Arctic LNG-2, our global upstream update, challenges and opportunities for the steel value chain, and more.
Wood Mackenzie
Wood Mackenzie is the leading global data and analytics solutions provider for the energy transition.
The US broadens sanctions against Arctic LNG-2
On 23 August, one day before Ukrainian Independence Day, the United States’ Department of the Treasury's Office of Foreign Assets Control (OFAC) announced new measures to degrade Russia’s wartime economy. With this latest action, the US sanctioned almost 400 entities and individuals “for enabling Russia’s prosecution of its illegal war in Ukraine”.
The measures include new steps to sanction entities and assets deemed to be supporting the development of the Arctic LNG-2 project and other future energy projects. This builds on the November 2023 US sanctions that targeted the Arctic LNG-2 project and its associated infrastructure.
In a recent insight, we answer:
Global upstream update: UK fiscal woes, Major exploration
In our most recent Global upstream update, we explore a range of industry developments and what they are likely to mean ‒ from big gas opportunities to supply-chain relationships and the continued rise of deepwater exploration.
One of the topics we cover is Scratching the subsurface: Majors’ exploration performance.
Deepwater continues to dominate the Majors’ exploration value-creation benchmarks. ExxonMobil added the most resources in volume terms between 2014 and 2023, while BP and Eni discovered the most gas, albeit often with different commercial outcomes.
Material development value in onshore and shelf Egypt (Western Desert and the Nile Delta) is helping to balance Eni’s exposure to deepwater exploration. Equinor’s exploration on the mature Norwegian shelf marks it out among the Majors. Shell’s success in Oman is contributing to material onshore value, while deepwater success in Namibia is a key strategic priority. TotalEnergies has made big deepwater finds in Namibia, South Africa and Suriname. Meanwhile, the bulk of Chevron’s value is being generated by deepwater US Gulf of Mexico assets, with the remainder derived from Egypt’s Nile Delta.
One of the hottest exploration plays is the Orange basin. We have mapped the sweet spots, which extend from Namibia to South Africa, where new wells are spudding soon (fill in the above form to see more). Watch, too, for bidding rounds in India, Bangladesh and Pakistan.
Could an expansion of Western sanctions derail Yamal LNG?
The EU has recently banned transshipments of Russian LNG in its ports. This adds to US sanctions on Arctic LNG-2 and poses a number of questions for the global gas market including. what are the implications? Will sanctions on Russian LNG keep escalating? How would more sanctions impact the LNG market?
Key figures of Yamal LNG trade
Yamal LNG, Russia’s large onstream Arctic project, produced 18 mmtpa in 2023. 70% of its LNG sales were shipped directly into markets, mainly to Europe but also to Asia via the Eastern Northern Sea Route (NSR) shipping lane during summer. The remaining 30% of its LNG sales, or 3-4 Mt, were transhipped, mainly in NW Europe, to accommodate contracted deliveries to Asia via the NSR. Small volumes were also transhipped for onward deliveries elsewhere in Europe.
Using our global gas modelling capabilities within our Lens platform, we assessed the hypothesis of tightening sanctions on Russian LNG and quantified what the implications on future market balances and prices would be.
Challenges and opportunities for the steel value chain
Last week, we held a Steel Value Chain Briefing in our Tokyo office, covering topics around the steel, iron ore and metallurgical coal industries, and the impact of the energy transition. The presentations sparked an interesting debate around how steelmakers should manage CO2 emissions, the carbon intensity of different steel-making technologies, what will happen if scrap and EAF costs rise, vertical integration in China, and more.
We delve into:
Can CO2 utilisation drive increased carbon capture?
In theory, using captured carbon dioxide (CO2) instead of simply storing it should improve capture project economics, boosting uptake. However, currently less than 5% of carbon capture capacity announced globally involves utilisation. So, what’s stopping this potentially useful resource being reused?
Wood Mackenzie has published an in-depth insight into the potential of CO2 utilisation as an enabler for carbon capture uptake, based on data from Lens Carbon, part of our Lens platform.
Why carbon capture matters
Strong carbon capture utilisation and storage (CCUS) buildout will be a crucial element of achieving global decarbonisation in a timescale aligned with minimising the impact of climate change. In our base case, which corresponds to a 2.5 ˚C global warming pathway, two billion tonnes per annum of CCUS and engineered CO2 removals will be needed by 2050. Meanwhile, under our net zero 2050 scenario, which assumes global warming is brought back under 1.5˚C by 2100, that figure rises to seven billion tonnes a year
Wood Mackenzie has published an in-depth insight into the potential of CO2 utilisation as an enabler for carbon capture uptake, based on data from Lens Carbon, part of our Lens platform.
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