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Khalid al-Falih, the new Saudi oil minister

Khalid al-Falih, the new Saudi oil minister  © Getty Images

Are we on the verge of a real upturn in oil prices? Over the last 10 days, the price has risen almost 20 per cent. Is the talk of a sustainable upturn and a return to the situation of two years ago when oil was over $100 serious, or is the story just a silly season invention at a time when most traders are on holiday?

There are three potential explanations for the rise.

First, something could have changed in the physical market where supply meets demand. That can be dismissed very quickly. Supply is up and demand is flat. Iraq, Russia and Saudi Arabia have all increased supply this year. Iraq in particular, despite the continuing conflict with Islamist militants in the north and west, has managed to reach record production levels of 4.5m barrels a day. US production is slightly down but across the world most producers are maximising output to maintain much-needed revenue flows. Read more

Sampling crude oil at well operated by Venezuela's state-owned oil company PDVSA

Sampling crude oil at well operated by Venezuela's state-owned oil company PDVSA  © Getty Images

In strong contrast to the previous downturns in the energy market the sharp falls in prices seen over the last two years have not triggered a wave of restructuring in the industry. Merger and acquisitions activity has been minimal. But is that about to change? Could a wave of privatisation now reshape the business landscape?

Cyclical downturns in the oil and gas sector are relatively common and have occurred roughly once a decade since the 1980s. The response has traditionally followed a well-trodden path. Companies cut costs and postpone projects. They push for tax concessions and improved terms, while trying to maintain dividends. When that fails, heads roll and the stronger brethren take over the weak. Read more

Construction of the EPR at Flamanville, northwest France

Construction of the EPR at Flamanville, northwest France   © Getty Images

The cloud of doubt around EDF’s long-planned new nuclear plant at Hinkley Point in Somerset continues to grow.

The final investment decision has been delayed yet again. The start up date has been put back to 2026 – nine years behind the original schedule. A new contingency, amounting to £2.7bn, has been added to the cost of the project.

Now, in a remarkably frank interview the French energy minister, Segolene Royal has said that the company may have been “carried away” by its enthusiasm for the project and has joined the chorus of internal staff and engineers in warning of the risks to EDF’s finances from going ahead. But although Hinkley inevitably gets all the attention in the British press, EDF’s real problem is to be found in the half constructed plant at Flamanville on the Cotentin Peninsula on the other side of the English Channel. Read more

FRANCE-CLIMATE-WARMING-COP21-DEMO

Climate change demonstrators during the Paris conference  © Getty Images

Two papers published in the last few weeks provide a sobering reality check after the rhetorical success of the Paris climate change conference in December. Getting any agreement was a diplomatic triumph but producing real change on the scale necessary will be much more difficult. The two documents are very different but both excellent pieces of work. Their calculations and assumptions are detailed, transparent and, most important of all, evidence based. Both, however, reflect a degree of unjustified optimism. Read more

FRANCE-POLITICS-GOVERNMENT

Emmanuel Macron  © Getty Images

The most interesting comment at Davos this year came from the French economy minister Emmanuel Macron who said that he simply did not believe for a second the figures put out by the Chinese government claiming that their economy had grown by 6.9 per cent in 2015. To anyone familiar with Chinese statistics the comment is welcome because it brings into sharp focus the fact that no one can trust the data being produced by what is now one of the world’s largest economies. The doubts are not limited to macro economic numbers. Chinese data on the energy sector also deserve to be regarded with great scepticism.

There are three reasons why Chinese data might be inaccurate. The first is that it is simply extremely hard to gather reliable data across a country which is so vast. Good data is hard to come by. In Nigeria gross domestic product was revised upwards in 2013 by 89 per cent because the old basis of calculation was inaccurate. There are many issues even in much smaller and more developed countries. Read more

National Tribute to The Victims of The Paris Terrorist Attacks At Les Invalides In Paris

Laurent Fabius  © Getty Images

The agreement on climate change in Paris will satisfy no one. The complaints are predictable and have already begun.

The commitments made are not legally binding and political decisions could be altered by future elections or regime changes. The funds available for adjustment are too limited and, of course, there is no carbon price.

All true, but politics is the art of the possible and what has been agreed is a triumph for French diplomacy and for the French Foreign Minister Laurent Fabius personally. Many deserve credit but success depends on leadership. He is the Energy Personality of the Year because he has played a crucial role in changing how the sector will evolve worldwide for decades to come. Read more

FRANCE-ENERGY-HYDRO-ALSTHOM

A pump turbine at Alstoms' global technology and hydropower centre in Grenoble, France  © Getty Images

Storage — whether of grain or of knowledge through the printed word — has been a crucial element in human development. Of all the many technical advances that are transforming the energy business none is potentially more important than storage: it give us the ability to control the way, and crucially the timing, of energy consumption. Used on a major scale it could help to make heat and light available to those outside the commercial economy and could radically alter the energy mix.

Two excellent recent research reports summarise the current state of the art in the field and offer some predictions. The first is from Lazards and is the latest in a series assessing trends in the costs of different mechanisms. The second is from Moody’s and concentrates on the advances being made in reducing the cost of batteries.

