Oil & Energy
Global Energy Advisory: What Does 2018 Hold For Oil Markets?
Oil prices look to be ending the year on a high with WTI breaking $60 on Friday morning and Brent climbing towards the $67 mark. Analysts are now looking towards the New Year, with opinion divided on whether oil markets can maintain this upwards momentum.
Oil prices are set to close out the year up more than 11 percent, hitting their highest level since 2015. However, the road to higher prices was rocky. In the first half of the year, the OPEC cuts appeared to have little effect, and oil prices gyrated. But the cuts started to take a large bite out of inventories in the third quarter and the price rally ensued. Other notable developments included the return of geopolitics as a market mover, with outages in Libya, Iraq, the North Sea and Canada all contributing to higher prices. U.S. shale also came roaring back in 2017, and those production gains are expected to continue into next year. Looking forward, there is disagreement among market analysts about where prices go from here. Some view oil as overpriced, with a price correction looming. Others see oil prices grinding higher as 2018 wears on due to falling inventories.
U.S. oil production unexpectedly falls. The EIA reported a drop in U.S. oil production, with last week’s output falling by 35,000 bpd. Also, crude inventories fell by a robust 4.6 million barrels for the week ending on December 22, although gasoline inventories ticked up again. The dip in oil production could very well be a one-off anomaly, but the report added some bullish momentum to oil on the final trading day of the year. WTI hovered at the $60-per-barrel mark with a few hours left in 2017.
Barclays: Oil set for price correction. Barclay’s analysts argue that oil prices are due for a correction, citing several reasons that point to a coming downturn. Investors are overstretched with bullish bets on oil futures, exposing the market to a snap back in the other direction. Also, China’s economy is expected to slow in 2018, raising the risk of weaker-than-expected demand. Plus, oil supply is rising in the U.S., Brazil and Canada, among other countries. Inventories could start to build again in 2018, slowing the rate of rebalancing. Barclays notes that there are plenty of reasons why their forecast could be wrong, but they predict lower prices in the near-term.
Trump could kill Iran nuclear deal in January. President Trump faces a series of deadlines in January that offer him the opportunity to tear up the 2015 nuclear deal with Iran. Every three months the President has to recertify the agreement, and Trump will have that decision before him again in about two weeks. “[I]n the event we are not able to reach a solution working with Congress and our allies, then the agreement will be terminated,” Trump said in October. The President could restore sanctions on Iran, which could lead to an escalation of conflict. Politico reports that Trump’s top national security team opposes such a move and hopes to convince the President not to go down that road.
Trump scrapping fracking rule. The Trump administration is rolling back Obama-era rules on hydraulic fracturing on public lands. The 2015 proposed rules had not yet taken effect, and were delayed by a Wyoming court. They would have required the disclosure of chemicals used in fracking and also set standards on well design. The oil and gas industry applauded the decision to scrap them.
Cold weather boosts coal and natural gas prices. The rate of coal burning in U.S. power plants hit a three-year high as the eastern half of the country found itself in a deep freeze. Coal temporarily reclaimed the top spot among power sources in the U.S., a position it held for decades until natural gas overtook it a few years ago. Coal and natural gas prices are up on higher demand for heating, with regional price spikes particularly acute. New England saw a spot gas price surge to $35/MMBtu. The development could add a bit of momentum to the Energy Department’s proposal to offer support for coal and nuclear power. Still, it should be noted that Henry Hub prices, while up a bit, remained below $3/MMBtu. The price spike is confined to areas in the northeast, and in any event, natural gas production is expected to continue to rise.
Explosion at Venezuelan refinery. Reuters reported that an explosion hit a unit at Venezuela’s largest refining complex, injuring two workers. The incident highlights the deteriorating state of Venezuela’s oil assets, as state-owned PDVSA lacks the cash to keep up with maintenance.
Libya pipeline explosion. An explosion hit a Libyan pipeline earlier this week, knocking about 70,000 to 100,000 bpd offline. The incident provided a lift to oil prices, and it also highlights the risk to supply from some unstable countries. Libya managed to restore output to about 1 mb/d this year after several years of producing only a fraction of that amount.
Russia looks to shale. Russia is starting to look at its shale potential, and large reserves are thought to be located in the Bazhenov shale in Western Siberia. In fact, it is thought to be the largest shale formation in the world. Up until now, Russia has relied on conventional sources, but Russian companies are starting to move into shale. “The Bazhenov is a huge prize,” says Alexei Vashkevich, Gazprom Neft’s exploration director, according to the WSJ. Output from Russia’s shale is not expected before the mid-2020s, but it could be crucial to offsetting declines from mature oil fields.
In our Numbers Report, we take a look at some of the most important metrics and indicators in the world of energy from the past week. Find out more by clicking here.
Thanks for reading and we’ll see you next week.
Tom Kool
Oil & Energy
The Tofu Brine Battery That Could End the Lithium Era
Researchers in Hong Kong and China have developed a new form of battery that is more eco-friendly and longer lasting than lithium ion batteries – and it runs on tofu brine. The new water battery is still in research phases, but if the technology proves to be scalable enough to hit commercial markets, it could be a game-changer for the energy and tech sectors.
“Compared with current aqueous battery systems … our system delivers exceptional long-term cycling stability and environmental friendliness under neutral conditions,” the research team, composed of scientists from the City University of Hong Kong and Southern University of Science and Technology in Shenzhen, Guangdong, said in a paper published this month in Nature Communications.
