The Terra Nova offshore oil project sits about 350 kilometres southeast of St. John’s in the deep blue waters of the Atlantic.  

And even though St. John’s Mayor Danny Breen can’t see the field and its massive floating, production, storage and offloading (FPSO) vessel from his office at city hall, he’s pleased it’s back to producing oil. 

“There’s lots of numbers you could use to demonstrate Terra Nova’s contribution to our province and community, from the royalties and taxes it generates for governments or the jobs and contracts it provides to people and businesses,” says Breen.  

“But it’s important for our psyche to see the FPSO back in production. To see it come back after some delays is great news for the province and the offshore industry.” 

St. John’s Mayor Danny Breen. Photo supplied to Canadian Energy Centre

Suncor Energy CEO Rich Kruger announced in late November that Terra Nova’s FPSO vessel had restarted production after undergoing an extensive makeover in Spain to improve reliability and extend its life.  

The massive vessel — standing 18 stories high and three football fields long — first started operating in 2002 and has produced more than 425 million barrels of oil, or enough to meet world oil demand at current levels for just over four days.  

While the FPSO was in Spain, additional subsea work took place in the middle of the Atlantic to extend the Terra Nova field’s life, including replacing two million kilograms of mooring chain that anchors the ship to the underwater drilling system.  

The project is forecast to extend the life of the Terra Nova project by 10 years and produce an additional 70 million barrels.  

Phil Skolnick, Eight Capital’s managing director of research, sees Europe and Asia as potential destinations for those barrels when the project ramps up to full production. 

Asian oil demand is rising, and Europe is now taking higher volumes of oil imports from countries other than Russia, its primary supplier before the start of the war in Ukraine.   

The Terra Nova FPSO. CP Images Photo

“You should see it start to make a real impact on the market by 2025, when Terra Nova is expected to get back to producing 180,000 barrels per day,” he says. 

“It will have a big impact for the Newfoundland economy.” 

Even when the FPSO was in drydock in Spain, Terra Nova continued to provide benefits to the community at home.  

In the third quarter of 2023, the latest period available, the project reported it spent $173.8 million in operational and capital expenditures.  

This included $52.2 million in procuring goods and services, with 62 per cent spent with suppliers in the province and 94 per cent with Canadian vendors.  

Terra Nova provides 710 direct jobs with 90 per cent of its workforce residing in Newfoundland and Labrador. The project is a partnership operated by Suncor, which holds a 48 per cent stake. The other partners are Cenovus Energy (34 per cent) and Murphy Oil (18 per cent). 

While wind, hydrogen and other energy projects have been proposed in Newfoundland and Labrador, Breen sees the offshore oil industry as a crucial part of the province’s economy now and in the future.  

He believes Terra Nova and the other three producing oil fields in the province — Hibernia, Hebron and White Rose — will assume added importance for the local economy and global energy security. 

“Oil is going to be around for a long time, even if demand decreases, because it is an essential part of so many products we use today. And that’s important for us because the offshore industry supports many families across Newfoundland and Labrador today,” Breen says.  

“The industry has been under a lot of scrutiny and has faced a lot of challenges, particularly in the approval for new projects. Keeping the production from approved supplies is going to be vital. That’s why it’s good to see the investment in Terra Nova and the return to production. That bodes well for the future.” 

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European governments are beginning to sound the retreat on some foundational net zero policies in the wake of “greenlash” from increasingly overburdened citizens.  

Russia’s invasion of Ukraine in 2022 prompted European governments to begin pivoting away from cheap Russian natural gas, which Europe increasingly relied on to backstop a laundry list of ambitious green policies. 

But despite pledges by the European Union to “divest away from Russian gas as quickly as possible,” nearly 15% of overall EU gas imports still came from Russia in the first half of 2023, while the amount of liquefied natural gas (LNG) imported from Russia actually increased by 39.5% compared to the same period in 2021, prior to the Ukraine invasion. 

Energy security and affordability have become central issues for Europeans amid a persistent global energy crisis, and that’s translated into a rethink of what had once seemed like unassailable green policies across Europe. 

Here’s a look at how some countries are dealing with the new global reality: 

Germany 

Nothing is more symbolic of Europe’s retreat from its net zero ambitions than Germany seeing a wind farm dismantled to make room for the expansion of a lignite coal mine just outside of Dusseldorf. 

And no European country has been more affected by the changing energy landscape than Germany, which introduced its multi-billion dollar Energiewende program in 2010, calling for a broad phaseout of fossil fuels and nuclear power, replacing them primarily with wind and solar power. 

Today, without cheap and reliable natural gas backups due to sanctions against Russia, Germany has gone from Europe’s economic powerhouse to the world’s worst performing major developed economy, facing “deindustrialization” due to skyrocketing energy costs. 

In addition to extending its deadline for shutting down coal plants until 2024, the German government has also scrapped plans for imposing tougher building insulation standards to reduce emissions as well as extending the deadline on controversial legislation to phase out oil and gas heating systems in homes, a decision the government admits will make it impossible to reach the country’s 2030 emissions targets. 

A major car manufacturer, Germany’s opposition to an EU-wide ban on the sale of new combustion vehicles by 2035 softened the legislation to allow exceptions for those that run on e-fuels. 

Germany’s quest for reliable energy exports prompted Chancellor Olaf Scholz to travel to Canada to make a personal appeal for Canadian LNG. He was sent home empty handed, advised there wasn’t a strong business case for the resource. 

Great Britain 

Britons have grown increasingly concerned about the cost of net zero policies, despite being largely supportive of striving for a greener future. 

A YouGov poll in August found while 71% generally favoured Great Britain’s aim to reduce carbon emissions to net zero by 2050, some 55% agreed that policies should only be introduced if they don’t impose any additional costs for citizens. Only 27% agreed reaching the goal was important enough to warrant more spending. 

That shift in public sentiment prompted Prime Minister Rishi Sunak to pump the brakes on some key policies enacted to reach the U.K.’s legally binding target of reaching net zero emissions by 2050. 

In September, the government delayed its looming ban on new gas- and diesel-powered cars by five years to 2035, while also extending its phaseout of gas boilers in homes and suggesting exemptions for certain households and types of property. 

