Oil, gas, nuclear, renewables, energy prices, electricity and climate issues. Scenarios, forecasts and analysis from Geopolitical Intelligence Services (GIS) experts on energy trends.
The future of OPEC
OPEC's influence in the global oil market has greatly diminished in recent years, mainly due to the shale revolution in the United States, but also because of diverging interests among its members. It has pledged to cut production, but doing so may prove difficult. There are still some scenarios where OPEC could rise to prominence, but the most likely scenario is for it to be further marginalized.
Iraq: OPEC’s wild card
Though OPEC agreed to reduce production at its September meeting, Iraq is resisting, arguing that the data used to determine the cuts is wrong and that it must continue producing to keep its economy afloat. If Iraq wins an exemption, other countries could follow, forcing OPEC to try for a bigger reduction. That will only happen if Saudi Arabia agrees to take on the lion's share of the cuts.
Risks for China’s energy strategy
China faces three big challenges in its energy strategy: reducing pollution, mitigating the negative effects of climate change and securing overland supply. The country has made huge investments to achieve its goals, but macroeconomic and geopolitical uncertainties could yet derail Beijing’s plans. In the end, China is likely to be successful, but will have to deftly manage its energy policies and alliances.
OPEC and the scope for meaningful intervention
OPEC’s informal gathering in Algiers on September 28 has sent a signal to the international community that the organization can still act coherently. For the first time since 2008, OPEC announced a coordinated production cut. Market forces are at work to limit the impact of this intervention, however, even if it is successfully implemented. .
Sovereign wealth funds and preserving oil wealth
Sovereign wealth funds have become an important tool for stabilizing the economies of oil and gas producers. In well-governed countries with strong institutions, they can substantially mitigate long-term risks. But in some developing states, the depletion or mismanagement of such funds could pose a serious threat.
Germany’s energy policy requires correction
The German government aims to increase the share of renewable energy in the country’s total electric power consumption from some 30 percent today to 45 percent by 2025. This aggressive drive toward Energiewende has already caused serious instability in the country’s electricity generation system and pushed energy prices upward. In the longer term, the policy endangers Germany’s position as Europe’s prime manufacturing nation. Fortunately, citizens have begun to take notice.
Mexico’s energy reforms and production outlook
Faced with output declines and the shale revolution, Mexico had little choice but to reopen its oil and gas industry to foreign investors. The early results have been promising, but President Enrique Pena Nieto’s energy reforms are not out of the woods yet.
China at the center of global energy change
A sluggish world economy and sustained improvement in energy efficiency caused growth in global energy consumption to slow to 1 percent in 2015, well below the 10-year average of 1.9 percent. Taking a closer look, one country stands out: China. Its changing economy shaped the dynamics of global energy last year and this is likely to continue for the foreseeable future.
India’s new nuclear push
India is making a big push to finally join the Nuclear Suppliers Group, which sets global rules on the spread of nuclear technology. Becoming a member is crucial for India, since it would solidify its ability to import and export nuclear technology freely. Without this, its nuclear energy sector could wither, with dire impacts for the country’s climate goals and its economy.
Oil prices: headed for a Goldilocks scenario?
Oil prices are headed for a sweet spot between $50 and $70 per barrel that would benefit key geopolitical players, including Europe, China, India and Russia. Market forces may keep them there. The result would be faster global growth, unless political conflicts intervene.