It lacks the export capacity for LNG: Russia is among the world’s largest producers of natural gas, but has only four export terminals, brought online in the last four years. It’s well behind other major producers, including the U.S., Qatar, and Australia.

Any Russian LNG projects will also be set back significantly by Western sanctions, which will make it difficult, if not impossible, to import cooling systems and other technology necessary to turn the piped gas into liquid fuel.

It can’t export to other buyers, like China, at the volume needed: Russia exports 16 billion cubic meters of piped gas to China annually, and discussions are underway for two additional pipelines. But even if these projects are brought online, exports will never be sufficient to offset the volumes to Europe, which already has dozens of pipes and multiple clients. As time goes on, Beijing’s ability to control prices will also increase, since Gazprom will be dealing with a single customer rather than multiple European buyers.

Turkey is not a reliable customer: Turkish President Recep Tayyip Erdoğan announced today that his country has reached agreement with Russian President Vladimir Putin to form an international “gas hub” in Turkey, which will allow Moscow to increase its own gas imports to Ankara.

But Erdogan is facing a difficult reelection bid next year, and none of his replacements are expected to be quite so cozy with Putin.

There is a likelihood that a new administration could shift to using the hub to import non-Russian supplies, including East Mediterranean gas, Kurdish gas, and eventually, even Iranian supplies.

Even if Erdogan does win reelection, he is facing his last five years in office—meaning that for Russia, this is a major investment that could yield only short-term results.

The bottom line: “Gas, especially, is the commodity that very much depends on the ability to find clients,” Vatansever told Breanne. Unlike oil, which is more easily transported to the highest bidder, gas “is very different.” And it’s currently the second-most important sector in Russia’s economy. Russia is ultimately losing “its number one source of profits and revenues, which is the European market.”

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Jeremy Beaman (@jeremywbeaman) and Breanne Deppisch (@breanne_dep). Email [email protected] or [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.

BIDEN TO ANNOUNCE 15 MILLION BARRELS SALE FROM U.S. EMERGENCY STOCKPILE: President Joe Biden will announce this afternoon the release of another 15 million barrels of oil from the Strategic Petroleum Reserve in December, as the administration seeks to stabilize markets and alleviate gas prices for consumers.

The sales will effectively complete the 180 million-barrel sale from the nation’s emergency stockpile first announced by the Biden administration in March—though it will now have another month to auction them off.

Since the drawdown first began in May, about 165 million barrels have been delivered or put under contract.

Biden will also use today’s remarks to outline the administration’s plans for replenishing the emergency stockpile, which it plans to do when prices are at or below about $67 to $72 per barrel.

Biden will also reiterate calls for oil companies to reduce their profit margins and pass savings along to consumers, a call Biden has frequently made in the past. Read more here.

NEW JERSEY TAKES ON OIL MAJORS WITH CLIMATE LIABILITY SUIT: New Jersey filed suit against multiple major oil and gas companies yesterday, accusing some of the world’s wealthiest energy companies of deceiving the public about fossil fuels and their contribution to climate change.

The state’s complaint, which seeks a range of damages against five majors and the American Petroleum Institute, alleged that industry had engaged in a “coordinated campaign of disinformation and deception” about their products and climate change. ExxonMobil, Shell, Chevron, BP, ConocoPhillips, and API are the named defendants.

It also claimed that each has engaged in greenwashing for marketing their investments in alternative energy sources that are “substantially and materially less than Fossil Fuel Defendants indicate to consumers.”

The larger story: With the suit, New Jersey joins a host of other Democratic-led jurisdictions, and Democrats in Congress, in an ongoing legal campaign to punish large oil and gas companies for climate change. Rhode Island, Massachusetts, the city of Baltimore, the District of Columbia, and other states and localities have leveled similar charges in court going back years.

Energy companies have disputed the allegations and criticized litigation against them, stressing also the utility of their products for sustaining modern life.

“Legal proceedings like this waste millions of dollars of taxpayer money and do nothing to advance meaningful actions that reduce the risks of climate change,” Casey Norton, an Exxon spokesperson, said in response to the NJ suit.

The venue question: New Jersey filed its complaint yesterday in state court, teeing up the prospect for challenges from the defendants over whether state or federal courts are the proper venue for such cases.

Exxon and other energy companies have challenged other climate liability suits filed in state court, arguing that they belong in federal court because federal law preempts state law. In at least some of the cases, including the suits from Rhode Island and the city of Baltimore, federal courts have remanded the cases back to state court against the energy companies’ requests (although the Supreme Court ruled that a lower federal court erred in part in doing so, in the Baltimore case).

MISSOURI BECOMES LATEST TO PULL FUNDS FROM BLACKROCK: Missouri is divesting some $500 million in pension funds from BlackRock, joining other Republican-led states that are cutting ties with the fund manager over its championing of environmental, social, and governance investment principles, the Washington Examiner’s Zach Halaschak reports.