In discussing storage it is important to demolish two myths. First, the technological advances are not about to transform the energy system to the point where a major proportion of consumers defect from existing distribution systems. Second, it does not require a dramatic breakthrough for making it on a significant scale to become economic. Read more

George Osborne’s concept of a “Northern Powerhouse” is a good and timely idea. The UK economy is disproportionately skewed to London and the South East. Other regions need development and jobs. The cities of the North – from Liverpool and Manchester to Leeds and Sheffield provide a strong base with great potential. What they can achieve could provide a model for other neglected areas. But good ideas need to be translated into tangible actions. So here is one possibility – Northern Power – a municipal energy business for the North of England. Read more

The energy business is entirely familiar with the concept of stranded assets. Now, however, a new concept has been introduced: the idea that some assets, specifically hydrocarbons, will inevitably be stranded and left undeveloped as the world reduces its hydrocarbon consumption in order to avoid the risks of climate change. The question is whether investors and companies should be worried by that concept. Read more

CHINA-STOCKS

  © Getty Images

The Chinese economy is clearly going through its most serious downturn in more than 30 years. After three decades of continuous growth averaging more than 8 per cent per annum, the problems of industrial over capacity and excessive debt are starting to take their toll. The stock market volatility of the last few weeks is a symptom of the bubble that has been allowed to develope in recent years and of the doubts that are now setting in about the sustainability of high growth. The more serious problem, as the published data is now showing, lies in the real economy and in the accumulated and now unfundable debts that have financed booms in sectors such as housing construction and urban property development. Read more

The borders drawn by Churchill and other politicians in the aftermath of the First World War have shaped the Middle East for almost 100 years. Now, however, sectarian upheaval combined with the US withdrawing from day-to-day engagement suggests that those boundaries could be redrawn as a result of the shifting balance of power on the ground. That process has started in northern Iraq and won’t stop there. The redrawing of the maps will have profound implications for the energy business. Read more

The next few months will be a critical period in the history of the North Sea. After 50 years which have seen 42 billion barrels of oil and gas produced, the province could now see a significant proportion of activity brought to a premature end. Fields which are uneconomic at current prices could be closed down and then decommissioned. Much of of the oil and gas which remains ( between 12 and 24 bn barrels ) could be left behind, undeveloped and valueless. For some fields, such as Brent, the exhaustion of reserves makes decommissioning inevitable. For others, however, we should be finding a way to maintain operations and to ensure that the resources in place can be developed when prices rise again. Read more

The urgent attempts by Europe’s leaders to negotiate a solution to the crisis in Ukraine represent an open acknowledgement that the policy of sanctions has so far failed. Mr Putin continues to destabilise the Government in Kiev and to undermine its authority in the east of the country. They may also reflect a growing realisation that sanctions are in danger of backfiring. Greece faces a serious debt crisis but at least the debate on how to resolve that crisis is now being held in the open. we know the options and the risks. In Russia, however, there is another debt crisis which is going unmanaged and which could easily get out of hand. Read more

Meet EVA — the latest racing car. EVA has an elegant shape, with aerodynamics worthy of any of the cars which race in Formula One. The difference is that EVA is solar powered. Read more

View inside the Hunterston B nuclear power station

Inside the Hunterston B nuclear power station in Scotland  © Jeff J Mitchell/Getty Images

2015 will be a crucial year for the nuclear industry across the world. Japan is expected to start bringing its nuclear reactors back on stream — four years after the Fukushima disaster. Elsewhere, a dozen different countries are considering whether or not to commit to new plants, with the decisions further complicated by the fall in the price of competing fuels such as coal and natural gas. Much depends on what happens in the UK, where the progress of proposed new developments will signal whether nuclear can be competitive as a long term source of energy. Read more

Russian president Vladimir Putin greets Chinese president Xi Jinping at the Apec meeting in Beijing last month © AFP

Russia’s President Vladimir Putin heads to New Delhi next weekend and will sign a deal with India on energy supply, marking the latest step in a remarkable set of developments that will reshape the international energy business and particularly the natural gas market for years to come. Read more

CEO of energy company Total, Patrick Pouyanne, speaks during the Oil and Money conference in London on October 30

Patrick Pouyanne, the new chief executive of Total, speaks at a conference in London on October 30  © BEN STANSALL / AFP / Getty Images

The guard is changing in the international energy sector. Shell, Total, BG, EDF, Areva and a host of other companies have appointed — or are about to appoint — new leaders. There are more to come, including strong rumours of a change at Gazprom as it struggles to cope with the implications of sanctions, a shrinking market and sector-wide dividend cuts, and as other companies adjust to the sharp fall in prices and realise that there are no contingency plans to cope with sub-$80 oil. Read more

Last week I wrote about the forthcoming independence referendum in Kurdistan. To move from events there to what is happening in Scotland is a surreal experience. In Erbil the vote will be a deadly serious matter which could create a new country for a nation which as they say has no friends but the mountains having been a victim of international betrayal and cynicism for centuries. There is no knowing whether the Kurdish referendum will end in triumph or tragedy. In Edinburgh what should be an equally serious debate about breaking the relationship with the rest of the UK is now close to a farce. Read more

Flying east over the mountains into the new international airport of Erbil, the administrative capital of Kurdistan, you are conscious of entering history. Times past – how many wars just have been fought around the citadel in Erbil – one of the oldest known settlements in continuous occupation in the world – over its 5,000 year history? But also current history because what is happening in Erbil now could reshape not just Iraq but the rest of the Middle East. And, almost incidentally, the world oil market. Read more

Getty Images

Why are renewables moving so slowly? Of course the output of renewable energy is growing in absolute terms and in terms of market share in most countries in the world. But the growth starts from a very low base. On the International Energy Agency’s latest numbers, renewables provide just 13 per cent of total global energy needs at the moment, and will provide only 18 per cent by 2035. If traditional biomass is excluded the figures are 7 per cent and 14 per cent.

The problem is cost. Electricity produced from offshore wind and solar costs somewhere between 50 and 100 per cent more per MW/hr than power from natural gas and, with some variations, will continue to do so for the next decade unless one makes the assumption that gas prices are going to increase. Onshore wind is cheaper and in the US in particular is the closest of all the renewables to being competitive without subsidies. Read more