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Yara's Hull Plant Mothballing Highlights Europe's Ongoing Energy Challenges

The recent announcement (on 7 February 2025) of Yara International's decision to mothball its Hull ammonia plant in the UK, which has an annual capacity of 300,000 metric tons represents a striking example of how Europe's energy crisis continues to impact industrial production.

This decision is part of a broader strategy to reduce European ammonia production by 1 million metric tons due to high natural gas feedstock costs and the impact of European carbon policies.

The Hull plant closure, likely permanent, reflects the challenges faced by energy-intensive industries in Europe, where elevated energy prices and regulatory pressures have significantly eroded competitiveness.

The Natural Gas-Fertilizer Connection

Fertilizer production, particularly nitrogen-based fertilizers, is
inextricably linked to natural gas prices. Natural gas serves not only as an energy source but also as a key raw material in the production process. Through the Haber-Bosch process, natural gas (methane) is converted into hydrogen, which then combines with nitrogen from the air to produce ammonia – the building block of nitrogen fertilizers.

When natural gas prices surge, fertilizer production costs increase dramatically, as gas can represent up to 80% of the production costs for nitrogen fertilizers. This direct relationship makes fertilizer plants particularly vulnerable to gas price volatility.

The Chain of Events: Europe's Energy Market Transformation

The current situation stems from a series of significant changes in Europe's energy landscape:

Europe took the decisive step of sanctioning gas imports from Russia altogether, forcing a dramatic restructuring of its energy supply chains. This led to a rushed transition toward liquefied natural gas (LNG) from distant suppliers like the United States and Qatar. However, LNG proves significantly more expensive than pipeline gas due to the complex processes of liquefaction, oceanic transport, storage and regasification.

Germany's decision to accelerate the dismantling of its nuclear power plants set an early precedent for increased gas dependency in Europe's largest economy. This shift put additional pressure on the continent's gas supplies and grid stability.

The situation intensified when the Baltic states decided to cut
themselves off from the Russian power grid on 9 February 2025, leading to significant spikes in regional electricity prices. This was preceded by Ukraine's decision to halt gas transit through its territory on 1 January 2025, which had been a crucial pipeline route for Russian gas reaching European markets.

New U.K. Tax Rates Are Hammering North Sea Oil And Gas Drilling

In the UK, the situation intensified in October when the UK government raised the Energy Profits Levy (EPL), commonly known as the windfall tax, from 35% to 38%. The United Kingdom currently imposes one of the world's highest tax burdens on offshore oil and gas production, with operators in the North Sea facing a total tax rate of 78% resulting from the combination of standard taxation and the EPL.

The policy has created a challenging environment for the UK's domestic energy production, Britain now paying the highest electricity prices in the World.

Norway's Gas Threat: A New Risk to Europe's Energy Security

Norway, a critical supplier of natural gas to Europe, has recently hinted at potential disruptions to its energy exports due to domestic and geopolitical pressures. Currently providing nearly half of Germany's gas supply, Norway has become indispensable for European energy security following the decline of Russian gas imports.

However, soaring electricity prices in Norway—six times the EU average—have sparked domestic backlash, with political parties advocating for reduced energy exports to prioritize national affordability. Additionally, technical failures, such as the January 2025 shutdown of Norway's Hammerfest LNG plant, have already tightened Europe's strained energy supply.

These developments highlight Europe’s vulnerability to disruptions in Norwegian gas flows, further exacerbating its ongoing energy crisis.

European Decarbonization Policies

Both the EU and the UK are undergoing significant transformations in their energy landscapes as part of ambitious decarbonization policies aimed at achieving net zero emissions by 2050. The EU’s European Green Deal and legally binding Climate Law, alongside the UK’s Clean Power 2030 Action Plan and Emissions Trading Scheme (ETS), have driven renewable energy adoption and reduced reliance on fossil fuels.

The measures have significantly impacted energy prices across Europe. Investments in green technologies, carbon pricing, and restrictions on fossil fuel use have increased costs for industries and households alike.

