NewBase September 10-2022 Energy News issue - 1546 by Khaled Al Awadi (AutoRecovered)_compressed.pdf

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NewBase Energy News 10 September 2022 No. 1546 Senior Editor Eng. Khaed Al Awadi
NewBase for discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
U.A.E: Adnoc and Dubai Supply Authority sign major gas deal
NewBase + BusinessArabia
A landmark gas sales agreement between Abu Dhabi National Oil Company (Adnoc) and Dubai
Supply Authority (DUSUP) was signed on Friday. UAE President His Highness Sheikh Mohamed
bin Zayed Al Nahyan and His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President,
Prime Minister and Ruler of Dubai, witnessed the signing of the agreement.
The agreement will see Adnoc supply DUSUP with natural gas, which will be used instead of clean
coal for electricity generation at Dubai Electricity and Water Authority's (DEWA) IPP (Independent
Power Producer) Hassyan Power Complex, further reducing carbon emissions from the power
generation process. This supports the UAE Net Zero by 2050 Strategic Initiative and its plans to
generate electricity from cleaner energy sources, a Wam news agency report said.
The agreement was signed at Qasr Al Watan by Sheikh Ahmed bin Saeed Al Maktoum, Chairman
of the Dubai Supreme Council of Energy and Director-General of DUSUP, and Dr Sultan Ahmed Al

Jaber, UAE Minister of Industry and Advanced Technology and Adnoc Managing Director and
Group CEO.
Sheikh Ahmed bin Saeed said: "This agreement supports the vision and directives of the wise
leadership to turn Dubai into a carbon-neutral economy and provide 100% of Dubai’s total power
generation capacity from clean energy sources by 2050.
This agreement further strengthens energy cooperation between Abu Dhabi and Dubai, building on
the foundations originally laid in 1998 and reinforced over the years, to expand the breadth and
depth of our energy relations.
"While many countries around the world are returning to coal as a result of geopolitical uncertainty
and energy price volatility, the UAE is delivering on its commitment to decarbonize its power sector."
Dr Al Jaber stated that in line with the directives of the UAE’s wise leadership, ADNOC is advancing
its efforts to harness Abu Dhabi’s vast natural gas resources to meet the world’s growing demand
for this important transition fuel and enable a responsible energy transition. This landmark
agreement will significantly reduce power generation emissions at the Hassyan Power Complex,
directly supporting the UAE Net Zero by 2050 Strategic Initiative.
"Working in close collaboration with our customers and partners, ADNOC will continue to expand
our natural gas capacity to deliver against our strategic objectives of decarbonizing our energy and
power systems, ensuring UAE gas self-sufficiency and driving long-term and sustainable growth for
the UAE," he added.
Adnoc’s integrated gas masterplan links every part of the gas value chain to ensure a sustainable
and economic supply of natural gas to meet the growing requirements of the UAE and international
markets.
The plan includes the application of new approaches and technologies to enable increased and
competitive gas recovery from existing fields as well as developing untapped resources and
leveraging innovation to continually drive emissions’ reduction.

Domestically produced natural gas is more commercially competitive compared to imported coal or
gas and it will support economic growth while lowering emissions when used as a subsitute for coal
in power generation.
Adnoc is a responsible provider of reliable, lower-carbon energy. In addition to the expansion of its
gas operations, Adnoc is growing its new energies business to capitalize on opportunities in
hydrogen and renewables, while decarbonizing its operations as it embraces the energy transition
and continues to help meet global energy demand.
The Hassyan Power Complex was initially built as a dual-fuel plant with the ability to operate full-
time at full load on both natural gas or clean coal but has been transformed to run only on natural
gas. Present net electricity generation capacity of Hassyan Power Complex is 1,200 megawatts
(MW). A further 600 MW (net) is scheduled to be added in Q4 of 2022 and an additional 600 MW
(net) will be added by Q3 of 2023.
The complex is an important addition to DEWA’s power generation projects, including Jebel Ali
Power and Desalination Complex, Al Aweer Power Station Complex, the Mohammed bin Rashid Al
Maktoum Solar Park, the largest single-site solar park in the world with a planned capacity of 5,000
MW by 2030, green hydrogen, and hydroelectric power plant in Hatta.