“If we continue down this path, we risk losing the British people and the resulting backlash would not just be against specific policies, but against the wider mission itself,” Sunak said of the potential consequences of maintaining strict net zero policies. 

The U.K. government also gave the green light for hundreds of new North Sea oil and gas licences, citing the need to bolster both energy security and the nation’s economy.  

France 

France’s net zero ambitions enjoy an advantage compared to its European peers due in large part to its significant fleet of nuclear power stations, which provide around 70 per cent of its electricity. 

However, President Emmanuel Macron has often opted for a more pragmatic approach to reaching climate targets, noting any energy transition can’t leave citizens disadvantaged. 

“We want an ecology that is accessible and fair, an ecology that leaves no one without a solution,” Macron said in September after ruling out a total ban on gas boilers, instead offering incentives to those looking to replace them with heat pumps. 

Macron also famously dropped a proposed fuel tax in 2018 that sparked sweeping yellow vest protests across France when it was announced.  

France has also extended the timeframe of its two remaining coal plants to continue operating until 2027, five years later than the plants were originally set to be shuttered. 

Italy 

Feeling the impacts of the global energy crisis, Italy has begun reassessing some of its previous commitments to transition goals. 

Earlier this year, Italy pushed back on EU directives to improve the energy efficiency of buildings, which Italy’s national building association warned would cost some $400 billion euros over the next decade, with another $190 billion euros needed to ensure business properties met the required standards. The Italian government has called for exemptions and longer timelines. 

Italy also warned the European Commission it would only support the EU’s phase out of combustion engine cars if it allows cars running on biofuels to eclipse the deadline, while further questioning a push to slash industrial emissions.  

Paolo Angelini, deputy governor at the Bank of Italy, warned a rapid abandonment of fossil fuel-driven industries could have a devastating impact. 

“If everybody divests from high-emitting sectors there will be a problem because if the economy does not adjust at the same time, things could blow up unless a miracle happens in terms of new technology,” he said. 

Poland 

Like Italy, Poland has dug in its heels against some EU net zero initiatives, and is actually suing the EU with the goal of overturning some of its climate-focused legislation in the courts. 

“Does the EU want to make authoritarian decisions about what kind of vehicles Poles will drive and to increase energy prices in Poland? The Polish Government will not allow Brussels to dictate,” wrote Polish Climate and Environment Minister Anna Moskwa on X, formerly known as Twitter, in July. 

In addition to looking to scrap the EU’s ban on combustion engine cars by 2035, Warsaw is also challenging laws around land use and forestry, updated 2030 emissions reduction targets for EU countries, and a border tariff on carbon-intensive goods entering the European Union. 

With some 70% of its electricity generated by coal, Poland is one of Europe’s largest users of coal. And it has no designs on a rapid retreat from the most polluting fossil fuel, reaching an agreement with trade unions to keep mining coal until 2049. 

Netherlands 

The political consequences of leaning too far in on net zero targets are beginning to be seen in the Netherlands. 

In March, a farmer’s protest party, the BBB or BoerBurgerBeweging (Farmer-Citizen Movement), shook up the political landscape by capturing 16 of 75 seats in the Dutch Senate, more than any other party, including the ruling coalition of the Labor and Green Parties. 

The upstart party was formed in 2019 in response to government plans to significantly reduce nitrogen emissions from livestock by 2030, a move estimated to eliminate 11,200 farms and force another 17,600 farmers to significantly reduce their livestock. 

What followed were nationwide protests that saw supermarket distribution centres blockaded, hay bales in flames and manure dumped on highways. 

In November, Dutch voters will elect a new national government, and while BBB has dropped to fifth in polling, much of that support has been picked up by the fledgling New Social Contract (NSC), which has vowed to oppose further integration with EU policies, a similar stance offered by the BBB. The NSC currently tops the polls ahead of the Nov. 22 election. 

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New major oil and gas megaprojects around the world are proceeding amid concern about underinvestment in conventional energy leading to painful supply shortages.  

“The energy future must be secure and affordable, as well as sustainable,” said Daniel Yergin, vice-chairman of S&P Global, earlier this year.  

“Adequate investment that avoids shortages and price spikes, and the economic hardship and social turbulence that they bring, is essential to that future.” 

Even if oil and gas demand growth slows, a cumulative $4.9 trillion will be needed between 2023 and 2030 to prevent a supply shortfall, according to a report by the International Energy Forum and S&P Global Commodity Insights.  

Major investments in countries like the United States, Norway, Qatar, Saudi Arabia and Mexico are being made to meet world demand.  

Meanwhile, due to regulatory uncertainty and concerns over proposed policies like an emissions cap for oil and gas production, Canada’s vast resources – produced with among the world’s highest standards for environmental protection and social progress – are being left behind.  

Here’s a look at just a handful of global oil and gas megaprojects, listed in rising order of development cost.  

Mexico: Altamira LNG 

US$1 billion 

New Fortress Energy 

Mexico is leapfrogging over Canada to become an LNG exporter.  

While Canada’s first LNG export project is expected to start operating in 2025, Mexico’s could come online this August – less than 10 months after Mexico’s government finalized a deal with U.S.-based New Fortress Energy to make it happen. 

While relatively small at 1.4 million tonnes of LNG per year (LNG Canada’s first phase will have capacity of 14 million tonnes per year), under Mexico’s agreement the Altamira site is to become an LNG hub.  

New Fortress Energy is to deploy multiple same-sized floating LNG units to produce LNG from natural gas transported through TC Energy’s Sur de Texas-Tuxpan pipeline.  

An existing LNG import terminal at Altamira is also expected to be converted into a 2.8-million-tonne-per-year export facility. 

United States: Willow Oil Project 

US$8 billion 

ConocoPhillips 

The U.S. government granted approval this March for the giant Willow oil project on Alaska’s North Slope to proceed.   

The project, owned by ConocoPhillips, is designed to produce 180,000 barrels per day at peak and operate for 30 years. It includes a processing facility, operations centre, and three drilling sites.  

