‘Paradise’: WA has cheapest gas in OECD Angela Macdonald-Smith Senior resources writer Sep 2, 2022 https://www.afr.com/companies/energy/paradise-wa-has-cheapest-gas-in-oecd-20220902-p5bete Western Australia has become “a low energy price paradise” with the lowest natural gas prices in the OECD, against a broader climate of global energy crises that have driven prices elsewhere – including Australia’s east coast – to record levels, according to consultancy EnergyQuest. Spot gas prices in WA, which has a domestic gas reservation policy of the kind rejected by Queensland when it opened up large gasfields in the past decade for export, averaged $5.54 a gigajoule in the June quarter. This was less than one-fifth of the prevailing price in the UK, and lower than prices in the shale-rich markets of the US and Canada, the firm said on Friday. The findings come as the federal government considers the Australian Competition and Consumer Commission’s recommendation to trigger the Australian Domestic Gas Security Mechanism, a policy tool that could lead to curbs on Queensland LNG exports, for 2023. Western Australia has remained shielded from the eye-watering gas prices hitting much of the rest of the developed world. Getty WA electricity prices are also much lower than in the National Electricity Market on the east coast, averaging $64 a megawatt-hour, while NEM prices were more than four times higher at an unprecedented $284/MWh. The NEM average was more than triple the average of the June quarter last year, even including several weeks when wholesale electricity and gas prices were capped by the Australian Energy Market Operator. WA’s electricity market is at the same time less emissions-intensive than the NEM and coal powers only 38 per cent of generation, compared with 59 per cent, EnergyQuest said in an analysis of the June quarter. “With energy prices at eye-watering levels around the world, we believe that Western Australia now has the lowest gas prices in the OECD,” EnergyQuest said. “Western Australia is a low-energy price paradise.” The findings support the effectiveness of WA’s domestic gas reservation system and capacity market for electricity, which the state’s minister for mines, petroleum and energy, Bill Johnston, says has brought significant benefits by keeping the market well supplied with affordable energy. Previous criticisms of the policies – including that it could deter investment in new gas supply and push up electricity prices by prioritising supply security over efficiency – do not appear to have been borne out by experience in Western Australia, a market that is transitioning to low-carbon power. A system of reserving a proportion of gas reserves was considered before the start-up of the Queensland LNG export industry but was rejected by government at the urging of the LNG project proponents. Since then domestic gas users on the east coast have suffered steep price increases for gas, with some in recent months being charged $45 a gigajoule or more for gas after the failure of their own retailer, in some cases four or five times their previous tariffs. East coast gas prices in the June quarter ranged from an average of $6.36/GJ to $29.85/GJ, EnergyQuest said, with the bottom of the range marked by the average price received for domestic gas by Origin Energy in the quarter, while the top of the range was the Adelaide wholesale price at $29.85/GJ. EnergyQuest said that at the energy prices prevalent in WA, one would expect energy-intensive manufacturing industries to be “falling over themselves” to either expand existing WA operations or open up new plants. “Alas, despite the best efforts of the WA government, it does not appear to be happening,” it noted. The escalation in prices for gas in most countries around the world, exacerbated by the shunning of Russian gas after the invasion of Ukraine, has meant that global prices for the fuel have overtaken oil, despite the increase also in crude oil prices. Brent oil prices averaged $US114 a barrel in the June quarter, but European and Asian spot gas prices were even higher in terms of the energy provided, with benchmark Asian LNG prices of $US31.30 per million British thermal units, the equivalent of $US182 per barrel of oil, EnergyQuest calculated. The US benchmark gas price, Henry Hub, was still below the equivalent value for oil, at $US44 a barrel. At $US386 a tonne, coal was also below oil, at about $US88 a barrel, but almost tripled compared to the preceding quarter. EnergyQuest noted a “complete disconnect” had opened up between spot oil and gas prices as at the end of last month and for forward prices through to November, with European and Asian gas prices still soaring while oil prices have fallen about $US30 a barrel since their peak in June. Gas prices now per MMBTU are approaching the same as for oil prices per barrel, even though oil has 17 times the energy of gas on an equivalent basis, it said, describing prices in Europe as “ruinous”. International consultancy FACTS Global Energy described gas prices in Europe as “exorbitant”, noting that European benchmark futures were last trading at more than $US79/MMBTU, corresponding to about $US450 a barrel for oil. It said natural gas could likely remain “historically expensive” at least into 2024. Australia’s LNG exporters including Woodside Energy, Origin Energy and Santos reaped benefits from the soaring international tariffs, with average Australian LNG prices more than doubling from a year earlier to an average of $17.88/GJ in the June quarter, EnergyQuest said. It estimates Australia exported a record 82.6 million tonnes of LNG in the 12 months to June 30, generating a record $70 billion of revenues, up 130 per cent from 2020-21. But EnergyQuest continues to dispute calculations by the Australian Competition and Consumer Commission about how much uncontracted gas is being exported, calculating the number of cargoes at about half of the number calculated by the competition watchdog.
