1 00:00:10,880 --> 00:00:14,080 Speaker 1: Hello, and welcome to another episode of the Odd Thoughts podcast. 2 00:00:14,160 --> 00:00:17,360 Speaker 1: I'm Tracy Alloway and I'm Joe. Wasn't so Joe. I 3 00:00:17,360 --> 00:00:19,640 Speaker 1: feel like we need to do an episode on European 4 00:00:19,760 --> 00:00:23,440 Speaker 1: energy once a month now. There are so many developments 5 00:00:23,560 --> 00:00:28,520 Speaker 1: happening so fast. German electricity prices, price caps in the UK, 6 00:00:29,200 --> 00:00:32,519 Speaker 1: the French nuclear industry, and it all relates to geopolitics 7 00:00:32,560 --> 00:00:34,960 Speaker 1: and inflation. How it fits with the e c B 8 00:00:35,240 --> 00:00:38,120 Speaker 1: and everything there really is like it's really like a 9 00:00:38,159 --> 00:00:41,600 Speaker 1: NonStop story that we have to be covering more or 10 00:00:41,640 --> 00:00:44,080 Speaker 1: less all the time. Yeah, and I feel like we 11 00:00:44,159 --> 00:00:47,840 Speaker 1: had some interesting conversations on this topic earlier in the year, 12 00:00:48,440 --> 00:00:51,680 Speaker 1: definitely throughout the summer and even way back into the spring. 13 00:00:52,120 --> 00:00:55,200 Speaker 1: And the difference now is that we really are starting 14 00:00:55,240 --> 00:00:59,400 Speaker 1: to see governments take some steps to try to limit 15 00:00:59,760 --> 00:01:03,240 Speaker 1: the impact of the energy crisis. Right. But here's the 16 00:01:03,320 --> 00:01:06,839 Speaker 1: thing that I don't really get, Like, sure, the government 17 00:01:06,920 --> 00:01:10,640 Speaker 1: can you know, cap prices theoretically, or they could provide 18 00:01:10,680 --> 00:01:14,840 Speaker 1: subsidies to homeowners theoretically, etcetera. But the one thing nothing 19 00:01:14,880 --> 00:01:18,600 Speaker 1: actually provides more molecules, Like none of there's nothing that's 20 00:01:18,720 --> 00:01:21,199 Speaker 1: on the government's balance sheet that it could be done 21 00:01:21,200 --> 00:01:24,440 Speaker 1: to like actually, in my mind, get at the core issue, 22 00:01:24,560 --> 00:01:28,360 Speaker 1: which is a shortage of natural gas, molecules or oil, etcetera. 23 00:01:28,600 --> 00:01:31,399 Speaker 1: And so the question of like how Europe gets through 24 00:01:31,400 --> 00:01:33,959 Speaker 1: the winter, how much of a recession will be, how 25 00:01:34,000 --> 00:01:37,200 Speaker 1: it's gonna ration, energy, etcetera, is still, to my mind 26 00:01:37,280 --> 00:01:39,160 Speaker 1: like a huge question mark. And I think a lot 27 00:01:39,240 --> 00:01:43,080 Speaker 1: might even depend on the weather. Yeah, that's exactly right, 28 00:01:43,200 --> 00:01:45,800 Speaker 1: And there's so much to discuss on this topic. But 29 00:01:45,920 --> 00:01:48,040 Speaker 1: I am happy to say that we really do have 30 00:01:48,280 --> 00:01:51,120 Speaker 1: the perfect guest for today. We're going to be speaking 31 00:01:51,240 --> 00:01:54,960 Speaker 1: with the commodities trader Pierre onderand about this topic. We 32 00:01:55,000 --> 00:01:57,040 Speaker 1: spoke to him, I think it was back in March 33 00:01:57,280 --> 00:01:59,400 Speaker 1: or April of this year when a lot of these 34 00:01:59,480 --> 00:02:03,000 Speaker 1: energy can sterns were just kicking off, And we're going 35 00:02:03,040 --> 00:02:04,640 Speaker 1: to catch up with him and see what he's thinking 36 00:02:04,680 --> 00:02:07,040 Speaker 1: about the market now. Can't wait. Pierre, Thank you so 37 00:02:07,120 --> 00:02:10,280 Speaker 1: much for coming back on all blots. My pleasure. High Tracy, 38 00:02:10,360 --> 00:02:12,680 Speaker 1: Hi Joe, good to speak with you again. Pierre. Maybe 39 00:02:12,800 --> 00:02:15,840 Speaker 1: just to begin with you know, we've spoken to some 40 00:02:15,919 --> 00:02:18,520 Speaker 1: of our colleagues, some people in the energy market recently, 41 00:02:18,639 --> 00:02:22,040 Speaker 1: back in August just about how dire the situation in 42 00:02:22,080 --> 00:02:26,239 Speaker 1: Europe could get this winter. At least one of them 43 00:02:26,320 --> 00:02:30,120 Speaker 1: was pretty pessimistic about the outlook. But you had a 44 00:02:30,200 --> 00:02:34,959 Speaker 1: Twitter thread recently where you were suggesting that maybe things 45 00:02:35,080 --> 00:02:39,120 Speaker 1: aren't that bad, Maybe there are steps that society as 46 00:02:39,160 --> 00:02:41,480 Speaker 1: a whole could be taking to try to offset some 47 00:02:41,560 --> 00:02:44,200 Speaker 1: of these commodities pressures. What do you think Europe can 48 00:02:44,240 --> 00:02:49,520 Speaker 1: do here? Yes, I think, I think, you know, then 49 00:02:49,600 --> 00:02:52,160 Speaker 1: we think we have you know, we've been you know, 50 00:02:52,880 --> 00:02:55,720 Speaker 1: used to living in in a very abundant world and 51 00:02:56,000 --> 00:02:58,320 Speaker 1: we have to switch into a wolf of a dime. 52 00:02:58,639 --> 00:03:01,320 Speaker 1: And once we understand that, I don't think the steps 53 00:03:01,320 --> 00:03:04,320 Speaker 1: we have to make our are too difficult. But first, 54 00:03:05,360 --> 00:03:08,359 Speaker 1: plan number one for no Russian gas, you know, pretty 55 00:03:08,440 --> 00:03:13,640 Speaker 1: much ever for the foreseeable future. Once politicians understand that 56 00:03:13,680 --> 00:03:16,440 Speaker 1: we have to plan for no Russian gas, then it 57 00:03:16,680 --> 00:03:19,400 Speaker 1: is much easier than you know, assuming that it will 58 00:03:19,440 --> 00:03:22,360 Speaker 1: come and then it doesn't go. So so far there 59 00:03:22,360 --> 00:03:24,720 Speaker 1: has been a lot of steps have been taken. So first, 60 00:03:25,880 --> 00:03:29,800 Speaker 1: you know, at the moment, Russian gas exposed to Europe 61 00:03:30,200 --> 00:03:33,560 Speaker 1: have gone down by seventy and I think they will 62 00:03:33,600 --> 00:03:35,000 Speaker 1: go down. I mean, for me, I think we have 63 00:03:35,040 --> 00:03:37,920 Speaker 1: to assume that we will not get from now and 64 00:03:37,960 --> 00:03:41,160 Speaker 1: pretty much from from next week onwards um and and 65 00:03:41,200 --> 00:03:44,680 Speaker 1: think about how we can live without Russian gas altogether. 66 00:03:45,000 --> 00:03:47,040 Speaker 1: So the good news is that Europe has been able 67 00:03:47,080 --> 00:03:50,600 Speaker 1: to import a lot more energy so liquid natural gas 68 00:03:50,640 --> 00:03:56,760 Speaker 1: than expected this year, pretty much almost double the imports 69 00:03:56,840 --> 00:04:01,200 Speaker 1: of llenergy and that increasing energy so apply corresponds to 70 00:04:01,240 --> 00:04:06,040 Speaker 1: about two thirds of the Russian losses so far, So 71 00:04:06,080 --> 00:04:07,760 Speaker 1: that's a good news. We managed to import a lot 72 00:04:07,800 --> 00:04:12,040 Speaker 1: more energy, and there's more import capacities as being built 73 00:04:12,560 --> 00:04:14,600 Speaker 1: and that will come online over the next few months. 74 00:04:14,880 --> 00:04:17,640 Speaker 1: So it looks like energy import capacity will not be 75 00:04:17,720 --> 00:04:22,600 Speaker 1: an issue for Europe. The problem is how much you know, 76 00:04:23,200 --> 00:04:27,279 Speaker 1: llergy can Europe really managed to to attract because the 77 00:04:27,279 --> 00:04:29,760 Speaker 1: West of the world is competing for that supply and 78 00:04:29,800 --> 00:04:34,200 Speaker 1: some other countries have no long term contracts. But I 79 00:04:34,240 --> 00:04:36,560 Speaker 1: will assume that you know, Europe being you know what, 80 00:04:37,760 --> 00:04:40,240 Speaker 1: you know, like one of the wealthiest continent, that they'll 81 00:04:40,240 --> 00:04:45,480 Speaker 1: be able to most of the competitors for for llergy. 82 00:04:45,920 --> 00:04:49,599 Speaker 1: And I think the hard part is mainly behind us. 83 00:04:49,640 --> 00:04:53,960 Speaker 1: I think now the global supply of energy is still 84 00:04:54,000 --> 00:04:58,200 Speaker 1: going up, we'll should have a big bump in. So 85 00:04:58,240 --> 00:05:02,640 Speaker 1: if we assume that Europe could attract about of the 86 00:05:03,000 --> 00:05:07,520 Speaker 1: energy additions, that will already go a long way in 87 00:05:07,600 --> 00:05:11,960 Speaker 1: solving solving the crisis. But we can't replace over the 88 00:05:12,000 --> 00:05:14,240 Speaker 1: next two years all of the Ossian gas. We can 89 00:05:14,279 --> 00:05:17,039 Speaker 1: replace a big part of it with energy, but not 90 00:05:17,160 --> 00:05:19,159 Speaker 1: all of it, So we need to have some kind 91 00:05:19,200 --> 00:05:23,520 Speaker 1: of demand response. Some of it already happened. So basically, 92 00:05:24,080 --> 00:05:29,200 Speaker 1: if you think of all the gas, about fifty percent 93 00:05:29,320 --> 00:05:33,800 Speaker 1: is coming from residential slash commercial demand as for hitting 94 00:05:34,080 --> 00:05:39,719 Speaker 1: and cooking, but many hitting, about twenty five percent is 95 00:05:39,760 --> 00:05:44,719 Speaker 1: coming from industrial demand or so from power. So so 96 00:05:44,800 --> 00:05:49,560 Speaker 1: far we've seen a switch of about thirty five oil 97 00:05:49,960 --> 00:05:54,599 Speaker 1: in the industrial demand. So already today we have lost 98 00:05:54,680 --> 00:05:57,920 Speaker 1: a lot of gas demand from the industry because natural 99 00:05:57,960 --> 00:06:01,080 Speaker 1: gas prices are much higher than than oil prices. Some 100 00:06:01,160 --> 00:06:04,120 Speaker 1: of that switching from gas to oil has happened, and 101 00:06:04,160 --> 00:06:09,080 Speaker 1: I switching happening just because some of it needs a 102 00:06:09,080 --> 00:06:12,040 Speaker 1: bit of lead time, so that in Europe and Asia. 103 00:06:12,120 --> 00:06:13,960 Speaker 1: So I think we will lose some natural guest demand 104 00:06:14,000 --> 00:06:18,440 Speaker 1: worldwide due to very high natural gas prices, and then 105 00:06:18,640 --> 00:06:24,239 Speaker 1: what's what's left to do is really bring residential demand 106 00:06:24,279 --> 00:06:27,279 Speaker 1: and power demand down to Willie balance the market and 107 00:06:27,320 --> 00:06:29,880 Speaker 1: the steps that have to be taken are not so dramatic. 