The researchers found that their battery model can be recharged over 120,000 times. “At over a hundred thousand cycles, this could mean a single water-based battery could last at least a decade or so,” states a recent report on the breakthrough from Interesting Engineering. “For applications like grid storage (solar farms, wind balancing), that’s extremely valuable,” the article went on to say.
This kind of lifespan would represent a drastic improvement over the battery technologies that dominate today’s market. Lithium-ion batteries degrade after between 1,000 and 3,000 charge cycles. This could prove revolutionary, as finding an alternative to lithium-ion batteries to power rechargeable devices is a major priority for Big Tech and the global energy sector.
Moreover, these tofu-brine batteries could prove safer and more environmentally friendly than lithium-ion batteries. According to the study authors, the full cells are environmentally benign and nontoxic and can be directly discarded to environments according to various standards.” Water based (also called aqueous) batteries can also potentially be cheap to produce as they rely on ingredients that are less rare in addition to being less hazardous.
Lithium is environmentally harmful to extract, prone to fires, and its supply chains are geopolitically fraught. Currently, China alone controls half of the global lithium market, and is rapidly increasing its stake. In 2024, more than eight in ten battery cells on the planet were made in China. This means that finding a battery model that can compete with lithium-ion batteries in applications like grid-scale energy storage and electric vehicles would have revolutionary implications for global markets.
Researchers around the world have been racing to develop battery models that could diversify the market and make it more competitive and resilient. These models range widely in size, components, and application, with models currently under development for next-gen sodium-ion batteries, quantum batteries, nuclear batteries, and even sand and dirt batteries.
Of course, the irony is that the leading alternatives to lithium-ion batteries are also being developed in Chinese labs. If this new tofu-brine battery proves scalable and applicable outside of a laboratory environment, it could just be another step toward Beijing’s goal of near-total domination of clean energy technology value chains and status as the world’s first and premiere ‘electro-state.’
China’s extreme advantage in global battery making gives it a major point of leverage in global economies as the world continues to electrify at a rapid pace. It is estimated that European demand for lithium in batteries will reach kilo tonnes (thousands of tonnes) of Lithium Carbonate Equivalent by next year, and North American demand will reach 250 kit LCE. it’s all but certain that the vast majority of that demand will be supplied by China.
Other nations are aware of the risk of this dependency, and are taking pains to protect and promote domestic battery manufacturing, but these efforts may be too little, too late. “For globally competitive battery manufacturing industries to emerge outside of Asia over the next ten years, companies will need to do far more than ensure regulatory compliance,” summarizes a McKinsey & Company report released in January. “Challenges will need to be overcome on multiple fronts spanning supply chains, talent management, operations and technology.”
By: Haley Zaremba
Oil & Energy
REA TO Spend N100bn On Hybrid Mini-grids For Govt Agencies In 2026
The Rural Electrification Agency (REA) says it will spend N100 billion in 2026 to deploy hybrid mini-grids for government agencies within and outside Abuja.
The Managing Directors, REA, Abba Aliyu, disclosed this while addressing newsmen on the sidelines of the 2026 budget defence session
The approved funds form part of the National Public Sector Solarisation programme, a component of the agency’s broader N170 billion budget proposal for 2026.
The initiative is designed to improve electricity reliability for public institutions while reducing operational costs and easing pressure on the national grid.
Aliyu explained that the agency’s total proposed budget for 2026 stands at N170 billion, with N100 billion of the amount dedicated specifically to the solarisation initiative targeting government agencies.
He said the hybrid mini-grid systems combine solar power with complementary energy sources to ensure an uninterrupted electricity supply.
“The total budget size for 2026 operations is N170 billion, out of which N100 billion had been approved for National Public Sector Solarisation.
Aliyu cited the National Hospital in Abuja as an example where similar infrastructure had been deployed to ensure stable power and cut operational expenses.He added that beyond the Solarisation
Recall that earlier in February 2026, REA signed a Memorandum of Understanding with the Economic Community of West African States (ECOWAS) to deploy solar power systems to 15 public institutions across Nigeria.
The project will be implemented under the Regional Off-Grid Electricity Access Project (ROGEAP), a World Bank-supported initiative aimed at expanding off-grid electricity access across West Africa and the Sahel.
ECOWAS will provide a $700,000 grant to fund the installation of solar photovoltaic systems in selected rural health centres and schools in the Federal Capital Territory, Niger, and Nasarawa States.
Oil & Energy
PIA: TotalEnergies Transfers OLO Oilfield HCDT Obligation To Aradel ……Says HCDT Enabled Completion of 100 Projects In 2 years
In his remarks, the Community Affairs Manager, Aradel Holdings Plc, Blessyn Okpowo, affirmed the company’s commitment to honouring all PIA obligations and continuing Total Energies’ community engagement approach.“We want to say that in line with the PIA, we will honour commitments and duties required of the settlor and we want to work very smoothly with the way TotalEnergies has worked with them,” he stated.
He recognised the Commission’s role in approving the Community Development Plan (CDP) before project start, underscoring regulatory excellence.The parties noted that between 2023 and 2025, the trust has enabled the completion of more than 100 community projects, spanning water supply, electricity, road infrastructure, education, and healthcare with a further 40 projects currently ongoing.
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