India, Mideast, EU transport corridor unveiled at G20
Leaders of the US, India, Saudi Arabia, the UAE and the EU have agreed to work together to establish a multinational rail and shipping corridor connecting south Asia to the Middle East and Europe. The initiative, announced on the sidelines of the G20 summit in New Delhi on 9 September, could act as a counter to China's growing influence across the energy-rich Middle East.
The India–Middle East–Europe Economic Corridor (IMEC) is "expected to stimulate economic development through enhanced connectivity and economic integration between Asia, the Arabian Gulf and Europe", according to a statement from the White House. It will comprise an eastern corridor linking India to the Mideast Gulf and a northern corridor connecting the Mideast Gulf to Europe, the statement added.
The plan is to connect countries in the Mideast Gulf to Jordan and Israel by rail, and to India and eastern Europe through shipping lanes. Its aim is to facilitate faster transit of goods and commodities, to develop energy infrastructure and to enable the production and transport of green hydrogen to all partner countries.
US president Joe Biden described the project as "a game-changing regional investment" that will lead to a "more stable, more prosperous and integrated Middle East". Biden thanked UAE president Mohammed bin Zayed al-Nahyan for his role in pushing the IMEC project. "I don't think we'd be here without you," Biden said. A well-placed Washington source confirmed to Argus that the UAE was behind the idea and had raised it with the Biden administration at the beginning of the year.
While no timeline for completion was given, US special presidential co-ordinator for global infrastructure and energy security Amos Hochstein said countries would meet in the next 60 days to discuss implementation. European Commission president Ursula von der Leyen said the project will increase the speed of trade between India and Europe by 40pc. Israel prime minister Benjamin Netanyahu described it "an unprecedented international project", realizing "a multi-year vision that will change the face of the Middle East".
The announcement of the deal comes weeks after the Brics group of nations — Brazil, Russia, India, China and South Africa — invited six other countries to become members including Opec producers Saudi Arabia, Iran and the UAE. In the past few years, Washington's traditional Arab partners Saudi Arabia and the UAE have been forging closer economic and trade ties with China, the world's second largest crude consumer. The US aims to woo its allies back through a set of projects and initiatives. China's president Xi Jinping was absent from this year's G20 summit for the first time since he took power.
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Hydrogen industry looks on the bright side
Hydrogen industry looks on the bright side
A tough year for clean hydrogen prospects is giving way to more optimism on projects and demand, writes Pamela Machado London, 24 May (Argus) — The clean hydrogen sector still lacks tangible progress and final investment decisions (FIDs) for projects remain few and far between, but it is reaching a moment of reckoning essential for market maturity, delegates at the World Hydrogen Summit in Rotterdam said this month. When asked whether they were more or less positive than a year ago, industry participants gave diverging answers, but there was widespread agreement that progress on clean hydrogen has been slower than expected in what one called "the year of doldrums". Increasing material and financing costs, the unstable geopolitical situation and a lack of clarity on regulatory frameworks are just some of the challenges developers have faced. This is a "grim environment if you were expecting the Swiss army knife approach" to work, industry body the Australia Hydrogen Council chief executive Fiona Simon said, alluding to the misguided expectation that hydrogen could be used across all sectors to help decarbonise. "We are coming to terms" with the real use and appropriate applications of hydrogen, Simon said, pointing to green steel production. "We are converging on the same concepts and same policies." The industry has reached the point where it is becoming a lot clearer which projects will actually materialise. A greater sense of realism is underpinning discussions, according to Dutch gas company Gasunie chief executive Willemien Terpstra. But delegates widely urged more policy action, especially on the demand side. Spurring on demand will be key to getting to more FIDs, Spanish utility Iberdrola's hydrogen development director, Jorge Palomar Herrero, said. "We can have great intentions and great projects but without the demand they are not going to happen." Even in Europe, which has pushed ahead with efforts to stimulate demand, these have not been enough to spur offtake, Herrero said. Demand-side incentives alone will likely not be enough and eventually there will have to be consumption obligations too, some said. "Carrots" may help to reduce project costs and kick-start production, but "sticks" will be key, delegates