What to Watch

Electric Cars Are Here to Stay, Says Oil Firm

The worldwide fleet of electric vehicles could grow to 320 million by 2040, helped by the rise of fully autonomous cars and shared mobility, oil-and-gas giant BP PLC said Wednesday.

BP’s prediction came as the company presented its energy outlook for 2018 at the annual International Petroleum Week conference in London.

Group Chief Economist Spencer Dale outlined BP’s central future scenario, which sees the world’s appetite for oil peaking within the next two decades.

The forecast shows peak-oil demand coming more quickly than BP has predicted in the past, with renewables like solar surging faster than expected. Until now, the company had said crude demand wouldn’t stop growing until the 2040s.

BP now expects that by 2040 roughly 30% of vehicle kilometers from passenger cars will be powered by electricity, even though electric vehicles would comprise only 15% of the global car fleet.

“The higher share reflects the importance of EVs in shared mobility,” which would be closely-linked with the emergence of electrically-powered autonomous vehicles, Mr. Dale said.

But even in that case, BP still expects the transport sector to be “dominated by oil,” with oil demand accounting for around 85% of industrial and passenger fuel transport demand by 2040.

“Oil and gas are likely to play a central role in the global energy system over the next twenty or thirty years,” Mr. Dale said.

Meanwhile, a strong U.S. dollar weighed on crude prices on Wednesday.

Brent crude, the global benchmark, fell 0.55% to $64.89 a barrel on London’s Intercontinental Exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.84% at $61.27 a barrel.

Energy News

Glencore’s $200 Million Predicament: How to Handle Payments to Individual Under U.S. Sanctions

Glencore is grappling with how it can pay former partner Israeli billionaire Dan Gertler up to $200 million the firm owes him in royalty payments. The U.S. Treasury Department placed sanctions on Mr. Gertler in December for alleged corruption in the Democratic Republic of the Congo. Glencore, which isn’t accused of corruption, declined to comment on payments it could owe Mr. Gertler. The company recorded  a rise in earnings on Wednesday.

Apple Seeks to Buy Mineral Battery Components Directly From Miners

Apple Inc. is in talks to buy cobalt, a vital component in batteries, directly from miners. The firm wants to avoid getting caught in a future cobalt crunch amid competition from a growing electric vehicle industry that also uses the mineral.

“Clearly inventory cover is much less than it was a year ago. The lower inventories are, the more the market will worry about geopolitical disturbances”

– Paul Horsnell, the head of commodity research at Standard Chartered

Turkey Has Yet to Greenlight Parts of a Russian Pipeline Project

Turkey has yet to issue a license for Russia’s Gazprom to construct the land-based portion of the embattled TurkStream gas pipeline, Reuters reports. The pipeline would bring gas from Siberia under the Black Sea. In the past some European countries have complained that Russia, which provides a third of the European Union’s natural gas, has occasionally flexed its muscle by cutting off supplies.

WSJ Energy In-Depth

U.S. Pursues Saudi Nuclear Deal, Despite Proliferation Risk

The Trump administration is pursuing a deal to sell nuclear reactors to Saudi Arabia despite the kingdom’s rejection of restrictions against the proliferation of nuclear weapons, The Wall Street Journal reports.

Saudi Arabia’s nuclear energy ambitions could open a new market worth tens of billions of dollars, drawing countries including Russia, South Korea and China to compete for the business. Administration officials consider it too important to overlook, especially when the U.S. nuclear power industry is on the decline.

But Saudi Arabia’s resistance to the toughest proliferation controls—a ban on enriching uranium or reprocessing spent fuel—already is stirring concern among U.S. lawmakers.

Big Number

260,000

Outside of the U.S. in non-OPEC regions, global fossil fuel growth will mostly come from Canada, Brazil and Kazakhstan, analysts said. Canadian and Brazilian total liquids production is expected to increase by 260,000 barrels a day year-on-year in 2018. Kazakhstan’s liquids output is expected to rise by 104,000 barrels per day, note analysts for JPMorgan in a recent report.

FutureCurve

Today: The Energy Institute hosts the International Petroleum Week conference in London, which concludes tomorrow. The speakers include BP Chief Executive Bob Dudley and Dr. Faith Birol, executive director of the International Energy Agency.

The American Petroleum Institute releases its forecast for U.S. oil inventories for the week ended Feb. 16.

Thursday: The U.S. Energy Information Administration will release its weekly petroleum status report.

March 5-9: Cambridge Energy Research Associates hosts the CERAWeek energy conference in Houston. The speakers include IHS Markit Vice Chairman Dr. Daniel Yergin and Amin Nasser, president and CEO of Saudi Arabia Oil Co., or Saudi Aramco.

June 5-6: The London Crude Oil Summit. The speakers include Shell Vice President of Crude Trading Mike Muller and Franco Magnani CEO, of Eni Trading and Shipping.

Reporter’s Notebook

The WSJ’s Christopher Alessi on France’s Total. Roughly half of the world’s energy will still come from oil and gas by 2040, Arnaud Breuillac, president for exploration and production at Total, said during the International Petroleum Week conference in London on Tuesday. But Mr. Breuillac said that over the next 20 years Total expects to have more gas than oil projects. “We need to integrate the value chain of gas,” he said. In terms of oil field development, he said, “we need to go for resilient oil projects—we’re going to be much more selective and efficient.”

WSJ Correspondent Benoit Faucon on the deal to cut global supply. OPEC expects cooperation with non-OPEC producers to continue beyond 2018 and may take action again if needed, the organization’s president said Tuesday, adding Russia had reassured the group it intends to keep curbing output until the end of the current pact. In November, the 14-strong Organization of the Petroleum Exporting Countries and 10 producers outside the group renewed production cuts of a combined 1.8 million barrels a day first until the end of this year. But there has been doubts Russia, the world’s largest oil producer and the biggest non-OPEC member in the coalition, will continue the effort in the long run. Speaking at a press briefing, Suhail al-Mazroui, energy minister of the United Arab Emirates who also holds OPEC’s rotating presidency, said there was a “consensus to explore cooperation” after the current pact ends.

The WSJ’s Erin Ailworth on the U.S. power market. Though some New Hampshire regulators have said no to Northern Pass, a 192-mile transmission line that would run through the state on its way to Massachusetts, officials in the neighboring Bay State have decided to keep backing the project for now. Massachusetts said it “will continue conditional contract negotiations” with the option to terminate discussions by March 27. It will also start pursuing negotiations with a second project that would bring Canadian hydropower via a line through Maine. Eversource, the utility proposing Northern Pass, lauded the decision as striking “a sensible balance by allowing negotiations with Northern Pass to continue, while establishing a backup protocol.”