Power Up: Global energy arenas adapt to Trump

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Jan 27 - By Gavin Maguire, Energy Transition Columnist

Hello Power Up readers! The global energy industry is still adapting to the return of U.S. President Donald Trump and the theatrical flurry of executive actions that marked his first week back on the job. We have details on what some major oil and liquefied natural gas (LNG) players are thinking and planning below. Also in today's edition: Russian President Vladimir Putin wants to have a chat with Trump, a recent U.S. LNG exporter’s IPO looks poorly timed, and China's fossil-fuel power output may fall this year for the first time in a decade. Let’s dig in…

ENERGIZED BY TRUMP

Following the barrage of measures signed by Trump last week – including pledges to unleash oil and gas output, cut support for wind power and do away with mandates for electric vehicles - the global energy sector is starting to respond.

In response to questions about Trump’s call to lower crude oil prices, Saudi Economy Minister Faisal al-Ibrahim told a panel at the World Economic Forum in Davos on Friday that Saudi Arabia and OPEC were seeking long-term oil market stability.

"The kingdom's position, OPEC's position, is all about long-term market stability to make sure that there's enough supply for the growing demand," he said.

The OPEC+ group of producers comprising the Organization of the Petroleum Exporting Countries, Russia and other allies says it does not target oil prices and already has a plan to begin raising output from April 2025, having delayed the increase several times because of weak demand.

"I think this is already in line with OPEC's easing policy in April," one delegate from the group said with reference to the U.S. president's comments.

Corporate oil producers are also expected to keep their powder dry and focus more on generating shareholder returns than boosting output.

Big Oil begins reporting fourth-quarter results this week, and outlooks for the coming year should reflect the dissonance between Trump's oil and gas-maximizing agenda and investor expectations. The industry has pushed in recent years to drive down costs and increase production by using more efficient technology rather than drilling many new wells.

In contrast to that somewhat cagey response by oil producers, Japan’s top buyer of LNG plans to increase purchases of U.S. LNG to diversify its supplies and meet growing demand.

Handling between 30-35 million metric tons of LNG annually, Japan's largest utility currently sources nearly half of this from the Asia Pacific region, including Australia, Malaysia and Indonesia.

"This accounts for very high exposure. My plan is to rebalance that and to make our LNG supply portfolio more diversified," Ryosuke Tsugaru, JERA's head of LNG division, told Reuters on the sidelines of the World Economic Forum annual meeting in the Swiss resort of Davos.

At home, industry analysts and consultants warned that despite Trump’s declaration of an energy emergency that is designed to speed up output and supply, there may be no quick fix for the country’s strained electricity grid.

Shortages of parts and skilled labor, as well as messy permitting processes with local and state entities over the siting of high-voltage transmission lines, mean that federal directives alone may not be enough to overhaul the nation’s power systems. Reporters Tim McLaughlin and Laila Kearney analyze the tricky situation here.

ESSENTIAL READING

Putin says he and Trump should meet to discuss Ukraine and energy prices

Russian President Vladimir Putin said on Friday that he and Trump should meet to talk about the Ukraine war and energy prices, issues that the U.S. president has highlighted in the first five days of his new administration.

Putin said, however, that there could be no serious peace talks with Ukraine unless the West leaned on President Volodymyr Zelenskiy to cancel a 2022 decree that bars him from negotiating with the Russian leader. Zelenskiy said Putin was trying to manipulate the U.S. president's efforts to secure peace.

Venture Global's $58 billion market debut falls short of high expectations

Venture Global's shares opened nearly 4% below their initial public offering price in a subdued NYSE debut on Friday, giving the U.S. LNG exporter a valuation of $58.2 billion and reinforcing the cautious approach of investors to new listings.

The IPO was expected to be the first blockbuster listing of 2025, as well as a litmus test for the appetite for energy companies under the Trump administration.

But as Breakingviews columnist Robert Cyran explains, the IPO may have left port too soon.

Boosting gas output while keeping prices low a tough task for Trump

Trump's sweeping measures aimed at maximising U.S. oil and gas production mark a U-turn in energy policy from former President Joe Biden's term, and make it clear that Trump expects domestic fossil fuel production to rapidly rise.

But even with faster permitting for exploration and sales, the new Trump administration may struggle to boost U.S. gas output without help from local and international prices.

That's because historically weak gas prices for electricity generation, not restrictive former policies, were the main factor in suppressing U.S. gas production in 2024.

China's fossil-fuelled power output may fall in 2025 for first time in decade

China's mostly coal-based thermal power generation is set to fall in 2025 for the first time in a decade, some analysts estimate, though they caution that extreme weather or stronger-than-expected industrial growth could upend that forecast.

U.S. utilities firms crank up dirty fuel use to fight cold snap
Power generators have boosted output from high-polluting coal and oil-fired power stations this year to help battle an extended cold snap enveloping much of the country.

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