The global energy sector in 2017 saw the Organization of Petroleum Exporting Countries (OPEC)'s decision to lower oil output, wide-ranging oil price fluctuations, and OPEC's oil cut extension decision to the end of 2018 largely feature on its agenda.
OPEC and non-OPEC oil producing countries agreed to extend their oil production cut for a further nine months to the end of 2018 in November.
On Nov. 30, 2016, OPEC members unanimously agreed during the 173rd Ordinary OPEC meeting and the third OPEC and non-OPEC ministerial meeting in Vienna, to lower oil production by 1.2 million barrels per day (mb/d) down to 32.5 mb/d effective from Jan. 1.
OPEC producers and non-OPEC producing countries led by Russia decided on Nov.30, 2017 that the oil production cap of 1.8 mb/d, which was due to end in March '18, would be extended to the end of December 2018.
The first production cap decision was the organization's first production cut in eight years, and its first intervention in the global oil market since mid-2014 when oil prices began to fall. The adjustments were initially applied for six months and were reconsidered for a six-month extension.
OPEC heavyweight Saudi Arabia will carry most of the burden of output reduction, with a daily cut of 486,000 barrels per day (b/d) while Russia pledged a cut of 300,000 b/d.
- Global oil price hits $65.83 in mid-December
At the beginning of 2017, global oil prices surged to their highest levels since 2015.
On Jan. 3, international benchmark Brent crude traded as high as $58.37.
On Oct. 27, Brent oil reached its highest level since 2016 with $60.44
On Nov. 7, Brent traded at $60.44, the highest level from the beginning of January 2016 and on Nov. 6, prices continued to fluctuate and hit the year's highest level of $64.27.
On Nov. 30, oil prices peaked after OPEC and non-OPEC oil producing countries agreed to extend their oil cut decision until the end of 2018.
On Dec. 12, Brent crude jumped to $65.83 per barrel after the shutdown of a major North Sea pipeline while the cost of WTI registered at $58.37 at 06.36 GMT. The oil prices increase came after the Forties North Sea pipeline, which delivers 450,000 barrels of oil per day, shut down for repairs.
- Combatting climate change and COP23 Bonn
The United Nations (UN) Climate Change Conference took place between Nov. 6 and 17 in Bonn.
During the conference, the UN’s top climate official called for urgent action on climate and warned against the catastrophic consequences of global warming.
In late August, Trump's U.S. administration issued its first written notification to the UN of its intention to withdraw from the Paris Climate Agreement.
The Paris Climate Conference (COP 21) on Dec.12, 2015 saw the first legally binding and universal agreement on climate change in over 20 years of UN negotiations.
Under the Paris Agreement, 195 countries struck an international deal to hold the global average temperature rise to well below 2 degrees Celsius and agreed to work towards limiting the temperature increase to 1.5 degrees Celsius.
On April 22, 2015, four months after COP 21, 171 countries at the UN headquarters in New York signed the Paris climate agreement.
Previously on June 19, the U.S. Secretary of Energy Rick Perry stressed that fossil fuels, including coal, are a priority for Trump administration's agenda for energy security and the economy.
Despite the reduction in coal production in the U.S and worldwide, along with global efforts to curb CO2 emissions, the U.S. government is still very focused on increasing domestic coal output.
- Trump prioritizes fossil fuels
On Nov. 8, 2016, the citizens of the U.S. hit the polls to elect the next president. President-elect Donald Trump took the oath of office on Jan. 20 as the 45th president of the U.S.
His views on climate change concerned many energy market players and countries. Since the beginning of his election campaign, Trump voiced his opinions on prioritizing fossil fuels over renewables, in direct contrast with President Barack Obama's actions.
During his two terms as president, Obama placed importance on renewable and green energy, while Trump was and continues to be vocal about wanting to lift restrictions on fossil fuels.
On Jan. 25, five days after taking office, Trump signed executive orders allowing the completion of the controversial oil pipelines, the North Dakota Access and Keystone XL.
The North Dakota Access pipeline, worth $3.7 billion, plans to stretch from the oil-rich Bakken formation in North Dakota to carry 470,000 barrels of crude through South Dakota and Iowa to Illinois.
Native Americans along with environmentalist groups argue that the Dakota Access pipeline poses a great risk to water sources of the people in the area and threatens sacred sites in the event of a potential oil spill.
The Standing Rock Sioux Tribe sued the government in July. In January, the U.S. Army Corps of Engineers denied a request by the company building the pipeline to tunnel under the Missouri River.
The pipeline is anticipated to help the U.S. reduce its dependency on foreign sources, and provide lower-cost petroleum products for industrialized states of Indiana, Michigan, Ohio, Wisconsin, Iowa, and Pennsylvania, to help increase their manufacturing and employment.
A federal court, however, overturned the decision in October 2016 paving the way for the project to be completed.
In December 2016, Obama suspended the project once again, giving a major victory to the tribes and environmentalist one month before leaving his office.
- Qatar Crisis
On May 23, the crisis began between Qatar and Saudi Arabia, the United Arab Emirates, Bahrain, Egypt, and Yemen erupted when Qatar’s official News Agency (QNA) website was reportedly hacked by an unknown group that allegedly posted false remarks -- attributed to Qatari Emir Tamim bin Hamad al-Thani -- about U.S. foreign policy and Iran.
