The three C’s of 2020: Covid, China and Climate.

EnergyQuest CEO Graeme Bethune looks back at 2020

As 2020 draws to a close it is time to reflect on the passing year. There are three themes that stand out to us from 2020. First, and obviously, the impact of the pandemic on individuals, countries and energy markets. In Australia the major impact on energy demand has been on transport fuels rather than on gas, LNG or electricity. However the fall in oil and LNG prices has impacted energy producers generally. Just when we thought everything was under control a number of states have closed borders to travelers from Sydney.  Things are much worse overseas. The pandemic looks set to continue to wreak havoc well into 2021.
A second  theme has been the politicisation of trade, most obviosly now with China. This trend has been developing for a few years now, initially led by the US. I remember hearing Rick Perry, then US Energy Secretary, speaking at the 2018 World Gas Conference about how US “freedom” gas could help reduce European reliance on Russian gas. Politicisation in US-China relations intensified further under the Trump Administration and has now spilled over to affect Australian trade with China. This is a complex issue and one with two sides to at least some of the stories. Friends in the wine industry tell us that some Australian wine producers have brought the imposition of Chinese tariffs on themselves by their marketing tactics. However the current situation where some Chinese cities have had to restrict electricity use while Australian cargoes of thermal coal are sitting idle offshore shows that politics trumps everything else for the Chinese authorities. We will continue to keep a close eye on trade issues through 2021.
A third theme has been the rush to adopt net zero targets by most companies in the Australian energy industry. The utilities like AGL, Origin and Energy Australia have already transitioned to a portfolio of energy sources, including renewables. However the transition to net zero is likely to be harder for the upstream oil and gas producers like Woodside and Santos. Is Woodside’s future as a hydrogen producer? Is Santos’s future as a carbon capture and storage company? We will continue to follow this theme closely at the company, national and international level in 2021.

Our regular reports, EnergyQuarterly and Australian LNG Monthly continue to be widely read and quoted in government and industry. Our East Coast Gas Outlook to 2040 study was also popular with companies trying to navigate their way through east coast gas issues. In addition we have also done plenty of consulting work under Rick Wilkinson, our Head of Consulting. In addition to work on the east coast Rick has also undertaken assignments on Western Australian and Northern Territory gas.
Altogether It’s been another busy year for EnergyQuest and 2021 looks like being much the same..