Europe spends big to help with energy prices. Image: Unsplash/Grant Durr
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- This weekly round-up brings you the latest on developments in the global energy sector.
- Top energy stories: Europe spends big to help with energy prices; oil prices wobble over Ukraine and recession fears; Estonians are told to prepare for blackouts.
1. News in brief: Energy stories from around the world
The Estonian Prime Minister has told citizens to prepare for blackouts if Russia disconnects the Baltic states from a regional power grid. "It would be wise to be prepared for possible power outages – that includes public authorities, companies, and every individual," Kaja Kallas said.
US government oil reserves are at their lowest level for 38 years, at 427.2 million barrels, or around four weeks’ of demand, according to a Reuters analysis of Department of Energy data. Releases of around 218 million barrels for the 12 months ending 30 September have calmed markets and cut energy prices.
Portugal has increased the target for its initial offshore wind power auction to 10 gigawatts (GW) in order to accelerate the country's energy transition. Environment Minister Duarte Cordeiro had put the capacity on offer at 6-8 GW in June, which had already doubled the government's target at the beginning of 2022.
French President Emmanuel Macron says he wants to halve the time it takes to complete renewable energy projects. Macron was visiting the country’s first off-shore wind farm in Brittany which took 10 years to build.
Strike action in France has impacted Exxon Mobil’s oil and petrochemical plants in the country. The company says the action, which unions undertook on 20 September after a dispute over pay, has reduced output at two of its plants.
UK-based industrial software company Aveva has agreed to a full buyout by its major shareholder Schneider Electric, according to the BBC. The French firm says it will maintain operations in Cambridge following the $10.5 billion deal.
2. Europe spends billions to cushion the blow of soaring energy bills
The UK government has unveiled plans to cap wholesale electricity and gas costs for domestic and business users for at least six months. Chancellor Kwasi Kwarteng told parliament that the package would cost $66 billion. "We expect the cost to come down as we negotiate new, long-term energy contracts with suppliers," he said.
Germany has moved to nationalize gas importer Uniper with a $7.8 billion package as the government tries to secure power supplies. It follows a previous multi-billion Euro bailout attempt to shore up the struggling company.
The German government had already put Gazprom Germania under trusteeship, which is a de-facto nationalization. Together with the Uniper bailout, the overall bill totals $39.5 billion, according to Reuters.
France also says it will spend $9.5 billion to take full control of utility EDF. Greece will spend a further $1.07 billion in power bill subsidies next month to protect both domestic and business users from high energy prices. Greece has so far spent more than $8.7 billion to subsidize energy costs since last September.
European governments have already spent almost $496 billion to protect businesses and citizens from soaring energy prices.
3. Oil prices edge down over global recession fears
Oil prices dropped on Friday to levels not seen since January. It came off the back of the dollar hitting its strongest level in two decades. A strong dollar reduces demand for oil as it makes it more expensive for buyers overseas paying in different currencies.
Central banks around the world are also continuing to hike interest rates, raising fears that these could help tip economies into recession. A survey by S&P Global indicated that a downturn in business activity in the euro zone deepened in September.
Oil prices had previously jumped on Wednesday after Russia’s announcement of a partial military mobilization. President Putin's decision to call up hundreds of thousands of reservists has raised concerns of a tighter energy supply if the war in Ukraine escalates. Oil prices hit a multi-year high in March following the outbreak of hostilities.
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The views expressed in this article are those of the author alone and not the World Economic Forum.
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