ABN AMRO Bank N.V Energy Monthly delivers the most comprehensive view of global energy markets in a single report. Written by a team of specialists since 2005, this flagship publication is a must-read for anyone who needs to know what is happening in the energy industry and why. It's widely known for its incisive commentaries on behind-the-scenes events, analyses of global news and the identification of major new trends. From crude oil to coal, from nuclear power to carbon emissions, it's all here – every month.
ABN AMRO Bank N.V Energy Monthly is produced by the VM Group for ABN AMRO Bank N.V. It can be downloaded here free near the start of each month but can also be sent directly to readers. Contact firstname.lastname@example.org to join our mailing list to receive it on the same day of publication.
“Gaddafi on the Run – Lower Gas Prices on the way”. The US newspaper headline was not only a little premature – it was possibly even wrong. The revolution in Libya was never about control of the country’s huge oil and gas reserves though, no doubt, they heightened the resolve of western countries to help bring about an end to the despotic reign of Muammar Gaddafi. Now, as Libyan rebel and NATO forces try to track down the man who used brute force and corruption to run his own fiefdom for four decades, political and economic reconstruction is already underway. But given the chaotic infrastructure in the battleweary country and with recriminations and even tribal in-fighting likely, how quickly can the world’s 12th largest crude oil exporter recover?
The prospects for the international crude oil market following regime change in Libya forms the feature of this month’s VM Group/ABN AMRO Energy Monthly. Before Libya descended into civil war it was producing an average 1.6m bpd of crude, a modest 2% of global supplies and a droplet compared to the output of most other Opec member states. Around 90% of its production was sold overseas, with oil and gas together representing around 92% of the government’s annual revenues. Its return to full production will help cool crude oil prices – but bigger factors, not least the state of global economic growth – will dwarf the Libya factor.
The September edition of the Energy Monthly also carries our regular update on prices of all major energy products, snapshots of speculative investment movements, a concise summary of all major energy-related news, and an updated series of crude oil supply-demand data from the IEA, EIA and Opec.
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When the Organisation of Petroleum Exporting Countries (Opec) met in June to consider raising crude output it was unanimously assumed that Saudi Arabia, the enduring and predominant force in global oil markets, that got its way and won agreement on higher output quotas. The assumptions were wrong. A coalition of opponents, forged by political as well as financial considerations, gave Riyadh a nasty shock. It lost the argument and quotas were left unchanged, leaving the Saudis to insist they would, as one of the few oil states with any significant spare capacity, produce whatever crude the market needed.
They at once contacted refiners in India, China, South Korea, Taiwan and Europe to ask if they wanted more oil. Suddenly, the Saudi’s desire for a modest increase in output was transformed into a determination to show rival oil suppliers that it was still calling the shots. But the set-back raised wider questions over the country’s continuing ability to maintain its pivotal role in global crude markets, given growing doubts about the true extent of its oil reserves, its increasing need to divert output to satisfy rapidly rising domestic demand as well as its ability to remain top dog in an increasingly fractious and divided oil producing cartel.
We explore the ramifications of this controversial step in the August issue of the VM Group/ABN AMRO Energy Monthly, published today.
The August edition of the Energy Monthly also carries our regular update on prices of all major energy products, snapshots of speculative investment movements, a concise summary of all major energy-related news, and an updated series of crude oil supply-demand data from the IEA, EIA and Opec.
On 23 June, with the Organisation of Petroleum Exporting Countries (Opec) split over whether or not to raise oil production and take the steam out of crude prices, three months of secret international discussions – led by the White House – came to fruition. The International Energy Agency (IEA), acting for 28 of the world’s largest energy consumers, shocked markets by announcing that its member countries would release 60m barrels of crude from their strategic petroleum reserves (half of them from the US) and sell them into the market over the next month. The decision – only the third time the IEA has acted in this way, involving the largest-ever sale of crude from reserves traditionally held for short-term supply emergencies – was presented as compensating for lost Libyan oil production. Opec, it implied, had shirked the task and been left squabbling internally as already-tightening oil supplies threatened a further price spike. We explore the ramifications of this controversial step in the July issue of the VM Group/ABN AMRO Energy Monthly, published today.
The July edition of the Energy Monthly also carries our regular update on prices of all major energy products, snapshots of speculative investment movements, a concise summary of all major energy-related news, and an updated series of crude oil supply-demand data from the IEA, EIA and Opec.