108 00:06:30,279 --> 00:06:32,760 Speaker 1: Basically a thing that I mean, it looks like in 109 00:06:32,800 --> 00:06:36,039 Speaker 1: my supplant demand model that we need to bring the 110 00:06:36,279 --> 00:06:41,520 Speaker 1: residential and commercial demand down by fifteen percent. Of responds 111 00:06:41,600 --> 00:06:45,440 Speaker 1: to lowering the term stat by three degrees from twenty 112 00:06:45,480 --> 00:06:49,040 Speaker 1: two degrees celsius to nineteen degrees celsius. So it might 113 00:06:49,040 --> 00:06:51,760 Speaker 1: sound a bit you know, chili relative to what we 114 00:06:52,120 --> 00:06:54,400 Speaker 1: are being we are used to, but it's not very cold. 115 00:06:54,440 --> 00:07:00,560 Speaker 1: It's basically had in nine six in in Europe and 116 00:07:00,839 --> 00:07:04,279 Speaker 1: the UK, and we were living with fifteen to sixteen 117 00:07:04,279 --> 00:07:07,520 Speaker 1: degrees in the seventies, you know, during the the energy 118 00:07:07,560 --> 00:07:12,080 Speaker 1: crisis of the seventies. Um so alreadys that will go along, 119 00:07:13,120 --> 00:07:15,560 Speaker 1: and then we'll need to bring power demand down by 120 00:07:15,560 --> 00:07:19,520 Speaker 1: five percent, which is you know, BIGI just switching some 121 00:07:19,800 --> 00:07:23,120 Speaker 1: you know, switching off the lights in a room that 122 00:07:23,160 --> 00:07:26,760 Speaker 1: are not used, switching off buildings at night when they're 123 00:07:26,800 --> 00:07:30,480 Speaker 1: not used, and stuff like that bring power demand down 124 00:07:30,560 --> 00:07:33,040 Speaker 1: by five percent. So there are steps to be taken. 125 00:07:33,280 --> 00:07:35,920 Speaker 1: Um in that situation, we don't need any Russian gas 126 00:07:35,920 --> 00:07:39,360 Speaker 1: at all. And actually Russia would not get one dred 127 00:07:39,400 --> 00:07:43,080 Speaker 1: billion dollars of European money as a result. So I 128 00:07:43,080 --> 00:07:47,000 Speaker 1: think if I were bring that you know, to be 129 00:07:47,720 --> 00:07:52,240 Speaker 1: three degrees cooler in in the winter, but still very comfortable, 130 00:07:52,680 --> 00:07:58,000 Speaker 1: very comfortable temperatures, and you know, switching off some lights 131 00:07:58,000 --> 00:08:01,960 Speaker 1: here and there and that enough to not gas at all. 132 00:08:02,200 --> 00:08:03,960 Speaker 1: So I think we have more language than we think. 133 00:08:04,000 --> 00:08:08,360 Speaker 1: I think the Shermong girls and the version protagonists, you know, 134 00:08:08,360 --> 00:08:10,880 Speaker 1: when they say that we're all gonna freeze to days 135 00:08:10,920 --> 00:08:13,200 Speaker 1: in the in the winter, it's actually not true. But 136 00:08:13,280 --> 00:08:15,200 Speaker 1: we need to plan, you know, I mean, it could 137 00:08:15,200 --> 00:08:18,880 Speaker 1: be true at the end. If we don't make steps 138 00:08:18,920 --> 00:08:21,760 Speaker 1: today to lower demand, then we will have some issue, 139 00:08:22,600 --> 00:08:25,320 Speaker 1: some shortage before the end of the winter. I keep 140 00:08:25,320 --> 00:08:27,640 Speaker 1: having to remind myself three degrees does it sound like 141 00:08:27,760 --> 00:08:30,400 Speaker 1: that much? But you know, for listeners, bear in mind, 142 00:08:30,680 --> 00:08:33,320 Speaker 1: you know that celsius in fahrenheit and something. But it 143 00:08:33,440 --> 00:08:35,240 Speaker 1: is interesting too that, as you point out, and you 144 00:08:35,280 --> 00:08:38,000 Speaker 1: said on Twitter, that actually was more the average in 145 00:08:38,040 --> 00:08:41,880 Speaker 1: the nineties. So it's not a huge backstab. Just on 146 00:08:41,960 --> 00:08:46,320 Speaker 1: the question of getting adequate llergy imports. How much of 147 00:08:46,320 --> 00:08:49,480 Speaker 1: it is it about essentially outbidding the rest of the 148 00:08:49,520 --> 00:08:55,280 Speaker 1: world versus expanding the physical infrastructure to take in that llenergy. 149 00:08:55,400 --> 00:08:59,200 Speaker 1: Is there an acceleration of LLERGY import terminal construction that 150 00:08:59,240 --> 00:09:01,280 Speaker 1: will start to move of the dial in the medium 151 00:09:01,320 --> 00:09:04,200 Speaker 1: or short term, Yeah, there are some. So I'm not 152 00:09:04,240 --> 00:09:07,240 Speaker 1: worried about the import capacity of Europe because we already 153 00:09:07,240 --> 00:09:12,240 Speaker 1: have some floating platform that can import energy that are 154 00:09:12,320 --> 00:09:16,080 Speaker 1: coming online in the next few months, and already today 155 00:09:16,120 --> 00:09:19,720 Speaker 1: like the energy imports, we present seventy one of the 156 00:09:19,760 --> 00:09:22,439 Speaker 1: import capacity of Europe. But we need a bit more 157 00:09:22,480 --> 00:09:24,680 Speaker 1: important in the north of Europe, and that will happen 158 00:09:24,720 --> 00:09:27,439 Speaker 1: over the next few months. So it doesn't look like, 159 00:09:28,520 --> 00:09:31,280 Speaker 1: you know, the import capacity is a constraint in Europe. 160 00:09:32,640 --> 00:09:34,520 Speaker 1: So what we need is that we need the global 161 00:09:34,520 --> 00:09:37,400 Speaker 1: supplier of energy to grow up. Um So, in terms 162 00:09:37,400 --> 00:09:42,120 Speaker 1: to give you some numbers, global supply of energy is 163 00:09:42,160 --> 00:09:45,880 Speaker 1: about five hundred and fifty busy m, so that's billion 164 00:09:45,960 --> 00:09:49,760 Speaker 1: cubic meters, and it's growing for the next few years 165 00:09:50,320 --> 00:09:54,520 Speaker 1: um at a one fifteen b c m yes of 166 00:09:54,600 --> 00:09:57,520 Speaker 1: the next two years, and then it goes to sixty 167 00:09:57,640 --> 00:10:01,439 Speaker 1: or so sixty bc mp year. And so if we 168 00:10:01,520 --> 00:10:06,160 Speaker 1: assume so basically with the current volume that Europe is important. 169 00:10:06,440 --> 00:10:09,960 Speaker 1: It will just need to import about of the additions 170 00:10:10,040 --> 00:10:13,520 Speaker 1: on top of the import today to balance the markets. 171 00:10:13,600 --> 00:10:16,480 Speaker 1: Fas for the next two years we accept slightly cooler 172 00:10:16,520 --> 00:10:39,000 Speaker 1: temperatures in the winter. So you mentioned this idea of Europe, 173 00:10:39,120 --> 00:10:42,080 Speaker 1: you know, giving a hundred billion dollars of money to 174 00:10:42,240 --> 00:10:45,960 Speaker 1: Russia for its commodities exports. And one thing that you 175 00:10:46,000 --> 00:10:49,080 Speaker 1: wrote after we last spoke in March was about how 176 00:10:49,320 --> 00:10:52,920 Speaker 1: price caps on Russian oil could work and add pressure 177 00:10:52,960 --> 00:10:55,960 Speaker 1: to the Russian economy, and you kind of focused on 178 00:10:56,000 --> 00:10:59,280 Speaker 1: a problem in the current situation, which is that Russia 179 00:10:59,760 --> 00:11:04,360 Speaker 1: is exporting less oil and gas, but it's selling that 180 00:11:04,440 --> 00:11:07,160 Speaker 1: oil and gas at higher prices, so it's still getting 181 00:11:07,160 --> 00:11:10,640 Speaker 1: a substantial amount of money from those exports. Uh. And 182 00:11:10,720 --> 00:11:12,920 Speaker 1: fast forward to this month, we have the G seven 183 00:11:13,200 --> 00:11:16,240 Speaker 1: endorsing that price cap on Russian oil. I should say 184 00:11:16,240 --> 00:11:20,200 Speaker 1: we're recording this UM on September twenty one, which is 185 00:11:20,360 --> 00:11:23,160 Speaker 1: the week of the UN General Assembly, so there might 186 00:11:23,200 --> 00:11:26,680 Speaker 1: be some news on this. But talk to us about 187 00:11:27,000 --> 00:11:29,640 Speaker 1: what you would like to see from the G seven 188 00:11:29,720 --> 00:11:33,160 Speaker 1: in order to make these price caps work, because it 189 00:11:33,200 --> 00:11:35,600 Speaker 1: does seem like it's kind of a delicate balancing act, 190 00:11:36,040 --> 00:11:39,520 Speaker 1: and presumably the West wants to pressure the Russian economy 191 00:11:39,559 --> 00:11:44,560 Speaker 1: without sending commodities prices way higher. Yes, so I think 192 00:11:44,600 --> 00:11:48,800 Speaker 1: it's possible to enforce, but you need and I think 193 00:11:48,840 --> 00:11:51,560 Speaker 1: a lot you know, all the consumers have an incentive 194 00:11:51,800 --> 00:11:55,640 Speaker 1: in playing game and you know, buying buying really cheaper 195 00:11:55,679 --> 00:11:58,120 Speaker 1: than what they've done, you know, in the past. So 196 00:11:58,520 --> 00:12:01,160 Speaker 1: I think the keys to find cap prize that is 197 00:12:03,160 --> 00:12:07,000 Speaker 1: lower than current prices obviously, and and lower than where 198 00:12:07,120 --> 00:12:09,600 Speaker 1: China and India are buying it. And I think somehow 199 00:12:09,679 --> 00:12:14,719 Speaker 1: there will be game, at least unofficially to to do that. 200 00:12:14,760 --> 00:12:16,839 Speaker 1: But then it's a question of how they will want 201 00:12:16,840 --> 00:12:19,679 Speaker 1: to enforce it, right, it's um there will always be 202 00:12:19,720 --> 00:12:22,040 Speaker 1: some cheating, But I think on on on a large part, 203 00:12:22,080 --> 00:12:25,960 Speaker 1: it's possible to enforce as far as um you know, 204 00:12:26,000 --> 00:12:29,080 Speaker 1: because there's like it's a large flow bicky. If you 205 00:12:29,120 --> 00:12:32,800 Speaker 1: have to replace all the oil exports to Europe and 206 00:12:32,880 --> 00:12:35,400 Speaker 1: move them to India and China, you need a lot 207 00:12:35,520 --> 00:12:38,079 Speaker 1: more ships. So backy, you have some constraints in terms 208 00:12:38,120 --> 00:12:41,520 Speaker 1: of shipping, and a lot of those ships are Greek, 209 00:12:41,720 --> 00:12:44,400 Speaker 1: so I think there will be some you know, the 210 00:12:44,480 --> 00:12:46,440 Speaker 1: devil will be in the detail. I think it's possible, 211 00:12:46,480 --> 00:12:50,400 Speaker 1: but the but hopefully they're speaking with enough people to 212 00:12:50,559 --> 00:12:54,079 Speaker 1: understand what has to be done to really minimize the 213 00:12:54,200 --> 00:12:58,559 Speaker 1: cheating so that we can really put a damp on 214 00:12:58,559 --> 00:13:02,640 Speaker 1: on Russiana revenue. Can we just go back a little 215 00:13:02,679 --> 00:13:06,600 Speaker 1: bit to the rationing, and some of the rationing seems 216 00:13:06,640 --> 00:13:09,959 Speaker 1: straightforward in Europe, It's like, okay, turned down the thermostats 217 00:13:09,960 --> 00:13:13,719 Speaker 1: in the winter, turn off lights in rooms when you're 218 00:13:13,720 --> 00:13:17,240 Speaker 1: not in them. But in terms of like industrial demand, 219 00:13:17,440 --> 00:13:20,160 Speaker 1: that seems like, you know, it almost seems like a 220 00:13:20,160 --> 00:13:23,160 Speaker 1: guarantee that there is a deep recession coming to Europe. 