In the UK, phasing out coal power and limiting new oil and gas licenses have heightened dependency on renewables and imported energy, raising concerns about energy security.

Deindustrialization in Europe: The Impact of Surging Energy and Gas Prices

These rising costs are placing heavy financial pressure on energy-intensive industries across Europe and the UK, accelerating trends of deindustrialization, exacerbated by geopolitical tensions, net zero energy policy decisions, and the reduction of Russian gas supplies.

Energy-intensive industries, such as chemicals, steel, and aluminum, have been particularly affected, with many companies curbing production or relocating to regions with lower energy costs like the U.S. or Asia. Yara's decision to close its Hull ammonia plant is only the latest in a long list of industrial failures across Europe.

#naturalgas  #deindustrialization  #europe  #fertilizer  #ammonia  #lng #ttf

Gas-fired power station has been added and a generic gas power plant technology created.

#gaspowerplant #gaspowerstation  #naturalgas  #steamcycle  #combinedcycle  #gasturbine 

Gas-fired power station has been added and a generic gas power plant technology created.

#gaspowerplant #gaspowerstation  #naturalgas  #steamcycle  #combinedcycle  #gasturbine 

Data source: U.S. Energy Information Administration, Short-Term Energy Outlook, December 2024.

India has emerged as the leading source of growth in global oil consumption in 2024 and 2025, overtaking China this year, EIA reports.

China’s oil consumption grew by more than India’s in almost every year from 1998 through 2023, with China’s oil consumption regularly growing more than any other country during those years.

Over 2024 and 2025, India accounts for 25% of total oil consumption growth globally. EIA expects an increase of 0.9 million barrels per day (b/d) in global consumption of liquid fuels in 2024 and even more growth in 2025, with global oil consumption increasing by 1.3 million b/d.

Driven by rising demand for transportation fuels and fuels for home cooking, consumption of liquid fuels in India is forecast to increase by 220,000 b/d in 2024 and by 330,000 b/d in 2025. That growth is the most of any country in each of the years.

China’s liquid fuels consumption is expected to grow by 90,000 b/d in 2024 before increasing by 250,000 b/d in 2025. In China, rapidly expanding electric vehicle ownership, rising use of liquefied natural gas for trucking goods, a declining population, and decelerating economic growth have limited consumption growth for transportation fuels. Most of the growth in China is the result of increasing oil use for manufacturing petrochemicals.

Although India’s growth in percentage and volume terms exceeds China’s growth in the forecast, China still consumes significantly more oil. Total consumption of liquid fuels in India was 5.3 million b/d in 2023, while China consumed more than triple that amount at 16.4 million b/d in 2023, based on December estimates.

Read our oil demand forecast to 2050.

#fuels  #petrochemicals  #electricvehicles  #crudeoil  #naturalgas  #lng  #liquidfuels  #china  #india 

ExxonMobil has unveiled an ambitious growth plan to increase its total production of oil and gas to 5.4 million oil-equivalent barrels per day by 2030, representing an 18% increase from current levels.

ExxonMobil News releases | Dec. 11, 2024

KEY PRODUCTION TARGETS

Permian Basin Operations

The company plans to roughly double its production in the Permian Basin to approximately 2.3 million oil-equivalent barrels per day by 20301. This expansion is supported by ExxonMobil's acquisition of Pioneer Natural Resources, which has given them the largest contiguous acreage position in the region1

Guyana Operations

In Guyana, ExxonMobil expects to reach a total production capacity of 1.7 million barrels per day, with gross production growing to 1.3 million barrels per day by 20301. The company plans to develop eight projects in the region by 2030.