In a breath-taking piece of Realpolitik, German Chancellor Angela Merkel has, 50 years after her country opened its first nuclear power plant and 22 years since it commissioned the last, signalled an end to Germany’s involvement with fission-fuelled energy. The decision to shut down all the country’s nuclear stations by 2022 has been messy and her critics accuse her of panicking in the face of anti-nuclear hysteria. It’s certainly handed Germany an arguably impossible challenge – to fill the energy gap left by nuclear’s departure. The country’s reactors provide almost 23% of its electricity; the German government insists a 10% cut in electricity usage and a doubling of renewable energy sources to 35% by 2020 will do the trick in replacing it. The plan may make political sense - but does it stack up in terms of energy supply and demand over the longer term? The implications of Germany’s nuclear shutdown are explored in the feature of the June issue of the VM Group/ABN AMRO Energy Monthly.
The June edition of the Energy Monthly also carries our regular update on prices of all major energy products, snapshots of speculative investment movements, a concise summary of all major energy-related news, and an updated series of crude oil supply-demand data from the IEA, EIA and Opec.
Every US president since Richard Nixon has taken his own people to task for their “addiction” to oil, and vowed to do something about it. Nixon himself invoked the spirit of the Apollo space missions to achieve energy self-sufficiency, while Gerald Ford warned that the country was no longer in control of its own destiny because of dependence on foreign oil. Jimmy Carter called the energy challenge “the moral equivalent of war” and George W Bush forecast “danger and decline” if the nation continued to rely on unreliable foreigners for its fuel. Most of them sought a technological “silver bullet” but signally failed to find it. Inevitably, President Obama has followed them, admitting that the country has been having “the same old conversation for four decades” but insisting that, this time, things are going to be different. Americans are going to have to change their ways. But the chances of Obama bringing about his energy revolution look hardly more encouraging than those of his equally earnest predecessors. This forms the focus for the feature of the May issue of the VM Group/ABN AMRO Energy Monthly, published today. The May edition of the Energy Monthly also carries our regular update on prices of all major energy products, snapshots of speculative investment movements, a concise summary of all major energy-related news, and an updated series of crude oil supply-demand data from the IEA, EIA and Opec.
Where is nuclear power’s renaissance likely to progress from here? Seen only ten years ago as a sunset industry, to be supplanted by clean-burning gas and renewable energy sources, nuclear power has since managed to revive support from energy companies, politicians and the public. The future of nuclear energy is now again under the spotlight and this topic is the feature of the April issue of the VM Group/ABN AMRO Energy Monthly, published today. The April edition of the Energy Monthly also carries our regular update on prices of all major energy products, snapshots of speculative investment movements, a concise summary of all major energy-related news, and an updated series of crude oil supply-demand data from the IEA, EIA and Opec.
The endangered future of carbon trading forms the main feature of the March issue of the VM Group/ABN AMRO Energy Monthly, published today. In 2009, four years after the European Union launched its much-vaunted Emissions Trading Scheme (ETS), declaring it to be a central component in its ambitious plans to fight climate change, the then Environment Commissioner Stavros Dimas hailed the project as the best model for the rest of the world to follow. That was then and this is now. “One more shock to the system and there won’t be any cap and trade. We will have a carbon tax”, remarked one gloomy trader after witnessing the recent turmoil within the ETS – the victim of a series of cyber-attacks by organised crime, its credibility in question, its structural weaknesses exposed, and its critics able to claim they were right all along. Some of them have long joked that all that was ever needed to trade in the ETS was a telephone number, reflecting a conviction that fundamental fault lines ran through the carbon market. In the words of another deeply cynical commentator: “If you sell moonbeams, this is what you can expect.” By the end of February, Jos Delbeke, head of the European Commission’s climate action directorate, was insisting that the reputation of the emissions trading system could not be allowed to be damaged by widespread criminal activity. He was too late. Now, a concerted effort is underway to re-establish the system’s integrity and reputation – while the rest of the world watches to see if the ETS is the sort of model they really want to follow.
The latest foray into Russia by BP forms the feature for the February issue of the VM Group/ABN AMRO Energy Monthly, published today. Bob Dudley, the New Yorker who stepped up to the plate when Tony Hayward was bundled out as CEO of BP after the Gulf of Mexico debacle, was seen as a man who could repair the company’s fractured image all the way to the White House. But in January, just as the White House Commission published its findings on the Deepwater Horizon disaster, and only two years after Dudley had hastily left Russia with BP complaining of “sustained harassment”, he was pointing the oil giant firmly towards a new era of cooperation with Moscow. The $16bn share swap with Russian state oil company Rosneft – intended to open up the way for oil and gas exploration in the Arctic where, ironically, Rosneft needs BP’s deepwater know-how – immediately drew criticism from the US and anger from BP’s existing joint venture partners in Russia. But behind the immediate drama, loaded with uncertainties and political overtones, lies a strategic decision intended to ensure that BP gets a foothold in a part of the world that may hold up to 25% of the globe’s undiscovered oil and gas reserves.
