and illegal U.S. sanctions; I promise that good things will happen regarding Iran’s oil sales in the coming months,” Oji told the state TV.

As reported by IRIB, Oji noted that Iran can barter its crude oil for goods or even for services and investment not only in the oil industry but also in other sectors as well.

“Oil sales have dropped dramatically since the imposition of unjust sanctions, but this capacity exists in the Oil Ministry and all the industry’s departments to increase oil sales,” the minister said.

Iranian oil exports have plunged under U.S. sanctions, which were reimposed three years ago after Washington abandoned Tehran’s 2015 nuclear deal with six powers.

“Iran will return to its pre-sanctions crude production level as soon as U.S. sanctions on Iran are lifted,” Oji said.

“We are against using oil as a political tool that would harm the oil market.”

Since April 9, Tehran and six world powers have been in talks to revive the nuclear pact. The sixth round of the negotiations adjourned on June 20. The next round of talks has yet to be scheduled.

Oji said Iran backed a decision made by the Organization of the Petroleum Exporting Countries and allies, a group known as OPEC+, on Wednesday to stick to a policy from July of phasing out record output cuts by adding 400,000 barrels per day (bpd) a month to the market.

Iran has been gradually boosting crude oil production to get ready for a strong comeback into the global market as the talks with world powers over the nuclear deal show signs of progress.

According to a Bloomberg report, National Iranian Oil Company (NIOC) officials have stated that the country’s oil fields are going through overhaul operations and connections with oil buyers are being re-established.

“In the most optimistic estimates, the country could return to pre-sanctions production levels of almost four million barrels a day in as little as three months,” the report published in May stated.

EF/MA

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