October 14, 2022 [Medium] – ” To achieve the ultimate victory and protect our children from new resource wars, energy blackmail and the devastating effects of climate change, we must not just embark on the path of the energy transition. We must race upon it and push Europe forward to completely stop using coal, oil, and gas.”
Firstly, I want to give a glimpse into the Glencore case in order to lay a foundation for what is happening more broadly with respect to deals involving industry collaboration for the Energy Transition.
It’s been reported by many news agencies and media outlets that Glencore is having an amazing year in terms of its profits from the Global Commodity Supercyle. As one of the world’s largest miners and commodities traders, the company’s exposure to thermal coal, crude oil and critical metals such as cobalt and zinc, has brought Glencore’s profit margins to exceedingly new highs.
Reuters reported that Glencore’s profits would exceed $3.2 billion [£2.6billion] in just the first half of this year (H1 2022). This is nearly the amount of profits the company made in the whole year of 2021, when the company held record profits of $3.7 billion. Therefore, Glencore is on its way to have another historical year in profits from the mining and trading of global commodities, which have been exacerbated by the ongoing Russia-Ukraine Conflict, ushering in a new Global Commodity Supercycle.
Since Glencore is one of the only companies that still has a full-fledged coal business, it has given the company extreme flexibility to give investors more returns through corporate buybacks and dividends. This reveals the oil dilemmas about how shareholders shape the narratives around oil & gas production scenario in the global economy.
During this time, the United States Special Presidential Envoy for Climate John Kerry spoke at the IV CEO Summit of the Americas about the Energy Transition’s role in the Global Economy.
The dominance of Russia’s hydrocarbon exports has come into full focus, per Euractiv on whether or not the oil and gas dependent economies can sustain themselves in the era of global climate change action. This means that Ukraine should follow an “accelerated energy transition” reconstruction plan as a result of the conflict. This stood out to me:
To achieve the ultimate victory and protect our children from new resource wars, energy blackmail and the devastating effects of climate change, we must not just embark on the path of the energy transition. We must race upon it and push Europe forward to completely stop using coal, oil, and gas.
After agreeing in principle to ban seaborne transport of Russian crude oil and petroluem products it was reported that European companies will have certain transitional periods before they have to comply to the new policies. It wasn’t stated that the ban on Russian oil imports would affect oil that is transiting through Russia that originated in another country by non-Russian producers.
At a meeting in Washington DC on 8 June 2022 the executive board chairmen of Ukraine’s Naftogaz, Yuri Vitrenko, pleaded with attendees about the “significant challenge” to gas imports due to Russian attacks on Ukraine. Gazprom’s Nord Stream 2 was also a major focus of the meeting since the company has reduced gas transit shipments to Ukraine in lieu of committments to ship 110 MMcmd.
Much of the above discussion revolves around a legal case between Russia’s Gazprom and Ukraine Naftogaz whereby both parties have accussed the other of not fulfilling contractual obligations. The court case is being politicized during the war in Ukraine, since Ukraine is one of the most important transport corridors for natural gas to the European Union markets.
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