221 00:13:23,200 --> 00:13:28,160 Speaker 1: If factories just can't afford to operate profitably at current prices, 222 00:13:28,200 --> 00:13:30,680 Speaker 1: how much demand destruction, Like what's that going to do 223 00:13:30,840 --> 00:13:33,760 Speaker 1: to Europe's industrial sector? And how much of a bite 224 00:13:33,760 --> 00:13:35,559 Speaker 1: will that take out? How much will it just sort 225 00:13:35,600 --> 00:13:39,640 Speaker 1: of like factory shutdowns essentially contribute to getting demand to 226 00:13:39,679 --> 00:13:45,600 Speaker 1: the necessary levels. So there's some industries that um use 227 00:13:45,720 --> 00:13:48,679 Speaker 1: natural gas as if eat stuck, so not only to 228 00:13:49,200 --> 00:13:53,360 Speaker 1: know not only geration, but that defeats stuck. So some 229 00:13:53,440 --> 00:13:59,120 Speaker 1: examples would be chemical manufacturing would be you know, glassmaking 230 00:14:00,160 --> 00:14:05,440 Speaker 1: would be petro chemical, the petro chemical industry. So for 231 00:14:05,520 --> 00:14:07,800 Speaker 1: some processes you need natural gas as the feedstock and 232 00:14:07,840 --> 00:14:10,720 Speaker 1: you cannot change it right, but some of them you can. 233 00:14:10,840 --> 00:14:14,199 Speaker 1: For example, for the petcam industry, you can use NAPSA 234 00:14:14,440 --> 00:14:18,440 Speaker 1: instead of instead of natural gas, so you can have 235 00:14:18,480 --> 00:14:21,480 Speaker 1: some switching from natural gas to oil. Also in in 236 00:14:21,680 --> 00:14:26,240 Speaker 1: the in terms of natural gas demand for the industry, 237 00:14:26,280 --> 00:14:29,840 Speaker 1: a lot of it is also to generate their own 238 00:14:29,880 --> 00:14:33,760 Speaker 1: power and and for that they can actually use oil 239 00:14:33,840 --> 00:14:36,320 Speaker 1: instead of natural gas. So you can have quite a 240 00:14:36,320 --> 00:14:39,760 Speaker 1: lot of switching in the industry. And already today we're 241 00:14:39,760 --> 00:14:43,200 Speaker 1: seeing switching of thirty pc from natural gas to oil. 242 00:14:43,880 --> 00:14:46,400 Speaker 1: So that's the good news. In in in the industry 243 00:14:46,480 --> 00:14:49,640 Speaker 1: that does have to take natural gas, well, I guess 244 00:14:49,640 --> 00:14:52,840 Speaker 1: we'll have to think of which ones are strategic and 245 00:14:52,880 --> 00:14:56,360 Speaker 1: which ones are not. And the strategic industries will have 246 00:14:56,440 --> 00:14:59,120 Speaker 1: to be helped by the government to be able to 247 00:14:59,240 --> 00:15:04,480 Speaker 1: afford gas and power places until the matter resolve and 248 00:15:04,480 --> 00:15:06,880 Speaker 1: and and it will you know, over the next two 249 00:15:06,960 --> 00:15:09,720 Speaker 1: to three years. It would be resolved to more lergy 250 00:15:09,880 --> 00:15:14,560 Speaker 1: and as far as we there's enough incentive for consumers 251 00:15:14,600 --> 00:15:19,240 Speaker 1: to red the unnecessary consumption of energy. I know this 252 00:15:19,320 --> 00:15:23,560 Speaker 1: is a slight turn or detour, but can you give 253 00:15:23,640 --> 00:15:25,600 Speaker 1: us a lot of perspective just from where your perspective 254 00:15:25,640 --> 00:15:28,760 Speaker 1: what's going on with French nuclear well brickally, you know, 255 00:15:28,960 --> 00:15:32,640 Speaker 1: it's a nuclear park. You know was at first at 256 00:15:32,680 --> 00:15:36,840 Speaker 1: the life expectancy of forty years and we're getting towards 257 00:15:36,840 --> 00:15:39,560 Speaker 1: the end of the forty years. So there's some issues 258 00:15:39,600 --> 00:15:42,200 Speaker 1: that the maintenance have to be done. Uh you know 259 00:15:42,240 --> 00:15:44,800 Speaker 1: they can they see some cousion, some you know, some 260 00:15:44,880 --> 00:15:47,520 Speaker 1: issue here and there that they have to fix. But 261 00:15:47,600 --> 00:15:51,680 Speaker 1: it looks like you know, the work mainly at those 262 00:15:51,720 --> 00:15:54,360 Speaker 1: power places. The work will be done for some of 263 00:15:54,400 --> 00:15:57,800 Speaker 1: that capacity to come back online. But I think there 264 00:15:57,800 --> 00:16:01,640 Speaker 1: should be a switch to to really invest massively into 265 00:16:01,760 --> 00:16:04,320 Speaker 1: nuclear like around Europe, and I hope that will come 266 00:16:04,360 --> 00:16:09,360 Speaker 1: because we need that baseload no no low calbum capacity. 267 00:16:09,920 --> 00:16:12,880 Speaker 1: That takes a while to build plants, right nuclear plants, 268 00:16:12,880 --> 00:16:15,680 Speaker 1: but they have to today decided to go for it. 269 00:16:16,440 --> 00:16:18,720 Speaker 1: If I can add also, you know, like the warmer 270 00:16:18,800 --> 00:16:23,560 Speaker 1: temperatures in the summer make it more difficult to cool 271 00:16:24,640 --> 00:16:27,600 Speaker 1: U nuclear reactors, so that's why some of them have 272 00:16:27,640 --> 00:16:29,840 Speaker 1: to shut down as well. And that happens not only 273 00:16:29,840 --> 00:16:32,880 Speaker 1: in Europe, but around the world, right, So there most 274 00:16:32,920 --> 00:16:35,800 Speaker 1: of them are built around weathers or around the sea, 275 00:16:35,920 --> 00:16:38,320 Speaker 1: and when the water becomes too warm, they have to 276 00:16:38,320 --> 00:16:41,840 Speaker 1: shut down until the water gets cooler. That you have 277 00:16:41,840 --> 00:16:46,240 Speaker 1: that tissue as well. So you mentioned perhaps some support 278 00:16:46,360 --> 00:16:51,160 Speaker 1: for certain industries who cannot easily substitute fuels, but you've 279 00:16:51,200 --> 00:16:55,440 Speaker 1: also been publicly critical of some government support schemes for 280 00:16:55,560 --> 00:17:00,120 Speaker 1: energy usage. Specifically, the UK is capping of electricity and 281 00:17:00,240 --> 00:17:02,480 Speaker 1: net gas prices. I think it's something like two thousand 282 00:17:02,520 --> 00:17:07,639 Speaker 1: five pounds for UK households. What's the issue there? And 283 00:17:07,720 --> 00:17:12,280 Speaker 1: I'm curious if that criticism also extends to the US 284 00:17:12,320 --> 00:17:16,280 Speaker 1: where the big you know, effort that's been underway here 285 00:17:16,320 --> 00:17:19,680 Speaker 1: when it comes to lowering energy prices is the release 286 00:17:19,760 --> 00:17:23,880 Speaker 1: from the U S is strategic petroleum reserve natural gas 287 00:17:23,920 --> 00:17:26,760 Speaker 1: in all Like, I think I understand that government you 288 00:17:26,960 --> 00:17:29,840 Speaker 1: want to help households and businesses, and of course they should, 289 00:17:29,880 --> 00:17:32,280 Speaker 1: you know, but we have to make sure that the 290 00:17:32,320 --> 00:17:36,439 Speaker 1: demand meat supply as well, because if demand is above supply, 291 00:17:36,480 --> 00:17:40,439 Speaker 1: eventually you have shortages and we all are in trouble, right, 292 00:17:40,480 --> 00:17:42,720 Speaker 1: we have blackouts, you know, we can't eat at all, 293 00:17:43,160 --> 00:17:45,600 Speaker 1: and then you know in the winter gets much much 294 00:17:45,600 --> 00:17:49,679 Speaker 1: called the rights three degree impact. So the key is 295 00:17:49,720 --> 00:17:52,560 Speaker 1: to do I think too if you look at the UK, 296 00:17:53,440 --> 00:17:57,000 Speaker 1: UK places have a lot more expensive than most European 297 00:17:57,280 --> 00:18:01,280 Speaker 1: places of emample in France, uh electricity and gas prices 298 00:18:01,280 --> 00:18:04,399 Speaker 1: are only a four percent relative to last year, and 299 00:18:04,480 --> 00:18:06,520 Speaker 1: next year there will be a fifteen percent, which is 300 00:18:06,800 --> 00:18:11,600 Speaker 1: way way below commercial like wholesale levels. In the UK 301 00:18:11,720 --> 00:18:14,560 Speaker 1: they followed at least the doubles you know over the years, 302 00:18:14,560 --> 00:18:17,040 Speaker 1: so that you should have some kind of price response 303 00:18:17,080 --> 00:18:19,880 Speaker 1: already because it's a lot more expensive than last year 304 00:18:19,920 --> 00:18:23,040 Speaker 1: and more expective than in Europe. But I think that 305 00:18:23,080 --> 00:18:25,240 Speaker 1: the government should do more. You know, you can't. Just 306 00:18:26,920 --> 00:18:29,080 Speaker 1: when I hear a listress saying, well, we don't want 307 00:18:29,119 --> 00:18:31,680 Speaker 1: to tell you to use the less energy, well actually 308 00:18:31,840 --> 00:18:34,679 Speaker 1: you do. You know energy doesn't You can't print energy, 309 00:18:34,760 --> 00:18:37,159 Speaker 1: right you? You can import some of it, but you 310 00:18:37,160 --> 00:18:39,359 Speaker 1: have limits to how much you want to you can import. 