The Willow leases are inside the National Petroleum Reserve – Alaska, which was established in 1923 as an emergency oil supply for the U.S. Navy. It is now administered by the U.S. Bureau of Land Management.  

Willow would occupy about 385 acres (around half the area of Central Park in New York City) in the northeast portion of the 23-million-acre reserve. It is expected to deliver nearly US$9 billion in government revenue, creating about 2,500 jobs during construction and 300 long-term positions.     

ConocoPhillips has yet to make a final investment decision, but is anticipating starting production in 2029, according to the Anchorage Daily News. 

United States: Golden Pass LNG 

US$10 billion 

QatarEnergy, Exxon Mobil 

Golden Pass LNG is one of four natural gas export terminals under construction on the U.S. Gulf Coast as the United States continues to build its platform as an LNG powerhouse.  

With about 90 million tonnes per year of LNG export capacity today, analysts with Wood Mackenzie expect that if current momentum continues, another 190 million tonnes per year could come online by the end of this decade. 

The US$10-billion Golden Pass project owned by QatarEnergy and Exxon Mobil will have three production trains with total export capacity of about 18 million tonnes of LNG per year.  

The U.S. began exporting LNG in 2016 and has since built more LNG capacity than anywhere else in the world, according to the U.S. Energy Information Administration.    

First LNG exports from Golden Pass are planned for 2024. 

Norway: Njord Field Restart 

US$29 billion 

Wintershall Dea, Equinor, Neptune Energy 

Norway has officially reopened a major offshore oil and gas field, with the goal to extend its life beyond 2040 and double its total production.  

Nearly US$30 billion in upgrades to the Njord project’s production platform and offloading vessel started in 2016, after nearly 20 years of operations. It was originally only expected to run until 2013, but improvements in recovery technology have opened the door to accessing substantially more resources.  

Production restarted in December 2022, just in time to help address Europe’s energy crisis.  

“With the war in Ukraine, the export of Norwegian oil and gas to Europe has never been more important than now. Reopening Njord contributes to Norway remaining a stable supplier of gas to Europe for many years to come,” Norway’s oil and energy minister Terje Aasland said in a statement. 

The project will drill 10 new wells and tie in two new subsea oil and gas fields, with the work expected to add approximately 250 million barrels of oil equivalent to the European market. Partial electrification of equipment is expected to reduce greenhouse gas emissions.  

Qatar: North Field East LNG expansion  

Qatar Energy, Shell, TotalEnergies, Eni, Exxon Mobil, ConocoPhillips, Sinopec   

US$29 billion 

The largest LNG project ever built is underway in Qatar.  

State-owned QatarEnergy’s US$29 billion North Field East Expansion will increase the country’s LNG export capacity to 110 million tonnes per year, from 77 million tonnes per year today. Startup is planned in 2025.   

A planned second phase of the project will further increase capacity to 126 million tonnes per year.  

World LNG demand reached a record 409 million tonnes in 2022, according to data provider Revintiv. It’s expected to rise to over 700 million tonnes by 2040, according to Shell’s most recent industry outlook.   

Saudi Arabia: Jafurah Gas Project 

US$110 billion 

Saudi Aramco 

State-owned Saudi Aramco is moving ahead with development of the massive Jafurah gas project, which it says will help meet growing energy demand and provide feedstock for hydrogen production. 

First gas from the $110-billion project is expected in 2025, rising to reach two billion cubic feet per day by 2030. That’s about one-third the volume of all the natural gas produced in British Columbia. Saudi Aramco produced 10.6 billion cubic feet of natural gas per day in 2022, or more than half the gas produced in Canada.  

Last year the company started construction work on the gas processing facility that is the anchor of the Jafurah project. Aramco is reportedly in talks with potential partners to back the US$110 billion development.  

Russia: Vostok Oil 

US$170 billion 

Rosneft  

Russian state-owned oil company Rosneft continues to barrel ahead with the massive Vostok oil project in the country’s arctic, which Rosneft calls the largest investment in the world.  

The US$170 billion project will use the Northern Sea Route to export about 600,000 barrels per day by 2024. Production is expected to increase to two million barrels per day after the second phase. For comparison, Canada’s entire oil sands industry produces about three million barrels per day.   

The main problem the energy industry faces is global underinvestment in conventional sources, Rosneft CEO Igor Sechin said earlier this year. He stressed the importance of Vostok’s oil supply for growing Asian economies.   

“Vostok Oil project will provide long-term, reliable, and guaranteed energy supplies,” Sechin said.  

Two new icebreaker vessels recently helped deliver 4,600 tonnes of cargo including oil pipes for the project to the arctic development sites, the Barents Observer reported.   

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The world needs more liquefied natural gas (LNG) projects to meet rising demand as Europe emerges as a key import region, according to the latest industry outlook.  

Europe’s LNG imports increased by 60 per cent last year to replace pipeline gas from Russia, Shell reported this week. Analysts expect Europe’s LNG requirements to nearly double by 2030, reaching 140 million tonnes compared to about 73 million tonnes in 2021.  

“More investment in supply will be needed to meet future LNG demand,” Shell said in its LNG Outlook 2023.  

“Gas will be needed in the long term to balance energy systems as the world transitions to a lower-emission future.” 

Total world LNG demand reached 397 million tonnes in 2022, an increase of 16 million tonnes from 2021. France, the U.K., Netherlands, Spain, Belgium and Italy led growth in LNG imports. 

In a move Shell called “the power of effective policy making,” last year Europe was able to set up two new LNG import terminals in just six months. 

In Germany alone, six new floating LNG storage and regasification terminals are expected to come online by the end of 2023. Germany recently received its first ever LNG shipment from the Middle East, according to industry reports.  

The U.S., Norway, Malaysia, Qatar and Russia drove LNG supply growth in 2022, Shell said.  

The first LNG project to export Canada’s vast available quantities of natural gas is expected to start operating in 2025. Expansion of the LNG Canada project also has potential to proceed, with pipeline operator TC Energy recently reporting it has been asked to start evaluating Phase 2.  