Indonesia: Empyrean Energy announces updated Plan of
Development for the Mako Gas Project.. Source: Empyrean Energy
Empyrean Energy, the oil and gas development company with interests in China, Indonesia and the
United States, has announced that the partners in the Duyung PSC have approved the
updated Plan of Development ('PoD') and have secured alignment with SKK Migas on the plan. The
PoD has now been submitted to the Indonesian Ministry of Energy and Mineral Resources for
approval. Empyrean holds an 8.5% interest in the Duyung PSC.
Empyrean has also announced that an Operator commissioned Competent Persons Report ('CPR')
has been prepared by GaffneyCline & Associates ('GCA') for the Mako development.
Highlights:
 Revised PoD approved by partners and submitted for ministerial approval
 Based on the CPR:
o Compelling project economics;
o 51% IRR and
o NPV10 net to Empyrean of US$49M (US$577M gross) in the Best Case (2C) scenario
o 23.8 Bcf net entitlement 2C resources to Empyrean during the PSC life;
o Plateau production of 120 MMscf/d for six years in the Best Case (2C) scenario
o CPR capital expenditure requirement to first gas estimated at US$251M gross
(US$21.3M net to Empyrean). It is anticipated that a reserve based lending ("RBL")
debt structure would be appropriate to fund the development.
 Operator has indicated that termed Gas Sales Agreements ("GSA"), for gas sold into
Singapore, are under discussion with SKK Migas with a view to finalising sales arrangements
in the near future.
The Operator of the Duyung PSC is WNEL, a 100%-owned subsidiary of Conrad Asia Energy, has
continued to technically mature the development of the Mako gas field alongside negotiations of
GSA(s), both in preparation for Final Investment Decision.

This has included finalising the revised PoD, on which the JV partners have now secured alignment
with governmental regulator, SKK Migas, and submission for ministerial approval.
The GCA CPR is closely aligned with the PoD and is premised on a two-phased development with
six wells in phase 1 and a further two wells in phase 2 after 5 years of production. The wells will be
tied back to a leased production platform at the field, with sales gas transported via the West Natuna
Transportation System pipeline to Singapore for sales to the Singapore market.
The development plan includes first gas in 2025, with a 120 MMscf/d production plateau and a gross
recoverable 2C contingent resource of 413 Bcf gas total and 281 Bcf net entitlement attributable to
the Duyung PSC JV partners (23.8 Bcf net to Empyrean) during the PSC life.
As reported in the CPR (dated 26 August 2022) and specified in the PoD revision, upside exists to
increase the plateau rate to 150 MMscf/d, should reservoir deliverability be sufficient. GCA has
confirmed Mako contingent resources that are broadly in agreement with the PoD as set out in the
table below.
Duyung PSC - Contingent Resources, GCA Operator CPR
* The CPR assumes that 88% of the GIIP of the Mako field is within the PSC boundary
** After allowing for boundary and all PSC terms
The Operator of the Duyung PSC is WNEL, a 100%-owned subsidiary of Conrad Asia Energy Ltd,
who hold a 76.5% interest in the Duyung PSC. Coro Energy Plc hold 15%. Empyrean hold 8.5%.
The Operator CPR, and the updated PoD, assumes first gas in 2025 and calculates the last
economic production years prior to the current Duyung PSC expiry date for Low, Best and High
cases of 2033, 2036 and 2036 respectively, which extend to 2039 and 2054 for the Best and High
respectively if the Duyung PSC is extended.