The Russian-flagged oil tanker Lana is pictured at a port in Marmara Ereglisi, western Turkey. Picture taken January 16, 2022. REUTERS/Yoruk Isik Russia Warns The West: Energy Price Cap Will Be Your Undoing Reuters By Guy Faulconbridge and Felix Light https://gcaptain.com/iran-guards-seize-foreign-ship-in-gulf-for-smuggling-diesel-2/ LONDON, Sept 9 (Reuters) – Russia warned the West on Friday that plans to try to cap the price of Russia’s oil and gas exports in retaliation for the war in Ukraine would fail and ultimately lead to the instability of the United States and Europe. The confrontation over Ukraine has prompted European Union customers to reduce their purchases of Russian energy while both the G7 and the EU are trying to impose a price cap on Russian oil and gas. Just before the EU announced a price cap on Russian gas on Wednesday, President Vladimir Putin threatened to sever supplies if such limits were imposed, warning the West it would freeze like the wolf’s tail in a fairy tale. The Group of Seven major industrialized countries wants to impose an oil price cap that would deny insurance, finance and brokering to oil cargoes priced above a yet to be set price cap on crude and two oil products. Russia’s foreign ministry spokeswoman, Maria Zakharova, said the West did not understand how such steps would ultimately impact their own countries, which would ultimately slip up. “The collective West does not understand: the introduction of a cap on prices for Russian energy resources will lead to a slippery floor under its own feet,” Zakharova said. Russia’s top lawmaker said on Friday that the West’s plans would fail and that prices would soar far beyond their attempted artificial price ceiling. “What G7 state officials call a price ‘ceiling’ will become a price floor,” Vyacheslav Volodin, the speaker of Russia’s lower house of parliament, the Duma, wrote on his Telegram channel. “The global market is not limited to seven countries.” The remarks from Moscow indicate the depth of the confrontation with the West which Putin says is a declining U.S.-dominated coalition which aims to shackle – or even destroy – Russia. The EU says it is in an energy war with Russia. EU energy ministers met on Friday to try to find a way to protect citizens from sky-high energy prices and prevent power utilities from collapsing. “We are in an energy war with Russia,” Czech Industry Minister Jozef Sikela said as he arrived at the emergency Brussels meeting. ‘ENERGY WAR’ Western attempts to punish the world’s biggest producer of natural resources ranging from oil and gas to gold, metals, coal and timber is not an easy task, especially when China, India and other consumers are still happy to continue buying. Still, Putin’s threat to reorient flows of Russian oil and gas eastwards would amount to the biggest turn in Russian energy policy since the Soviets built gas pipelines westwards to Europe from Siberia in the early 1970s. Russia is the world’s second largest oil exporter after Saudi Arabia, the world’s top natural gas exporter. Europe usually imports about 40% of its gas and 30% of its oil from Russia. Since the war began, European Union customers have pledged to reduce their reliance on Russian energy while Russia has cut or shut down supplies on three of its biggest westward gas pipelines while oil supplies have been redirected eastwards. Russia’s Gazprom GAZP.MM has for years been studying the possibility for a major new gas pipeline – the Power of Siberia 2 – to travel through Mongolia taking Russian gas to China. The proposed pipeline could carry 50 billion cubic meters (bcm) of natural gas a year, Gazprom says – slightly less than the Nord Stream 1, the currently shutdown pipeline which links Russia to Germany under the BalticSea. The existing Power of Siberia pipeline, which runs from Russia to China, was launched at the end of 2019 with an annual capacity of 61 bcm per year. (Reporting by Reuters; editing by Guy Faulconbridge)