Meanwhile, construction is expected to begin this year on the long-awaited smaller scale Woodfibre LNG project, with the first exports planned for 2027. The proposed Cedar LNG project, owned 50 per cent by the Haisla Nation, is awaiting a decision on whether it can proceed by provincial and federal regulators.  

“Cedar LNG is at a critical point with what’s happening globally in the energy sector,” Haisla chief councillor Crystal Smith told CEC earlier this year.  

While LNG from Canada’s west coast is expected to be mainly destined for Asia, it could help meet demand in Europe by diverting other world shipments, according to analysts with Wood Mackenzie.    

“More western Canadian LNG would allow a lot of the other sources to go to Europe. It’s like a domino,” said Matthias Bloennigen, Wood Mackenzie’s director of Americas consulting. 

Total world LNG demand is expected to reach 700 million tonnes by 2040, a more than 75 per cent increase from 2022, Shell said.  

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Two million barrels of Canadian heavy oil is headed to India this month to buyer Reliance Industries, owner of the world’s largest oil refinery.  

India is eager to receive more oil (and natural gas) from Canada for decades to come, according to foreign policy expert Shuvaloy Majumdar. 

“Indian energy demand is essentially bottomless for the long term, and they’re going to need as many sources of energy as possible,” says Majumdar, who recently stepped down as head of the foreign policy and national security program with the Macdonald-Laurier Institute.  

“In the Indo-Pacific region, I’m aware that the Indians are certainly interested in long-term, stable partnerships with Canadian energy because they’re not entirely content with the partnerships that they presently hold.” 

Climbing the ladder of prosperity 

India is expected to have the world’s largest population by 2028, reaching 1.45 billion and rising to 1.67 billion people by 2040, according to the United Nations Population Fund.  

The country is growing fast, but is “yet to climb the ladder of prosperity,” says India’s Ministry of Finance. 

In 2021, India ranked 101 of 167 countries in the Legatum Prosperity Index. The index, published by the UK-based Legatum Institute, considers metrics like safety, personal freedom, living conditions, health, and economic quality. Since 2011, India has moved up the rankings by 11 places. 

It’s likely to keep moving up the list as its economy grows. India’s GDP is expected to more than double over the next decade, reaching $7.5 trillion in 2031 compared to $3.5 trillion in 2022, according to a forecast by Morgan Stanley. 

India is “poised to become the factory to the world,” analysts wrote.  

Rising energy demand 

All of that will take a lot of energy. According to the International Energy Agency (IEA), by 2040 India’s total energy demand will be 70 per cent higher than it was in 2019.  

Renewables like wind and solar are expected to grow to supply 10 per cent of India’s energy mix in 2040, up from one per cent in 2019. Meanwhile, oil and gas is projected to rise to 37 per cent in 2040, compared to 32 per cent in 2019, as more natural gas enters the market.  

Indian Prime Minister Narendra Modi’s goal is to increase the share of natural gas to 15 per cent by 2030, up from 6 per cent in 2019.  

Mainly through liquefied natural gas (LNG) imports, this will help reduce reliance on coal power.  

Coal supplied 44 per cent of India’s energy needs in 2019, according to the IEA. By 2040, it is still expected to fill 34 per cent of demand.  

India had 23 new coal plants under construction and 21 in pre-construction as of July 2022, according to Global Energy Monitor.  

Reducing emissions 

India has committed to reach net zero emissions by 2070 and is making strides to get there. It has already achieved the target of having 40 per cent of its installed electric capacity come from non-fossil fuels before 2030, the government reports.  

India also co-chairs the International Solar Alliance, which aims to unlock US$1 trillion of investments in solar energy by 2030. 

But India isn’t shy about its ongoing need for fossil fuels. In its latest economic survey, India’s Ministry of Finance highlighted that even in Europe, energy security is again the top priority as nations work to reduce reliance on Russia.  

“When one considers that developed countries set aside their obsessive concerns about climate change and global warming to burn more coal to generate electricity this year… it does not seem so strange or irresponsible that developing countries must put their own growth and development aspirations ahead of their global climate obligations,” the ministry said.  

Canada’s energy opportunity in India isn’t just about oil and gas, Majumdar says – it’s also about critical minerals to meet Indian electrification demand, conventional nuclear technology, small modular reactors, uranium resources, and more.  

“This is not just traditional energy,” he says. “We’re talking emission free nuclear energy, we’re talking about leading edge technologies like hydrogen, carbon capture and sequestration, geothermal; all of these are Canada’s energy proposition.” 

Supply from ‘risky geographies’ 

Canada’s oil and gas industry can be “a form of insurance” against price spikes from unstable suppliers, according to a 2020 report by Gateway House Indian Council on Global Relations. 

“India’s energy trade and investments are concentrated in risky geographies,” wrote author Amit Bhandari. 

India relies on imports for about 85 per cent of its oil and 50 per cent of its natural gas. 

In 2021, its biggest suppliers were Iraq, Qatar and Saudi Arabia, according to the U.S. Energy Information Administration. Last year Russia rose to the top, providing as much as 25 per cent of India’s oil imports, according to S&P Global.   

Because of its reliance on imports, India is vulnerable to energy price spikes from geopolitical developments like war, civil strife and government sanctions, Bhandari wrote.   

“If they have a price spikes, they have riots on the streets because they have people who are very vulnerable based on their low incomes,” Majumdar says.  

How Canada can help 

Canadian oil is already being purchased by Indian refiners like Reliance Industries. LNG could do the same, once Canada’s first export project is up and running in 2025.  

Bhandari noted that state-owned Indian Oil Corporation had a 10 per cent stake in the proposed Pacific NorthWest LNG terminal in B.C. before that project was shelved in 2017.  

Using natural gas instead of coal for power generation reduces emissions by about 50 per cent, according to the IEA. A 2020 study focusing on Asia found that LNG from Canada could do even better, decreasing emissions by up to 62 per cent.   

Bhandari says it’s a good idea for India to invest in Canadian oil and gas no matter whether India itself ultimately uses the resources. 

“One of the few ways to protect against high oil prices is by acquiring stakes in oil and gas fields globally — without the oil (or gas) necessarily having to reach India physically,” he wrote.  