The Operator CPR utilises a gas price of US$9.97/Mscf in 2025 which is calculated on a Brent linked
price formula with a Brent slope of 12% and a Brent price deck of US$80/bbl in 2025, escalating 2%
pa from 2027 thereafter. Different gas prices may eventually be agreed with the gas buyers and
the regulator when the GSA's are eventually signed.
The Operator CPR estimates that the post tax NPV10 resulting from the Best Case Contingent
Resources within the Duyung PSC acreage and within life of Duyung PSC (363 Bcf) is some
US$578M (US$49M net to Empyrean) representing a 51% IRR.
Under the PoD and CPR, first gas from the Mako gas project is planned to be evacuated via the
West Natuna Transportation System. The development will utilise a Conductor Support Frame
(CSF) for one dry wellhead and gas import-export support, bridged-linked to a leased Mobile
Offshore Production Unit.
The CPR Phase 1 capital expenditure is estimated to be US$251M and total capital expenditure will
be US$303M. These estimates will be updated as a consequence of envisaged Front End
Engineering and Design (FEED) studies. It is anticipated that RBL debt funding will be appropriate
to provide funds for the development.
Empyrean CEO, Tom Kelly, stated:
'Empyrean would firstly like to thank the Conrad and SKK Migas teams for the enormous volume of
work that has gone into achieving alignment with SKK Migas and the Duyung partners in order to
submit the PoD for ministerial approval. This is a great achievement. The independent assessment
of the project by Gaffney Cline shows that the project economics are highly robust. Empyrean is
also encouraged by the significant upside that exists if the current macro environment of higher
South East Asian gas prices results in any improvement on pricing assumptions contained in the
CPR. There also exists significant upside if the reservoir performs better than the 2C Best case. We
look forward to the conclusion of GSA negotiations.'

Egypt:Bechtel-led coalition wins Idku Energy Hub project FEED
TradeArabia + NewBase
Shell Egypt, EGAS and Petronas have awarded a front-end engineering and design (FEED)
contract to a Bechtel-led coalition that includes Enppi and Petrojet to study a proposed unified power
system between the onshore gas processing plant of the West Delta Deep Marine (WDDM) gas
fields in the Mediterranean Sea off the coast of Egypt, and the Egyptian LNG export terminal (ELNG)
in Idku, east of Alexandria.
The FEED, for the Idku Energy Hub
project, will explore the benefits of a
One Power Hub concept, integrating
the electrical power systems at the
WDDM and ELNG, as opposed to
having two separate systems, said a
statement.
It seeks to increase the power saving
and greenhouse gas (GHG)
abatement benefits of unifying the
electrical power systems of the
onshore plants. The synergies will
include optimization of the number of
running gas turbine generators,
modelling the most efficient operating
mode for both plants, reducing GHG
emissions and economizing the fuel consumption in the entire hub.
This project is part of a wider programme between the coalition and the Egyptian Ministry of
Petroleum and Mineral Resources (MOP) aiming to decarbonise existing oil and gas facilities across
the country and deliver on its climate change strategy.
"I am so proud that the oil and gas sector is contributing significantly to achieving top strategic goals:
accelerating decarbonization and economizing power consumption," Minister of Petroleum and
Mineral Resources Eng Tarek El-Molla said. "I am pleased that our partners are taking such
initiatives to promote these priorities."
"This project is a demonstration of our commitment to powering progress by providing more and
cleaner energy," Eng. Khaled Kacem, Vice President and Country Chair of Shell Egypt, said. "As
partners in Egypt's journey to become a regional energy hub we are also mobilizing our efforts and
expertise to support the country's energy efficiency ambitions. This is also a significant step towards
full implementation of the decarbonization MOU between Shell and the MOP that was signed earlier
this year."
"This project is an excellent example of private and public sector partnership to support Egypt's
decarbonization strategy," Paul Marsden, President of Bechtel Energy said. "Our Bechtel team is
looking forward to continuing to support Egypt's climate change strategy."
Bechtel, Enppi and Petrojet will execute the FEED on a fast-track basis aiming to complete the
scope of work within 2022.
The project is a testimony to the operational excellence in WDDM and ELNG plants. Reducing
greenhouse gas emissions and optimising fuel consumption and running hours of the rotating
equipment will enhance production and reduce operating cost.