heard. Consumption mandates could accelerate momentum in emerging markets that have big ambitions for exports to future demand centres, World Bank private-sector arm IFC energy chief investment officer Ignacio de Calonje said. Governments are now ready to act on these requests, according to Brussels-based industry body the Hydrogen Council's director for policy and partnerships, Daria Nochevnik. "The penny has dropped," Nochevnik told Argus , noting that the need for demand-side action was the number one priority outcome of a ministerial-executive roundtable held in Rotterdam this month. Seeing red, feeling blue But governments must also remove red tape to speed things up, delegates said. European developers in particular are increasingly frustrated with the paperwork involved in funding applications, German utility Uniper vice-president for hydrogen business development Christian Stuckmann said. Shortening lengthy permitting and funding processes is high on governments' lists, Nochevnik noted. Some delegates renewed calls for a wider acceptance of "blue" hydrogen — made from natural gas with carbon capture and storage — to address concerns that, if it is up to renewable hydrogen alone, things will start too late or not at all. There appeared to be widespread consensus that blue hydrogen will have a key role to play, especially in a transitional period, as it can already deliver significant emissions reductions. But there is a "stigma" in Europe, industrial gas firm Linde vice-president for clean energy David Burns said. This could hamper its adoption, which many delegates argued the world cannot afford. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Q&A: Oman Shell to balance upstream with renewables
Q&A: Oman Shell to balance upstream with renewables
Dubai, 24 May (Argus) — Shell has been in Oman for decades now and had a front row seat to its energy evolution from primarily an oil producing nation to now a very gas-rich and gas-leaning hydrocarbons producer. Argus spoke to Oman Shell's country chairman Walid Hadi about the company's energy strategy in the sultanate. Edited highlights follow: How would you characterize Oman's energy sector today, and where do new energies fit into that? Oman is one of the countries where there is quite a bit of overlap between how we see the energy transition and how the country sees it. Oman is clear that hydrocarbons will continue to play a role in its energy system for a long period of time. But it is also looking to decrease the carbon intensity to the most extent which is viable. We need to work on creating new energy systems or new components of energy system like hydrogen and EV charging to facilitate that. It is what we would like to call a 'just transition' because you think about it from macroeconomic perspective of the country and its economic health. Shell is involved across the energy spectrum in Oman – from upstream gas to alternative, clean energies. What is Shell's overall strategy for the country? In Oman, our strategic foundation has three main pillars. The first is around oil and liquids and our ambition is to sustain oil and liquids production. At the same time, we aim to significantly reduce carbon intensity from the oil production coming from PDO. The second strategic pillar is gas, and our ambition here is to grow the amount of gas we are producing in Oman and also to help Oman grow its LNG export capabilities. The more committed we are in unlocking the gas reserves in the country, the more we can support Oman's growth, diversification, and the resilience of its economy through investments and LNG revenue. Gas also offers a very logical and nice link into blue and green hydrogen, whether in sequence or as a stepping stone to scale the hydrogen economy in the country. The last strategic pillar is to establish low-carbon value chains, predominantly centered around hydrogen, more likely blue hydrogen in the short term and very likely material green in the long term, which is subject to regulations and markets developing. How would you view Oman's potential to be a major exporter of green hydrogen? When examining the foundational aspects of green hydrogen manufacturing, such as the quality of solar and wind resources and their onshore complementarity, Oman emerges as a highly competitive country in terms of its capabilities. But where we are in technology and where we are in global markets and on policy frameworks — the demand centers for green hydrogen are maturing but not yet matured. I think there will be a period of discovery for green hydrogen globally, not just for Oman, in the way LNG started 20-30 years ago. When it does, Oman will be well-positioned to play global role in the global hydrogen economy. But the question is, how much time it is going to take us and what kind of multi-collaboration needs to be in place to enable that? The realisation of this potential hinges on several factors: the policies of the Omani government, its bilateral ties with Japan, Korea, and the EU, and the technological advancements within the industry. Shell has also been looking at developing CCUS opportunities in the country. How