“For India, investing in the Canadian upstream should be seen as a form of insurance.” 

The country is a willing customer for Canadian energy, Majumdar says.  

“India is ready to be an investor in our oil and gas. It’s ready to be a purchaser of our oil and gas. It’s ready to be a long-term partner for both our countries’ economic development,” he says. 

“If Canada decided to focus on Indian development, its energy, its education systems, infrastructure, its investment climate, it would put Canada at the heart of Indo-Pacific growth for the next half century.” 

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As Canada’s oil and gas industry faces the uncertainty of a looming emissions cap and a “Just Transition,” billions of dollars of investment is underway in other countries to grow oil and gas supply for the future.  

Here’s just a handful of examples.

Afghanistan – Amu Darya basin  

US$690 million 

Xinjiang Central Asia Petroleum and Gas Co. 

Afghan Deputy PM Mullah Abdul Ghani Baradar at a news conference in Kabul announcing an oil development agreement with Xinjiang Central Asia Petroleum and Gas Co. Photo: Twitter/Zabihullah Mujahid

In January, Chinese state-owned Xinjiang Central Asia Petroleum and Gas Co. signed a deal with the Taliban-controlled Afghanistan government to invest nearly US$700 million over four years on oil development in the country’s north. 

The 25-year contract also involves building Afghanistan’s first oil refinery.  

The Taliban militant group returned to power in Afghanistan after the withdrawal of U.S. forces in 2021. Its ownership share of the oil project will gradually rise to 75 per cent, according to spokesman Zabihullah Mujahid.  

The Taliban maintains close ties with the terrorist group al-Qaeda, according to the Council on Foreign Relations (CFR). Since resuming its rule in Afghanistan, authorities have resumed public floggings and executions, violently cracked down on protesters and activists, “obliterated” women’s rights, and “enforced prohibitions on behavior deemed un-Islamic,” the CFR says.  

Brazil – Santos Basin 

TotalEnergies 

US$1 billion 

Map courtesy TotalEnergies

France-based TotalEnergies announced in January it will go ahead with a US$1 billion expansion of oil production offshore Brazil. 

The development is located about 300 kilometres off the coast in the Santos Basin. TotalEnergies, which has operated in Brazil for more than 40 years, is 45 per cent owner along with partners Shell, Repsol and Sinopec.  

The project will consist of three new deepwater wells connected to an existing floating production and storage vessel. It is expected to increase production to 60,000 barrels per day in 2025, up from about 35,000 barrels per day today.  

Norway – Norwegian Continental Shelf 

Aker BP 

US$29 billion 

Rendering courtesy Aker BP

Oslo, Norway-based Aker BP and its partners filed formal plans in December for four offshore oil and gas projects on the Norwegian Continental Shelf. 

A total investment of nearly US$30 billion, the developments are expected to increase Aker BP’s oil and gas production to around 525,000 barrels per day in 2028, compared to 400,000 in 2022. 

The company’s strategy is to meet the world’s growing need for energy while simultaneously contributing to reducing emissions, said CEO Karl Johnny Hersvik. 

The projects are enabled by a 2020 government stimulus package that “allowed oil companies to embark upon new commitments,” he said. 

Qatar – North Field East LNG expansion 

Qatar Energy 

US$29 billion 

Qatar’s Minister of State for Energy Affairs and QatarEnergy CEO Saad Sherida al-Kaabi (R) and TotalEnergies CEO Patrick Pouyanne announce partnership in the giant North Field East LNG project at the QatarEnergy headquarters in Doha on June 12, 2022. Getty Images photo

One of the world’s largest LNG exporters is expanding its capacity with the largest LNG project ever built.  

State-owned QatarEnergy’s US$29 billion North Field East Expansion will increase the country’s LNG export capacity to 110 million tonnes per year, from 77 million tonnes per year. Startup is expected in late 2024.  

A planned second phase of the project will further increase capacity to 126 million tonnes per year. QatarEnergy’s partners include Shell, TotalEnergies, Exxon Mobil, ConocoPhillips and Eni.  

World LNG demand reached a record 409 million tonnes in 2022, according to data provider Revintiv. It’s expected to rise to over 700 million tonnes by 2040, according to Shell’s most recent industry outlook.  

Russia – Vostok Oil  

Rosneft  

US$170 billion  

Russian President Vladimir Putin and executives with state oil company Rosneft present a major shipbuilding complex to Indian Prime Minister Narendra Modi. India will be an investor in a new US$170 billion oil project in the Russian Arctic. Photograph courtesy Rosneft

Despite the war in Ukraine and wide-ranging energy sanctions, Russian state-owned oil company Rosneft says work continues to advance on schedule for the massive Vostok oil project.  

The US$170 billion project will use the Northern Sea Route to export about 600,000 barrels per day by 2024. Production is expected to increase to two million barrels per day after the second phase.  

Rosneft reports that as of mid-2022, more than 1,000 units of special construction equipment are in operation, as well as seven new Russian arctic class drilling rigs, with another five on the way. Over 4,000 people and 2,000 vehicles have been mobilized.  

“This means that the project lives and develops as planned, the inevitable difficulties are being overcome, but we have full confidence that all the tasks will be completed,” Rosneft CEO Igor Sechin said. 

“In the context of decreasing investment in the oil and gas sector, Vostok Oil is the only project in the world capable to provide a stabilizing effect on the hydrocarbon markets.” 

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As winter sets in across Europe, the real impacts of the worst energy crisis in a half century are starting to be felt by both industries and individuals.

In the United Kingdom, three-quarters of all households, or 53 million people, will be pushed into energy poverty by January, defined as having to spend 10 per cent or more of their net income on fuel.

Germany’s Office of Civil Protection and Disaster Assistance is urging households to stock up on battery-powered flashlights and candles, preparing meals on camp stoves and stocking up on “long-life foods that can be eaten cold,” as regular blackouts to reduce fuel demand has become a strong possibility.

Even Switzerland’s small population of under 9 million is being warned that they may have to leave their electric vehicles parked, and even turn off their game consoles and Christmas lights in the event of significant power shortages.