U.S: In 2022, 24% of electricity generation on renewable sources
source: U.S. Energy Information Administration, Electric Power Monthly, June 2022
In the first six months of 2022, 24% of U.S. utility-scale electricity generation came from renewable
sources, based on data from our Electric Power Monthly. The renewables' share increased from
21% for the same time period last year. Renewables are the fastest-growing electricity generation
source in the United States.
Renewable generation sources include conventional hydropower, wind, solar, geothermal, and
biomass. In the United States, most renewable electricity generation comes from hydropower, solar,
and wind. Generation from renewable energy sources has grown rapidly as renewable capacity,
mostly solar and wind, has been added to the grid.
In 2021, a record amount of new utility-scale solar capacity was installed in the United States. From
June 2021 to June 2022, 17.6 gigawatts (GW) of new utility-scale solar capacity came online,
bringing U.S. utility-scale solar capacity to 65.8 GW, according to our Preliminary Monthly Electric
Generator Inventory.
In June 2022, the United States had 137.6 GW of wind capacity, and 10% (14.3 GW) of that capacity
was installed between June 2021 and June 2022. Based on planned additions reported to us by
power plant owners and developers, another 7.0 GW of wind and 13.0 GW of solar capacity will
come online by the end of the year.
Hydropower and wind generation, which, combined, make up the majority of U.S. renewable
generation, typically peak in the first half of the year, when there are more windy days and the winter
snowpack is melting. In the second half of 2022, we expect that renewables will make up a smaller
share of generation than they did in the first half of the year (20%) as wind and hydroelectric
generation decline, based on our latest Short-Term Energy Outlook.

U.S. RGGI CO2 emissions price reached record in June 2022
U.S. Energy Information Administration, based on data from the Regional Greenhouse Gas Initiative
The 56th Regional Greenhouse Gas Initiative (RGGI) quarterly auction, held June 1, 2022, resulted
in a record-high clearing price of $13.90 per ton for CO2 emissions allowances, surpassing the
previous quarter’s clearing price ($13.50 per ton) by 3% and the June 2021 clearing price ($7.97
per ton) by 74%. Allowance prices set in the RGGI auctions have been increasing since the June
2017 auction, which cleared at $2.53 per ton.
RGGI is a cooperative
agreement among 11 U.S.
states to reduce
CO2 emissions from power
plants; it was the first
program in the country to
place a cap on power sector
CO2 emissions. In RGGI
states, regulated power
plants are required to
purchase one RGGI
CO2 allowance for every
short ton of CO2 they emit.
Emissions allowance prices
are influenced by several
factors, such as the
predefined limit on allowable emissions, the number of participants in the market, and energy prices.
RGGI is implemented through CO2 Budget Trading Programs specific to each member state. The
RGGI-wide CO2 cap is a regional budget for CO2 emissions from the power sector and is an
aggregation of the individual state program targets. As states join or withdraw from RGGI, the
aggregated cap is modified to reflect those changes.
The original RGGI member states were Connecticut, Delaware, Maine, Maryland, Massachusetts,
New Hampshire, New Jersey, New York, Rhode Island, and Vermont. New Jersey withdrew from
RGGI in 2012 but rejoined in January 2020. Starting in January 2021, Virginia became a full
participant in the RGGI CO2 emission allowance market. Pennsylvania was set to join RGGI as its
12th member; however, in July 2022, the Pennsylvania Commonwealth Court entered a preliminary
injunction that temporarily prevents the state from implementing its CO2 Budget Trading Program.
RGGI held its first auction in September 2008. Between 2009 and 2011, emissions were capped at
188 million short tons of CO2 per year. The cap was lowered in 2012 and 2014, but emissions have
consistently been under the limit for each year of the program. RGGI’s emissions cap increased
from 80.2 million short tons of CO2 in 2019 to about 96 million short tons of CO2 in 2020. Most of
that increase was to accommodate New Jersey as it reentered RGGI. RGGI’s plan allows state
emissions caps to decline (tighten) at 3% per year through 2029, falling to a regional total of 30%
below 2020 emissions levels by 2030.
In 2015, as a part of their climate change plans, a number of participating RGGI states, including
Connecticut, Massachusetts, New Hampshire, New York, Rhode Island, Vermont, and Virginia,
agreed to pursue emission reductions of 80% to 95% below 1990 emissions levels by 2050 or
achieving a per capita annual emission goal of less than two metric tons by 2050.
The 57th quarterly RGGI auction was held on September 7, 2022.
ENERGY

