14:04 PM Friday, November 16, 2018
Electric Cars Will Not Kill Oil
Trucks, trains and ships run on diesel; Ukraine eyes natural gas independence in 2020; Oil and gas sector liberalized to attract private investment, domestic and foreign
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KYIV – Electric cars will dent -- not destroy -- oil dependent economies like Russia’s.

That is the perspective of Andrew Bonnington, editorial director of S&P Global Platts, the energy price and information provider. He spoke here Thursday at the annual Ukrainian Petroleum Market Conference.

“Electric cars are really only an answer in the light vehicle sector, passenger vehicle sector,” cautioned Bonnington, who flew in from London. “There is a bigger picture to demand for transport fuel. Ships, trucks will continue to run on diesel.”

Bonnington acknowledged: “In the UK, France, Germany -- every week there is a statement about stopping sales of oil powered cars by 2040.”

Countries that quickly adopt electric cars tend to be smaller, highly urbanized countries, like Netherlands and Norway. In Norway, about one third of new car sales are plug in electrics.

In new cars, electric and gasoline will largely replace diesel in the 2020s. But diesel will have a long life powering trucks, ships and some trains, Andrew Bonnington, editorial director of S&P Global Platts, told the annual Ukrainian Petroleum Market Conference in Kyiv. (UBJ Editor)

No oil shocks in near future

Electric cars, generally soft worldwide oil demand, and the highly efficient American shale oil and gas industry will probably combine to prevent oil price spikes in the near future, said Bonnington. He said Platts is not in the business of forecasting energy prices.

“Very few experts are predicting a surge of oil prices to level of three years ago, when oil was at $100 a barrel,” Bonnington said, speaking in the shadow of Russia, a nation historically emboldened by high oil prices. Referring to the recent entry of the U.S. into the world gas market, he said: “The U.S. has taken over the OPEC as the pivotal price maker.”

Last year, the U.S. started exporting liquefied natural gas. According to International Energy Agency forecast released in July, the US will generate almost 40% of the rise in global gas output over the next five years.

Energy prices – gasoline, natural gas, and electricity – are politically sensitive in Ukraine. Two weeks ago, protesters protested high LPG prices outside the national headquarters of the Security Service of Ukraine, SBU, at 33 Volodymyrska Street, Kyiv. (UNIAN/Vladimir Gontar)

Ukraine is on track to becoming self-sufficient in natural gas by 2020, said Oleksdandr Lisnichenko, director of the oil and gas department of the Ministry of Energy and Coal Industry.

To reach this goal, Ukraine plan to reduce gas consumption by another 10 percent, largely through energy efficiency.

In first half of next year, Ukraine is to receive EUR 50 million in EU financial for the Energy Efficiency Fund, Hennadiy Zubko, Minister of Regional Development, Construction and Housing and Utilities, said Thursday after meeting with EU officials in Kyiv.

On the production side, the goal is to raise production by about one third. To reach 2020 needs of 27 billion cubic meters, private companies would produce 7 billion and state companies would produce 20 billion.

In Ukraine, foreigners are not yet chanting ‘drill, baby, drill!’

Lisnichenko said the government is trying to make Ukraine more attractive to international energy companies through a combination of cutting bureaucratic red tape and lowering production royalties.

“The government is trying to liberalize as much as possible,” said Lisnichenko, a former Shell executive.

However the legacy of broken contracts, bureaucratic barbed wire, a poor international image, and low oil prices was visible Thursday at the conference. Aside from two foreign journalists and one gas trader from the Emirates, all participants appeared to be Ukrainians.

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