Oil & Energy
New Energy Reality, A Massive Opportunity For Investors
Since the very beginning of the novel coronavirus pandemic, it was clear that coronavirus would have a severe and lasting impact on the energy industry. At first, as the worldwide economy ground to a sudden halt, energy demand plummeted, causing oil markets to go haywire. OPEC+ almost immediately turned on each other causing a price war and global oil glut, and in North America oil prices did the previously unthinkable, with the West Texas Intermediate crude benchmark bottoming out way below zero, closing the day at nearly $40 in the hole. In the same month, energy consumption in the United States hit a stunning 16-year low.
Now, although oil markets have recovered in comparison to what some are calling Black April, the outlook is still bleak for fossil fuels. Energy consumption actually continued to get a lot worse, hitting a whopping 30-year low before leveling off. Demand has not fully recovered to pre-pandemic levels, and energy consumption will remain impacted for a long time to come. As the months have passed, the complexity of what the pandemic has done to our energy consumption patterns has become more clear.
Some of these effects are no-brainers. Commercial and industrial energy consumption is down (consumption in the commercial sector dropped by 11 percent and the industrial sector dropped by 9 percent year over year). Household energy consumption is up (8 percent nationally and an incredible 21 percent in Arizona and Michigan). But the big picture is a lot more complicated, and a lot more interesting.
A new study from Diana Sabau at CommercialCafe compares the second quarter of 2019 to the second quarter of 2020 and analyses the contrast from a number of different angles. The study looks at the breakdown state-by-state, and the impact of COVID-19 on energy consumption is surprisingly diverse in different parts of the country. The state with the biggest drop in commercial energy consumption was Hawaii, which clocked a loss of 22 percent thanks in large part to the shutdown of the tourist sector and the islands’ energy-guzzling hotels and restaurants along with other hospitality-related businesses. Hawaii was followed by Pennsylvania and Washington, D.C., which saw commercial energy consumption drop by 21% and 20%, respectively.
One of the interesting takeaways from this analysis is that the industrial sector’s plummeting energy usage would have been remarkably lower were it not for hospitals, which were running on overdrive and have the energy footprint to prove it. “Because treatments typically heavily rely upon electrical devices — such as heart and vital signs monitors; IV machines; sequential compression devices; ventilators and so on — energy consumption here has increased sixfold,” Com-mercialCafe reports.
The energy mix has also notably changed year over year, with renewables overtaking coal for the first time, and not by a small margin. Renewables beat out the notoriously dirty fossil fuel by 7 percent in the second quarter. Natural gas, however, remained supreme, accounting for about 40 percent of the total energy mix in the first half of this year.
This sudden and extreme change in the way that energy is consumed in the United States has led to great innovation. “With so much unused or underused space on the market, owners and investors are seeing renewed potential in adaptive reuses of these buildings,” For-bes reported this week. “For instance, thousands of square feet of office space in Boston, San Diego, Houston and New York are currently being converted into lab space as demand for this type of space has been growing since the onset of the pandemic.”
Other experts believe that this unprecedented interruption to the energy industry’s status quo is an invaluable opportunity to redirect the trajectory of energy around the world in order to better our means of production and consumption on the eve of catastrophic climate chan-ge. The bigwigs over at the World Economic Forum have advocated for the use of this cataclysmic shift in momentum to design and implement a “new energy order” and a “great reset.” With countries around the world planning green stimulus packages for post-pandemic economic recovery, it’s looking hopeful that one of the silver linings of this tragic pandemic will be a more intentional, efficient, and responsible energy landscape.
Zaremba writes for Oilprice.com
Haley Zaremba
The Federal Government has offered explanation with regard to recent changes to fuel sulphur content standards for diesel.
The Government said the change was part of a regional harmonisation effort, not a relaxation of regulations for local refineries.
The Chief Executive, Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed, told newsmen that the move was only adhering to a 2020 decision by the Economic Community of West African States (ECOWAS) which mandated a gradual shift to cleaner fuels across the region.
Ahmed said the new limits comply with the decision by ECOWAS that mandated stricter fuel specifications, with enforcement starting in January 2021 for non-ECOWAS imports and January 2025 for ECOWAS refineries.
“We are merely implementing the ECOWAS decision adopted in 2020. So, a local refinery with a 650 ppm sulphur in its product is permissible and safe under the ECOWAS rule until January next year where a uniform standard would apply to both the locally refined and imported products outside West Africa”, Ahmed said.
He said importers were notified of the progressive reduction in allowable sulphur content, reaching 200 ppm this month from 300 ppm in February, well before the giant Dangote refinery began supplying diesel.
Recall that an S&P Global report, last week, noted a significant shift in the West African fuel market after Nigeria altered its maximum diesel sulphur content from 200 parts per million (ppm) to around 650 ppm, sparking concerns it might be lowering its standards to accommodate domestically produced diesel which exceeds the 200 ppm cap.
High sulphur content in fuels can damage engines and contribute to air pollution. Nevertheless, the ECOWAS rule currently allows locally produced fuel to have a higher sulphur content until January 2025.
At that point, a uniform standard of below 5 ppm will apply to both domestic refining and imports from outside West Africa.
Importers were previously permitted to bring in diesel with a sulphur content between 1,500 ppm and 3,000 ppm.
It would be noted that the shift to cleaner fuels aligns with global environmental efforts and ensures a level playing field for regional refiners.
The Port Harcourt Electricity Distribution (PHED) plc says it has commenced implementation of the April 2024 Supplementary Order to the MYTO in its franchise area while assuring customers of improved service delivery.
The Supplementary order, which took effect on April 3, 2024, emphasizes provisions of the MYTO applicable to customers on the Band A segment taking into consideration other favorable obligations by the service provider to Band A customers.
The Head, Corporate Communications of the company, Olubukola Ilvebare, revealed that under the new tariff regime, customers on Band A Feeders who typically receive a minimum supply of power for 20hours per day, would now be obliged to pay N225/kwh.
“According to the Order, this new tariff is modeled to cushion the effects of recent shifts in key economic indices such as inflation rates, foreign exchange rates, gas prices, as well as enable improved delivery of other responsibilities across the value chain which impact operational efficiencies and ability to reliably supply power to esteemed customers.
“PHED assures Band A customers of full compliance with the objectives of the new tariff order”, he stated.
Ilvebare also said the management team was committed to delivering of optimal and quality services in this cost reflective dispensation.
The PHED further informed its esteemed customers on the other service Bands of B, C D & E, that their tariff remains unchanged, adding that the recently implemented supplementary order was only APPLICABLE to customers on Band A Feeders.
The Nigerian National Petroleum Company Ltd (NNPCL) has announced the signing of an agreement with African Refinery for a share subscription agreement with Port-Harcourt Refinery.
The agreement would see the co-location of a 100,000bpd refinery within the Port-Harcourt Refinery complex.
This was disclosed in a press statement on the company’s official X handle detailing the nitty-gritty of the deal.
According to the NNPCL, the new refinery, when operational, would produce PMS, AGO, ATK, LPG for both the local and international markets.
It stated, “NNPC Limited’s moves to boost local refining capacity witnessed a boost today with the signing of share subscription agreement between NNPC Limited and African Refinery Port Harcourt Limited for the co-location of a 100,000bpd capacity refinery within the PHRC complex.
“The signing of the agreement is a significant step towards setting in motion the process of building a new refinery which, when fully operational, will supply PMS, AGO, ATK, LPG, and other petroleum products to the local and international markets and provide employment opportunities for Nigerians.
By: Lady Godknows Ogbulu
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