Daily Energy Report
India’s crude imports from Iraq, high costs of energy transition, Chevron’s technical challenges in Venezuela, Libya’s energy ambitions, Iraq’s southern oil export capacity, and more
CHART OF THE DAY: The Decline in India’s Crude Imports from Iraq
Figure (1) above on India’s crude oil imports from Iraq shows the decline in flows in 2022 and how it continued in 2023.
EOA’s Main Takeaway:
Looking at the first 5 months of this year, India’s crude oil imports from Iraq declined by an average of 263,000 b/d, which is the largest decline for this period for any of India’s crude oil suppliers. For example, for the same period, imports from the US declined by an average of 137,000 b/d, while imports from Saudi Arabia dropped by only 101,000 b/d. Imports from some West and North African oil producers almost collapsed.
The decline in imports from the US, West, and North Africa is market-related, while the drop in imports from Saudi Arabia is linked to the OPEC+ output cut. As for Iraq, and while some of its cargoes to Asia have slipped, its crude oil exports to Europe have skyrocketed as it supplants Russian crude barrels.
Our main takeaway here is that there is no competition yet between barrels from Arab Gulf states on the one hand and those from Russia on the other in India’s market. As long as Arab Gulf states can cut production as planned and sell in Europe, they have no problem. In case of a recession and a decline in demand, we may see strong competition in India and China if Russia DOES NOT cut output in line with the OPEC+ quota. As for now, we advise readers to ignore reports about oil competition between Saudi Arabia and its allies in the Gulf on the one hand, and Russia on the other.
STORY OF THE DAY
A coal processing plant in Hejin in central China's Shanxi Province. Source: VOA News, 2019
In its New Energy Outlook: China report, BloombergNEF said that China, which is considered the world’s biggest greenhouse gas emitter, can reach net zero by 2050 if it raises investment in decarbonization to about $38 trillion.
EOA’s Main Takeaway:
The green transition is extremely expensive, and some arguments about investments to meet climate goals are beyond comprehension. This $38 trillion figure is double the annual GDP of China, the second-largest economy in the world. On average, China spent about $180 billion per year in the last five years on the green transition, according to the International Energy Agency (IEA). Assuming no depreciation, no problems, and no malfunction, China needs 211 years to spend the required amount mentioned in the report above.
Just to show how expensive the transition is, the IEA estimates that upgrading the grid to achieve net zero, requires $3.9 trillion. That is more than the total GDP of the entire continent of Africa!
NEWS OF THE DAY