Even with our vast natural resources, Canadians haven’t been immune, with soaring energy prices impacting costs at the pumps, restaurants and grocery shelves.

Welcome to the global energy crisis of 2022. Hope you brought a sweater.

But how did we get here?

While many point to the February 2022 invasion of Ukraine by Russia, the seeds of the energy crisis had been sown years earlier, with some countries pushing a rapid phase out of fossil fuel production that hobbled investment into critical domestic oil and gas projects while ramping up energy imports from producers like Russia, despite its history of weaponizing natural resources.

The following is a timeline of today’s world energy crisis, which provides both a warning for Canada, as well as an opportunity to help our global partners by supplying the energy security they so desperately need.

2020 – 2021:

• The COVID-19 pandemic slows investment in new oil and gas development, spurred by reduced demand and crashing global oil prices.

Summer 2021:

• With global energy markets rebounding, Europe faces a wind drought, with the continent’s largest producers – Great Britain, Germany and Denmark – harnessing just 14 per cent of power capacity, compared to an average of about 20-26 per cent in previous years. With less wind power, demand for coal and natural gas rises, along with prices.

September 2021:

• Despite a growing array of nations agreeing to phase out coal, power generation from coal-fired plants reaches an all-time high, increasing by 8 per cent and accounting for more than half of the additional power demand in 2021. That growth, largely driven by Asia, results in record emissions from coal of more than 100 megatonnes over the previous peak in 2018.

November 2021:

• With elevated energy costs impacting prices at gas pumps and home heating bills, Washington withdraws 50 million barrels of oil from the U.S. Strategic Petroleum Reserve, the first of many such withdrawals in the months ahead. The SPR is maintained to ensure energy security in the event of global shortages of oil and gas.

December 2021:

• Natural gas prices reach record highs with dire warnings prices could go even higher with Russian troops massing on Ukraine’s border.

January 2022:

• UK energy company OVO, one of Britain’s largest utilities, advises customers facing steep power bills to cuddle pets, leave ovens on and eat porridge to stay warm.
• A slowdown in natural gas exports from Russia to Western Europe results in a 30 per cent increase in gas prices, prompting International Energy Agency head Fatih Birol to accuse Russia of manufacturing the energy crisis by throttling supply and heightening “geopolitical tensions.”
• Birol identifies Canada is a preferred global oil and gas supplier and should take steps to ensure it remains so in the decades to come. “We will still need oil and gas for years to come… I prefer that oil is produced by countries… like Canada who want to reduce the emissions of oil and gas,” he says.

February 2022:

• Japan agrees to redirect some of its imports of liquefied natural gas (LNG) to Europe as increasing supply disruptions from Russia worsen as tensions grow with the west.
• As energy prices continue to soar in Europe, governments begin efforts to shield households and businesses via measures like subsidies and price caps.
• Following months of flaring tensions, Russian troops invade eastern Ukraine prompting widespread condemnation and raising concerns over how Europe’s dependence on Russian oil and gas could impact international response.

March 2022:

• The first economic sanctions against Russia are announced, with Canada and the U.S. quickly ordering a ban of oil and gas imports from Russia. Due to its heavier reliance on Russian energy, the EU takes a more cautious approach, agreeing to reduce purchases of Russian gas by two-thirds by the end of 2022.
• With the cost of gasoline and energy beginning to soar, Washington considers diplomatic talks with state-owned oil and gas producers in Venezuela, Saudi Arabia and Iran to help replace Russian energy impacted by sanctions.
• Days after Russia’s invasion, the U.S. administration orders the release of another 30 million barrels of oil from its Strategic Petroleum Reserve in an effort to boost global supply. By month’s end, Washington orders ongoing releases of an average of 1 million barrels of oil per day for the next six months to act as a bridge while “domestic production ramps up.”

April 2022:

• The World Bank warns the energy crisis will spark the largest commodity shock in 50 years, which will impact everything from energy to food to consumer goods.
• Decommissioned coal plants in Europe are brought back online while China begins to ramp up coal production in response to soaring energy costs.
• In a sign of things to come, European countries look at ways to ration energy, including in Italy, which bans schools and public buildings from setting air conditioning lower than 25C.

May 2022:

• Hungry for alternatives to Russian natural gas, European countries become major players on the global LNG import market, significantly driving up costs while pricing some LNG-reliant Asian countries out of the market.
• The Bank of America warns a further drop in supply of Russian oil and gas will likely trigger a global recession and wreak havoc on energy markets.
• Amid a heat wave and with domestic supplies tapped, India’s power ministry calls for more coal imports to stave off blackouts.

June 2022:

• Steel, chemical and fertilizer manufacturers begin shutting down European factories due to the impact of soaring oil and gas prices as well as growing concerns Russia may cut off energy supplies.
• After meeting in Germany, G7 leaders agree that increasing LNG deliveries is important and that “investment in this sector is necessary in response to the current crisis.”
• Soaring LNG prices force Pakistan to scrap energy contracts despite a worsening power crisis that prompts the government to order shopping malls and factories to close early in some cities.

July 2022:

• Following a three-month economic crisis that saw Sri Lanka run out of all its fuel reserves after being unable to secure fresh supplies, President Gotabaya Rajapaksa flees the country, prompting thousands of protestors to storm the presidential palace.
• IEA head Birol warns the global energy crisis will continue to worsen in the months ahead, noting “The world has never witnessed such a major energy crisis in terms of its depth and its complexity.”
• European lawmakers vote to move ahead with a plan to label some nuclear and natural gas power as green energy, a major shift from previous EU policy.

August 2022:

• Despite western sanctions against Russian oil and gas sparked by its invasion of Ukraine, it’s expected Russia will see a 38 per cent increase on earnings from its energy exports compared to 2021, due to increasing purchases from Asian buyers and soaring energy prices.
• Skyrocketing energy prices across the U.K. are expected to take a heavier toll than the 2008 financial crisis, with more than half of all households at risk of falling into energy poverty.
• German Chancellor Olaf Scholz visits Canada hoping to secure a reliable supply of LNG, saying “As Germany is moving away from Russian energy at warp speed, Canada is our partner of choice. We hope that Canadian LNG will play a major role in this.” Despite the plea, Canadian Prime Minister Justin Trudeau expresses skepticism about the business case to supply LNG to Europe.