Russia has warned against capping energy prices. But Europe is
thrashing out the details regardless Sam Meredith@SMEREDITH19
KEY POINTS
o European Commission President Ursula von der Leyen on Wednesday sought to lay the
groundwork for Friday’s meeting with a five-point plan.
o This includes a price cap on Russian gas, a windfall tax on fossil fuel profits, a mandatory target
for reducing electricity use and emergency credit lines for power companies.
o Russian President Vladimir Putin responded to the proposals by threatening to rip up existing
supply contracts if a cap on Russian energy exports is imposed.
European Union energy ministers on Friday gathered in Brussels for emergency talks on
how to protect households and businesses from runaway gas and electricity prices
ahead of winter.
European Commission President
Ursula von der Leyen sought to lay the
groundwork for Friday’s meeting with
a five-point plan. This includes a price
cap on Russian gas, a windfall tax on
fossil fuel profits, a mandatory target for
reducing electricity use and emergency
credit lines for power companies.
Russian President Vladimir
Putin responded to the proposals by
threatening to rip up existing supply contracts if a cap on Russian energy exports is
imposed, warning that he was prepared to let Europe “freeze” during the colder months.
Russian Foreign Ministry spokeswoman Maria Zakharova on Friday reportedly warned
that the West failed to understand how energy price caps could impact their own
countries. “The collective West does not understand: the introduction of a cap on prices
for Russian energy resources will lead to a slippery floor under its own feet,” Zakharova
said, according to Reuters.
It is not expected that EU member states will reach a decision on Friday regarding the
proposed policy ideas. The 27-nation bloc has endured a sharp drop in gas exports from
Russia, traditionally its largest energy supplier, amid the standoff over the Kremlin’s
onslaught in Ukraine.
Imported Russian gas to Europe currently stands at 9%, representing a substantial fall
from roughly 40% before the war.
The bitter energy dispute between Brussels and Moscow has recently seen
Russia completely halt gas flows via a major supply route to Europe, exacerbating the
risk of recession and a winter shortage.

Speaking in Brussels ahead of the talks, EU Energy Commissioner Kadri Simson told
reporters that Friday’s meeting was necessary to provide governments with the right
tools to address the deepening energy crisis.
“This is not only about prices,” Simson said. “It is also a challenge on the aspect of the
security of supply.”
Energy bills have skyrocketed since Russia invaded Ukraine in late February and the
West responded with a barrage of punitive economic measures.
Renewables needed ‘faster than ever’
“We are facing an extraordinary situation, not only because Russia is an unreliable
supplier, as we have witnessed over the last days, weeks, months, but also because
Russia is actively manipulating the gas market,” von der Leyen said in a statement on
Wednesday.
“I am deeply convinced that with our unity, our determination, our solidarity, we will
prevail,” she added.iEU lawmakers have repeatedly accused Russia of weaponizing
energy exports to drive up commodity prices and sow uncertainty across the bloc.
Moscow denies using energy as a weapon.
Last week, Russia’s state-owned energy giant Gazprom cited an oil leak for the indefinite
shutdown of the Nord Stream 1 gas pipeline, which connects Russia to Germany via the
Baltic Sea.
However, the Kremlin has since said that the resumption of gas supplies to Europe is
completely dependent on the EU lifting its economic sanctions against Moscow.