big a role can CCUS play in the region's energy transition? CCUS is going to be an important tool in decarbonising the global energy system. We have several projects globally that we are pursuing for own scope 1, scope 2 emissions reductions, as well as to enable scope 3 emissions with the customers and partners In Oman, we are pursuing a blue hydrogen project where CCUS is a clear component. This initiative serves as a demonstrative case, helping us gauge the country's potential for CCUS implementation. We are using that as a proof point to understand the potential for CCUS in the country. At this stage, it's too early to gauge the scale of CCUS adoption in Oman or our specific role within it. However, we are among the pioneers in establishing the initial proof point through our Blue Hydrogen initiative. You were able to kick off production in block 10 in just over a year after signing the agreement. How are things progressing there? We have started producing at the plateau levels that we agreed with the government, which is just above 500mn ft³/d. Block 10 gas is sold to the government, through the government-owned Integrated Gas Company (IGC), which so far has been the entity that purchases gas from various operators in Oman like us, Shell. IGC then allocates that gas on a certain policy and value criteria across different sectors. We will require new gas if we are going to expand LNG in Oman. There is active gas exploration happening there in Block 10. We know there is more potential in the block. We still don't know at what scale it can be produce gas or the reservoir's characteristics. But blocks 10 and 11 are a combination of undiscovered and discovered resources. We are aiming to significantly increase gas production through a substantial boost. However, the exact scale and timing of this expansion will only be discernible upon the conclusion of our two-year exploration campaign in the block. We expect to understand the full growth potential by around mid to late 2025. Do you have any updates on block 11? Has exploration work there begun? We did have a material gas discovery which is being appraised this year, but it is a bit too early to draw conclusions at this stage. So, after the appraisal campaign is completed, we will be able to talk more confidently about the production potential. Exploration is a very uncertain business. You must go after a lot of things and only a few will end up working. We have a very aggressive exploration campaign at the moment. We also expect by the end of 2025, we would be in a much better position to determine the next wave of growth and where it is going to come from. Shell is set to become the largest off taker from Oman LNG, how do you view the LNG markets this year and next? As a company, we are convinced, that the demand for LNG will grow and it needs to grow if the world is going to achieve the energy transition Gas must play a role, it has to play a bigger role globally over the time, mainly to replace coal in power generation and given its higher efficiency and lower carbon intensity fuel in the energy mix. While Oman may not be the largest LNG exporter globally or hold the most significant gas reserves, it is a niche player in the gas sector with a sophisticated and high-quality gas infrastructure. Oman's resource base remains robust, driving ongoing exploration and investment efforts. This growth trajectory includes catering to domestic needs and servicing industrial hubs like Duqm and Sohar, alongside allocating resources for export purpose. We have the ambition to grow gas for domestic purpose and for gas for eventual exports Have you identified any international markets to export LNG? We have been historically and predominantly focused on east and we continue to see east as core LNG market with focus on Japan, Korea, and China. Europe has also emerged on the back of the Ukraine-Russia crisis as growing demand center for LNG. Over time we might focus on different markets to a certain extent. It will be driven on maximising value for the country. By Rithika Krishna Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Q&A: Marine CO2 goals need culture shift: TotalEnergies
Q&A: Marine CO2 goals need culture shift: TotalEnergies
Amsterdam, 20 May (Argus) — A cultural change in buying behaviour and supply patterns is necessary for the shipping sector to meet its decarbonisation targets and may be the biggest hurdle to overcome, strategy and projects director for TotalEnergies' marine fuels division Frederic Meyer told Argus. Edited highlights follow: What is the biggest challenge standing in the way of the maritime industry in meeting decarbonisation targets and the fuel transition ? A cultural change is required — for decades the maritime sector has relied on by-products with high energy density from the crude refining process such as fuel oil. The industry will now have to pivot its attention towards fuels developed for the purpose of consumption within the maritime industry. This will also require time as the sector looks to level up, and it remains to be seen whether there will be enough time to meet the International