The same day, the Twitter account of Qatar’s foreign minister featured a statement urging the ambassadors of Saudi Arabia, Egypt, Kuwait, Bahrain and the United Arab Emirates to leave Qatar within 24 hours.
On June 2, the United Arab Emirates, Saudi Arabia, Bahrain, Egypt and Yemen all abruptly announced their decision to sever diplomatic relations with Qatar, citing “national security” concerns. These countries, excluding Yemen, threatened to impose further sanctions on Doha if it failed to accept a long list of demands including the closure of the Qatar-funded Al Jazeera television.
On Nov. 7, Qatar signed contracts worth €12 billion ($14.15 billion) with French companies during a one-day visit by President Emmanuel Macron amid a continuing crisis between Doha and its Gulf neighbors. The signed contracts cover defense, armaments, the operation and maintenance of metros and tramways, and soil pollution treatment.
In addition on Nov. 11, Qatar signed an agreement with the U.K. to purchase 24 Eurofighter Typhoon fighter jets, according to Qatar's Defense Ministry.
Qatar denies the accusations levied against it and described attempts to diplomatically isolate it as a violation of international law and its national sovereignty.
The world's biggest LNG supplier is also forging ahead with a partnership with ExxonMobil for the $1.3 billion Golden Pass LNG terminal in Texas, which is set to start LNG production from shale gas in five years.
- Jerusalem case
On Nov. 6, Trump announced the U.S.' recognition that Jerusalem should be made Israel’s capital as well as plans to relocate the U.S. embassy in Israel from Tel Aviv to Jerusalem.
The controversial decision angered Muslims throughout the world. The city remains at the heart of the Israel-Palestine conflict, with Palestinians hoping that East Jerusalem -- occupied by Israel in 1967 -- might eventually serve as the capital of a future Palestinian state.
The dramatic shift in Washington’s Jerusalem policy triggered demonstrations in the occupied Palestinian territories, Turkey, Egypt, Jordan, Tunisia, Algeria, Iraq and other Muslim countries.
Experts maintain that instability in the region could negatively affect general trade including energy.
At an extraordinary Organization of Islamic Cooperation summit in Istanbul on Dec. 13 saw a final declaration of East Jerusalem as Palestine’s capital came in response to Trump’s decision to recognize Jerusalem as Israel’s capital and relocate Washington’s embassy from Tel Aviv to Jerusalem.
- Illegitimate independence referendum in KRG region of northern Iraq
On Sept. 25, Iraqis in areas held by the Kurdish Regional Government (KRG) -- and in a handful of territories disputed between Erbil and Baghdad -- voted on whether to secede from Iraq.
Along with Baghdad, Turkey, the U.S., Iran, and the UN have all spoken out against the poll, saying it will only distract from the ongoing fight against Daesh and further destabilize the region.
Meanwhile, on Dec. 10, Iraqi Oil Minister Jabar Ali al-Luaibi announced that Iraq and Iran inked an agreement to soon carry Kirkuk oil from northern Iraq to Iran.
Al-Luaibi said the agreement between Iraq's State Organization for Marketing of Oil and Iran would pave the way for the transfer of between 30 to 60 thousand cubic meters of Kirkuk oil per day to Iran.
- Hurricanes hit oil production in the U.S. in 2017
Production of crude oil declined by 1.07 million bpd for the week ending Oct. 13 due to Hurricane Nate, which cut off large amounts of output in the U.S.' Gulf of Mexico region.
Hurricanes Harvey, Irma and Maria cost the U.S. more than $260 billion in destruction and lost economic output.
Hurricane Harvey, which hit the state of Texas in August, cost $87 billion in property damage, and $10 billion in economic output losses, data from economic research firm Moody's Analytics showed.
In addition, Hurricane Irma, which affected the state of Florida at the beginning of September, caused $56.5 billion in destruction, and $14 billion in lost output. And Hurricane Maria, which hit the U.S. territory of Puerto Rico, cost $55 billion in property damage, and $40 billion in economic output losses, according to the firm.
- Nord Stream II
Denmark passed a law at the end of November to permit the Danish foreign minister to ban Russia's Nord Stream II natural gas pipeline from traversing its waters.
The bill will allow foreign, security and defense policies to be considered as an argument in support of the ban when Denmark is to decide whether energy companies should be allowed to disconnect power cables and pipelines in Danish territorial waters.
In effect, the latest decision will permit the Danish government to decide whether Gazprom's Nord Stream II should be allowed through Danish waters.
In addition to the obstacles from Denmark, the EC's new draft law proposed on Nov. 8 stipulates that EU third party access or anti-monopoly legislation applies to offshore pipeline segments in EU territory.
The project also faces resistance from other European countries including Lithuania and Poland in addition to Denmark.
The entry point of the Nord Stream II gas pipeline into the Baltic Sea will be the Ust-Luga area of the Leningrad Region in Russia from where the pipeline will stretch across the Baltic Sea to Germany.
The Nord Stream II is a 1,200 kilometer-long pipeline project, which aims to double the current capacity of 55 billion cubic meters per year for the Nord Stream pipeline to take gas from Russia to Germany across the Baltic Sea to supply 26 million households in the region.
The line's route passes through the Danish island of Bornholm, between Sweden and Poland.
By Gulsen Cagatay
Anadolu Agency
energy@aa.com.tr