Amber Rudd, home secretary, speaking at the Conservative party conference

Amber Rudd, home secretary, speaking at the Conservative party conference  © Getty Images

A few weeks ago I argued that Brexit would have very little impact on the energy sector in the UK or Europe. Energy prices are decided by the international market, the energy mix has always been dictated by national governments and there is no apparent appetite for Britain to diverge from the climate policies and emissions targets set by the EU with its full support. All that remains true, but circumstances have changed. A new factor has emerged in the Brexit debate that could do great damage to the country’s sector.

The issue was expressed in chilling terms in two speeches at the Tory party conference this month. Theresa May, prime minister, said: “If you believe you’re a citizen of the world, you’re a citizen of nowhere. You don’t understand what the very word “citizenship’ means”.

 Read more

Hillary Clinton

Hillary Clinton  © Getty Images

Is it mad or deeply cynical to say that the outcome of the US presidential election doesn’t really matter for the energy sector? Surely there are big differences of belief between the two candidates, reflected in their stated policy positions? Surely their supporters are giving their votes and money to bring about changes they believe in? True, but if you take a step back from the noise and fury of the campaign it is worth asking whether the sector will be very different in 2025 if Hillary Clinton prevails or if the recent drift in the polls continues and President Donald Trump is inaugurated on January 20. Read more

The Azerbaijani president Ilham Aliyev (left) with John Kerry, US Secretary of State, earlier this year

The Azerbaijani president Ilham Aliyev (left) with John Kerry, US Secretary of State, earlier this year  © Getty Images

For a few years in the 1990s, Azerbaijan looked like one of the world’s lucky countries. Freed from Soviet dominance, rich in resources, especially oil and gas, and immune to the radical and extremist Muslim fundamentalism that was spreading from Saudi Arabia and other parts of the Middle East, the country seemed to have a lot going for it. Twenty years later the situation has deteriorated badly and looks likely to get worse. Economic success is being destroyed by rampant corruption. Constitutional changes this autumn will entrench the power of President Ilham Aliyev, who rules Azerbaijan as if it were a family estate. What went wrong and what can be done? Read more

Theresa May, UK prime minister

Theresa May, UK prime minister  © Getty Images

I have the sense that Mrs May is a grammar school pupil who likes to get a good mark and to be told she has done well. As a grammar boy myself I recognise the psychology. On Hinkley Point, whatever the inevitable noise from those who dislike the headline outcome, she deserves praise. So “VG 8½ out of 10. A good start to the term. Keep it up”.

There are several illuminating aspects of the latest announcement on Hinkley Point.

First, Mrs May has faced down heavy civil service pressure to reconfirm the deal as provisionally agreed by David Cameron’s government. The willingness to review and now amend the project is a signal that she is prepared to challenge the legacy she inherited from Mr Cameron and his chancellor George Osborne. It is impossible to understand the current government and its policies without appreciating the depth of contempt there is for the public school drinking club circle symbolised by the Bullingdon Club. When the clique took power in Downing Street, they were openly contemptuous of Mrs May and other Tories who did not share their privileged background.. The UK has a new government and scores are being settled. Read more

  © Getty Images

The buzz word of the moment in the energy business is “transition”. It provided the theme for the ONS conference and exhibition in Stavanger in Norway two weeks ago as well as the title for several recent consultancy studies.

Unsurprisingly, transition is the main concept in many of the corporate strategy reviews now being undertaken by some of the leading energy producers and utilities. The meaning of the word, however, is loose and variable. It is not even clear whether some of the big operators in the market understand the breadth of the transition that is already taking place and the extent to which it could reshape the prospects for their businesses.

The transition is normally discussed in terms of the move from hydrocarbons to lower or zero-carbon sources of energy supply. Driven by the fear of climate change and by the adoption of various public policies, the shift has been under way for two decades and more. The Paris conference at the end of last year provided new impetus, even if the end product fell somewhat short of a global deal backed by law and a carbon price. Different countries are moving at different speeds, and the result is a gradual shift in the energy mix, which now promises to be accelerated by advances in technology. Low carbon sources of supply are falling in price and some are within reach of the point where they can be competitive without subsidy. Read more


How the proposed Hinkley reactor could look, according to an EDF computer-generated image  © AFP Photo / EDF Energy

The Downing Street review of the Hinkley Point nuclear power project is coming to an end – and a decision will soon have to be made, probably before the end of September. The latest wave of public relations activity from EDF, the company that hopes to build the plant, shows how nervous the company is about the outcome. Given the range of doubts about the costs, the construction risks, the reactor technology and the involvement of the Chinese, that nervousness is well justified. Can EDF come up with an offer that deals with the doubts? If it focuses on substance rather than spin, it is just possible. The choice will be made in Paris. Read more

  © US Energy Information Administration

The attempted coup in Turkey on July 15 may have failed but its consequences are still playing out. Some 40,000 people have been detained as suspected conspirators – so many in fact that ordinary convicts are being released to make room for them. Tens of thousands more have been suspended from their jobs under suspicion of being sympathisers. The trawl for the guilty has reached institutions a long way from the military front line including the energy ministry, where 300 staff have been suspended along with 25 “experts” working for the sector’s regulator EPDK. If it weren’t so serious for those involved you could be forgiven for laughing at a president who sees the number crunchers who set the tariffs for consumers of gasoline and electricity as a threat to his regime. Read more

Opposition protestors in Caracas last month amid demands for a refrendum on removing President Nicolas Maduro from power

Opposition protestors in Caracas last month amid demands for a referendum on removing President Nicolas Maduro from power  © Getty Images

After years of decline, the situation in Venezuela is becoming desperate. Could the latest fall in the oil prices provide the tipping point that finally brings to an end the unhappy period of Marxist rule begun by Hugo Chavez in 1999?