Maritime Organisation (IMO)'s net-zero by or around 2050 targets. But we have seen some good progress from cargo owners who are seeking scope 3 emissions related documents. How does TotalEnergies see marine biodiesel demand moving in the short term? In the short term, there is little incentive for the majority of buyers in the market. This is due to a lack of any regulatory mandates, as well as limited impact from existing regulations such as the IMO's carbon intensity indicator (CII) and the EU's Emissions Trading System (ETS). Despite providing a zero emission factor incentive for biofuels meeting the sustainability criteria under the EU's Renewable Energy Directive (RED), EU ETS is still on a staggered implementation basis beginning with only 40pc this year, rising to 70pc next year and 100pc in 2026. Further, EU ETS prices have been quite low, which also weighed on financial incentives for marine biodiesel. Therefore, many buyers are currently waiting for further incentives and signals from the regulators before purchasing marine biodiesel blends. Another point impacting demand is the current edition of ISO 8217, which does not provide much flexibility when it comes to marine biodiesel blend percentages and specifications. The new 2024 edition will likely provide greater flexibility for blending percentages, as well as a provision for biodiesel that does not meet EN14214 specifications. This will provide greater flexibility from a supply point of view. However, there remains stable demand from buyers who can pass on the extra costs to their customers. And how do you see this demand fluctuating in the medium to long term? If the other alternative marine fuels, such as ammonia and methanol, that are currently being discussed do not develop at the speed necessary to meet the decarbonisation targets, then marine biodiesel demand will likely be firm. Many in the market have voiced concerns regarding biofuel feedstock competition between marine and aviation, ahead of the implementation of sustainable aviation fuel (SAF) mandates in Europe starting next year. With Argus assessments for SAF at much higher levels than marine biodiesel blends, do you think common feedstocks such as used cooking oil (UCO) will get pulled away from maritime and into aviation? With regards to competition among different industries for the same biofuel feedstock, suppliers may channel their feedstock towards aviation fuels due to the higher non-compliance penalties associated with SAF regulations as opposed to those in marine, which would incentivise greater demand for SAF. An area that can be explored for marine is the by-product when producing SAF, which can amount to up to 30pc of the fuel output. This could potentially feed into a marine biodiesel supply pool. So it's not necessarily the case that the two sectors will battle over the same feedstock if process synergies can be found. Regarding fuel specifications, market participants have told Argus that the lack of a marine-specific fuel standard for alternatives such as marine biodiesel is feeding into uncertainty for buyers who may not be as familiar with biofuels. What impact could this have on demand for marine biodiesel blends from your point of view? Currently, mainstream biodiesel specifications in marine biodiesel blends are derived from other markets such as the EN14214 specification from road diesel engines. But given the large flexibility of a marine engine, there is room to test and try different things. For "unconventional" biofuels that do not meet those road specifications, there needs to be a testing process accompanied by proof of results that showcase its safety for combustion within a marine engine. Some companies may not have the means or capacity to test their biodiesel before taking it into the market. But TotalEnergies always ensures that there are no engine-related issues from fuel combustion. Suppliers need to enact the necessary testing and take on the burden, as cutting out this process may create a negative perception for the product more generally. Traders should also take on some of the burden and test their fuels to ensure they are fully compatible with the engine. With many regulations being discussed, how do you see the risk of regulatory clashes impacting the industry? The simple solution would be an electronic register to trace the chain of custody. In the French markets, often times the proof of sustainability (PoS) papers are stored onto an electronic database once they are retired to the relevant authority. This database is then accessible and viewable by the buyer, and the supplier could also further deliver a "sustainability information letter" which mirrors the details found in the PoS. It is important for the maritime sector to adopt an electronically traceable system. What role could other types of fuels such as pyrolysis oil potentially play in the maritime sector's decarbonisation targets? We have teams in research and development at TotalEnergies which are studying the potential use of other molecules, including but not limited to pyrolysis oil, for usage in the maritime sector. It may become an alternative