“I think what this energy crisis has shown is that we need renewables and the green
energy transition faster than ever,” Deepa Venkateswaran, senior analyst of European
Utilities at Bernstein, told CNBC’s “Squawk Box Europe” on Friday.
“At this point, renewables have never ever been [this much] cheaper than wholesale
prices, which are driven by gas and fossil fuel prices,” she added.
Oil price cap
Speaking alongside French Finance Minister Bruno Le Maire ahead of a separate
meeting of EU finance ministers in the Czech Republic, German Finance Minister
Christian Lindner called for solidarity across the bloc in the search for solutions to help
households and businesses.
“It is a signal that France and Germany starts this meeting together, it is a signal that we
are standing shoulder to shoulder not only here but policy-wise as well,” Linder said,
jovially nudging France’s Le Maire.
Linder said he would invite all EU member states to support the idea of a price cap on
Russian oil.
The G-7 economic powers issued a joint statement last week backing the initiative,
although energy analysts remain highly skeptical about the integrity of the proposal.
The Kremlin has warned it would stop selling oil to countries that impose price caps on
Russian energy exports.
“We want to avoid higher revenues for Russia and we want to maintain the price level
for our economies and one favorable means is the oil price cap. It is more effective when
more member states of the European Union support this idea,” Lindner said.

NewBase September 10 -2022 Khaled Al Awadi
NewBase for discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Oil rises 4% on supply threats, still set for weekly drop
Reuters + NewBase
Oil prices rose about 4% on Friday, supported by real and threatened cuts to supply, although
futures posted a second weekly decline as aggressive interest rate hikes and China's COVID-19
curbs weighed on the demand outlook.
Russian President Vladimir Putin has threatened to halt oil and gas exports to Europe if price caps
are imposed and a small cut to OPEC+ oil output plans announced this week also supported prices.
Brent crude rose $3.69, or 4.1%, to settle at $92.84 a barrel. U.S. West Texas Intermediate (WTI)
crude rose $3.25, or 3.9% to settle at $86.79 a barrel.
"Over the coming months, the West will have to contend with the risk of losing Russian energy
supplies and oil prices soaring," said Stephen Brennock of oil broker PVM. Pressured by worries
about a recession and demand, Brent is down sharply from a surge in March close to its all-time
high of $147 after Russia invaded Ukraine.
The Group of Seven is trying to find ways to limit Russia's lucrative oil export revenue in the wake
of the invasion. A price cap that G7 countries want to impose on Russian oil to punish Moscow
should be set at a fair market value minus any risk premium resulting from its invasion of Ukraine,
a U.S. Treasury Department official told reporters on Friday.
Oil price special
coverage
o Oil benchmarks heading for second weekly decline
o Putin threatens to cut off all energy supplies
o Fed's Waller: need aggressive rate hikes now while economy can take it
o Millions in China's Chengdu thrown into extended COVID lockdown

Despite Friday's bounce, both crude benchmarks were headed for a weekly drop, with Brent down
about 0.2% on the week after at one point hitting its lowest since January. WTI posted a weekly
decline of 0.1%.
If the U.S. Federal Reserve is able to keep the unemployment rate below 5%, it can be aggressive
on bringing down inflation but after that tradeoffs will appear, Fed Governor Christopher Waller said
on Friday.
The Fed should be aggressive with rate hikes while the economy "can take a punch," he said.
A U.S. Department Of Energy official said the White House was not considering new releases from
the U.S. Strategic Petroleum Reserve (SPR) at this time beyond the 180 million barrels that
President Joe Biden announced months ago. Earlier, Energy Secretary Jennifer Granholm told
Reuters the administration was weighing the need for further SPR releases.
"The White House is backing off another release from the SPR," said Phil Flynn, an analyst at Price
Futures Group. "Looks like a lot of the fears the market had previously have gone away."
U.S. oil rigs fell five to 591 this week, their lowest since mid June, energy services firm Baker Hughes
Co (BKR.O) said, as the growth in the rig count and production has slowed despite relatively high
energy prices.
Meanwhile, European Central Bank's unprecedented rate hike of 75 basis points this week and
more COVID-19 lockdowns in China have weighed on prices.
The city of Chengdu extended a lockdown for most of its more than 21 million residents on Thursday
while millions more in other parts of China were told to shun travel during upcoming holidays. read
more
Money managers cut their net long U.S. crude futures and options positions by 3,274 contracts to
165,158 in the week to Sept. 6, the U.S. Commodity Futures Trading Commission (CFTC) said on
Friday.

