Both U.S. and European oil and gas companies are expected to see a significant increase in second-quarter earnings, thanks to the resurgence of oil prices, with one firm being described as a “cash machine” by experts. At the same time, there are conflicting reports as to the EU’s emissions from electricity since economic activity began to resume after the shutdown imposed by the pandemic. And Ghana has set its sights on controlling its oil and gas industry, rather than relying on outside investors.
Oil Majors See Cash Rolling In
Oil and gas company earnings and revenue are expected to far exceed expectations in the U.S. in the second quarter of 2021, with those in the sector that have already reported seeing a growth in revenue of more than 90%.
Earnings for the sector during the second quarter of 2021 are expected to be nearly $14 billion, with ExxonMobil and Chevron contributing the largest share in the U.S. market.
ConocoPhillips is expected to announce the third-highest earnings and has been described by Bank of America as a “cash machine.”
In Europe, Royal Dutch Shell Plc displayed its confidence in the sector’s greater profits by increasing dividends to shareholders by nearly 40% and $2 billion of share buybacks. Shell said that supply of their commodity is constrained while demand for it is quite strong.
Meanwhile, France’s TotalEnergies SE announced it expects to buy back as much as $800 million in shares by the end of the year, based on the assumption that the price for a barrel of oil will average $66.
The average price of a barrel of oil in the second quarter of 2021 was roughly $66, in contrast to the same time last year when the average price was $28.
Scots Protest Against ExxonMobil-Run Plant
A chemical plant in Fife, Scotland, has attracted protesters from throughout the country who are demanding that it be shut down.
The plant, which is run jointly by Shell and ExxonMobil, has formerly been the target of protests by local residents who say it is a source of air and noise pollution from flaring. Protesters say the facility has also repeatedly breached environmental regulations.
The two-day protest occurred just after the reopening of the plant, which had closed temporarily for a £140 million upgrade to reduce flaring.
An ExxonMobil spokesman said the company is committed to reductions in emissions and flaring, and is investing significant funds to lessen the plant’s impact on the environment. At the same time, the spokesman said the plant is important to Scotland’s energy supply and its manufacturing supply chain.
Report: EU Uses More Electricity While Emissions Stay the Same
A recently published study says that electricity use in the EU is now back to pre-pandemic levels but with fewer emissions.
The report says the reduction in emissions can be attributed to a decline in fossil fuel use — encouraged by significantly higher prices for gas and for carbon on the EU Emissions Trading System. In the past six months, the price per ton of carbon has moved up to 50 euros, while the cost of renewable energy has remained stable over the same period.
Fossil gas and coal-powered plants were found to be almost twice as expensive to operate as wind and solar plants in some countries, including Spain, Italy, Germany, and France, the report said.
However, another study found that Germany’s emissions from electricity generation produced 21 million more tons during the past six months, with gas and coal-powered plants being responsible for most of that increase. That study found the rise in emissions linked to electricity was a direct result of renewed economic activity.
Currently, nearly half of the electricity supply for the EU’s 27 countries comes from coal, oil, and gas. The bloc is aiming to reduce its greenhouse gas emissions 55% relative to 1990 levels by the year 2030.
Two U.S. Solar Firms Want Tariffs to Continue
Two U.S. solar firms have filed a formal request to the U.S. International Trade Commission seeking to have tariffs extended on imported solar panels.
The tariffs were introduced by former President Donald Trump and were designed to boost U.S. manufacturing, which had been in decline for years. They are set to expire early in 2022, having already dropped to 18% from the original 30%.
The firms requesting the extension — Auxin Solar and Suniva — said that the imports unfairly disadvantaged local manufacturers that could not compete on cost and extending the tariffs would secure the country’s solar energy independence.
However, many solar companies rely on these cheaper imports for carrying out their work, since most U.S. solar industry jobs are in installation and sales. Only 14% of jobs in the solar industry are in manufacturing.
President Joe Biden has said that his climate plan would lead to millions of jobs in clean energy industries.
The Trade Commission says it is looking at the request.
Repsol Increases Ambition for Clean Energy
Repsol has set higher targets for installing renewable energy capacity and investing in clean energy.
The Spanish energy company is now planning to have 6 gigawatts (GW) of renewable energy online worldwide by 2025 after having previously set a target of 5.2 GW. It also hopes to spend 300 million euros more this year on zero- or low-carbon investments than originally planned.
Repsol’s chief executive said they feel confident to aim higher because the company now has the technology and the personnel with requisite skills needed to achieve greater targets.
In the first six months of 2021, the company’s renewable energy capacity increased to just under 500 megawatts (MW) with the addition of solar photovoltaic capacity in Spain’s Ciudad Real province and in Chile.
In a bid to bring down the costs of capital, the firm is also considering acquiring partners for its renewable energy business. It hopes to find a partner for its 335-MW wind farm that began operations in northern Spain last year.
California Power Shortages Prompt State of Emergency
California’s governor instituted a state of emergency that will allow the use of diesel fuel, as the state struggles to supply enough energy during intense heat.
The state faces a power supply shortfall of up to 3.5 GW due to battling fires, intense drought that has decreased hydropower capacity, and intense heat that is increasing the use of air conditioning.
The special order waives air quality rules so that big energy users, including ships, can use diesel as backup fuel. It also is easing requirements for clean energy and storage projects.
California’s grid operator was unable to obtain sufficient additional supplies of power through usual channels.
Ghana Seeks Billion-Dollar Loan for Oil Exploration
Ghana’s government sought permission from the country’s parliament to borrow almost $1.7 billion to develop its oil and gas fields, amid fears that the global energy transition may leave it with stranded assets.
After ExxonMobil pulled out of a venture in the country earlier this year, the government decided it was time for Ghana to take control of the management of its fossil fuel assets. It wants $1.3 billion to buy stakes in two fields. The stakes would be controlled for the government through the Ghana National Petroleum Corporation subsidiary GNPC Explorco.
Another $350 million is being sought to help with covering capital expenditure for another field.
The government has suggested a legal amendment would facilitate it becoming an operator in the industry in its own right.
The pandemic led to a drop in oil revenues for the government, widening the budget deficit from an expected 4.7% in 2020 to more than 11% of GDP.
St. Lucia Receives $21 Million for Geothermal Exploration
The World Bank, along with Canadian and U.K. agencies, has provided $21 million in funds to St. Lucia, an island in the Caribbean, to enable the island to explore its potential for developing geothermal energy.
The funds will finance a project to explore geothermal resources at Sulphur Springs in the town of Soufriere and the viability of developing them as an energy source.
It is also expected to help promote the private sector’s involvement in clean energy projects on the island.
The government is hoping to reduce its dependence on fuel imports while improving the reliability of the island’s electricity supply and facilitating lower electricity costs for homeowners and businesses.
The funds will be spent on exploratory drilling, market engagement, technical assistance, and capacity building.
The project also contains a training component for women interested in obtaining technical jobs in the energy sector.
Opinion writer: Jewel Fraser
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