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Shell expects 50pc rise in LNG demand by 2040

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Global demand for liquefied natural gas (LNG) is estimated to rise by more than 50 per cent by 2040, as China and countries in South and Southeast Asia use more LNG to support their economic growth, Shell said in an outlook report on Wednesday.

Global LNG trading rose by 1.8pc to 404 million metric tons in 2023 from 397 million in 2022, Shell said in its 2024 annual LNG outlook, adding that tight supply is maintaining prices and price volatility above historic averages and constraining economic growth.

Although demand for natural gas has peaked in some regions, it continues to rise globally, and is expected to reach around 625-685 million tons per year in 2040 according to the latest industry estimates, the report said.

“China is likely to dominate LNG demand growth this decade as its industry seeks to cut carbon emissions by switching from coal to gas,” said Steve Hill, Executive Vice President for Shell Energy.

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“With China’s coal-based steel sector accounting for more emissions than the total emissions of the UK, Germany and Turkey combined, gas has an essential role to play in tackling one of the world’s biggest sources of carbon emissions and local air pollution,” he added.

OIL APPETITE

Saudi Arabia’s decision to postpone oil capacity expansion plans should not be interpreted as an assessment that demand for crude is falling, OPEC Secretary General Haitham Al Ghais said on Tuesday.

“First of all I want to be clear I cannot comment on a Saudi decision … but this is in no way to be misconstrued as a view that demand is falling,” Al Ghais told Reuters in Dubai on the sidelines of the World Governments Summit.

The Saudi government on Jan 30 ordered state oil company Aramco to lower its target for maximum sustained production capacity to 12 million barrels per day (bpd), 1 million bpd below a target announced in 2020 and set to be reached in 2027.

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Sources have told Reuters the kingdom’s surprise reversal of its oil expansion plan was at least six months in the making and based on an assessment that much of Saudi Arabia’s excess capacity was not being monetised.

Saudi Arabia is the world’s largest oil exporter and de-facto leader of the Organization of Petroleum Exporting Countries.
OPEC raised its world oil demand forecasts for the medium and long term in its annual outlook published in October.

Its World Oil Outlook said it expects world oil demand to reach 116 million barrels a day (bpd) by 2045, around 6 million bpd higher than the previous year’s report, with growth led by China, India, other Asian nations, and Africa and the Middle East.

“We stand by what was published in our latest outlook we firmly believe that it is robust,” Al Ghais said.

OPEC is due to release the 2024 edition of the outlook later this year and Al Ghais said we would have to “wait and see” until September or October when it is due if numbers vary.

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“But we believe now our numbers stand and are very solid numbers,” he said.

“If anything, changing narratives we are seeing now … a lot of countries in the world turning back and slowing down and rethinking their net zero goals … that will create further long-term demand for oil.”

Al Ghais also said he was not concerned about Angola’s exit from the group, announced in December. “It is not the first time a member exits the organization for its own considerations.”

“We have had members leave and members join and we have had some that leave and re-join so I’m not too concerned about that.”

Angola said on Dec 21 that it would leave OPEC, a decision that prompted a drop in oil prices at the time and that some analysts said raised questions about the unity of both OPEC and the wider OPEC+ alliance.

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Al Ghais the country was welcome to re-join if it wished to do so in the future.

The nature of production cuts being implemented by OPEC+, which brings together OPEC and its allies including Russia, being voluntary is a reflection of the group’s flexibility, Al Ghais said.

“For now it’s probably the most suitable way,” he said.

“A voluntary cut is a sovereign decision by a country to adjust its production. It shows the inherent flexibility in our approach and that we have several means and ways to attend to market stability.”

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Yellen pushes for joint G7 response to China industrial overcapacity

Yellen pushes for joint G7 response to China industrial overcapacity

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Yellen pushes for joint G7 response to China industrial overcapacity

 US Treasury Secretary Janet Yellen said on Tuesday that the United States and Europe needed to respond to China’s industrial overcapacity in a “strategic and united way” to keep manufacturers viable on both sides of the Atlantic.

Read more: China solar module exports shift towards Asia, which are up over 100pc for Pakistan

Yellen told reporters during a visit to Frankfurt that G7 finance ministers shared US concerns about Chinese efforts to dominate clean energy industries, but did not need “detailed coordination” on trade actions following the imposition of steep US tariffs on Chinese goods.

“But I do think that the concerns about China’s strategy are shared and all I’m suggesting is that given that many countries share this concern, it’s more forceful to communicate to China as a group,” Yellen said.

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In remarks on the US-European alliance in Frankfurt, Yellen said China’s excess industrial capacity threatened both American and European firms as well as the industrial development of emerging market countries.

Read more: Chinese EV maker BYD welcome to open factory in France: Minister

“China’s industrial policy may seem remote as we sit here in this room, but if we do not respond strategically and in a united way, the viability of businesses in both our countries and around the world could be at risk,” she said.

Last week, the Biden administration announced steep new tariffs on Chinese electric vehicles (EVs), solar products, semiconductors, battery parts, steel and other strategic industries.

Read more: China should hike import tariffs on large cars to 25pc, says research body

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Yellen had warned Chinese officials on a trip to Guangzhou and Beijing in April that the US would not accept their excess production of these goods that would flood global markets with cheap exports.

In remarks later at the TechQuartier technology and finance incubator in Frankfurt, Yellen said Chinese production in these sectors significantly exceeded global demand, threatening the development of clean energy industries around the world.

The Biden administration was taking action to protect US workers and firms from being undercut by “unfair Chinese economic competition”, she said.