FINANCIAL INVESTMENT

Capital Expenditure

▪️ 2025: $27-29 billion in cash capital expenditure1
▪️ 2026-2030: $28-33 billion annually1

Expected Returns

The company projects an additional $20 billion in earnings and $30 billion in cash flow over the next six years. These investments are expected to generate returns of more than 30% over their lifetime4

STRATEGIC FOCUS

By 2030, more than 60% of the company's production will come from advantaged assets (Permian, Guyana, and LNG), up from the current 50%. The company also plans to pursue up to $30 billion in lower emissions investment opportunities while targeting to lower its operated Upstream emissions intensity by 40-50% versus 2016 levels.

#naturalgas  #crudeoil  #exxonmobil  #oildemand  #demandgrowth 

Source: PipeChina | Time: 2024-12-02 | China-Russia East Line Natural Gas Pipeline Completed

On December 2, the China-Russia East Line Natural Gas Pipeline, the largest single-pipe gas transmission pipeline in  China, was fully connected, with an annual gas transmission capacity of 38 billion cubic meters, reaching the highest level. Natural gas is transported from Heihe, Heilongjiang, all the way south to the eastern part of China, and finally reaches Shanghai.

The China-Russia East Line is the third cross-border natural gas pipeline supplying gas to China after the Central Asia Pipeline and the China-Myanmar Pipeline. It is an important part of the Northeast Corridor among China's four major energy strategic channels.
 
The China-Russia East Line starts from Heihe, Heilongjiang Province in the north and ends in Shanghai, passing through 9 provinces, autonomous regions and municipalities. It is 5,111
kilometers long and is divided into three sections: the northern section (Heihe, Heilongjiang Province - Changling, Jilin Province), the middle section (Changling, Jilin Province - Yongqing, Hebei Province), and the southern section (Yongqing, Hebei Province - Shanghai).

Since the northern section was put into operation on December 2, 2019, the sections from Changling, Jilin to Taixing, Jiangsu have been put into operation one after another, and the natural gas transported has increased year by year from 5 billion cubic meters in the first year to more than 30 billion cubic meters in 2024. The Nantong to Luzhi section put into operation this time is the last section of the newly built pipeline in the southern section of the China-Russia East Line, which realizes the full connection of the China-Russia East Line, and the "north gas goes south" directly to Shanghai, and is connected with the West-East Gas Pipeline System to further cover Zhejiang, Anhui and other places.

With the full line connected, the annual gas transmission capacity of the China-Russia East Line reached 38 billion cubic meters, and it was interconnected with the Northeast Pipeline Network, the Shaanxi-Beijing Pipeline System, the West-East Gas Pipeline System, and multiple coastal liquefied natural gas receiving stations and gas storage facilities, effectively enhancing the natural gas supply capacity and emergency peak-shaving guarantee capabilities in China's eastern region. It is estimated that by 2025, the natural gas entering the Yangtze River Delta region through the China-Russia East Line will further increase by nearly 5 billion cubic meters, accounting for about one-fifth of the total gas transmission of the National Pipeline Network Group to the Yangtze River Delta region, effectively improving the regional natural gas supply capacity.

#pipechina  #naturalgas  #naturalgaspipelinegroup  #pipeline  #gaspipeline  #china  #russia  #gasnetwork  #chinarussiaeastline 

African Energy Week 2024 presents the vision of a diversified energy future

AFRICAN ENERGY WEEK: OIL & GAS DEMAND EXPECTED TO REMAIN STRONG THROUGH 2050

Global demand for oil and gas is expected to remain strong in the coming decades, according to Haitham al-Ghais, Secretary-General of the Organization of the Petroleum Exporting Countries (OPEC). Speaking at the  Africa Energy Week (AEW) in Cape Town,  South Africa, on 6 November, Haitham al-Ghais explained that this increase in energy demand would be driven by global population growth and a doubling of global GDP by 2050. “OPEC sees the outlook for global oil and gas consumption as very positive. By 2050, energy demand will increase by 24%,” he said.

The world population, currently 8 billion, is expected to reach 9.7 billion by 2050, with a significant share of this growth concentrated in developing countries, particularly in Africa. Al-Ghais stressed that this population increase and the economic growth of emerging megacities and cities of several million inhabitants would amplify the demand for energy, requiring the mobilization of all available resources, including fossil fuels.