In the last two months the oil price has fallen by 20 per cent, ending the hopes of producers around the world that the downward slide of the last two years is over and that prices will soon return to a level that they used to regard as “normal”. For many, the latest fall will be the last straw. Numerous companies have maintained their dividend payments through borrowing. With prices falling again that looks unsustainable. Many, including the state companies, also face hard investment decisions on projects that need higher prices to be viable. With capex requirements outstripping revenue and little prospect of raising more money through rights issues more projects will be postponed or abandonedRead more

Theresa May, UK prime minister

Theresa May, UK prime minister  © Getty Images

All new leaders face tests. Do they mean what they say? Will they flinch or give way under pressure? For a prime minister the tests can come from any direction — from the trades unions, from the Kremlin, from political opponents, from dissident backbenchers. Theresa May’s first test as British premier has come from the Chinese in the form of a remarkable article in the Financial Times.

Liu Xiaoming, the Chinese ambassador to the court of St James, does not like the idea that the new UK government should be reconsidering the plan to build a nuclear power station at Hinkley Point in southwest England, and by implication the idea that Chinese companies should own, build, operate and control a further nuclear plant at Bradwell in Essex, in the east of the country.

The article is puzzling. What sort of diplomat negotiates on serious issues through the media? Wouldn’t they normally work discreetly to identify the cause of the problem — if there is one — and then seek to find a quiet solution? Issuing threats is not very diplomatic. Indeed, the article reads as if it had been written by a PR firm instructed to put pressure on ministers. One wonders how Beijing would react if the British ambassador there were to write an article demanding that Hong Kong be allowed to choose its own leaders. Read more

Sameh Shoukry, Egypt's foreign minister, who was visiting Israel last week

Sameh Shoukry, Egypt's foreign minister, who was visiting Israel last month  © Getty Images

The world has discovered a new province rich in energy supplies. Three major discoveries of gas have been made in the eastern Mediterranean over the last few years and there is the prospect of much more being found in areas still to be explored. That makes the region one of huge international interest. The only challenge is getting the gas to the markets in which it will be used, and that is a problem not of geography or technology but of politics.

How to resolve this new “Eastern Question”? For years the absence of a satisfactory answer has stalled the development of the Israeli and Cypriot fields and deterred further exploration. But now it begins to look possible that a combination of circumstances has opened the door to a practical solution.

The eastern Mediterranean — often described as the Levant Basin — covers the stretch of water that runs from the northern coast of Egypt up past Sinai, Israel, Lebanon, Syria and Cyprus to the southern coast of Turkey. The three big discoveries are the Leviathan field 130 km off Haifa in Israel, the Aphrodite field just east of Leviathan offshore Cyprus and Zhor in Egyptian waters 120 miles north of Port Said. Read more

The French economy minister Emmanuel Macron visits the Civaux nuclear power plant operated by EDF, which is 85% owned by the state

The French economy minister Emmanuel Macron visits the Civaux nuclear power plant operated by EDF, which is 85 per cent owned by the state  © Getty Images

The saga of Hinkley Point goes on. The UK government is right to delay approval of a project in which it has lost confidence. The EDF board may have approved the deal to build a new nuclear power plant in Somerset, southwest England, but the obvious risks were such that the only prudent response is to pause and to reconsider all the options. The government must be right in wanting to avoid locking the UK into an expensive source of supply at a time when the costs of every alternative — including natural gas, solar and wind — are falling. In the post-Brexit world competitiveness is critical.

Theresa May, the prime minister, has also appreciated that approval of the project is now a UK bargaining chip in Britain’s relationship with the French. Cancelling the Hinkley project would destroy the thousands of jobs promised along the supply chain – most of which is located in France. The pressure is now on President François Hollande, who faces a very difficult re-election campaign next year, to force EDF to come up with a much better offer. Read more

Greg Clark leaves 10 Downing Street as the new business, energy and industrial strategy secretary

Greg Clark leaves 10 Downing Street as the new business, energy and industrial strategy secretary  © Getty Images

A changing of the guard in an organisation is a good time at which to pause and reconsider every aspect of strategy. The mistakes of the past can be admitted, entrenched but outdated positions can be quietly left behind and altered circumstances accepted. That is what should happen now in the UK in relation to energy policy. Read more

A solar farm in France. A European common grid would help overcome the problem of intermittancy with renewables  © Getty Images

With a few honourable exceptions, the debate on British membership of the EU has so far consisted of a contest between the outs and the half outs – that is, those who want Britain to leave completely and those prepared to stay only if the country is protected from further incursion by immigrants or European policy makers. The other approach – active engagement to change and improve what happens – has barely been articulated. In several areas positive engagement is much needed and offers substantial benefits. Energy policy is a good place to start.