Australia could grab 20% of the world’s lithium refining by 2027 Bloomberg News | October 4, 2022 https://www.mining.com/web/australia-could-grab-20-of-the-worlds-lithium-refining-by-2027/ Image: Lithium Australia – VSPC Ltd. Australia is poised to grab a fifth of the world’s lithium hydroxide refining capacity within five years as demand grows for battery metals that bypass China, Canberra said in a report. China produces more than 80% of the world’s lithium hydroxide, a processed form of the in-demand metal, according to the International Energy Agency. However, several companies are building refineries in Australia that would turn locally-mined lithium ore into battery-grade chemicals. If these plans progress on time Australia could have 10% of the refining market by 2024 from a negligible amount currently, and 20% by 2027, the government said in a report released Tuesday. But delays and technical issues could derail the timeline, it warned. Chinese company Tianqi Lithium Corp. has already opened a refinery near Perth in Western Australia, in a joint venture with Australia’s IGO Ltd. US group Albemarle Corp. is close to opening a plant nearby in a joint venture with Mineral Resources Ltd. Both projects have been beset with technical problems and cost blowouts, however. Australian groups Wesfarmers Ltd, Mineral Resources and Liontown Resources Ltd. are also planning to open new lithium refineries. Australia is the world’s biggest producer of the raw form of the metal that’s vital to the electric vehicle industry, supplying just under half of global demand. Most of that is sent to China as hard rock ore, where it’s refined into battery-grade lithium hydroxide. Asia remains the biggest market for Australian lithium, but demand is growing in Europe and the US as carmakers there accelerate the switch to EVs, the government said in the report. It cited President Joe Biden’s landmark climate legislation, the Inflation Reduction Act, as a driver of refining in Australia. The IRA grants tax credits on EVs, but requires 50% of materials to be produced either in the US or from a country with a US free trade agreement. The IRA is likely to boost Australia’s lithium sector, BloombergNEF said in a report on Tuesday, pointing to recent announcements by South Korean battery maker SK On Co. and Japan’s Prime Planet Energy & Solutions Inc. that they planned to increase investment in the country. Lithium is on track to become the Australia’s fifth-most valuable export commodity, surpassing beef and wheat, and on par with copper and crude oil, the government said. Exports of the battery metal are forecast to reach A$13.8 billion ($8.9 billion) this financial year, a more than tenfold rise over two years. Most of the growth in export revenue is due to surging prices, which have doubled since the beginning of the year as carmakers around the world scramble to secure enough to meet ambitious EV targets, the government said. Lithium ore prices are projected to more than quadruple this year, it said. Increased output will also drive the sector’s earnings, with Australian lithium production expected to more than double over the next five years. Still, it remains a small export industry next to the three biggest export sectors: iron ore, coal, and liquefied natural gas will together earn A$329 billion in revenue this year, the government forecast. (By James Fernyhough)
