Over-indulgence during the festive season? Again? One too many hangovers? A touch of mental anguish as yet again your promises of restrained celebration lie in tatters?

Unfortunately, this edition of Energy Matters will not help you get back in shape. But it will help you keep an eye on the top 10 big energy issues in 2023 and the upcoming elections that will shape the energy world:

1. Russian-Ukraine conflict will continue, as the confrontation continues to disrupt global supply and demand for natural gas, oil & oil products, coal, petrochemicals, and food. Don’t expect any side to give up; the battle zones extend over some US$ ~15 trillion of resources – critical strategic minerals (notably lithium, titanium & graphite), and hydrocarbons (coal, oil & gas).
2. Natural gas globally, is now the go-to energy transition fuel; expect to hear lots about pipelines, new discoveries and big developments, and LNG projects as the global supply chain seeks not only to cope and refill storage, but also grow.
3. Energy demand, be it electricity, renewables, biomass, or hydrocarbons is growing as the world tries to shake free of Covid and bounce back economically. OPEC+ can be expected to re-enter the fray, seeking to manipulate prices. The inflationary impacts of high energy prices in 2022 will have largely worked their way through the system during the year.
4. Explorers are not going to give up their search for new oil & gas; expect to hear about significant new discoveries coming from offshore Namibia, Suriname, Guyana, NE Canada, Israel, Cyprus, Brazil, and Mexico. The industry is not short of cash to pursue both big barrels in new deep-water fields and also the advantaged add-on barrels around existing onshore and offshore fields. High commodity prices and high margins per barrel are driving new investments. Global production growth is centred on deep-water and unconventional reservoirs.
5. Commitment of rich countries to crank up renewables investments and lead global decarbonisation will be tested. Expect lots of activity around low carbon energy technologies – particularly the build out of nuclear base-load power, both large and small-scale, also wind, solar, hydrogen and geothermal projects. Big Oil can be expected to make further inroads into renewables, including through JVs and acquisitions; their focus is electrons and fuels.
6. Changeover of domestic heating away from hydrocarbon sources (‘the decarbonisation of homes’) is a critical aspect, and perhaps the most challenging aspect, of reaching Net Zero. Expect to see governments throw lots of money at the problem, especially in Europe and USA. All manner of grants, subsidies, and loans for installing heat pumps are coming, plus a surge in manufacturing and improved installation procedures will see both air-source and ground-source heat pump installation, and low-medium enthalpy geothermal, rise dramatically.
7. The frantic search to secure critical and strategic minerals for the energy transition will reach a new frenzy. China has dominated critical minerals, particularly downstream and midstream, but not upstream production. China has around 40% of copper, 60% lithium, and 75% of cobalt, focussed on later stage manufacture, such as solar panels and batteries. The Rest of the World is struggling with the reality of insufficient supply diversity and China in control of large parts of the path to Net Zero. One aspect of the USA consciously disengaging with China is the opportunity for new supply chains emerging in Central and South America, and Europe.
8. Carbon capture and underground storage (CCUS) is steadily moving forward with giant projects based around large industrial clusters; many are behind schedule but their significance to our energy future and the use of hydrocarbons should never be forgotten. The pressure is now on project delivery.
9. Of course we must expect severe weather events as our climate continues to evolve. 2023 will have its share of floods, wildfires, hurricanes, heatwaves – we now live in a world where all extreme weather is pinned upon climate change. Reaching Net Zero – and a new way of meeting energy demand – is a decades-long transition that has to deliver projects; don’t expect any respite from the weather.
10. Elections can have significant impact on energy, the energy transition, and geopolitics. Given the potential for new governments, new ministerial staff, and regulators in 2023, it is worth pausing to reflect further upon some countries that have elections this year:

In Africa, elections in Nigeria and South Sudan, who are both giants amongst oil in sub-Saharan Africa, have significance, whilst Sierra Leone elections may impact the pace of their offshore oil & gas ambition. In the Democratic Republic of Congo, elections have relevance for critical minerals particularly cobalt and copper, both essential ingredients for batteries and electricity in the global energy transition. In Zimbabwe, which has the largest lithium deposits in Africa, elections may enable long overdue improvements to the mining laws and propel the country to be one of the world’s largest lithium exporters. Zimbabwe has both the 5th biggest lithium reserves worldwide and the world’s single largest-known lithium pegmatite deposit.

In the Americas, elections will impact the direction of Argentina, its vast oil & gas reserves, and valuable lithium resources in salt flats. In Canada and the USA, state and governor elections will have ramifications for the pace of the energy transition and hydrocarbons in general.

In Asia, more than 25% of the world’s population could see elections that change the course of their future energy supply and demand. This includes India, Pakistan, Bangladesh, and Thailand. The significance for the future of coal, LNG, oil imports and renewables cannot be overstated.

Meanwhile in Europe, still struggling to stabilise its energy markets and improve energy security following the severing of ties to Russian oil & gas, there are elections in Germany, Greece, Spain, and Poland. Would-be suppliers of natural gas – Cyprus and Israel – also have elections, as well as Turkey which continues to become an ever more important transit corridor for hydrocarbons to reach European markets from Azerbaijan, Central Asia, and the Middle East. Last, but by no means least, parliamentary elections are scheduled in Ukraine.

In 2022, we saw how the world of energy continues to astonish in the ways it is shaping our future. We start 2023 in a fragmented world, with fractured markets, greater than ever demand for hydrocarbons, low economic growth, and high inflation, lurching from crisis to crisis, a lingering pandemic, and with a dire need for collaboration on big issues. There is no reason to suspect things will be either calm, or orderly; buckle-up and shape-up for another wild ride!

Chris Sladen runs an advisory service offering insights to inform, shape a decision, policy & regulation, and guide the next steps for energy ventures, acquisitions & divestments, energy transition and climate strategies. Chris has a unique global experience having worked in over 40 countries. This is underpinned by extensive knowledge of petroleum systems and where best to find oil and gas, notably in the Gulf of Mexico & nearby areas, Europe and NE & SE Asia, as well as the development of midstream, downstream & renewables investments in many emerging economies. Chris has extensive experience acquired on the Boards of companies, subsidiaries, business chambers & organisations. Chris has a career of over 40 years in the energy sector, living in Mexico (2001-2018), Russia, Vietnam, Mongolia, China & UK. His contributions to the energy and education sectors have been recognised by the UK Government with both an MBE and CBE, and also the Aztec Eagle from the Mexican Government – the first foreigner in the energy sector to achieve this award. Chris has published extensively over five decades. Chris’ articles for Energy Matters reflect his experience and enthusiasm and are not paid for in any way.

KeyFacts Energy Industry Directory: Reconnoitre