Where crude oil prices are headed this year forms the topic for the New Year feature of the January issue of the VM Group/ABN AMRO Energy Monthly, published today. Despite the economic slowdown, the price of crude oil ended 2010 at more than $91/barrel, the highest in more than two years. The International Energy Agency says it’s worried that economic recovery is under threat from such high crude oil prices, but there is probably little that can be done about it; the whole world has tilted eastwards – China now accounts for about half the crude oil demand growth outside the OECD. What will be the response of Opec, some of whose members are the only serious ‘swing’ producers, with spare capacity to meet rising demand? Opec is not due to meet before June, but we think six months is rather long to wait – and that it could reconvene earlier than that.
The December issue of the VM Group/ABN AMRO Energy Monthly. The International Energy Agency said in November that the world’s natural gas market was about to have its own “golden age”, because of the likely rapid growth in demand, led by China and the Middle East. But right now, global gas markets are groaning under a supply glut of historic proportions. The worldwide recession has crushed demand, producing a slump in gas prices and leaving markets to face a 5%-15% worldwide surplus at least until 2015, possibly longer. But beyond the stark reality of the current demand situation, there are unprecedented shifts underway in a gas market that has changed out of all recognition in the last decade, and is now undergoing another revolution as it heads towards that golden age. How might the global gas market find equilibrium in this context?
The US coal industry and its problematic future forms the focus of the feature in the November issue of the VM Group/ABN AMRO Energy Monthly. The combined pressures of falling demand, increasing competition from alternative fuels and a swathe of proposed measures to cut harmful pollutants in the fight against climate change mean that coal mining in America is now engaged in a fight for long-term survival. The Obama administration has until recently been regarded as unfriendly to coal, though it is under no illusion about the critical role that coal must continue to play in power generation for the foreseeable future. But if the coal industry is to continue mining production in anything like its present form, then it has to move fast to change its image and its working practices.
The Desertec project forms the focus of the feature in the October issue of the VM Group/ABN AMRO Energy Monthly. The Sahara desert is one of the world’s biggest energy resources – each of its 9.4m kilometres annually soaks up solar energy equivalent to 1.5m barrels of oil. Yet very little of this is captured and converted into an energy form which consumers can actually use. A German-led project, Desertec, the world’s most ambitious project for renewable energy, is now embarked on raising sufficient finance to deliver concentrated solar power (CSP), ultimately equivalent to 470 GW, to both Europe and Africa. It’s a grand scheme – and the necessary finance is on a grand scale too, at least €400bn. It represents a chance for a true revolution not just in power generation, but in cutting CO2 emissions, too. But the challenges ahead – not just commercial but also political and technical – are immense.
The September edition of the VM Group/ABN AMRO Energy Monthly looks at how Big Oil has had a terrible year so far. The explosion on 20 April that killed 11 men and sent BP’s Deepwater Horizon drilling rig to the bottom of the Gulf of Mexico set off an environmental, commercial and political firestorm that may take years to extinguish. The catastrophe raises uncomfortable questions about the offshore oil and gas sector’s operational safety standards, about the regulatory frameworks within which it works and, by no means least, about the insatiable demand for energy that increasingly is sending exploration companies into more difficult and potentially hazardous territory.
The August edition of the VM Group/ABN AMRO Energy Monthly the major new oil resource in Brazil comes under the spotlight. Such has been the flow of good news about his country’s vast energy resources that Brazil’s President Lula da Silva has already declared God to be “a Brazilian”. With what could be up to 100bn barrels of oil lying deep under the Atlantic, Lula says that Brazil is entering a new energy-rich era, in which his country’s new oil will help bring global crude oil prices down, allowing poor countries to buy more of it. Yet there is plenty of scope for all this to turn sour – the levels of required investment are mind-boggling and there are doubts about whether Brazil’s partially state-owned oil major, Petrobras, has sufficient technological expertise to go it alone.
We argue in the July edition of the VM Group/ABN AMRO Energy Monthly that China’s appetite for coal will create all kinds of stresses and strains in the global energy mix – not least by keeping coal prices steadily rising for the foreseeable future.
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