Read more: US criticism of Chinese overcapacity rehashes ‘China threat’ rhetoric: Xinhua

She added that Chinese industrial capacity would be a focus of the Group of Seven finance meetings later this week in Stresa, Italy.

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“We want to see healthy green technology sectors, from innovative start-ups to green manufacturing factories, in the United States, Europe, and around the world, not just in China,” Yellen said.

FROZEN RUSSIAN ASSETS

Yellen, who received an honorary degree from the Frankfurt School of Finance and Management, said the European Union and other countries were taking similar actions to use their own authorities to investigate potential trade remedies for Chinese EVs and other products.

Yellen also said that it was important for the G7 countries to show that they had a plan to channel substantial aid to Ukraine from some $300 billion in frozen Russian assets.

Read more: With solar industry in crisis, Europe in a bind over Chinese imports

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She said that not every detail of the plan with a “completed term sheet” needed to be worked out by the time of the G7 leaders’ summit in Puglia, Italy, on June 13-15. But the plan needed enough agreement that leaders could seriously consider it.

Earlier, Yellen said the US and European Union should stand together against Russian aggression and Iranian “support for terrorism,” including agreeing on a way to unlock the value of some $300 billion worth of frozen Russian sovereign assets to aid Ukraine.

“That’s why I believe it’s vital and urgent that we collectively find a way forward to unlock the value of Russian sovereign assets immobilized in our jurisdictions for the benefit of Ukraine,” Yellen said. “This will be a key topic of conversation during G7 meetings this week.”

Yellen also is pushing for the G7 finance leaders to agree at their meetings this week on a plan to use the income stream from the frozen Russian sovereign assets to back a larger loan to Ukraine.

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Asia-Pacific real estate assets at ‘high risk’ from climate change: Report

Asia-Pacific real estate assets at ‘high risk’ from climate change: Report

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Asia-Pacific real estate assets at 'high risk' from climate change: Report

Nearly one in ten properties owned by leading real estate investment trusts (REITs) in the Asia-Pacific region may be at “high risk” of damage from climate change, particularly in coastal regions, a report published on Wednesday showed.

REITs, with an estimated global market capitalisation of about $3 trillion, are considered safe havens for long-term investors but damage from climate risks, such as floods and forest fires, could hurt valuations and boost insurance premiums, climate risk consultancy XDI said.

“What we are seeing is that the physical risks to build assets increase over time under climate change, and are particularly more pronounced in scenarios where global warming is allowed to accelerate,” said lead author Philip Tapsall.

Individual companies and communities that stood to be affected need to do more to adapt to the risks, he added. “We still have time to act, so what we are really trying to do is signal the existence of this risk.”

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Read more: Rangelands demise ‘severely underestimated’: UN report

In its report, XDI analysed more than 2,000 property assets valued totally at $142 billion held by the 20 largest REITs in Japan, Australia, Singapore and Hong Kong.

It used global climate models and regional weather data to assess the damage expected as a result of extreme weather.

Properties suffering annual damage of more than 1 per cent of their total replacement value were deemed “high risk”, with nearly one in ten expected to meet such criteria by 2050. XDI identified coastal inundation as the biggest threat in the Asia-Pacific.

Tapsall called for more transparency and disclosure to ensure that companies, their investors and lenders can measure and manage future climate impacts.

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“The worst thing that could happen is that there is a disorderly withdrawal of capital from vulnerable communities, so what we need is a clear articulation of the risk, and from there to think about the response.” 

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More gas tariffs hikes planned as Pakistan eyes another IMF programme

More gas tariffs hikes planned as Pakistan eyes another IMF programme

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More gas tariffs hikes planned as Pakistan eyes another IMF programme

As the International Monetary Fund (IMF) and Pakistan are currently involved in policy-level talks on the next loan programme, the authorities have proposed another round of gas tariff hike for different set of consumers, sources say.

With the aim of controlling the gas circular debt in mind, Pakistan have shared three plans with the Washington-based lender, the sources said, as the IMF – one of the Bretton Woods Institutions established in 1944 – isn’t backing down on its primary demand of reducing budget deficit.

The latest increase in gas tariffs will be applicable from August this year and affect not only domestic consumers but also fertilizer, cement and CNG sectors.

According to the sources, it is proposed that gas tariffs for both protected and non-protected domestic consumers should be increased by Rs100 to Rs400, depending upon their consumption.

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Read more: Pakistan sees 2024-25 inflation at 11.8pc, IMF thinks it will be 12.7pc

However, the government wants to keep the gas tariffs for tandoors unchanged as these serve the working class and other low-income groups.

Earlier, the PML-N government in Punjab reduced the roti prices, forcing the tandoor owners to sell 100 gram roti for Rs15 and fixed the naan [120 grams] price at Rs20 – a move which has been later replicated in other parts of the country too.

The three plans submitted by Pakistan are part of the overall talks revolving around the gas sector circular debt as well as the intended reforms.

Energy reforms for both gas and power sectors have not only been a main IMF demand but also suggested by the World Bank and other international financial institutions (IFIs).

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That’s why the two sides also held discussions on a dividend scheme to reduce the circular debt which is affecting the working of Sui Northern and Sui Southern – the two marketing companies responsible for gas marketing in the country.

Moreover, the sources also said that the two sides had agreed on data sharing with the IMF concerning arrears recovery, tariffs and tariffs at the latest.

Earlier, it was reported in media that the fertilizer companies did not pass on the benefits to the farmers after receiving billions in subsidies, as the IMF has been advocating for targeted subsidies so that the low-income groups are the beneficiates instead of big businesses.

It worth noting that the urea prices have been raised continuously in Pakistan, which adversely impacted the farmers by increasing the cost of production.

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