NewBase Specual Coverage
The Energy world –September -01 -2022
CLEAN ENERGY
UK: The UK’s new government must attract new investment in
North Sea gas, oil, and wind - OEUK
The UK’s continental shelf still contains energy reserves equivalent to 15 billion barrels of oil –
enough to fuel the UK for 30 years – according to a new report from Offshore Energies UK.
OEUK’s Economic Report 2022: A Focus on UK Energy Security, published on September 7,
examines the impacts of the global energy crisis on the UK and the nation’s prospects for boosting
future energy independence.
The report coincides with the formation of a new
government by Liz Truss who this week became the UK’s
new Prime Minister. She has promised to announce a
plan to boost UK energy security and deal with soaring
energy costs, within a week. A keynote speech on energy
could be delivered as soon as Thursday, September 8.
It comes amid turmoil in the global energy markets, linked
to Russia’s manipulation of gas flows into Europe, which
has driven up global prices. The UK’s reliance on imports
means average domestic annual bills have risen from
about £1,300 to £3,500 in less than 12 months.
OEUK’s report will praise the UK offshore industry’s
response – it has boosted the UK’s offshore domestic gas
production by 27% since January.
It will also cite data from the North Sea Transition
Authority, suggesting that the UK continental shelf still
contains gas and oil equivalent to about 15 billion barrels
of oil. The UK’s total energy consumption equates to
about a billion barrels of oil a year so these reserves
could support UK energy security for decades to come,
with the right investment.
The report suggests an action plan focused on a rapid acceleration of investment into such
resources. This should include announcing the next round of North Sea oil and gas exploration
licences as soon as possible alongside a rapid expansion of offshore wind.
The government’s key aim, says the report, must be to maximise the UK’s energy independence
and reduce its vulnerability to further global price shocks and shortages.
The report also analyses the cumulative impacts of rising global gas prices on UK consumers. It
estimates that UK domestic consumers’ annual gas and electricity bills will have risen from about

£32 billion in 2021 to around £100 billion once the next round of price rises takes effect in October.
More price rises are predicted in 2023.
The impact of global price rises on UK business is similar. The report will say: 'Businesses are even
more exposed to changes in [global] gas prices as there is no protective price cap in place for non-
domestic energy use … If it was to be assumed that average spend this year was to treble (roughly
the same rate of increase as the domestic price cap) then overall spend on electricity and gas by
industry and businesses could rise to £108bn, from £36bn last year.'
Long-term problems loom
The report says the UK could face potential energy shortages and high prices this winter and warns
that global prices could remain high for at least three years.
The report also welcomes the government’s announcement of a review of the UK’s electricity
markets. At the moment UK electricity prices are based on the cost of gas.
This is because gas is used to generate 40% of UK power, the biggest single source. It means that
gas power costs set the national price for electricity. So, when gas prices rise, electricity prices rise
too. However, this also means that power from other generators, including those based on nuclear
and renewable, increases too – even though their costs had not changed.
'We need to see reform of the electricity market to ensure that the falling cost of
renewable power is also passed on to consumers,' says the report.

