Two major news pieces have recently been broadcast which are sure to be of interest to petroleum companies in Canada and elsewhere in the world. The first relates to COP27 and pressure to minimize if not eliminate the use of fossil fuels to slow global warming whilst the second explores the impact that the rise in China’s COVID cases is having on oil exports and profits.
COP27
World leaders are currently attending the 27th Global Climate Change Conference in Egypt and the discussion so far has largely centered on attempting to get a commitment to increase funding for measures that will mitigate against climate change and reduce the reliance on fossil fuels.
Many countries have suffered significant damage from storms and unusual weather patterns, which are believed to be caused by global warming. They are calling for rich nations, including Canada, to pay heavy duties to be allowed to continue to produce the fossil fuels needed to produce the enormous raft of petroleum-derived products that are in everyday use around the world.
It is still early days in the conference and no agreements have yet been reached, but it appears that discussions are tense and anybody involved in this industry would be wise to keep abreast of developments.
China’s COVID Resurgence Affecting Petroleum Prices
China’s increasing levels of COVID infection and their commitment to eradicating the disease have seen oil stocks slip again this week as the country continues to resist pressure to import crude oil from Western countries. This will have a knock-on impact on global oil prices which will be a cause for dismay for many in the industry and the risk of a global economic recession is still looking too likely for comfort.
Russia continues to complicate matters, currently transiting the ocean to deliver oil to China via an alternative route to the traditional Suez Canal, which is estimated to be significantly quicker although with a far greater environmental impact should a spillage occur.
A Glimmer of Hope
It isn’t all doom and gloom, however, as Canada may have the answer to both climate change and exports to China and other Asian countries in the form of liquefied natural gas (LNG). Studies from a global energy research and consultancy firm, commissioned by the Canadian Energy Center, propose that supplying LNG to Asian countries to meet their growing demand for energy would not only lower global CO2 emissions by replacing their dependency on coal but the annual net emissions savings would be the equivalent of removing every single car from Canadian roads.
Further work is required to determine the feasibility of this proposal but experts anticipate that global energy demand will only continue to grow over the coming decades, despite pressure from environmental groups to reduce greenhouse gasses and achieve the climate goals set by COP27 and previous iterations.
Canada is well positioned to capitalize on this opportunity which could feasibly achieve two significant goals: increased profits through the supply of LNG to Asia for the generation of power – and substantial reductions in emissions.
It is clear that change is coming and to enjoy continued success, businesses in the industry will need to adapt.