Warning of power outages in Europe this winter – ‘Shift away from’ fossil fuels ‘is adding to the price pressure’ – & accusations that Moscow is restricting supply of oil


By: - Climate DepotNovember 16, 2021 4:28 PM

https://www.reuters.com/business/energy/trafigura-ceo-weir-sees-very-very-tight-oil-market-2021-11-16/

Trafigura warns of power outages in Europe this winter

Nov 16 (Reuters) – Europe is at risk of power outages this winter due to insufficient gas reserves and over the long-term, oil could rise above $100 a barrel, the chief executive of commodity trading giant Trafigura said on Tuesday.

Demand for oil, coal and natural gas as well as metals such as cobalt, nickel and copper have soared as the global economy reopens from COVID-19 restrictions, triggering price spikes that threaten the nascent recovery.

European gas prices have hit record highs this year prompting some countries to respond with emergency measures such as price caps and subsidies but that may not be enough, Jeremy Weir said.

“We haven’t got enough gas at the moment quite frankly, we’re not storing for the winter period. So hence there’s a real concern that there’s a potential if we have a cold winter that we could have rolling blackouts in Europe,” Weir said at the FT Commodities Asia Summit.

Russian state gas monopoly Gazprom (GAZP.MM), a major exporter to Europe, started refilling its European storage facilities last week but on Monday it booked lower pipeline capacity for December.

Some European lawmakers have accused Moscow of restricting supply to put pressure on Germany to speed up the authorisation of the Nord Stream 2 pipeline. Russia has denied this.

Climate change has put oil companies under pressure to shift away from polluting fossil fuels and the resulting drop in investment in new production is adding to the price pressure.

“I think people need to recognise it’s not a situation where you might just flick the switch and you increase production. There’s a lot of investment, it takes some time to do that,” said Weir.

Privately owned Trafigura is one of the world’s biggest energy traders

Trafigura is investing in carbon capture and storage and Weir said carbon trading could become Trafigura’s third pillar of business after the business was launched in April.

“What’s interesting is that people shy away from decarbonisation, and I think it’s a great challenge, but also it’s a fantastic business opportunity,” he said.

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Welcome to Net Zero: Trafigura chief warns of rolling power outages in Europe this winter
Financial Times, 16 November 2021

 

Europe risks rolling power outages if there is a prolonged period of cold weather this winter, according to the chief executive of Trafigura, one of the world’s biggest commodity traders.

Speaking at the FT Commodities Asia Summit, Jeremy Weir said there was still insufficient natural gas in the region despite the promise of increased flows from Russia.

“We haven’t got enough gas at the moment quite frankly. We’re not storing for the winter period,” he said. “So hence there is a real concern that. . . if we have a cold winter that we could have rolling blackouts in Europe.”

President Vladimir Putin last month ordered Russia’s state gas giant Gazprom to begin filling the storage facilities it controls in Germany and Austria, boosting hopes that exports to Europe would rise.

However, there has been only limited increases in supply from Russia over the past week and on Monday Gazprom booked lower pipeline capacity for December. Russia has denied restricting exports to Europe but has been accused by lawmakers of trying to put pressure on Germany to speed up the authorisation of the controversial Nord Stream 2 pipeline.

European wholesale prices eased slightly last month but remain more than four times the level of a year ago and have risen in recent days. Some industries have already cut production as a result of record prices, including Trafigura’s Nyrstar zinc business, but there remain fears that the market will remain tight until the spring. Europe is heavily reliant on gas after phasing down coal-fired power generation.

Governments would be expected to cut gas supply to non-essential industries before allowing the electricity grid to be affected, but Weir’s comments illustrate the depth of concern in the energy sector.

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