311 00:18:39,359 --> 00:18:42,800 Speaker 1: You can only import what's available on the world. Um 312 00:18:43,119 --> 00:18:46,000 Speaker 1: and if you overbid I want, like if you try 313 00:18:46,040 --> 00:18:49,439 Speaker 1: to buy you know, the one extra cargo that another 314 00:18:49,480 --> 00:18:52,439 Speaker 1: country needs desperitely, then you you bring prices up a 315 00:18:52,440 --> 00:18:54,959 Speaker 1: lot and then the government will have to to to 316 00:18:55,000 --> 00:18:57,200 Speaker 1: pay the bill which is eventually which is at the 317 00:18:57,280 --> 00:18:59,920 Speaker 1: end of the day taxpayer, right. And so I think 318 00:19:00,200 --> 00:19:04,760 Speaker 1: government should do more um to motivate, to encourage I mean, 319 00:19:04,800 --> 00:19:07,920 Speaker 1: first to explain why to go on the public awareness campaign, 320 00:19:08,520 --> 00:19:11,399 Speaker 1: to explain to the consumer what you know, how to 321 00:19:11,840 --> 00:19:16,919 Speaker 1: reduce their energy demand while still you know, living comfortably um. 322 00:19:16,960 --> 00:19:20,480 Speaker 1: And that's something that they've been they have started doing 323 00:19:20,480 --> 00:19:23,360 Speaker 1: in the in in the EU, and I hope the 324 00:19:23,480 --> 00:19:27,000 Speaker 1: UK will will will do that as well, because you 325 00:19:27,040 --> 00:19:29,359 Speaker 1: need to bring demand down. The market will not be 326 00:19:29,440 --> 00:19:33,640 Speaker 1: able to two to be in balanced if you don't, 327 00:19:33,720 --> 00:19:37,439 Speaker 1: let you know, consumer prices go up and your supply 328 00:19:37,600 --> 00:19:40,240 Speaker 1: is going down, then you know, how can you meet 329 00:19:40,960 --> 00:19:44,000 Speaker 1: You can't import enough energy to to really you can't 330 00:19:44,040 --> 00:19:48,879 Speaker 1: replace natural gas with all the energy um. You need 331 00:19:48,920 --> 00:19:51,679 Speaker 1: to bring demand down to And what about the spr release? 332 00:19:51,880 --> 00:19:54,680 Speaker 1: How significant has that been in terms of bringing down 333 00:19:54,760 --> 00:19:58,119 Speaker 1: oil and gas prices? And then secondly is that a 334 00:19:58,160 --> 00:20:01,639 Speaker 1: sustainable strategy because one of the criticisms as well, you 335 00:20:01,760 --> 00:20:04,919 Speaker 1: really saw this inventory and then it becomes harder and 336 00:20:05,000 --> 00:20:09,560 Speaker 1: perhaps more expensive to buy it back. Yes, I mean, 337 00:20:11,240 --> 00:20:15,480 Speaker 1: so for this year, right, we have We still have 338 00:20:15,640 --> 00:20:18,760 Speaker 1: the Russian invasion of Ukraine, but so far we have 339 00:20:18,880 --> 00:20:22,639 Speaker 1: not lost any Russian oil or very little bitlically maybe 340 00:20:23,119 --> 00:20:26,040 Speaker 1: maximum half a million bar of the day, which is 341 00:20:26,040 --> 00:20:29,840 Speaker 1: a lot less than what we expected earlier in the year. 342 00:20:30,640 --> 00:20:33,560 Speaker 1: So so far Russia has been able to to you know, 343 00:20:33,600 --> 00:20:37,359 Speaker 1: to export pretty much as much as they wanted around 344 00:20:37,400 --> 00:20:40,520 Speaker 1: the world. But the EU embargo has not started yet, right, 345 00:20:40,560 --> 00:20:44,520 Speaker 1: so we're starting in in could in early December and 346 00:20:44,560 --> 00:20:49,520 Speaker 1: then products in early February. Um so so far, but 347 00:20:50,840 --> 00:20:57,600 Speaker 1: the better administration used that as the user potential you know, 348 00:20:57,960 --> 00:21:00,959 Speaker 1: version supply loss that the next use to release THEESPR, 349 00:21:01,520 --> 00:21:04,800 Speaker 1: and we had the largest SPR whillis ever m you know, 350 00:21:04,880 --> 00:21:08,960 Speaker 1: briefly by hundred and sixty million barars I today over 351 00:21:09,000 --> 00:21:12,800 Speaker 1: the last six months, which is weughly a million barrels 352 00:21:12,840 --> 00:21:14,840 Speaker 1: a day from the US and also half a million 353 00:21:14,840 --> 00:21:17,639 Speaker 1: barrels a day from the west of the world. Publicly, 354 00:21:17,680 --> 00:21:19,720 Speaker 1: if we lost half a million barllars a day from 355 00:21:19,880 --> 00:21:22,840 Speaker 1: from Russia, but we got one point five million barllars 356 00:21:22,840 --> 00:21:25,200 Speaker 1: a day extra from the ESPR, I think it means 357 00:21:25,200 --> 00:21:27,960 Speaker 1: that the Russian invasion of Kin bought a million barllars 358 00:21:27,960 --> 00:21:31,199 Speaker 1: a day, more production, more supply on the market. And 359 00:21:31,240 --> 00:21:34,119 Speaker 1: I think that one of the reasons why the market 360 00:21:34,200 --> 00:21:37,360 Speaker 1: has gone down since the summer is the fact that 361 00:21:38,359 --> 00:21:43,160 Speaker 1: market participants were expecting Russian supply to go down by 362 00:21:43,400 --> 00:21:45,480 Speaker 1: buffy two million bars a day and we have not 363 00:21:45,880 --> 00:21:48,440 Speaker 1: seen that yet. But on the other hand, we saw 364 00:21:48,440 --> 00:21:53,000 Speaker 1: the SPR release, and there are like large worries about 365 00:21:53,200 --> 00:21:56,760 Speaker 1: you know, uh, like important worries about a large recession 366 00:21:56,800 --> 00:21:59,760 Speaker 1: coming with interest rates going up and with the impact 367 00:21:59,800 --> 00:22:04,960 Speaker 1: of the Russian war on the globody economy. Um. So 368 00:22:05,000 --> 00:22:07,000 Speaker 1: I think it's a mix of that, right, Like, Russian 369 00:22:07,000 --> 00:22:10,640 Speaker 1: supply hasn't gone down, we had a large SPR supply, 370 00:22:11,080 --> 00:22:14,440 Speaker 1: demand is probably weaker than what we expected. And then 371 00:22:14,480 --> 00:22:17,879 Speaker 1: you have all the macro worries about you know, fighting 372 00:22:17,920 --> 00:22:21,000 Speaker 1: inflation for getting you know, higher and higher interest rates 373 00:22:21,119 --> 00:22:26,000 Speaker 1: while the consortable is being hit with higher community places. 374 00:22:26,040 --> 00:22:28,480 Speaker 1: So when we talked to you in the spring, I 375 00:22:28,480 --> 00:22:30,800 Speaker 1: mean there were a number of factors and you said, 376 00:22:30,840 --> 00:22:32,560 Speaker 1: you know, there was a possibility that we could see 377 00:22:32,600 --> 00:22:35,159 Speaker 1: two hundred dollar oils. I think the number that you 378 00:22:35,200 --> 00:22:38,040 Speaker 1: put out and obviously now uh, you know, w T 379 00:22:38,200 --> 00:22:41,400 Speaker 1: I think is somewhere maybe at the high eighties. Right now, 380 00:22:41,840 --> 00:22:45,080 Speaker 1: where what do you see here? I mean the SPR release, 381 00:22:46,000 --> 00:22:48,560 Speaker 1: They're not they can't keep releasing it forever, right, it's 382 00:22:48,600 --> 00:22:52,680 Speaker 1: a finite amount that they release. It's still seems plausible 383 00:22:52,720 --> 00:22:55,959 Speaker 1: that we could have risks to Russian supply, and of 384 00:22:56,000 --> 00:22:58,680 Speaker 1: course we haven't talked about. You know, China has had 385 00:22:58,920 --> 00:23:02,400 Speaker 1: hard lockdowns over the last several months in major cities 386 00:23:02,640 --> 00:23:07,919 Speaker 1: and that is significantly curtailed the country's petroleum consumption previous reasons. 387 00:23:08,080 --> 00:23:10,200 Speaker 1: So I'm curious, like, which way you see the risk 388 00:23:10,520 --> 00:23:15,640 Speaker 1: skewed and where could oil go now? Yes, I think 389 00:23:15,840 --> 00:23:18,800 Speaker 1: res as cute to the upsite clearly as you say, 390 00:23:19,240 --> 00:23:22,200 Speaker 1: I believe we're gonna lose some Russian supply. I don't 391 00:23:22,200 --> 00:23:25,280 Speaker 1: know how much, but I would say between one and 392 00:23:25,320 --> 00:23:28,800 Speaker 1: two million pars a day. The SPR release will have 393 00:23:28,880 --> 00:23:30,760 Speaker 1: to stop, I mean always. I think the pace of 394 00:23:30,760 --> 00:23:34,520 Speaker 1: the release is going to slow down now, um quite 395 00:23:34,520 --> 00:23:36,000 Speaker 1: a lot, and I don't think they can carry on 396 00:23:36,040 --> 00:23:39,560 Speaker 1: for very long, so that will stop. Then China at 397 00:23:39,600 --> 00:23:42,320 Speaker 1: some point will we open. We don't know when, but 398 00:23:42,720 --> 00:23:44,840 Speaker 1: they will, and there's probably two million packs a day 399 00:23:44,840 --> 00:23:49,000 Speaker 1: of demand that can come back once China, you know, 400 00:23:49,160 --> 00:23:51,840 Speaker 1: we opened to the world and you start having people 401 00:23:51,880 --> 00:23:55,080 Speaker 1: going there and change people traveling again. So I think 402 00:23:55,119 --> 00:23:57,400 Speaker 1: you have a lot of even risks that you know 403 00:23:57,640 --> 00:24:00,840 Speaker 1: that are positive for the oil Twice, I would say 404 00:24:00,880 --> 00:24:05,840 Speaker 1: the only negative events is is is a global re session, 405 00:24:06,080 --> 00:24:11,199 Speaker 1: but a large enough global re session blessing overall. The 406 00:24:11,200 --> 00:24:14,160 Speaker 1: the risk in the medium terms more to the up side. 407 00:24:14,600 --> 00:24:18,119 Speaker 1: But it looks like in the short term people are 408 00:24:18,160 --> 00:24:21,760 Speaker 1: still very worried about, you know, with sessional risk, and 409 00:24:21,880 --> 00:24:25,080 Speaker 1: the macroecon Michaut looks so so far it's trading like 410 00:24:25,280 --> 00:24:28,200 Speaker 1: it's on the day to day basis if he wants 411 00:24:28,200 --> 00:24:30,640 Speaker 1: to go lower. But when I look at my supplanted 412 00:24:30,640 --> 00:24:33,639 Speaker 1: demand balance for the next few years, to me, it 413 00:24:33,640 --> 00:24:36,800 Speaker 1: looks bullish, right, and it looks and and it looks 414 00:24:36,800 --> 00:24:39,240 Speaker 1: like prices we'll have to go up at least for now. 415 00:24:39,240 --> 00:24:42,000 Speaker 1: I'm happy that is getting less money at least in 416 00:24:42,000 --> 00:24:44,280 Speaker 1: the meantime with lower old places. But I'm not sure 417 00:24:44,320 --> 00:24:48,639 Speaker 1: it's really justified who has the upper hand between US 418 00:24:48,720 --> 00:24:52,600 Speaker 1: shale and opaque at the moment, because you know, with 419 00:24:52,760 --> 00:24:56,000 Speaker 1: prices going higher over the summer, we might have expected 420 00:24:56,040 --> 00:24:59,119 Speaker 1: to see more of a response from US energy producers 421 00:24:59,200 --> 00:25:02,000 Speaker 1: that didn't really seem to happen. They still seem to 422 00:25:02,000 --> 00:25:05,560 Speaker 1: be kind of cautious about ramping up production. And meanwhile, 423 00:25:05,560 --> 00:25:08,600 Speaker 1: we have seen some noises from OPEC about how they 424 00:25:08,720 --> 00:25:13,960 Speaker 1: would like the price to go higher from here. Well, 425 00:25:14,040 --> 00:25:17,600 Speaker 1: the reality that we there is almost no spare production 426 00:25:17,680 --> 00:25:20,800 Speaker 1: capacity arond the world. So most of the OPEC members 427 00:25:20,960 --> 00:25:23,639 Speaker 1: at maximum production. If you look at the Southeast there 428 00:25:23,720 --> 00:25:26,120 Speaker 1: at eleven million dollars a day production They've never had 429 00:25:26,320 --> 00:25:31,160 Speaker 1: they've never managed to to have that level of production 430 00:25:31,200 --> 00:25:33,920 Speaker 1: for more than a month, So now we're expecting them 431 00:25:33,960 --> 00:25:39,280 Speaker 1: to be at that level for years. Um, the US, 432 00:25:39,320 --> 00:25:42,000 Speaker 1: shall it looks like, you know, US production is still going, 433 00:25:42,240 --> 00:25:44,800 Speaker 1: but I think a lot less than in the past. 434 00:25:44,840 --> 00:25:47,640 Speaker 1: So instead of growing like one to one point five 435 00:25:47,640 --> 00:25:49,840 Speaker 1: million bars a day, I think they will grow around 436 00:25:49,840 --> 00:25:51,879 Speaker 1: a half a million dollars today over the next couple 437 00:25:51,920 --> 00:25:55,560 Speaker 1: of years. So it's still you know, a bullish outlook 438 00:25:55,600 --> 00:25:57,240 Speaker 1: over wall. But then it depends if we have a 439 00:25:57,240 --> 00:26:01,360 Speaker 1: total demand collapse due to too large financial crisis. That's 440 00:26:01,400 --> 00:26:04,280 Speaker 1: a big question mark. You know, something that you brought 441 00:26:04,359 --> 00:26:08,000 Speaker 1: up on our last conversation that I haven't heard many 442 00:26:08,040 --> 00:26:10,160 Speaker 1: people talk about, and I was sort of kicking myself 443 00:26:10,200 --> 00:26:13,000 Speaker 1: for not having followed up on it. But you know, 444 00:26:13,119 --> 00:26:16,880 Speaker 1: we talked about the economics of US shill producers and 445 00:26:17,119 --> 00:26:19,159 Speaker 1: is the price signal strong enough for them to invest? 446 00:26:19,359 --> 00:26:21,520 Speaker 1: But something you said that I haven't heard many other 447 00:26:21,520 --> 00:26:25,280 Speaker 1: people talk about is available wells and is the is 448 00:26:25,320 --> 00:26:28,160 Speaker 1: the oil there at the same level that it used 449 00:26:28,200 --> 00:26:30,679 Speaker 1: to be and is it or has it? Have we 450 00:26:30,760 --> 00:26:34,000 Speaker 1: sort of picked the low hanging fruit? How much is 451 00:26:34,080 --> 00:26:36,359 Speaker 1: that in your view and impediment and what do you 452 00:26:36,400 --> 00:26:39,800 Speaker 1: see specifically on the sort of just like available supply 453 00:26:40,160 --> 00:26:42,880 Speaker 1: part that may be contributing to a sort of less 454 00:26:42,880 --> 00:26:49,159 Speaker 1: the stellar supply response by domestic producers. Yeah, I think 455 00:26:49,200 --> 00:26:51,800 Speaker 1: it's a mix of you know, the low hanging foods 456 00:26:51,800 --> 00:26:56,000 Speaker 1: having been taken so they're going through less you know, 457 00:26:56,160 --> 00:27:01,840 Speaker 1: polishing parts of the basin, and and also like supply 458 00:27:02,040 --> 00:27:06,440 Speaker 1: you know, supply issues like supply like production part issues 459 00:27:06,960 --> 00:27:11,119 Speaker 1: that they can't get from from you know, all the 460 00:27:11,160 --> 00:27:14,240 Speaker 1: elements they need and all the fracking cruise to be 461 00:27:14,320 --> 00:27:16,520 Speaker 1: able to grow production fast enough. So I think it's 462 00:27:16,520 --> 00:27:19,080 Speaker 1: a mix of those of those two. But I would 463 00:27:19,119 --> 00:27:22,960 Speaker 1: say it's more of a question there's and and there's 464 00:27:23,000 --> 00:27:27,800 Speaker 1: also the pressure from shareholders to not grow production too fast. 465 00:27:29,080 --> 00:27:33,840 Speaker 1: Decline rate operations. The decline rates for SHELA like the 466 00:27:33,880 --> 00:27:36,640 Speaker 1: first year, so they need to really keep on drilling 467 00:27:36,720 --> 00:27:41,120 Speaker 1: to to keep productions still or to make it go up. 468 00:27:41,160 --> 00:27:44,280 Speaker 1: As soon as they review the drilling, production can go 469 00:27:44,359 --> 00:27:48,040 Speaker 1: down pretty fast. So just on incentives for oil production, 470 00:27:48,359 --> 00:27:51,520 Speaker 1: one thing that we have heard is, you know, the 471 00:27:51,520 --> 00:27:54,959 Speaker 1: futures curve still isn't in the right sort of shape 472 00:27:55,000 --> 00:27:58,840 Speaker 1: to incentivize future production. So I'm wondering how much you 473 00:27:58,880 --> 00:28:03,119 Speaker 1: place on that argument. And then be you tweeted recently 474 00:28:03,280 --> 00:28:05,919 Speaker 1: and this is something that we've heard from previous guests 475 00:28:05,920 --> 00:28:08,840 Speaker 1: to this idea that the oil futures market is I 476 00:28:08,880 --> 00:28:11,920 Speaker 1: think you said completely broken. And the fact that you 477 00:28:11,960 --> 00:28:15,200 Speaker 1: could see a really volatile spot price, you know, big 478 00:28:15,240 --> 00:28:19,640 Speaker 1: moves for no reason or on very little news. How 479 00:28:19,720 --> 00:28:25,359 Speaker 1: much economic information is currently embedded in the price, I 480 00:28:25,400 --> 00:28:27,320 Speaker 1: think you're white. I mean, like there are some days 481 00:28:27,320 --> 00:28:29,240 Speaker 1: where I think the day I tweated that the markets 482 00:28:29,240 --> 00:28:31,880 Speaker 1: were completely broken, the day where we went down ten 483 00:28:31,920 --> 00:28:36,000 Speaker 1: dollars Barton from from like ninety five to like from 484 00:28:36,200 --> 00:28:39,360 Speaker 1: one hundred and five to nine dollars in less than 485 00:28:39,360 --> 00:28:42,160 Speaker 1: twenty four hours and there was no no headlines, and 486 00:28:42,520 --> 00:28:44,960 Speaker 1: somebody comes and that he'd beat he'd bid, he'd bid 487 00:28:45,240 --> 00:28:47,760 Speaker 1: for like twenty four hours and being down tend allars 488 00:28:47,880 --> 00:28:51,080 Speaker 1: and and then we assume many days now nowadays is 489 00:28:51,160 --> 00:28:53,280 Speaker 1: normal to go down five dollars one with the and 490 00:28:53,320 --> 00:28:58,080 Speaker 1: then back up three and and the volumes are much 491 00:28:58,120 --> 00:29:00,480 Speaker 1: lower than in the past. The opening test has gone 492 00:29:00,520 --> 00:29:05,360 Speaker 1: down a lot. Also in terms of positions. If you 493 00:29:05,400 --> 00:29:07,800 Speaker 1: look at the commitment of traders, so data coming from 494 00:29:07,840 --> 00:29:12,480 Speaker 1: from the CFTC, and you look at non commercial positions, 495 00:29:12,960 --> 00:29:16,560 Speaker 1: it went from one point four billion barrels in two 496 00:29:16,560 --> 00:29:20,600 Speaker 1: thousand and eighteen to three million today, So there's a 497 00:29:20,640 --> 00:29:24,880 Speaker 1: lot less people being long oil in general. Um. And 498 00:29:24,920 --> 00:29:26,280 Speaker 1: then if you look at the phones that are a 499 00:29:26,360 --> 00:29:28,200 Speaker 1: bit more active and look at their p n L 500 00:29:28,280 --> 00:29:32,840 Speaker 1: day today, they will adjust their positions in line with 501 00:29:32,880 --> 00:29:35,760 Speaker 1: the volatility. So if a market is twice as volatile, 502 00:29:36,120 --> 00:29:39,360 Speaker 1: they're going to have half of the position in battles 503 00:29:39,400 --> 00:29:41,680 Speaker 1: than they used to have. And so that leads to 504 00:29:42,600 --> 00:29:45,680 Speaker 1: a bit of a snowball effect. What you have less equality, 505 00:29:45,840 --> 00:29:49,840 Speaker 1: less positioning, and but then every day you have still 506 00:29:49,840 --> 00:29:51,840 Speaker 1: people trying to do something and you have some hedging 507 00:29:51,920 --> 00:29:54,160 Speaker 1: that has to go through, which is the main the 508 00:29:54,240 --> 00:29:56,960 Speaker 1: same type of volumes than in the past, but in 509 00:29:57,000 --> 00:29:59,760 Speaker 1: the in the market that is a lot less liquid, 510 00:30:00,040 --> 00:30:02,400 Speaker 1: and then it moves, it moves prices a lot. So 511 00:30:02,880 --> 00:30:05,440 Speaker 1: I've been like very surprised by the price action over 512 00:30:05,440 --> 00:30:08,720 Speaker 1: the last few months and and and worried about what 513 00:30:08,840 --> 00:30:11,600 Speaker 1: the price means. You know, if you can go down 514 00:30:11,680 --> 00:30:14,440 Speaker 1: from hundred to nineteen one day for the reason, why 515 00:30:14,480 --> 00:30:17,160 Speaker 1: not go down to fifty dollars in the day for 516 00:30:17,320 --> 00:30:20,400 Speaker 1: the reason? You know, it's if nobody is willing to 517 00:30:20,440 --> 00:30:25,080 Speaker 1: come and think it's it's cheap to buy it, nobody 518 00:30:25,080 --> 00:30:28,080 Speaker 1: has any risk capetite anymore, then then the price doesn't 519 00:30:28,080 --> 00:30:32,600 Speaker 1: mean anything. And I'm afraid that you know, a producers, 520 00:30:33,000 --> 00:30:39,320 Speaker 1: that's another issue to deal with, right on top of 521 00:30:40,200 --> 00:30:44,240 Speaker 1: getting the financing, you know, having the white asset worrying 522 00:30:44,280 --> 00:30:48,480 Speaker 1: about you know, you know, the shareholders and activists and 523 00:30:48,560 --> 00:30:50,600 Speaker 1: all kinds of stuff, then they have to worry as 524 00:30:50,600 --> 