ESADEgeo Daily Digest, 11/03/2019

Resultado de imagen de oil pipelineInternational Energy Agency / United States to lead global oil supply growth, while no peak in oil demand in sight

  • The United States will conduct global oil supply growth during the next five years due to the important strength of its shale industry, which triggers a rapid transformation of world oil markets according to the IAE’s annual oil market forecast. By the end of the forecast, oil exports from the USA will overtake Russia and close in on Saudi Arabia, which will bring greater diversity of supply.
  • Global oil demand is set to ease, especially in China, which will slow down, but it still increases an annual average of 1.2 mb/d to 2024, according to the report, Oil 2019. The story of how the United States transformed itself into a major exporter within less than a decade is extremely rare. It is the result of the ability of the US shale industry to respond quickly to price signals by ramping up production. The United States accounts for 70% of the total increase in global capacity to 2024, which adds a total of 4 mb/d. This follows spectacular growth of 2.2 mb/d in 2018.
  • Global oil markets are going through a period of big changes, with long-lasting implications on energy security and market balances. The USA is increasingly leading the expansion in global oil supplies, with significant growth also seen among other non-OPEC producers, including Brazil, Norway and new producer Guyana.
  • In the longer term, security of supply is linked to upstream investment, and preliminary investment plans indicate that upstream investment is set to rise in 2019 for the third year in a row. In the downstream sector, product markets are on the eve of one of the biggest shakeups ever, with the implementation of the International Maritime Organisation’s new rules governing bunker fuel quality in 2020.

Euractiv – Georgi Gotev / Merkel’s successor responds to Macron’s Europe vision

  • German Chancellor Angela Merkel’s successor, Annegret Kramp-Karrenbauer, described her European vision her vision in a German paper on Saturday. She aligns herself with recent French proposals on security but disagrees on key social issues. It is an important comment since she is likely to be the future chancellor of the country.
  • AKK agrees that Europe should share a common border force, and she called for a mutual permanent seat for the European Union on the United Nations Security Council, a long-standing demand of Germany. Nonetheless, France is keen to keep the seat.
  • Moreover, she disagrees with Macron’s Europe-wide minimum salary. The centralization of Europe and the “Europeanisation of social services and the minimum wage would be the wrong way”, she defended. Furthermore, she also called for a common border force across Europe.
  • Financial Times – Guy Chazan / Germany’s Kramp-Karrenbauer warns on ‘European centralism’

The New York Times – Eric Schmitt & Charlie Savage /  U.S. Airstrikes Kill Hundreds in Somalia as Shadowy Conflict Ramps Up

  • The US military has increased its battle against Shabab, an extremist group linked to Al Qaeda in Somalia, in spite of President Trump seeks to reduce operations against Islamist insurgencies worldwide, from Syria and Afghanistan to West Africa. The annual death toll of suspected Shabab fighters increased to the third record high in three years. Last year, the strikes killed 326 people in 47 attacks, as the Defense Department data shows.
  • Somalia, a country that occupies a key strategic location in the Horn of Africa, has faced civil war, droughts and an influx of Islamist extremists over the years. The growing United States military engagement stands in stark contrast to the near-abandonment not long after the “Black Hawk Down” battle in 1993, which left 18 Americans and hundreds of militia fighters dead.
  • The United States estimates that the Shabab has about 5,000 to 7,000 fighters in Somalia, but the group’s ranks are fluid. A State Department official, citing interviews from Shabab deserters, said that the number of hard-core ideologues may be as few as 500.
  • Along with the EU and the UN, the USA also has continued to invest in so-called soft power assistance to Somalia, providing humanitarian aid such as food to drought victims, and development programs on education and training.
  • Officials cited signs of recent incremental progress in efforts to help the Somali government build a functional national army. Moreover, in December, the United States re-established a permanent diplomatic presence in Somalia for the first time since 1991.

Financial Times – Nick Butler / Ukraine and the shifting balance of power

  • Ukraine has not disappeared from the headlines, although the Russian annexation of Crimea five years ago is regarded internationally as a true reality.  In spite of the seizure, Ukraine has not broken apart; the economy has raised after the crisis in 2014, and efforts to end corruption have been made.
  • The situation is, nonetheless, far from being stabilized, and the presidential election at the end of March could produce an outcome that reverses many of these gains, and could have an impact at the European gas market.  On the latest opinion polls, President Petro Poroshenko and former Prime Minister Yulia Timoshenko are trailing comedian Volodymyr Zelensky, but 44 candidates are in the field.
  • The absence of active western support for President Poroshenko, despite his achievement of maintaining Ukrainian independence towards Russia, suggests that a Tymoshenko victory would be tolerated both by the USA and by Europe.
  • With a new president in Kiev, Moscow could choose to maintain the flow of gas through “Brotherhood” pipeline to Central Europe as well as building up volumes through Nord Stream 2, which would help candidate Tymoshenko. If Russian pipelines that cross Ukraine to enter Europe were closed, Ukraine would lose transit fees, which amount to some $3bn a year. However, the implications of a realignment of Ukraine with Moscow are wider than the gas market. For Moscow, it would return Ukraine to its “rightful” place as a satellite state, and it will make other countries from the Baltics to the Balkans shiver at the thought that neither US nor the EU would have the will to sustain confrontation with Russian aggression.

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