Missouri State Treasurer Scott Fitzpatrick accused BlackRock of prioritizing a “woke political agenda” over delivering shareholder value, mirroring arguments from Republican state financial officers in Texas, South Carolina, and West Virginia, among others, asserting that BlackRock boycotting investments in fossil fuels in favor of alternative and greener assets.

BlackRock has challenged those accusations, touting its investments in pipeline projects and other fossil energy ventures, to the disappointment of environmentalists and some Democratic financial officers.

Greens and Democrats aren’t happy with BlackRock, either: Michael Berg, political director in the Sierra Club’s Missouri Chapter, criticized the GOP divestment effort against BlackRock as climate change denial but said the firm “continues to be a major financier of fossil fuels, and it isn’t doing nearly enough to address the destructive impacts of its investments.”

Elsewhere, New York City Comptroller Brad Lander, who oversees the tens of billions of city pension dollars which BlackRock manages, recently demanded more transparency and a more concrete decarbonization plan from BlackRock.

BlackRock’s continued investments in fossil fuels “impede global decarbonization efforts,” Lander wrote in a recent letter to CEO Larry Fink. He urged Fink to support “keeping fossil fuels in the ground” to attain climate goals.

FUEL INVENTORIES REMAIN DOWN: Gasoline inventories remained lower than normal and operative refining capacity fell for the week ending Oct. 14, according to EIA’s updated weekly petroleum data.

Refineries last week operated just below 90% of operable capacity for the second consecutive week. Total motor gasoline inventories also decreased by 100,000 barrels from the week before and remain around 7% below the five year average for this time of year.

Diesel inventories increased by the same amount but remained about 20% below the five year average.

The low inventories have been a big part of the rising fuel price story in recent weeks, considering that a shortage of refining capacity, or refinery outages, mixed with low inventories, could leave some regions short of transportation fuel or heating oil this winter.

Inventories have been a special concern of Energy Secretary Jennifer Granholm’s, who’s criticized refiners for large earnings and for exporting large volumes of refined products, and is reportedly weighing limits on refined product exports because of the lower inventories.

OZ ENERGY PLAN ENVISIONS U.S. ‘ENERGY DOMINANCE’: Republican Senate candidate Mehmet Oz wants to “protect vital energy infrastructure from cancel culture” as part of a broader energy plan his campaign released today, which seeks to further distinguish himself from Democratic adversary John Fetterman and Democrats’ climate change agenda.

Oz’s plan favors more oil and gas leasing on federal lands, more pipeline infrastructure, and more stable financing of energy projects.

“We must cast aside Biden’s woke energy agenda which steals our jobs, increases inflation, and makes us dependent on hostile nations,” the plan says.

Throughout the campaign, Oz has sought to tether Biden’s energy agenda and more restrictive green measures like proposed fracking bans to Fetterman.

Fetterman previously supported a moratorium on fracking in Pennsylvania and endorses a transition to green energy — but he says he will support the sizable natural gas industry in Pennsylvania.

WHITE HOUSE ANNOUNCES NEW BATTERY FUNDING AWARDS: The White House announced the award of nearly $3 billion in federal cost-share grants to fund new electric vehicle battery and component manufacturing.

The grants, provided by the bipartisan infrastructure law, will go to 20 manufacturing and processing companies for projects across 12 states. Recipients include manufacturers of anodes, cathodes, and other battery inputs, like synthetic graphite.

BIDEN IS ‘PLAYING POLITICS’ WITH ENERGY CRISIS, SAYS FORMER CONGRESSMAN: Former Republican Rep. Greg Walden of Oregon joined former FERC chairman Neil Chatterjee and Breanne on this week’s “Plugged In” podcast to discuss how the energy landscape has changed since Russia’s invasion of Ukraine, as well as recent moves Biden has taken to help alleviate rising energy costs, including the sale of 180 million barrels of oil from the emergency stockpile.

The stockpile was created for an emergency, not just to “bring the price of gas down a few cents a gallon,” said Walden, who spent years as the top Republican on the Energy and Commerce Committee before retiring last year.

Walden also urged the Biden administration to take advantage of opportunities to enhance “smart” competition and to ensure the U.S. has reliable and affordable energy at home to avoid a similar fate as Europe. Listen to the full episode here.

The Rundown

Financial Times Europe at risk of ‘much worse’ energy crisis next year, warns Qatar

Energy Intel UAE energy minister defends OPEC+ cut

Calendar

THURSDAY | OCTOBER 20

10:00 a.m. The Federal Energy Regulatory Commission holds its monthly meeting.

11:00 a.m. The National Oceanic and Atmospheric Administration’s Climate Prediction Center will hold a news briefing on the 2022-2023 U.S. winter outlook, and discuss various climate factors, including drought, influencing the winter forecast.