00:30:54,320 Speaker 1: well on the price of all that can move down 525 00:30:54,680 --> 00:30:57,920 Speaker 1: or for no reason. I mean generally it's been down 526 00:30:57,960 --> 00:31:00,680 Speaker 1: more easily than I would say. What has it actually 527 00:31:00,680 --> 00:31:04,360 Speaker 1: been like for you to trade energy and commodities over 528 00:31:04,400 --> 00:31:06,280 Speaker 1: the past few months, Like what is it like on 529 00:31:06,320 --> 00:31:08,320 Speaker 1: a day to day basis and how has it changed 530 00:31:08,480 --> 00:31:11,240 Speaker 1: versus say a year ago. Well, you know, we've had 531 00:31:11,280 --> 00:31:14,680 Speaker 1: like a structural British position on energy and that worked 532 00:31:14,680 --> 00:31:16,280 Speaker 1: well in the first half of the of the year, 533 00:31:16,640 --> 00:31:18,560 Speaker 1: and then we gave back some gains over the last 534 00:31:18,600 --> 00:31:21,840 Speaker 1: few months. So basically when it happened, we just reduce 535 00:31:21,880 --> 00:31:24,680 Speaker 1: positions because you know, you don't you accept that I 536 00:31:24,720 --> 00:31:27,200 Speaker 1: don't understand really what's going on the market. You know, 537 00:31:27,560 --> 00:31:30,720 Speaker 1: I might disagree, but I don't understand. So I don't 538 00:31:30,720 --> 00:31:33,320 Speaker 1: want to be too stubborn and I want to reduce 539 00:31:33,360 --> 00:31:37,360 Speaker 1: my positions um to focus on survivable. So for me 540 00:31:37,520 --> 00:31:41,040 Speaker 1: to period of time when I focus on survivable, I'm like, okay, 541 00:31:41,040 --> 00:31:42,720 Speaker 1: well I don't really get it. I don't really agree 542 00:31:42,720 --> 00:31:44,800 Speaker 1: with it, but you know, it is what it is. 543 00:31:45,120 --> 00:31:48,480 Speaker 1: I have to accept it. Let's reduce positions because I 544 00:31:48,520 --> 00:31:51,480 Speaker 1: don't want to lose a lot more money than what 545 00:31:51,640 --> 00:32:10,600 Speaker 1: we give back over the last few months. Already, I 546 00:32:10,640 --> 00:32:14,600 Speaker 1: actually have another natural gas question, and you know, I'm 547 00:32:14,640 --> 00:32:17,240 Speaker 1: just thinking like very long term, Like okay, we've been 548 00:32:17,240 --> 00:32:20,400 Speaker 1: talking about this winter and how Europe will scrape by, 549 00:32:20,440 --> 00:32:24,880 Speaker 1: but it's not often that we see a continent completely 550 00:32:24,960 --> 00:32:28,000 Speaker 1: re architectic essentially how it gets energy. And so of 551 00:32:28,000 --> 00:32:31,960 Speaker 1: course the pipelines from Russia to continental western Europe were huge, 552 00:32:32,000 --> 00:32:35,320 Speaker 1: or continental Europe. And now it looks like in the 553 00:32:35,440 --> 00:32:40,400 Speaker 1: sort of aftermath or the sort of ongoing however long 554 00:32:40,440 --> 00:32:42,880 Speaker 1: this goes, that there's gonna be this huge shift towards 555 00:32:42,920 --> 00:32:46,160 Speaker 1: demand towards US natural gas. And you mentioned that, Okay, 556 00:32:46,200 --> 00:32:50,120 Speaker 1: maybe Europe itself is not particularly limited by import capacity, 557 00:32:50,360 --> 00:32:53,719 Speaker 1: but we know that the US is limited by export capacity, 558 00:32:54,040 --> 00:32:57,280 Speaker 1: and that domestic producers could sell all they wanted if 559 00:32:57,320 --> 00:33:00,000 Speaker 1: if there was the if we had like more export terminals. 560 00:33:00,480 --> 00:33:04,160 Speaker 1: Is this going to be a fundamental long term change 561 00:33:04,200 --> 00:33:08,520 Speaker 1: to the energy story that ultimately benefits domestic US gas 562 00:33:08,600 --> 00:33:12,479 Speaker 1: producers in a massive way for years to come. I 563 00:33:12,480 --> 00:33:15,880 Speaker 1: think so. I think it's very positive for for US, right, 564 00:33:15,920 --> 00:33:19,160 Speaker 1: I mean, large part of what we're gonna lose from 565 00:33:19,240 --> 00:33:22,480 Speaker 1: Russia going to Europe is going to be replaced by 566 00:33:22,960 --> 00:33:26,120 Speaker 1: energy coming from from the US, from other countries as well, 567 00:33:26,120 --> 00:33:29,520 Speaker 1: but a large part from the US, because I think 568 00:33:29,720 --> 00:33:33,520 Speaker 1: US is probably going to be close to half of 569 00:33:33,720 --> 00:33:39,960 Speaker 1: the the energy growth addish the energies additions over the 570 00:33:40,000 --> 00:33:43,520 Speaker 1: next three to four years. So yeah, US will will 571 00:33:43,600 --> 00:33:47,520 Speaker 1: benefit from it. And and and the fact that I 572 00:33:47,560 --> 00:33:53,080 Speaker 1: think energy policies in general will remain high. Um, there 573 00:33:53,120 --> 00:33:55,080 Speaker 1: will still be you know a lot of money in 574 00:33:55,120 --> 00:33:59,160 Speaker 1: moving cargoes until the US has export capacity, which I 575 00:33:59,200 --> 00:34:03,360 Speaker 1: think is not to be for you know, six or 576 00:34:03,400 --> 00:34:07,920 Speaker 1: twenty seven if if you even even I'm not sure 577 00:34:07,960 --> 00:34:11,480 Speaker 1: that they will have excess capacities. And so if we're 578 00:34:11,480 --> 00:34:14,960 Speaker 1: talking about a big redesign of the global energy market 579 00:34:15,040 --> 00:34:18,759 Speaker 1: that's basically happening in real time, you know, more lerg 580 00:34:18,960 --> 00:34:22,640 Speaker 1: coming out of the US, potentially more emphasis on renewables 581 00:34:22,719 --> 00:34:26,279 Speaker 1: or maybe even nuclear in Europe. How do you position 582 00:34:26,560 --> 00:34:29,920 Speaker 1: for that? Well, I think you have to look like 583 00:34:29,960 --> 00:34:32,960 Speaker 1: either in equities in the stocks that will benefit from 584 00:34:33,000 --> 00:34:35,440 Speaker 1: that from that point, so I think it's quite positive 585 00:34:35,600 --> 00:34:38,960 Speaker 1: for you know, all the natural gas producers that can 586 00:34:39,120 --> 00:34:44,440 Speaker 1: export that have you know, also some export capacity. Um, 587 00:34:44,480 --> 00:34:46,200 Speaker 1: I think that's the one that will benefit the most. 588 00:34:46,440 --> 00:34:50,000 Speaker 1: And then uranium, like uranium, just being long uranium is 589 00:34:50,000 --> 00:34:53,439 Speaker 1: probably a good trade. Being long the company that build 590 00:34:53,480 --> 00:34:56,719 Speaker 1: nuclear reactors will be a good one. And I think 591 00:34:56,760 --> 00:35:01,080 Speaker 1: still solar solar and wind um will will benefit from 592 00:35:01,080 --> 00:35:05,279 Speaker 1: me too. I think it's a yeah, it's nuclear and 593 00:35:05,360 --> 00:35:09,800 Speaker 1: wind and naturally gas in the US. Do you see 594 00:35:09,840 --> 00:35:16,320 Speaker 1: any short term or medium term tensions between essentially energy 595 00:35:16,360 --> 00:35:18,880 Speaker 1: security and climate goals? And of course you know we 596 00:35:18,920 --> 00:35:22,600 Speaker 1: know that coal production is up, as you mentioned in 597 00:35:22,640 --> 00:35:25,919 Speaker 1: Europe factories switching to oil, which I believe is more 598 00:35:26,640 --> 00:35:30,239 Speaker 1: is worse for climate and CEO two emissions. Can you 599 00:35:30,239 --> 00:35:32,759 Speaker 1: talk a little bit about like our is someone going 600 00:35:32,800 --> 00:35:35,840 Speaker 1: to have to make a sort of like priorities sacrifice. 601 00:35:35,880 --> 00:35:38,920 Speaker 1: You've talked about the industrial or the sort of economic sacrifice. 602 00:35:38,960 --> 00:35:41,399 Speaker 1: But at some point to make this work, will there 603 00:35:41,400 --> 00:35:43,879 Speaker 1: have to be a more explicit like acceptance like oh, 604 00:35:43,920 --> 00:35:47,000 Speaker 1: maybe we push our net zero goals out a few years, 605 00:35:47,120 --> 00:35:50,560 Speaker 1: or some sort of like rethinking of like the emphasis 606 00:35:50,719 --> 00:35:57,480 Speaker 1: on decarbonization. I mean, somehow if we recabinized earlier, we 607 00:35:57,480 --> 00:35:59,879 Speaker 1: wouldn't be in that tissue, right we'll have we would 608 00:35:59,880 --> 00:36:02,960 Speaker 1: you less natural gas, and Russia couldn't, you know, do 609 00:36:03,040 --> 00:36:06,960 Speaker 1: what they're doing. So I think the issue is not decambanization, 610 00:36:07,120 --> 00:36:10,040 Speaker 1: is actually probably that we haven't done it fast enough yet, 611 00:36:10,520 --> 00:36:14,720 Speaker 1: and this energy security issue will only I think should 612 00:36:14,760 --> 00:36:18,560 Speaker 1: accelerate the transition, because when you deal with nuclear wind 613 00:36:18,640 --> 00:36:21,200 Speaker 1: or power, you're you know, you're not giving that money 614 00:36:21,239 --> 00:36:24,720 Speaker 1: to autocratic regimes and and so I think if anything, 615 00:36:24,760 --> 00:36:28,160 Speaker 1: that will accelerate the energy transition as it should. But 616 00:36:28,239 --> 00:36:30,160 Speaker 1: in the short term, to keep the lights on, to 617 00:36:30,239 --> 00:36:32,520 Speaker 1: make sure we don't have you know, social unrest, we 618 00:36:32,560 --> 00:36:34,759 Speaker 1: have to accept that more code is being used and 619 00:36:34,800 --> 00:36:37,160 Speaker 1: more all is being used. But you know, in the 620 00:36:37,239 --> 00:36:39,640 Speaker 1: very short term, for like a couple of years, maybe 621 00:36:39,719 --> 00:36:42,440 Speaker 1: three years, um. But what they need to do is 622 00:36:42,440 --> 00:36:47,200 Speaker 1: well focused on bringing more more generation capacity right from 623 00:36:47,320 --> 00:36:51,160 Speaker 1: you know, nuclear from from wein from win and solar 624 00:36:52,080 --> 00:36:55,440 Speaker 1: as much as possible, as fast as possible, because we 625 00:36:55,640 --> 00:36:57,440 Speaker 1: cannot say, okay, well, you know what, we're going to 626 00:36:57,520 --> 00:37:00,680 Speaker 1: stop having oil and cool and with nothing to replace it, 627 00:37:00,760 --> 00:37:04,839 Speaker 1: because then then we'll really fuze to death and and 628 00:37:04,840 --> 