The leading role of oil and gas

According to OPEC projections, oil and natural gas will still account for 55% of global energy supply in 2050, with oil alone accounting for 30% of this share. “The world will need all kinds of energy resources in the coming decades,” the OPEC Secretary General said, adding that renewables, although growing, will not be enough to meet this increased demand. In order to meet the growing needs and stabilize markets, OPEC estimates that massive investments will be needed in the oil sector. “Until 2050, the oil sector will require investments of $17.4 trillion,” al-Ghais said, adding that this funding will be mainly directed towards production programs to ensure stable supplies and prevent sudden fluctuations in fuel prices.

A strategic event for the sector

The African Energy Week, which brings together over 1,000 participants, including officials from 22 African countries, industrialists, business people and analysts, continues until November 8. The event provides a platform to discuss energy challenges in Africa and how the continent can meet the growing global energy needs.

Source

#oilandgas #crudeoil #naturalgas #africa #refining #refinery #oildemand #energy #fossilfuels #fuelprices #oilsector

Francesco Sassi, 21 Oct 2024, eklipX Research

Spanish energy giant Repsol is freezing the development of all major hydrogen assets in the country, says the company.
After international companies cancelled their plans to export hydrogen from Norway to Germany, this is another alarming sign for the industry in the E.U.
According to Repsol, the world-renowned Oil & Gas Spanish giant, has halted all developments of green hydrogen projects in Spain with a large electrolysis capacity, namely over 350 MW. The company says that the existing regulations in Spain are at the root of this decision.
From Repsol's perspective, the current political discussion about possible windfall taxes on energy companies and banks to be confirmed in the long term makes these investments simply too risky.  Spain is one of the few E.U. countries to still apply a windfall profit tax to fund relief measures for consumers. In 2023, the levy granted Madrid additional €2.9 billion going into the State's coffers.
At the end of 2023, the same government extended the measure for 12 months, allowing companies to partially offset the levy on renewable energy projects. Now, the tensions between the State & Market stakeholders are rising due to the proposal of extending the windfall tax in the future.
Thus, we should understand Repsol's decision in the contexts of growing, domestic political frictions, and the instability of the hydrogen market in the E.U.

#oilandgas  #crudeoil  #naturalgas  #hydrogen  #greenhydrogen  #electrolysis  #repsol  #spain  #eu  #pipeline 

Sunset on a refinery

"Oil refineries across Europe will be forced to shut as the West abandons fossil fuels in the race to net zero," – said BP CEO Murray Okincloss, commenting on the company's financial statements, The Telegraph reports.

He believes that older and smaller refineries in the EU will close or switch to biofuels as conventional oil refining becomes unprofitable due to a combination of soaring fuel taxes and falling demand from drivers switching to electric cars.

“So I would expect the least efficient refineries, which are the smallest, oldest around the world, to gradually close down as the world transitions over the next 10 to 30 years.”

BP has four refineries in Europe, three of which are already planned for conversion to produce biofuels including sustainable aviation fuel (SAF). Grangemouth Refinery in Scotland, which is owned by Ineos, employs 500 people but is scheduled to shut early next year.

Data from Fuels Europe shows that refining capacity in the EU, as well as in the UK, Switzerland and Norway, is already declining. Capacity has fallen from 781 million tonnes a year in 2009 to 677 million tonnes now. This means that Europe accounts for about 15% of the world's refining capacity - well behind the US with 21% or  APAC with 36%.

Contradicting the statements reported above, BP said in June that it was scaling back this year’s plans for the development of new sustainable aviation fuel (SAF) and renewable diesel projects at its existing sites, pausing planning for two potential projects while continuing to assess three for progression, according to Oilprice.

“This is aligned with BP’s drive to simplify its portfolio, focusing on value and returns,” the UK-based supermajor said.

In June, BP declared to continue investing in deepwater fields in the Gulf of Mexico, and made a statement saying it was "scaling back" new biofuels projects.

