Oil Updates — Crude slips; BP says Ukraine war will accelerate transition to clean energy

Oil prices edged lower on Monday, even as Beijing pledged over the weekend to promote a consumption recovery that would support fuel demand.

Brent crude futures fell 31 cents, or 0.36 percent, to $86.35 a barrel at 08.20 a.m. Saudi time, while US West Texas Intermediate crude was at $79.45 a barrel, down 23 cents, or 0.29 percent.

On Saturday, China’s cabinet said it would promote a consumption recovery as the major driver of the economy and boost imports, state broadcaster CCTV reported.

Ukraine war to accelerate shift to clean energy: BP

Russia’s war in Ukraine is expected to weigh on long-term energy demand and accelerate the world’s shift to renewables and low-carbon power as countries boost domestic energy supplies, oil giant BP said in its latest report.

In its benchmark 2023 Energy Outlook, BP said the Ukraine war will slow global economic activity by 2035 by around 3 percent compared with last year’s forecast due to higher food and energy prices as well as reduced trade activity.

BP lowered its oil and gas demand forecast in 2035 by 5 percent and 6 percent, respectively, under its central forecast scenario that is based on governments’ current energy transition plans. The changes are focused mostly in Europe and Asia which rely heavily on energy imports, BP said.

Under its three scenarios, global energy demand peaks between the late 2020s and 2035, according to BP, whose Chief Executive Bernard Looney aims to rapidly grow the company’s renewables business and slash oil and gas output by 2030.

Put together, BP expects primary energy consumption in 2035 to be lower by 2 percent compared with last year’s outlook, with half of the decline due to gains in energy efficiency and half due to lower economic activity.

“The increased focus on energy security as a result of the Russia-Ukraine war has the potential to accelerate the energy transition as countries seek to increase access to domestically produced energy, much of which is likely to come from renewables and other non-fossil fuels,” BP Chief Economist Spencer Dale said in the report.

Oil demand is set to start declining rapidly after 2030 under BP’s three scenarios, but will continue to play a major role in the global energy system, with world demand reaching 70 to 80 million barrels per day by 2035, compared with today’s consumption of around 100 million bpd.

Carbon emissions in 2030, under BP’s central scenario, are 3.7 percent lower than in the previous outlook.

TotalEnergies says well drilling in Lebanon’s offshore Block 9 to begin in Q3

TotalEnergies is keen to start work on Lebanon’s offshore Block 9 “as soon as possible,” with assessments to begin early next month and well-drilling to launch in the third quarter of 2023, its CEO Patrick Pouyanne said on Sunday.

Pouyanne was speaking at a joint news conference in Beirut after signing a three-way consortium deal with QatarEnergy and Eni to explore oil and gas in two maritime blocks off the coast of Lebanon known as Blocks 4 and 9.

Following months of talks, QatarEnergy has taken a 30 percent stake in the consortium, leaving TotalEnergies and Eni with 35 percent each.

Lebanon hopes discoveries will help it reverse a crippling economic crisis that has cost the local currency more than 97 percent of its value, eroded the country’s foreign reserves and caused rolling blackouts across towns and cities.

Pouyanne said a vessel would arrive in Lebanese waters on Feb. 6 to carry out an environmental survey in Block 9, “and we plan to drill during the third quarter of the year.”

The CEO of Eni, Claudio Descalzi, said the exploration could offer a “big opportunity” for Lebanon as the world was facing a major lack of gas.

“From a geological point of view, I am positive” about a discovery in Lebanon’s Block 9, Descalzi told reporters.

“We have to hope and pray that it is a real and material one,” he said.

Pouyanne and Qatar’s energy minister Saad Al-Kaabi, also the CEO of QatarEnergy, said they were discussing possible coordination on renewable energy in Lebanon.

(With input from Reuters)