00:37:08,080 Speaker 1: and have social unrests. So you need society to keep 629 00:37:08,080 --> 00:37:11,120 Speaker 1: on functioning. For that, we still need enough you know, 630 00:37:11,320 --> 00:37:14,839 Speaker 1: enough energy. Um. I think we can deal with ten 631 00:37:14,920 --> 00:37:17,640 Speaker 1: or fifteen percent lessers enough fat in the system somewhere 632 00:37:17,760 --> 00:37:20,760 Speaker 1: in consumption, but you can't really deal with fifty percent 633 00:37:20,840 --> 00:37:26,279 Speaker 1: less right without having massive social arrests and huge, like 634 00:37:26,280 --> 00:37:29,120 Speaker 1: a really huge financial crisis. So I think what we 635 00:37:29,160 --> 00:37:33,760 Speaker 1: have to focus on is bringing more low carbon generation 636 00:37:33,880 --> 00:37:38,640 Speaker 1: capacity as quickly as possible. And then naturally you will 637 00:37:38,680 --> 00:37:40,880 Speaker 1: not use the coal and oil if you don't need it, 638 00:37:41,000 --> 00:37:44,600 Speaker 1: right that you then you have the choice. But when 639 00:37:44,719 --> 00:37:46,480 Speaker 1: you can't say okay, you know, actually you don't use 640 00:37:46,520 --> 00:37:49,640 Speaker 1: oil and don't use call if that is the only 641 00:37:49,680 --> 00:37:54,360 Speaker 1: option you have. So just on this topic up in Europe, 642 00:37:54,400 --> 00:37:56,560 Speaker 1: one of the other big trends that we've seen is 643 00:37:56,880 --> 00:38:00,440 Speaker 1: nationalization of energy companies UM. You know, so things going 644 00:38:00,440 --> 00:38:04,480 Speaker 1: on in France and in Germany. Just today when we're recording, 645 00:38:04,480 --> 00:38:07,840 Speaker 1: there was this announcement that Germany is nationalizing its big 646 00:38:07,960 --> 00:38:11,800 Speaker 1: utilities company, Uniper UM. I think they're putting in something 647 00:38:11,840 --> 00:38:15,160 Speaker 1: like eight billion euros worth of equity into the company. 648 00:38:15,760 --> 00:38:19,120 Speaker 1: How significant is that for Europe's energy market? How does 649 00:38:19,120 --> 00:38:22,760 Speaker 1: it change it? And then secondly, if governments are suddenly 650 00:38:22,800 --> 00:38:28,279 Speaker 1: shareholders in energy companies or utilities, does that accelerate the 651 00:38:28,280 --> 00:38:31,319 Speaker 1: shift to renewables or does it slow it down? I 652 00:38:31,360 --> 00:38:33,560 Speaker 1: think it will accelerate it. I mean, because it's an 653 00:38:33,680 --> 00:38:37,920 Speaker 1: energy security issue, you need to uh and that's why, 654 00:38:38,000 --> 00:38:40,840 Speaker 1: like early I became less polish on carbon, so on 655 00:38:40,960 --> 00:38:44,840 Speaker 1: cabin price e the EU s carbon crediting you because 656 00:38:44,840 --> 00:38:48,919 Speaker 1: I think now the month dates will come from the 657 00:38:48,960 --> 00:38:51,040 Speaker 1: top down from government saying okay, you know what we 658 00:38:51,080 --> 00:38:56,440 Speaker 1: need explicit extra and and and wind and and we're 659 00:38:56,480 --> 00:38:59,399 Speaker 1: going to go for nuclear UM at some point we're 660 00:38:59,400 --> 00:39:03,000 Speaker 1: gonna have those lines and governments will have to to 661 00:39:03,040 --> 00:39:06,120 Speaker 1: look at the long term and and and and and 662 00:39:06,520 --> 00:39:12,080 Speaker 1: go quicker because we cannot stay um dependent on ATO 663 00:39:12,160 --> 00:39:14,360 Speaker 1: CATECH regimes for too long. We know you know what 664 00:39:14,480 --> 00:39:18,040 Speaker 1: that money can be used for. So you talked about 665 00:39:18,080 --> 00:39:21,120 Speaker 1: the fact that to get through this winter right now, 666 00:39:21,200 --> 00:39:23,640 Speaker 1: that Europe can do it in part simply by outbidding 667 00:39:23,640 --> 00:39:25,920 Speaker 1: the rest of the world, which is good for Europe, 668 00:39:25,960 --> 00:39:28,799 Speaker 1: I guess because it's Europe is incredibly rich and you 669 00:39:28,840 --> 00:39:30,759 Speaker 1: can afford to outbid the rest of the world. But 670 00:39:30,840 --> 00:39:33,799 Speaker 1: it's basically a sort of zero something. Can you talk 671 00:39:33,840 --> 00:39:37,680 Speaker 1: a little bit about where you see the most stress emerging, 672 00:39:37,960 --> 00:39:41,760 Speaker 1: essentially from the countries that are on the losing side 673 00:39:41,760 --> 00:39:47,280 Speaker 1: of these bidding wars. Well, it's uh just it's general 674 00:39:47,360 --> 00:39:49,759 Speaker 1: to generally the countries that have the most issues to 675 00:39:49,800 --> 00:39:53,520 Speaker 1: start with it, right, So small like emerging markets that 676 00:39:54,640 --> 00:39:59,080 Speaker 1: and in imports of natural gas. So you sweet earlier 677 00:39:59,160 --> 00:40:01,360 Speaker 1: this year with or the collapse of you know in 678 00:40:01,400 --> 00:40:06,719 Speaker 1: Sri Lanka. Pakistan you know is obviously having lots of 679 00:40:06,719 --> 00:40:10,400 Speaker 1: issues to due to the floods and that are linked 680 00:40:10,400 --> 00:40:13,840 Speaker 1: to the climate change. But also for all those countries, 681 00:40:13,960 --> 00:40:16,520 Speaker 1: natural gas imports become a lot more expensive so that 682 00:40:16,800 --> 00:40:22,520 Speaker 1: they become more energy poor. Um And generally that's that's 683 00:40:22,600 --> 00:40:24,279 Speaker 1: that's what will happen. But I don't think it's only 684 00:40:24,320 --> 00:40:26,680 Speaker 1: a biding wor basically you have like it's a biding 685 00:40:26,680 --> 00:40:30,960 Speaker 1: war in the short term the first like here also 686 00:40:31,000 --> 00:40:33,279 Speaker 1: and then you have enough switching hopefully in the rest 687 00:40:33,320 --> 00:40:38,200 Speaker 1: of the world from from gas to oil or other things. 688 00:40:38,719 --> 00:40:42,240 Speaker 1: Um yeah, generally gas to all is the cheapest actually 689 00:40:42,239 --> 00:40:45,359 Speaker 1: because now oil is even cheaper than coal, and then 690 00:40:45,360 --> 00:40:47,480 Speaker 1: that will support all demands to some extent that will 691 00:40:47,520 --> 00:40:52,760 Speaker 1: be marginal the bulish oil, but it will displaces natural 692 00:40:52,880 --> 00:40:57,120 Speaker 1: gas um demand, so bakly you'll have a bit less 693 00:40:57,120 --> 00:41:01,840 Speaker 1: demand for natural gas. That will no open more energy 694 00:41:01,920 --> 00:41:05,000 Speaker 1: cal goals to export to the country that needed. So 695 00:41:05,040 --> 00:41:09,520 Speaker 1: eventually you get a price. Do I do suspect the 696 00:41:09,600 --> 00:41:12,239 Speaker 1: natural gas prices to stay high generally for the next 697 00:41:12,239 --> 00:41:16,080 Speaker 1: two years so and then go down and stay elevated. 698 00:41:16,200 --> 00:41:19,120 Speaker 1: But I think the first step down will be if 699 00:41:19,160 --> 00:41:22,680 Speaker 1: we can manage this winter properly and and realize that 700 00:41:22,760 --> 00:41:24,640 Speaker 1: actually in what we did it with no Russian gas 701 00:41:24,640 --> 00:41:29,359 Speaker 1: already psychologically the price there will be a large price 702 00:41:29,360 --> 00:41:33,760 Speaker 1: impact to natural gas. And and then all the switching 703 00:41:33,840 --> 00:41:35,919 Speaker 1: and the extraal energy will we will get we care 704 00:41:36,000 --> 00:41:39,440 Speaker 1: and putting pressure on natural gas. I think it's really 705 00:41:39,760 --> 00:41:45,400 Speaker 1: paramount that governments, you know, use those public awareness campaigns 706 00:41:45,400 --> 00:41:49,800 Speaker 1: too to bring that demand that we don't absolutely need down, 707 00:41:49,880 --> 00:41:53,560 Speaker 1: because not only we can avoid shortages, but also bring 708 00:41:53,600 --> 00:41:58,359 Speaker 1: it will bring prices down significantly and and that will 709 00:41:58,400 --> 00:42:01,400 Speaker 1: be good for the global economy. And know, so you 710 00:42:01,440 --> 00:42:04,640 Speaker 1: mentioned that you're you're still bullishly positioned when it comes 711 00:42:04,640 --> 00:42:07,640 Speaker 1: to energy, I mean broadly, and maybe less bullish on 712 00:42:07,680 --> 00:42:10,120 Speaker 1: carbon credits than you were at the beginning of the year. 713 00:42:10,520 --> 00:42:13,600 Speaker 1: But what's the big wild card when it comes to 714 00:42:13,600 --> 00:42:16,600 Speaker 1: the energy market at the moment, Like, what's the big 715 00:42:16,640 --> 00:42:19,400 Speaker 1: thing that you are potentially on the lookout for that 716 00:42:19,520 --> 00:42:23,760 Speaker 1: could unsettle some of those positions. Is it simply Europe 717 00:42:24,040 --> 00:42:28,040 Speaker 1: losing its appetite to you know, stomach some pain when 718 00:42:28,040 --> 00:42:33,239 Speaker 1: it comes to reducing energy demand. I'm not too worried 719 00:42:33,239 --> 00:42:37,399 Speaker 1: about that. I think Europe will, you know, like more 720 00:42:37,440 --> 00:42:42,920 Speaker 1: aggressive Russia becomes the easierities to accept some pain on 721 00:42:42,960 --> 00:42:46,520 Speaker 1: our side. And because we you know, all psychologically we 722 00:42:46,600 --> 00:42:48,560 Speaker 1: understand it's a war power time and we need to 723 00:42:49,200 --> 00:42:51,000 Speaker 1: take a heat as well. So I'm not too worried 724 00:42:51,000 --> 00:42:54,560 Speaker 1: about that. So I would say there's two conflicting forces. 725 00:42:55,000 --> 00:42:57,760 Speaker 1: One is how much or we will lose from Russia, 726 00:42:58,680 --> 00:43:03,839 Speaker 1: because we will lose some once the price cap goes through. 727 00:43:04,200 --> 00:43:06,120 Speaker 1: We'll have to see how putting we act to it, 728 00:43:06,280 --> 00:43:08,200 Speaker 1: to it if he cuts production and if he has 729 00:43:08,239 --> 00:43:10,839 Speaker 1: how much, So we have to understand how much all 730 00:43:11,000 --> 00:43:13,799 Speaker 1: we will lose from Russia. And the second is you know, 731 00:43:13,920 --> 00:43:16,319 Speaker 1: the global economy in general, right if you look at 732 00:43:16,680 --> 00:43:20,080 Speaker 1: the impact of higher interest rates around the world for 733 00:43:20,239 --> 00:43:24,000 Speaker 1: the consumer and businesses and countries. Um, we don't know 734 00:43:24,080 --> 00:43:27,200 Speaker 1: yet what impact it will have for interest rates to 735 00:43:27,280 --> 00:43:30,440 Speaker 1: have gone up so much over the left few months. 