The EU has only limited competence when it comes to energy policy. The mix of fuels and the tax system under which they are traded remain matters of national choice. That isn’t likely to change. It would be a waste of time to try to force France to accept fracking or to tell the Germans that they are going to have to keep nuclear power. Any attempt to centralise such emotive decisions will fail. 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

Flooding on the Somerset Levels in 2014

Flooding on the Somerset Levels in 2014  © Getty Images

Is climate change the cause of extreme weather events? Until now the link has been suspected but never confirmed with scientific confidence. That position is now changing. A new study from the US confirms that for some extreme events there is a causal connection.

This link between climate science and immediate weather conditions can only strengthen the case of those arguing for policy change. The impact of a damaging heatwave in terms of deaths, sickness and other social and economic costs is much more likely to rouse public opinion than the distant prospect of what might to some sound like a modest increase in the global mean temperature. All politics are local, and they are also immediate. The discount rate applied to future possibilities is very high: what could happen to a future generation decades matters much less than what is happening to me here and now. It brings climate to the foreground and diminishes the argument of those who say that since we don’t know everything we should do nothing and wait until we see how things turn out. If the impact is immediate and people are dying as a result, the call for action will be loud. Read more

Russian Gas Supplies Through Ukraine Turned Off

Russia locks on gas supplies to Ukraine  © Getty Images

Is Europe trapped in a state of dependence on Russian gas? What would happen if by some accident, let alone a strategic decision taken in Moscow, the gas stopped coming. Would eastern Europe grind to a halt, and would the west, led by Germany, sue for peace on any terms ?

This was the core topic for debate last week at a seminar organised by the Geopolitics Forum at Corpus Christi College in Cambridge as part of their series on nightmare scenarios. With wide participation from within the university and beyond, we were able to go beyond the headlines to build an analysis based on facts. It is worth setting out a few of those facts. Read more

George Osborne Visits North Sea oil in Scotland

George Osborne on the Montrose Platform in the North Sea  © Getty Images

On Wednesday, George Osborne will present the UK budget to the House of Commons. At a moment of deep uncertainty for the country’s energy industry — which is discouraging investment and creating quite unnecessary risks for the future. From the North Sea to Hinkley Point and shale there is confusion and doubt. Mr Osborne should come forward with a package of messages to restore confidence. Here are four obvious steps the chancellor should take.

First, the North Sea is now on the verge of a serious cutback in activity that will reduce energy supply and lead to lost jobs as well as much lower tax revenues. The hopes expressed in Sir Ian Wood’s report two years ago for an renaissance in the North Sea and the development of the billions of barrels of remaining resources will be lost. Read more

Executive Vice President in charge of fi

Thomas Piquemal  © Getty Images

Thomas Piquemal, the finance director of EDF has performed a significant public service by resigning and focusing attention on the continuing problems around the UK’s Hinkley Point nuclear project in Somerset.

I cannot remember the last occasion when the CFO of a major company resigned over an issue of policy. The event is certainly rare and can only increase the pressure on the French company’s chairman, Jean-Bernard Lévy.

There are multiple questions behind the resignation. Read more


The Saudi oil minister, Ali al-Naimi   © Getty Images

The kingdom’s not for turning. There will be no production cuts. Oil will continue to be produced at unwanted levels until other suppliers are forced out of the market.

That was the unequivocal message delivered at the IHS Cera conference in Houston two weeks ago by the Saudi oil minister, the 81-year-old Ali al-Naimi. Mr al-Naimi tried to claim that the US shale industry was not his particular target but that did not seem to convince those involved in a sector which is beginning to feel the real pain of $30 oil.

For the Saudis such pain, along with the even greater suffering being felt by their former allies such as Algeria and Venezuela, may appear to be a necessary cost in securing the kingdom’s goal — a secure oil market share for itself whatever happens to anyone else. On this view, all the others just have to learn the harsh realities of life. Think of it as the application of sharia law to the oil industry. Read more

The engine room at the Flamanville nuclear reactor  © Getty Images

The news that there is to be a further delay to the long-promised Hinkley Point nuclear power station in Somerset should come as no surprise to those who have followed the saga over the last eight years. As the FT report on Monday confirmed, the board of EDF wishes to delay the project for another year . That could easily turn into two years or three or more because it depends on the resolution of the deep problems at Flamanville in France, where a similar reactor is being built, and on the company’s financial health, which is fragile.

The EDF board is right to seek a delay. It is the only rational decision for EDF as a company and in reality for the UK. Whatever the embarrassment involved it is impossible to proceed with a project where the risks and ultimate costs are unknown. The resistance to the project from managers and staff within EDF is very telling. The UK government must accept that Hinkley will not be built for the foreseeable future.

But what comes next ? Read more