Opinion The Best Way to Respond to Saudi Arabia’s Embrace of Putin Sen. Richard Blumenthal and Rep. Ro Khanna propose new legislation to halt arms sales to Saudi Arabia and rebalance the U.S.'s relationship with Riyadh. Saudi Arabia Crown Prince Mohammed bin Salman talks with Russia President Vladimir Putin during a G20 session with other heads of state, Friday, Nov. 30, 2018 in Buenos Aires, Argentina. | Pablo Martinez Monsivais/AP Photo 10/09/2022 https://www.politico.com/news/magaz...over-saudi-arabia-its-time-to-use-it-00061082 This week, Saudi Arabia colluded with Russia — deciding to cut 2 million barrels a day of oil production at the OPEC+ meeting, thus raising the price of gas to Russia’s advantage. The shocking move will worsen global inflation, undermine successful efforts in the U.S. to bring down the price of gas, and help fuel Putin’s unprovoked invasion of Ukraine. The Saudi decision was a pointed blow to the U.S., but the U.S. also has a way to respond: It can promptly pause the massive transfer of American warfare technology into the eager hands of the Saudis. Simply put, America shouldn’t be providing such unlimited control of strategic defense systems to an apparent ally of our greatest enemy — nuclear bomb extortionist Vladmir Putin. That is why we are proposing bicameral legislation in the Senate and House on Tuesday that will immediately halt all U.S. arms sales to Saudi Arabia. For several years now, our colleagues have been considering similar proposals, but those measures haven’t passed. Due to intense bipartisan blowback to Saudi’s collusion with Russia, we think this time is different. Based on our conversation with colleagues, our legislation is already garnering bipartisan support in both chambers. What would lead the Saudis so unwisely to err with their recent OPEC+ mistake? Stunned energy commentators have suggested that the Saudis were merely concerned about their endangered financial returns, acting rationally. Denying any political motives, Ali Shihabi, a Saudi analyst, insisted in the New York Times that the move was merely “to keep the price in an acceptable band.” But this claim is unjustified. OPEC has never cut production in such a record tight market and these production cuts will lead to unsustainably low oil inventories, sending the price of oil skyrocketing out of any “acceptable band.” Furthermore, the G-7 oil price caps plan is not targeted at OPEC; it is strictly limited to Russian oil. Nor can this Saudi move be justified by the non-existent global recession its leaders cite. Presently markets are very tight, with lush 73 percent profit margins for Saudi Arabia. In other words, there was no immediate need for Saudi Arabia to reduce supply unless they were seeking to harm the U.S. to the benefit of Russia. Every OPEC member has been making massive profits recently — except Russia because it is OPEC’s least efficient producer. It costs Russia $46/barrel to extract oil but, with U.S. technology, the Saudi’s cost is only $22/barrel. Plus, only Russia has had to offer huge $35/barrel discounts to customers like India and China since few others want sanctioned Russian oil. To be clear, Saudi Arabia remains important to energy security and stability in the Middle East, to global economic prosperity, and as a regional ally against Iran, but it made a terrible mistake this week. The country’s support for Russia should spark a far-reaching review of the U.S.-Saudi relationship — even as the regime tries to “sportswash” its international image in the wake of Washington Post columnist Jamal Khashoggi’s brutal murder and the humanitarian disaster caused by Saudi’s war in Yemen. Members of Congress are already talking about how best to respond. Some propose extending domestic antitrust laws to international commerce. Others propose reviving a GOP initiative to withdraw U.S. troops from Saudi Arabia. But that idea has failed previously given that the U.S. would rather have its own troops there than Russian or Chinese troops. A simpler, far more urgent move to fortify U.S. national security would be to pause all U.S. military supplies, sales and other weapons aid to Saudi Arabia. This includes the controversial, new and hastily planned Red Sands testing facilities in Saudi Arabia. U.S. military