September 2022:

• The EU proposes a temporary windfall tax on profits for fossil fuel companies in order to raise $140 billion Euros to provide income supports or consumer rebates for member countries amid the energy crisis. The commission also suggests a requirement for countries to cut overall electricity demand by at least 10 per cent until the end of March.
• Claiming repairs are needed, Russia halts the supply of gas to Europe via its Nord Stream 1 pipeline, disrupting plans by Germany and other European nations to top up energy reserves before winter.
• Explosions in the Baltic Sea rupture both the Nord Stream 1 and Nord Stream 2 pipelines that connect Russia’s natural gas to Europe. It’s later determined the three massive leaks are the result of sabotage.

October 2022:

• Amid ongoing energy shortages, blackouts sweep across up to 80 per cent of Bangladesh after the national grid collapses, threatening to inflict severe damage to the economy of the world’s second largest exporter of clothing.
• The IEA’s 2022 World Energy Outlook predicts in the coming year some 75 million people around the world will lose access to electricity and another 100 million will have to go back to cooking with wood or dung.
• Despite the ongoing energy crisis, OPEC+ member countries, including Russia and Saudi Arabia, agree to slash oil production by 2 million barrels per day, citing “the uncertainty that surrounds the global economic and oil market outlooks.”

November 2022

• Global demand for floating LNG storage and regasification platforms skyrockets as countries look to boost their ability to boost imports of natural gas.
• The United Kingdom’s national electricity grid makes plans for planned blackouts for households between 4 p.m. to 7 p.m. on “really, really cold weekdays” over the winter months.
• Despite refusing to diplomatically recognize Venezuelan President Nicolas Maduro, the U.S. agrees to lift sanctions to allow it to resume oil imports from a nation its State Department describes as “marked by authoritarianism, intolerance for dissent, and violent and systematic repression of human rights and fundamental freedoms.”

December 2022:

• The IEA warns EU countries face a potential shortfall of nearly 30 billion cubic metres of natural gas in 2023, about 7 per cent of its total consumption, potentially paving the way for the energy crisis to worsen next year.
• JP Morgan investment bank CEO Jamie Dimon warns Europe’s energy crisis could extend for several years due primarily to chronic underinvestment in oil and gas.

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While some of Canada’s leaders question the business case for accelerating liquefied natural gas (LNG) exports, one U.S. company alone is in the process of building five new LNG facilities in the Gulf of Mexico.  

The first is expected to be finished in March 2023 and the next four “every few months” after until all are operational in 2024.

Energy-short Europe is a near-term target market, but New Fortress Energy says that long-term, the booming LNG business is global. 

“We started creating our own supply long before there was a crisis, and we did so in order to satisfy what we view as a virtually inexhaustible amount of demand,” CEO Wes Edens told analysts on the company’s third quarter results call.  

With supportive permitting by regulators in both the U.S. and Mexico, repurposed offshore drilling rigs and floating platforms, New Fortress Energy expects to bring online seven million tonnes per annum (MTPA) of LNG export capacity before the end of 2024.  

LNG buyers can move fast too. Germany just finished building its first floating LNG import terminal, completed in just 200 days. 

Germany’s federal economics minister Robert Habeck said the new terminal is a “central building block for energy security,” according to German broadcaster NDR. 

“Germany can be fast and advance infrastructure projects with great determination when the federal and regional governments, together with the project participants, all pull together,” he said.   

There are 33 LNG import terminal projects in Europe that are either under construction or in the planning phase, according to the Institute for Energy Economics and Financial Analysis.  

The supply is desperately needed to replace imports from Russia, which supplied about 40 per cent of Europe’s natural gas before its invasion of Ukraine.   

“We like to go back to one simple metric, which is in 2021 there was 122 MTPA of Russian gas supply through pipelines; in 2022, there was 67 MTPA and in 2023, we expect it to be zero,” said New Fortress managing director Andrew Dete. 

“That’s effectively replacing 1,500 LNG cargoes, and you need 20 plus new LNG terminals to do it.” 

The company is just one example of America’s massive LNG expansion. The U.S. rose from zero LNG exports in 2015 to become the world’s largest LNG exporter in 2021. It’s now set to triple current capacity by 2033, according to Wood Mackenzie. 

Plans for what became the first U.S. LNG export project were announced in 2010, about one year before Shell purchased the site at Kitimat, B.C. where Canada’s first LNG project is being built. It is expected to be complete in 2025.   

While LNG from B.C. will mainly be destined for Asia (where it can reduce emissions by replacing coal), analysts say it can also help meet demand in Europe.   

“More western Canadian LNG would allow a lot of the other sources to go to Europe. It’s like a domino,” said Matthias Bloennigen, director of Americas consulting with Wood Mackenzie. 

Asia represents 67 per cent of world LNG demand today, and that share is expected to grow to 73 per cent while demand doubles to reach 700 MTPA by 2040. 

“We’re at the early stages of an LNG boom cycle,” said Kateryna Filippenko, Wood Mackenzie’s director of global gas research.  

“Europe will continue to compete with Asia for LNG supply at times of high demand.” 

Analysts estimate that by 2025, nearly US$200 billion will be spent on new LNG plants in North America. Canada must move faster to take part.  

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The U.S. decision to ease sanctions and allow it to resume oil imports from Venezuela will hurt Canada’s oil sector, according to industry analysts. 

It’s another blow by the administration that cancelled the 830,000 barrel per day Keystone XL pipeline from Canada in January 2021. Now officials are seeking alternate supplies to replace imports from Russia and keep costs down for Americans.  

“They should be talking to Canada instead of Venezuela,” says Phil Skolnick, a New York-based analyst with Eight Capital. 

The importance of heavy oil 

In question is the massive market for “heavy oil” – which both countries produce – in the U.S. Gulf Coast refining cluster. Canada is now the largest supplier to the region, in recent years helping replace sinking imports from Venezuela amid what IHS Markit called “decades of decline and decay.” 