option to avoid industry clashes, as pyrolysis oil would not be an attractive option to the aviation sector. We are currently exploring tyre-based pyrolysis oil, but have only started doing so recently so it remains an untapped resource. We need to figure out the correct purification and distillation process to ensure compatibility with marine engines. For the time being we are specifically looking at tyre-based pyrolysis oil and not plastic-based, but we may look at the latter in a later stage. The fuel would also have to meet the RED criteria of a 65-70pc greenhouse gas (GHG) reduction compared with conventional fossil fuels, so we are still exploring whether this can be achieved. By Hussein Al-Khalisy Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Clean hydrogen industry still upbeat but more realistic
Clean hydrogen industry still upbeat but more realistic
London, 17 May (Argus) — The clean hydrogen sector still lacks tangible progress and final investment decisions (FIDs) for projects remain few and far between, but it is reaching a moment of reckoning essential for market maturity, delegates at the World Hydrogen Summit in Rotterdam said. When asked whether they were more or less positive than a year ago, industry participants gave diverging answers, but there was widespread agreement that progress on clean hydrogen has been slower than expected. This has been "the year of doldrums", the Dutch port of Rotterdam's hydrogen supply chain programme manager Martijn Coopman said. Increasing material and financing costs, the unstable geopolitical situation and a lack of clarity on regulatory frameworks are just some of the challenges developers have faced. This is a "grim environment if you were expecting the Swiss army knife approach" to work, industry body the Australia Hydrogen Council's chief executive Fiona Simon said, alluding to the — misguided — expectation that hydrogen could be used across all sectors to help decarbonise. "We are coming to terms" on the real use and appropriate applications of hydrogen, Simon said, pointing to green steel production. "We are converging on the same concepts and same policies". The industry has reached the point where the wheat is separated from the chaff and it is becoming a lot clearer which projects will actually materialise. There is now a greater sense of "realism" underpinning discussions according to Dutch gas company Gasunie chief executive Willemien Terpstra. And this is why market participants are more optimistic than a year ago. Demanding as ever Still, delegates widely urged more policy action, especially on the demand side, which has been a recurrent theme. Spurring on demand will be key to get to more FIDs, Spanish utility Iberdrola's hydrogen development director Jorge Palomar Herrero, said. "We can have great intentions and great projects but without the demand, they are not going to happen". Even in Europe, which has pushed ahead with efforts to stimulate demand, these have not been enough to spur offtake, Herrero said. Demand-side incentives alone will likely not be enough and eventually there will have to be consumption obligations too, some said. Incentives may help to reduce project costs and kickstart production, but the amount of "carrots" needed is "phenomenal", so "sticks" will be key, the port of Rotterdam's Coopman said. Consumption mandates could help accelerate momentum in emerging markets and developing countries that have big ambitions for exports to future demand centres, the World Bank's private sector arm IFC energy chief investment officer Ignacio de Calonje said. Governments are now ready to act on these requests, according to industry body the Hydrogen Council's director for policy and partnerships Daria Nochevnik. "The penny has dropped," Nochevnik told Argus , noting that the need for demand-side action was the number one priority outcome of a ministerial-executive roundtable held in Rotterdam this week. Red and blue Governments must also remove red tape to speed things up, conference delegates said. European developers in particular are increasingly frustrated with paperwork involved in funding applications, according to German utility Uniper's vice-president for hydrogen business development Christian Stuckmann. Shortening lengthy permitting and funding processes is also high on governments' lists, Nochevnik noted. Some delegates renewed calls for a wider acceptance of "blue" low-carbon hydrogen made from natural gas with carbon capture and storage to address concerns that, if it is up to renewable hydrogen alone, things will start too late — or not at all. There appeared to be widespread consensus that this low-carbon hydrogen will have a key role to play, especially in a transitional period, as it can already deliver significant emissions reductions. But there is still a "stigma" in Europe, according to industrial gas firm Linde's vice-president for clean energy David Burns. This could hamper its adoption, which many delegates argued the world cannot afford. By Pamela Machado Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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