collaboration with the Saudi regime is more extensive than many realize, but that also gives the U.S. significant economic and security leverage over Riyadh. Today, Saudi Arabia is hugelydependent on U.S. defense assistance, purchasing the vast majorityof its arms from the United States. The country cannot substitute defense suppliers unless it wishes to partner with Russia, Iran or China for far inferior systems which have no interoperability with their existing weaponry. (While Saudi does source some military technology from other countries, that’s typically low-grade weaponry and small arms such as legacy grenade launchers, rifles and ammunition.) Perhaps even more important than Saudi’s reliance on U.S. arms is its reliance on U.S. companies to help build up the local defense industry through big-ticket joint ventures. These sensitive and intensive arrangements — which have received little public attention — were largely initiated in 2017 and have outsourced U.S. sensitive technology and U.S. jobs to Saudi Arabia without any U.S. control. The U.S. doesn’t have arrangements of this magnitude with any other allies. Given the early-stage nature of these joint ventures as well as minimal interoperability between Saudi’s current weapons system and potential foreign replacements, Saudi can do little to respond to this proposed legislation other than come back to the table and negotiate with the U.S. in good faith. As one expert noted, “it would take decades to transition away from U.S. and UK aircraft, for example, to Russian or Chinese aircraft. Same is true for tanks, communication and other hi-tech equipment.” It would be a severe challenge, if not downright impossible, for Saudi to execute an overnight short-term sourcing pivot if faced with a ban on arms sales. And any ban could be temporary — until Saudi Arabia reconsiders its embrace of Putin. Maybe it is worth considering some ancient Russian wisdom ourselves. Over a century ago, Russian playwright Anton Chekhov warned, “Knowledge is of no value unless you put it into practice.” Perhaps the same is true about leverage. It is of no value unless used.
The Saudi-U.S. relationship was always a marriage of convenience Analysis by Adam Taylor Reporter October 14, 2022 Saudi Crown Prince Mohammed bin Salman and President Biden meet at Al Salman Palace upon his arrival in Jiddah, Saudi Arabia, on July 15. (Bandar Algaloud/Saudi Royal Court/Reuters) Not even a fist bump could save the Saudi-U. S. relationship. When President Biden visited the Saudi city of Jiddah three months ago, he was greeted with a fratboy-like familiarity by the 37-year-old Crown Prince Mohammed bin Salman. The meeting sparked a wave of criticism for the U.S. leader, who was accused of cozying up to the de facto head of a country he had once pledged to make a “pariah” after to the murder of Saudi dissident and Washington Post contributor Jamal Khashoggi. But any hopes for a renewed bromance between the United States and Saudi Arabia were shattered last week when the Saudi-led oil cartel OPEC Plus announced it would cut its oil output by 2 million barrels a day — a move that could boost prices in the United States over the winter, a major political problem for Biden only a month before highly competitive midterm elections. That OPEC Plus includes Russia, at odds with the United States and its allies over its invasion of Ukraine, was just another kick in the teeth. The Biden administration quickly fired back. It announced it would be reviewing the U.S. relationship with Saudi Arabia, warning of “consequences” for the action. In return, Riyadh offered an unusually detailed and combative response. On the official Saudi Press Agency, an unnamed official rejected any suggestion that it was taking sides against the United States and that the decision to cut production was based only on “economic considerations.”
