Saudi energy think tank urges global cooperation

Under Saudi Arabia’s G20 presidency, leaders and central bank governors have agreed new measures to assist low-income countries struggling amid the coronavirus disease outbreak. (AFP)
Short Url
Updated 01 April 2020

Saudi energy think tank urges global cooperation

  • New study argues that global teamwork is the only resolution to the current oil market crisis

DUBAI: A prestigious Saudi Arabian energy think-tank has called for global co-operation to solve the crisis in global oil markets.

The King Abdullah Petroleum Studies and Research Center (KAPSARC) said that the “unprecedented disruption” of recent weeks on the world’s energy markets required “greater international co-operation with the Organization of the Petroleum Exporting Countries (OPEC).”
In a paper entitled “The world needs OPEC, but OPEC can’t go it alone,” the center argued that such co-operation was “the only short-term resolution to the current oil market crisis.”
The study comes amid moves in the international energy community for some form of combined approach by the three big producers — Saudi Arabia, the US and Russia — to stabilize markets.
In recent weeks there has been unprecedented energy volatility which has seen the price of crude fall by half on international markets amid record drops in demand for crude as national economies shut down because of restrictions to combat the coronavirus outbreak.
Energy experts have estimated that global demand for oil has fallen by at least 20 percent in the past month, and that storage facilities around the world are rapidly filling with crude.
Some big producers in the US are believed to be considering shutting oil facilities as prices in local markets reach “negative” levels, meaning that the oil companies pay customers to take crude away.

FASTFACT

20% - Energy experts have estimated that global demand for oil has fallen by at least 20 percent in the past month.

The crisis began earlier this month when Saudi Arabia and Russia — the two leaders of the OPEC+ alliance of OPEC members and other producers — failed to agree new output restrictions at a meeting in Vienna.
Saudi Arabia responded by announcing big new production targets, with capacity set to reach 12.3 million barrels per day next month, and significant discounts to customers around the world. Russia and several other big producers in the UAE, Iraq and Nigeria also said they would be lifting their crude output.
“The result of no-deal was another blow to the market sentiment, which was already turning bearish in the face of the growing COVID-19 outbreak. Oil market volatility is now at an all-time high, with the turmoil in the global
financial system further exacerbating the situation and making it more difficult for OPEC and supporting countries to stabilize the market,” KAPSARC said.


EU pledges to stay green in virus recovery

Updated 29 May 2020

EU pledges to stay green in virus recovery

  • To help economies from the 27-nation bloc bounce back as quick as possible

BRUSSELS: The European Commission pledged on Thursday to stay away from fossil-fueled projects in its coronavirus recovery strategy, and to stick to its target of making Europe the first climate neutral continent by the middle of the century, but environmental groups said they were unimpressed.

To weather the deep recession triggered by the pandemic, Commission President Ursula von der Leyen has proposed a €1.85 trillion ($2 trillion) package consisting of a revised long-term budget and a recovery fund, with 25 percent of the funding set aside for climate action.

To help economies from the 27-nation bloc bounce back as quick as possible, the EU’s executive arm wants to increase a €7.5-billion ($8.25 billion) fund presented earlier this year that was part of an investment plan aiming at making the continent more environmentally friendly.

Under the commission’s new plan, which requires the approval of member states, the mechanism will be expanded to €40 billion ($44 billion) and is expected to generate another €150 billion in public and private investment. The money is designed to help coal-dependent countries weather the costs of moving away from fossil fuels.

Environmental group WWF acknowledged the commission’s efforts but expressed fears the money could go to “harmful activities such as fossil fuels or building new airports and motorways.”

“It can’t be used to move from coal to coal,” Frans Timmermans, the commission executive vice president in charge the European Green Deal, responded on Thursday. “It is unthinkable that support will be given to go from coal to coal. That is how we are going to approach the issue. That’s the only way you can ensure you actually do not harm.”

Timmermans conceded, however, that projects involving fossil fuels could sometimes be necessary, especially the use of natural gas to help move away from coal.

The commission also wants to dedicate an extra €15 billion ($16.5 billion) to an agricultural fund supporting rural areas in their transition toward a greener model.

Von der Leyen, who took office last year, has made the fight against climate change the priority of her term. Timmermans insisted that her goal to make Europe the world’s first carbon-neutral continent by 2050 remained unchanged, confirming that upgraded targets for the 2030 horizon would be presented by September.

Reacting to the executive arm’s recovery plans, Greenpeace lashed out at a project it described as “contradictory at best and damaging at worst,” accusing the commission of sticking to a growth-driven mentality detrimental to the environment.

“The plan includes several eye-catching green `options,’ including home renovation schemes, taxes on single-use plastic waste and the revenues of digital giants like Google and Facebook. But it does not solve the problem of existing support for gas, oil, coal, and industrial farming — some of the main drivers of a mounting climate and environmental emergency,” Greenpeace said.

“The plan also fails to set strict social or green conditions on access to funding for polluters like airlines or carmakers.”

Timmermans said the EU would keep investing in the development of emission-free public transportation, and promoting clean private transport through the EU budget.