The oil price is expected to push above US$60 per barrel due to both (geo)political reasons (in particular tensions in e.g. Venezuela and Libya, along with US sanctions in other countries like Iran), as well as to a convergence of interests between OPEC and Russia, both of which have declared their intention to limit production levels. However, with a rising US production this is not necessarily sustainable on the long run. Saudi Arabia has indeed a short-term interest to push up the oil price in order to better valorize Saudi Aramco’s possible partial privatization.
In the long run however, the Kingdom, with the world largest low-cost oil reserves and aware of the importance of energy transition worldwide and the risk of sitting on stranded reserves, will have a clear interest to fight for market shares and not for price. Oil prices are hence expected to remain between US$50 and US$80 per barrel until 2040. For short periods of time, the price may spike in any direction, responding to short term economic, financial and/or political events, rather than fundamental long-term market realities. The current oil price of US$60-70/b already incorporates in our opinion a geopolitical risk premium of some US$10-20/b.
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The Ministry of Coal of India plans to launch a large scale programme to promote the use Coal Bed Methane (CBM) as an alternative fuel to meet residential energy demand within the next two years.
According to the Canada Energy Regulator (CER), Alberta’s marketable gas production is expected to stagnate over the period 2019-2040. On the contrary, British Columbia’s gas production is projected to keep on increasing, catching up with Alberta’s in 2040 thanks to rising growing tight gas production from the Montney Formation. The two provinces accounted for 94% of Canada’s gas production from 2010 to 2018. LNG exports from Canada’s west coast are expected to start in 2025.
The government of Indonesia plans to double gas production in the archipelago over the next decade, in bid to reduce the country’s energy trade deficit. The country intends to produce 127 bcm of natural gas in 2030, against 72 bcm in 2018. The government previously said the country could become self-sufficient in 2025.
According to the Ministry of Energy of Indonesia, the slowdown in the country's electricity demand (+4.5% in 2019 against a government target of +6.3%, and +3.8% only in January 2020) at a time when new power capacities are being commissioned may result in state-owned power utility PT PLN generating more power than needed. Some islands such as Java and Bali may be over-supplied by up to 41.5% in 2020, while Halmahera may be over-supplied by 202%.
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