The company has tempered its enthusiasm for its low-carbon program, and with it cut its climate commitments, adapting to an operating model that assumes continued high oil demand into the 2040s and beyond.

“Labour policy says oil and gas production in the North Sea will be with us for decades to come ... They launched a consultation process with the sector last night and we’ll be engaged deeply with them on that,” Okincloss said.

The oil giant's net profit for the second quarter of this year was higher than expected ($2.76 billion). The company's low-carbon and natural gas division, on the other hand, performed poorly, posting a loss of $0.1 billion.

#refining  #refinery  #crudeoil  #naturalgas  #oilandgas  #europe  #saf  #sustainableaviationfuel  #renewablediesel  #biofuels 

Petrochemicals producer and distributor Sidi Kerir Petrochemicals Co. (Sidpec) has announced the formation of a consortium to import US shale gas to 🇪🇬 Egypt. SIDPEC will hold a 25% stake in the $663-million consortium, set to be established later this year.

According to the announcement, 40% of the initiative's financing will come from shareholders within the consortium, while 60% will be secured through bank loans. The consortium includes The Egyptian Ethylene & Derivatives Company (ETHYDCO) (25%), construction contractor Gama Construction Company (25%), refining company Egyptian Petrochemicals Holding Company (ECHEM) (15%), and Egypt's state-owned Egyptian Natural Gas Company (GASCO) (10%).

This initiative responds to Egypt's dwindling natural gas supplies, with estimates indicating the country needs approximately $1.18 billion worth of natural gas imports.

#sidpec  #ethydco  #egypt  #naturalgas  #shalegas  #gasco  #echem 

A completed LNG heat exchanger manufactured at Air Products' Port Manatee facility is being loaded on a carrier at the Port of Manatee for shipment to the customer.

On 10 July 2024, Honeywell and Air Products jointly announced today that Honeywell has agreed to acquire Air Products’ liquefied natural gas (LNG) process technology and equipment business for $1.81 billion in an all-cash transaction. This represents approximately 13x estimated 2024 EBITDA.

Air Products’ LNG Business has approximately 475 employees with headquarters in Allentown, Pennsylvania and a 390,000-square-foot manufacturing facility in Port Manatee, Florida, where all sizes of CWHEs are made.

Currently, Honeywell provides a pre-treatment solution serving LNG customers globally. Air Products’ complementary LNG process technology and equipment business consists of a comprehensive portfolio, including in-house design and manufacturing of coil-wound heat exchangers (CWHE) and related equipment. CWHEs provide the highest throughput of natural gas in a single exchanger with a small footprint and robust, reliable and safe operations both onshore and offshore.

Air Products continues to focus on its two-pillar strategy to grow and invest in its industrial gas business and drive the energy transition through clean hydrogen at scale.

#lng  #hydrogen  #greenhydrogen  #bluehydrogen  #liquifaction  #naturalgas  #airproducts  #honeywell 

Prime Minister Narendra Modi announced that India is poised to invest approximately $67 billion in the development of its oil and gas industry in the upcoming years. Modi stated that the aim is to elevate the share of natural gas in the energy mix from 6% to 15%. He highlighted the necessity of this investment, estimating it will be executed over the next 5-6 years.




Modi further underscored India's significant position as the third-largest global consumer of energy, oil, and LPG, and the fourth-largest importer and processor of LNG. He projected that India's hydrocarbon demand would escalate from the current 19 million barrels of oil equivalent to 38 million boe by 2025.

Emphasizing India's achievements in renewable energy, Modi noted that the country ranks fourth globally in installed renewable energy capacity. He added that approximately 40% of the nation's installed capacity is derived from non-fossil fuel sources.

Considering this trajectory, Modi expressed confidence that, with appropriate strategies, India could potentially serve as a quality alternative to Europe in the coming years, thus hinting at significant geopolitical implications.

#naturalgas  #oilandgas  #investment  #enrgy  #india