Other findings:
 Gas and oil supplied 75% of the UK’s total energy in 2021
 Gas also provided 40% of the UK’s electricity
 The UK will have to import around 80% of its gas and 70% of its oil unless there
is rapid investment offshore by 2030
 OEUK sees potential for £26bn in oil and gas capital investment by 2030 – but
only a third is approved.
OEUK’s acting CEO Mike Tholen said:
'Our report is a red alert for UK energy security. Today 24 million UK homes are heated by gas
boilers; 30-plus gas-fired power stations produce about 40% of our electricity, and we have 32
million vehicles running on diesel and petrol.
'The UK’s homes and businesses cannot yet do without these fuels, but Putin’s war in Ukraine
shows the risks of relying on other countries for energy. Our North Sea reserves mean the UK can
protect itself – provided we invest – as well as building the low-carbon systems for the future.”
'It means we must expand the supply of low carbon energy including wind and hydrogen but the
scale-up will take time. UK gas will give us a bedrock of reliable energy through the transition and
minimise reliance on imports.
“In practical terms we need the new government to rapidly announce the next round of oil and gas
exploration licenses and speed up production approvals.
He added: 'We are also encouraging the UK government’s focus on tariff reform. Right now, our
energy markets are being controlled by President Putin who is driving up the price of gas to break
ours and Europe’s resolve over Ukraine. We cannot let that continue. We need to move away from
a system that allows the price of gas to control the cost of electricity. This is also important for our
ambition of moving towards low-carbon energy where our power comes increasingly from
renewables and nuclear.'

Ross Dornan, OEUK’s market intelligence manager, said:
'The best way for the UK to ensure secure gas and oil supplies is by increased investment in its own
resources. Without that, the UK will be increasingly reliant on imports.
'Electricity prices have historically been linked to the cost of gas, but power is increasingly generated
by multiple sources besides gas. That includes a growing proportion of renewables – the price of
which is falling. Basing electricity prices entirely on the price of gas is no longer necessary and is
damaging for consumers.'

NewBase Energy News 10 September 2022 - Issue No. 1546 call on +971504822502, UAE
The Editor:” Khaled Al Awadi” Your partner in Energy Services
NewBase energy news is produced Twice a week and sponsored by Hawk Energy Service – Dubai, UAE.
For additional free subscriptions, please email us.
About: Khaled Malallah Al Awadi,
Energy Consultant
MS & BS Mechanical Engineering (HON), USA
Emarat member since 1990
ASME member since 1995
Hawk Energy member 2010
www.linkedin.com/in/khaled-al-awadi-38b995b
Mobile: +971504822502
khdmohd@hawkenergy.net or khdmohd@hotmail.com
Khaled Al Awadi is a UAE National with over 30 years of experience in the Oil & Gas
sector. Has Mechanical Engineering BSc. & MSc. Degrees from leading U.S.
Universities. Currently working as self leading external Energy consultant for the GCC
area via many leading Energy Services companies. Khaled is the Founder of the
NewBase Energy news articles issues, Khaled is an international consultant, advisor,
ecopreneur and journalist with expertise in Gas & Oil pipeline Networks, waste
management, waste-to-energy, renewable energy, environment protection and
sustainable development. His geographical areas of focus include Middle East, Africa
and Asia. Khaled has successfully accomplished a wide range of projects in the areas
of Gas & Oil with extensive works on Gas Pipeline Network Facilities & gas compressor
stations. Executed projects in the designing & constructing of gas pipelines, gas
metering & regulating stations and in the engineering of gas/oil supply routes. Has drafted
& finalized many contracts/agreements in products sale, transportation, operation & maintenance
agreements. Along with many MOUs & JVs for organizations & governments authorities. Currently dealing
for biomass energy, biogas, waste-to-energy, recycling and waste management. He has participated in
numerous conferences and workshops as chairman, session chair, keynote speaker and panelist. Khaled is
the Editor-in-Chief of NewBase Energy News and is a professional environmental writer with over 1400
popular articles to his credit. He is proactively engaged in creating mass awareness on renewable energy,
waste management, plant Automation IA and environmental sustainability in different parts of the world.
Khaled has become a reference for many of the Oil & Gas Conferences and for many Energy program
broadcasted internationally, via GCC leading satellite Channels. Khaled can be reached at any time, see
contact details above.

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