White collar crime Glencore hit with $490m fine for bribing its way across Africa By Jack Farchy and Jonathan Browning November 4, 2022 https://www.smh.com.au/business/com...ng-its-way-across-africa-20221104-p5bvj8.html Less than four weeks after South Sudan became an independent country in 2011, a delegation of Glencore traders arrived by private jet in search of oil. They were carrying with them $US800,000 ($1.2 million) in cash to pay bribes. The revelation was among several detailed in a London courtroom this week that showed how, decades after Glencore founder Marc Rich created the popular image of commodity traders crisscrossing the globe to dispense bribes in exchange for lucrative contracts, remarkably little had changed in the way some traders at the company were doing business. The revelations about Glencore’s trading in Africa come just six months after the London-listed company pleaded guilty in related US cases.Credit:AP The UK Serious Fraud Office showed how Glencore paid more than $US28 million in bribes across five African countries over five years to 2016, using methods that were in some cases carbon copies of deals that Rich had put in place in the 1970s and 1980s. On Thursday, a judge handed down a penalty of £276 million ($490 million) for Glencore’s conduct, on top of around $US1.1 billion the company has already paid in related cases in the US and Brazil. Glencore traders hand-delivered large quantities of cash to government officials, they sought to profit from political turmoil, and they inserted themselves into government-to-government deals that had been negotiated at preferential rates. In South Sudan, Glencore wasted little time. The east African country became independent on July 9, 2011. By July 21 a Glencore executive – identified by the SFO only as “GE7” and as the company’s Business Ethics Committee member for the London office – was on a plane “to persuade the President of South Sudan and others in government” to give Glencore’s joint venture there a contract to sell its oil. Two other employees arrived in the capital Juba with $US800,000 in cash a few days later. They said it was for “opening office in South Sudan, cash for office infrastructure, salaries, cars,” but Glencore’s local agent in fact used some of it to pay bribes, the SFO said. A few months later, the assistant to the President of South Sudan visited Glencore executives in Zurich and London. A Glencore executive withdrew a further $US275,000 from the company’s “cash desk” at its Swiss headquarters, and the next day Glencore’s South Sudanese unit was offered an oil deal. Commodity traders have spent years trying to distance themselves from the image of their industry forged in the days of characters like Marc Rich, instead presenting themselves as logistics businesses, moving oil, metals and grain from A to B in response to market signals. But the revelations about Glencore’s trading in Africa come just six months after the London-listed company pleaded guilty in related US cases, while top oil trader Vitol Group admitted to paying bribes in three Latin American countries, and Brazilian prosecutors accused Trafigura Group of involvement in a kickback scheme, in a civil case. Trafigura has denied the allegations. “The extremely sizeable cash sums that were permitted to be withdrawn from the offices in Switzerland, using such spurious descriptions as office expenses, demonstrates the most blatant of conduct,” Judge Peter Fraser said at the Southwark Crown Court on Thursday. “It demonstrates the number of people at Glencore who must have been complicit in this behaviour.” An SFO prosecutor said October 24 that as many as 11 former staff were under investigation for criminal wrongdoing. “The corruption described is so brazen. This was less than 10 years ago,” said Alexandra Gillies, author of Crude Intentions, a book about corruption in the oil industry. “It’s critical that the executives and employees involved are held legally accountable. Bribery was clearly an embedded part of the company’s approach to maximising profits in some of the poorest countries in the world.” The UK Serious Fraud Office showed how Glencore paid more than $US28 million in bribes across five African countries over five years to 2016.Credit:Bloomberg At the hearing attended by Glencore’s chair, Kalidas Madhavpeddi, the company’s lawyer said the company “unreservedly regrets the harm caused by these offences.” Madhavpeddi declined to comment on the proceedings when approached by Bloomberg outside the court. The SFO case outlined how in Nigeria, Glencore paid millions of dollars to an intermediary that were used to bribe officials at the state oil company, using sham contracts to disguise the true purpose of the payments. The Nigerian agent also transported cash by private jet to Cameroon. There a Glencore trader used it to bribe officials at the state oil and gas company and the state refinery. In Malawi, Glencore used a playbook that Rich had pioneered 40 years earlier. In the 1980s, thanks to an enterprising employee who went by the pseudonym Monsieur Ndolo, the trading house inserted itself in a deal between the government of Iran and the government of Burundi, profiting from the interest-free payment terms that Tehran was willing to offer its poorer African ally. In its case summary, the SFO detailed how Glencore had done something similar in a government-to-government oil deal between Nigeria and Malawi. Glencore traders and executives sanctioned bribes to officials at the Nigerian state oil company in order to take “take advantage of the ‘free credit’ benefit inherent in the joint venture agreement,” according to the SFO. The SFO noted that Glencore had anti-corruption policies in place at the time of the wrongdoing, but said “these were largely ignored because corruption was condoned at a very senior level within the company.” Bloomberg