736 00:43:30,840 --> 00:43:34,000 Speaker 1: For now you know these things, it's it's like paying 737 00:43:34,040 --> 00:43:37,040 Speaker 1: that add up and eventually we have some kind of 738 00:43:37,120 --> 00:43:39,640 Speaker 1: some kind of issue. Um, So I think the mix 739 00:43:39,719 --> 00:43:43,680 Speaker 1: of much higher interest rates and still high energy prices 740 00:43:43,920 --> 00:43:48,879 Speaker 1: and the worries about the war and and all that, 741 00:43:48,920 --> 00:43:52,560 Speaker 1: you know, makes people want to spend less. Um that 742 00:43:52,840 --> 00:43:55,640 Speaker 1: could also have a negative impact on on on on 743 00:43:55,719 --> 00:43:58,279 Speaker 1: demand and eventually on prices. So I think these are 744 00:43:58,760 --> 00:44:00,640 Speaker 1: you know, it's not it's not that did to forecast 745 00:44:00,680 --> 00:44:02,880 Speaker 1: because on one hand, you're gonna lose some supply, on 746 00:44:02,920 --> 00:44:07,719 Speaker 1: the other hand, we're gonna lose some demand. UM. So yeah, 747 00:44:07,760 --> 00:44:11,240 Speaker 1: it's it's not a musical overall with time you should 748 00:44:11,239 --> 00:44:14,160 Speaker 1: go up, but it should go up, but in you know, 749 00:44:14,360 --> 00:44:16,400 Speaker 1: clearly the market of being telling us that it's not 750 00:44:16,520 --> 00:44:20,520 Speaker 1: as as obvious. All right. I have two short questions. 751 00:44:20,560 --> 00:44:24,160 Speaker 1: So the first one is on Russian oil exports, which 752 00:44:24,200 --> 00:44:27,560 Speaker 1: you mentioned have not dropped off like they expected. Setting 753 00:44:27,600 --> 00:44:31,560 Speaker 1: aside sanctions, one question that's come up is essentially whether 754 00:44:31,640 --> 00:44:36,400 Speaker 1: Russia can import equipment to maintain its oil sector or 755 00:44:36,400 --> 00:44:40,400 Speaker 1: whether Russia loses um uh sort of expertise and know 756 00:44:40,520 --> 00:44:44,040 Speaker 1: how from the departure of foreign energy companies. Is that 757 00:44:44,160 --> 00:44:47,000 Speaker 1: still a risk out there for Russian supply. Setting aside 758 00:44:47,000 --> 00:44:49,759 Speaker 1: the politics and price caps, that the quality of the 759 00:44:49,840 --> 00:44:54,160 Speaker 1: Russian oil infrastructure degrades. I think it tweel and on 760 00:44:54,239 --> 00:44:58,239 Speaker 1: top of that, I mean with mobilization that put in 761 00:44:58,239 --> 00:45:01,440 Speaker 1: the once today, all that will have an impact I 762 00:45:01,480 --> 00:45:06,000 Speaker 1: think on on on oil supply going forward. So so 763 00:45:06,080 --> 00:45:09,000 Speaker 1: it will go down due to the sanctions or due 764 00:45:09,000 --> 00:45:13,560 Speaker 1: to to put in one thing to to cut to 765 00:45:13,560 --> 00:45:15,640 Speaker 1: to show that he doesn't think we with the price caps. 766 00:45:15,680 --> 00:45:19,760 Speaker 1: But also eventually with time production will go down anyway 767 00:45:19,960 --> 00:45:23,000 Speaker 1: due to the lack of investment that will go into 768 00:45:23,080 --> 00:45:26,560 Speaker 1: the system. And then my final question is how did 769 00:45:26,560 --> 00:45:30,280 Speaker 1: you get that statu about what average temperatures in homes 770 00:45:30,280 --> 00:45:32,520 Speaker 1: were in Europe in the nineties. How do you track that? 771 00:45:32,600 --> 00:45:35,960 Speaker 1: And why have European homes gotten warmer over the last 772 00:45:36,040 --> 00:45:41,960 Speaker 1: twenty years. I think it's generally energy has been you know, 773 00:45:43,160 --> 00:45:46,040 Speaker 1: relatively cheap, I will say for some time. I mean 774 00:45:46,080 --> 00:45:47,440 Speaker 1: we have a period of time for a few years 775 00:45:47,440 --> 00:45:50,600 Speaker 1: where it gets a bit expensive, but over over you know, 776 00:45:50,800 --> 00:45:54,879 Speaker 1: twenty year period, even like almost thirty year period. If 777 00:45:54,880 --> 00:46:01,359 Speaker 1: you look at consumption at the percentage of income has 778 00:46:01,400 --> 00:46:04,160 Speaker 1: been going down in general, so energy has been relatively 779 00:46:04,200 --> 00:46:08,360 Speaker 1: abundant and and and cheap, So you no, we we 780 00:46:08,400 --> 00:46:12,280 Speaker 1: could live a more comfortable life basically, I think it's 781 00:46:12,360 --> 00:46:14,200 Speaker 1: due to that. And in terms of where where I 782 00:46:14,239 --> 00:46:16,640 Speaker 1: got the start, some of them is just the idea. 783 00:46:17,200 --> 00:46:24,000 Speaker 1: The idea showed that one degree, like moving the the 784 00:46:24,120 --> 00:46:26,319 Speaker 1: terms sat down by one degree, has an impact of 785 00:46:26,920 --> 00:46:30,759 Speaker 1: ten b c m for the for Europe, so that's 786 00:46:31,480 --> 00:46:36,200 Speaker 1: about five percent or so, and so backy, you know, 787 00:46:36,320 --> 00:46:39,040 Speaker 1: you just think it's kind of linear, says we degrees 788 00:46:39,120 --> 00:46:45,120 Speaker 1: will be will be one and and then about knowing 789 00:46:45,160 --> 00:46:48,520 Speaker 1: what the temperatures were in the past. It was actually 790 00:46:48,880 --> 00:46:53,640 Speaker 1: some medical medical journal. Actually it was the Indoor Beat 791 00:46:53,760 --> 00:46:59,120 Speaker 1: on environ that's the magazine, and that's the study that 792 00:46:59,239 --> 00:47:02,800 Speaker 1: was made into this than fourteen to look at the 793 00:47:02,840 --> 00:47:09,279 Speaker 1: impact of winders on. I love that you're looking at 794 00:47:09,320 --> 00:47:13,360 Speaker 1: those sources for these stats. All right, so slightly cooler 795 00:47:13,400 --> 00:47:16,520 Speaker 1: winter or colder winter in Europe, but hopefully not a 796 00:47:16,840 --> 00:47:20,960 Speaker 1: frozen one. Pierre on Duran from and Duran Capital, Thank 797 00:47:21,000 --> 00:47:23,440 Speaker 1: you so much, appreciate you coming on. Thanks very much, 798 00:47:26,680 --> 00:47:40,120 Speaker 1: m Well, Joe. Always good having Pierre on the show, 799 00:47:41,120 --> 00:47:43,000 Speaker 1: really good just to get an update of how he's 800 00:47:43,000 --> 00:47:45,479 Speaker 1: thinking about the market at the moment. I do think 801 00:47:45,520 --> 00:47:50,080 Speaker 1: this idea that the price disconnect from fundamentals or you know, 802 00:47:50,120 --> 00:47:53,000 Speaker 1: maybe not completely disconnected from fundamentals, but the idea that 803 00:47:53,120 --> 00:47:56,520 Speaker 1: it's so volatile right now, the moves are kind of unexpected. 804 00:47:56,560 --> 00:47:59,520 Speaker 1: There's lots of liquidity in the market, and that makes 805 00:47:59,560 --> 00:48:03,000 Speaker 1: it hard or for everyone to deal with what's happening 806 00:48:03,080 --> 00:48:06,080 Speaker 1: right And of course that was a point that Alex 807 00:48:06,160 --> 00:48:09,640 Speaker 1: Turnbull made in our conversation a few months ago with 808 00:48:09,719 --> 00:48:12,319 Speaker 1: Javier Blast Talking to Pure is great. I like that 809 00:48:12,440 --> 00:48:16,040 Speaker 1: he provides a sort of non hysterical take, which are 810 00:48:16,080 --> 00:48:17,799 Speaker 1: kind of rare these days because a lot of that 811 00:48:18,160 --> 00:48:20,359 Speaker 1: I like, you know, it's like, how does he have 812 00:48:20,400 --> 00:48:23,360 Speaker 1: that stat about temperature in the nineties. Well, he's a 813 00:48:23,680 --> 00:48:26,759 Speaker 1: there's a different reason why he's a massively successful hedge 814 00:48:26,800 --> 00:48:29,440 Speaker 1: fund manager and most people aren't. It's like putting in 815 00:48:29,680 --> 00:48:31,920 Speaker 1: uh the work like that and having like you know, 816 00:48:31,960 --> 00:48:34,680 Speaker 1: putting in the effort to learn about these things, lots 817 00:48:34,719 --> 00:48:37,480 Speaker 1: of really interesting insights. And to your point about I'm 818 00:48:37,480 --> 00:48:39,760 Speaker 1: glad you asked them, like what is it like been trading, 819 00:48:39,800 --> 00:48:41,520 Speaker 1: because you know, it's one thing to look at a 820 00:48:41,600 --> 00:48:44,000 Speaker 1: screen and price going up, but actually like how is 821 00:48:44,080 --> 00:48:46,319 Speaker 1: the how is that price on the screen being arrived at? 822 00:48:46,360 --> 00:48:48,839 Speaker 1: Is a really interesting question right or just got it 823 00:48:48,880 --> 00:48:51,960 Speaker 1: directionally right? But then how do you actually execute on 824 00:48:52,000 --> 00:48:54,279 Speaker 1: that idea? So energy markets are tight, but how do 825 00:48:54,280 --> 00:48:57,360 Speaker 1: you actually put that into practice? And are the prices 826 00:48:57,400 --> 00:49:00,399 Speaker 1: that are flashing up on your screen actually reflecting what 827 00:49:00,480 --> 00:49:02,480 Speaker 1: you think is going on in the market. Shall we 828 00:49:02,560 --> 00:49:05,480 Speaker 1: leave it there? Let's leave it there. Okay. This has 829 00:49:05,520 --> 00:49:08,760 Speaker 1: been another episode of the All Thoughts podcast. I'm Tracy Alloway. 830 00:49:08,840 --> 00:49:11,440 Speaker 1: You can follow me on Twitter at Tracy Alloway and 831 00:49:11,480 --> 00:49:13,759 Speaker 1: I'm Joe wi isn't though. You could follow me on 832 00:49:13,840 --> 00:49:17,560 Speaker 1: Twitter at the Stalwart, follow our guest Pierre on durand 833 00:49:17,600 --> 00:49:21,799 Speaker 1: at on Durand Pierre. Follow our producer Carmen Rodriguez at 834 00:49:21,840 --> 00:49:25,040 Speaker 1: Carmen Armand, and check out all of our podcasts Bloomberg 835 00:49:25,200 --> 00:49:28,040 Speaker 1: under the handle at podcasts. Thanks for listening.