Imports from Venezuela stopped entirely in 2019 after the U.S. imposed additional sanctions to pressure authoritarian leader Nicolás Maduro to leave power.  

The Biden administration says the move to ease the sanctions is a result of Venezuela’s government taking steps to improve humanitarian conditions. But negotiations were in fact underway months ago as a potential solution to replace oil from Russia following its invasion of Ukraine.  

Ripple effect 

More Venezuelan oil to the U.S. Gulf Coast could push out imports from Canada, causing Canadian producers to receive lower prices because of a wider “differential” or discount compared to benchmark West Texas Intermediate.  

This has a ripple effect to everyday Canadians because government royalties are paid on a sliding scale based on oil prices – the lower the price received, the lower the royalties. 

“Politics aside, this is a significant negative to Canadian oil differentials,” Dan Tsubouchi, chief market strategist with Canadian investment management firm SAF Group, wrote in a research note.   

Western Canadian Select, Canada’s primary blend of heavy oil, is already trading at the widest differential to WTI since early 2020. It’s the result of increased production and not enough pipeline capacity, as well as the U.S. government’s decision to release similar quality oil from the Strategic Petroleum Reserve.

Venezuela could happen quickly 

Skolnick says the impact of easing the sanctions on Venezuela will depend on how quickly Chevron – the company granted the license to proceed – can bring production online. The license entitles Chevron to restart production in existing fields, but not start up new ones.  

Tsubouchi said it could happen faster than many expect, as Chevron can now provide important equipment and supplies like diluent for pipeline blending and diesel for reliable power.  

“An increase of even 100,000 or 200,000 barrels per day would be significant to Canadian oil,” he wrote.  

“Certain things will happen quickly.” 

Responsible production 

Meanwhile, Venezuela remains one of the world’s worst offenders on human rights, with a score of 14 out of 100 on Freedom House’s Global Freedom Index. Canada’s score is 98.  

The U.S. has refused to recognize Maduro’s presidency since 2019, declaring that he was not re-elected democratically and fosters policies “marked by authoritarianism, intolerance for dissent, and violent and systematic repression of human rights and fundamental freedoms.” 

There’s also evidence that Venezuela’s heavy oil is worse for the environment than oil produced in Canada.  

A 2018 study led by researchers at Stanford University found Venezuela’s emissions per unit of oil to be higher than Canada’s on average (20 grams of CO2 equivalent per MJ of energy compared to about 18 gCO2e/MJ). 

Researchers noted that Canada was only one of a handful of countries with “higher quality data,” meaning that their estimate for Venezuela is likely incomplete. 

The study also used data from 2015, and significant progress has since been made in Canada to reduce emissions intensity. Average oil sands emissions per barrel decreased by 21 per cent from 2009 to 2021, according to S&P Global.  

If it had been allowed to proceed, the Keystone XL pipeline was expected to start operating mere months from now, in the first quarter of 2023.  

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As European countries like Germany race to build new liquefied natural gas (LNG) import terminals to keep the lights on and the heat running, analysts say LNG from western Canada could help. 

Mainly destined for Asia, LNG shipped from B.C. could help divert other world shipments to Europe.   

“More western Canadian LNG would allow a lot of the other sources to go to Europe. It’s like a domino,” said Matthias Bloennigen, director of Americas consulting with Wood Mackenzie. 

Europe is “by no means out of the woods” despite having met natural gas storage targets that could help avoid a painful deepening of the energy crisis this winter, according to the International Energy Agency.  

Natural gas storage sites in the European Union are now 95 per cent full, in part thanks to a surge in LNG imports.  

But Europe needs to take immediate action to avoid the risk of natural gas shortage next year, the IEA said in early November.  

LNG flows to the highest bidder 

More LNG will be part of the answer, as tankers re-route to meet the highest bidders. In the past, that has been in Asia. Following Russia’s invasion of Ukraine, it’s in Europe.  

“A significant volume [of LNG] that was previously going to other markets, such as Asia or Latin America, is now being consumed by Europeans,” S&P Global LNG director Ciaran Roe wrote on Oct. 26. 

Between 2018 and 2021, Asian LNG price benchmark Japan Korea Marker (JKM) averaged US$6.52 per mmbtu, compared to US$5.27 per mmbtu for European benchmark Dutch TTF, according to GLJ. 

But TTF has traded above JKM since February 2022, averaging US$40.66 compared to US$34.07 so far this year. This includes a spike in August when the price for the Dutch benchmark hit US$70.70 compared to US$52.23 in Asia. 

Huge growth expected for Asian LNG imports 

Asia represents 67 per cent of world LNG demand today, and that share is expected to grow as demand doubles to reach 700 million tonnes per year by 2040. 

Over the coming decades Canada has a massive opportunity to ship LNG from the British Columbia coast to supply customers in northeast Asia, according to a new report by Wood Mackenzie.  

“For Asian buyers, Canadian LNG is quite cost competitive due to its relatively low shipping and liquefaction costs compared to other global exporters,” it said. 

Read the full report 

Wood Mackenzie estimates the delivered full cycle cost of LNG from western Canada to northeast Asia to be US$9.10 per mmbtu, in line with US$9.20 from the United States, the world’s largest LNG exporter.  

A meaningful reduction in emissions 

But competitive costs are not the only benefit for Canadian LNG in Asia, the report said.  

Canadian LNG can do more to reduce emissions than other sources of natural gas as growing Asian economies reduce reliance on coal.  

If Canada increases its LNG export capacity to Asia, net emissions could decline by 188 million tonnes of CO2 equivalent per year through 2050 – or the impact every year of taking 41 million cars off the road.  

“If Canada does not export as much LNG as anticipated to northeast Asia, the region would need to rely on LNG from elsewhere that has a higher emissions intensity,” Wood Mackenzie said. 

The consultancy’s report didn’t examine economic impacts of Canada’s LNG industry, including from LNG Canada, the one project that is under construction.  

A 2020 assessment by the Conference Board of Canada found that adding more projects in B.C. could support 96,550 direct, indirect and induced jobs annually across the country between 2020 and 2064. 

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