Picture used for illustrative purposes only.

Adnoc, Petronas and Storegga announced on Tuesday the signing of a Joint Study and Development Agreement (JSDA) to evaluate the carbon dioxide (CO2) emissions storage capabilities of saline aquifers and the construction of carbon capture and storage (CCS) facilities in the Penyu basin, offshore Peninsular Malaysia.

The agreement is targeting at least 5 million tonnes per annum (mtpa) of CO2 capture and storage capacity by 2030, and its scope includes a CO2 shipping and logistics study, geophysical and geomechanical modelling, reservoir simulation and containment research while exploring the application of advanced technologies, including artificial intelligence (AI), to enhance storage capacity.

Nora’in Md Salleh, Petronas CCS Solutions Sdn. Bhd. (PCCSS)’ s Chief Executive Officer, said, “This agreement with Adnoc and Storegga will potentially allow us to build our capability to develop and de-risk saline aquifers as carbon dioxide storage sites by leveraging on our partners’ expertise and experience in other regions.

“This strategic partnership aligns with Petronas’ overarching goal of establishing Malaysia as a regional CCS hub to serve Asia Pacific, where it may build up the storage capacity through saline aquifers. This also demonstrates our earnestness in establishing the right pace to deliver CCS hubs here while also contributing to the national climate target.”

Petronas is a member of Malaysia’s National Energy Transition Roadmap (NETR) Committee, which has identified CCS as one of six energy transition levers to enable the country to be sustainable, low-carbon and resilient. The Malaysian Government is set to table a standalone CCUS bill by the end of 2024.

Nora’in Md Salleh added, “Malaysia is interested in intensifying bilateral economic partnerships with the UAE in the fields of economy, tourism, entrepreneurship, SMEs, fintech, innovation, transportation, renewable energy, logistics, agriculture, food security, environment and infrastructure within the Malaysia-UAE Joint Committee for Cooperation (JCC) framework.

“With the signing of the JSDA, Petronas supports the JCC and enhances the established relationship between Petronas and Adnoc, reciprocating Petronas’ presence in Adnoc’s unconventional upstream business in Abu Dhabi.”

Having Storegga as a partner to collaborate in Malaysia is imperative, as Storegga is one of the few companies that boldly took the first steps to progress CCS globally when it was in its infancy stage. Today, Storegga is widely recognised as one of the leading players in this space.

Hanan Balalaa, Adnoc Senior Vice President for New Energies, said, “Carbon capture is an important tool to responsibly reduce carbon emissions and Adnoc will continue to develop this technology as we work towards our Net Zero by 2045 goal. We are committed to working with trusted global partners like PETRONAS and Storegga to develop and utilise global carbon management hubs, enabling our customers to reduce their emissions and supporting their decarbonisation goals.”

Malaysia’s geological abundance of deep saline aquifer reservoirs should allow for the development of large-scale, permanent CO2 storage solutions, and the agreement will significantly accelerate regional CCS deployment while strengthening collaboration between the strategic partners. The success of this initiative will lay the foundations for a regional CCS hub serving both domestic and international emitters.

ADNOC is targeting a carbon capture capacity of 10 mtpa by 2030, equivalent to those released by 2 million internal combustion vehicles.

Tim Stedman, CEO of Storegga, said: “This pioneering partnership is an opportunity to develop a world-class CCS hub and bring about large-scale industrial decarbonisation. Storegga’s experience from other leading CCS regions, plus the expertise of our partners, represent a combined intent to act now to tackle climate change.”

The JSDA’s activities are provisionally scheduled to begin later this year.

Vietnam’s sea freight rates cool: The Vietnam Maritime Administration (VMA) said that sea freight rates in the country have decreased recently, dropping by about 4 percent compared to the previous week.

The import and export of cargo through seaports grew dramatically, reaching the highest level in the past five years, Vietnam News Agency (VNA) reported on Tuesday.

In the first seven months of 2024, the volume of goods passing through Vietnamese seaports is estimated at 501.117 million tonnes, up 16 percent over the same period in 2023. Container cargo throughput is estimated at 16.902 million TEUs (twenty-foot equivalent), a 21 percent rise over the same period.

“This is the highest growth rate in the past five years and is three times higher than the average growth rate in the past five years of 5.5 percent,” a spokesman for the VMA said.

“The Cai Mep - Thi Vai deep water port area saw a 41 percent increase in container cargo, reaching 2.8 million TEUs compared to 2023. The Lach Huyen port area recorded 875,000 TEUs, an 87 percent increase over 2023.”

Decreasing freight rates

By the end of July, sea freight rates had decreased across all routes, with the most significant drop being on the Asia-to-West Coast of the US route, where rates fell by 20 to 30 percent. Other routes saw reductions of around 15 to 25 percent.

The reason for the decrease in freight rates is that shipping lines have increased their capacity and the pressure from the peak season has lessened, according to Vietnam National Television (VTV).

The VMA forecasts that this downward trend in freight rates will continue.

Previously, sea freight rates on major routes skyrocketed. At one point, the cost of shipping a container to Europe reached US$4,000-5,000, more than double the rates at the end of last year. Similarly, shipping rates to the US rose to US$6,000-7,000 for a container.

Transport costs per container to closer destinations including China, Japan, the Republic of Korea and Southeast Asia increased by 1,000-2,000 USD.

Global trends

According to the VMA sea freight rates are driven by market supply and demand dynamics. Given Vietnam’s highly open economy, the country is a crucial link in the global supply chain and thus, shipping rates for goods through ports in Vietnam are subject to global trends.

Most Vietnamese import-export businesses do not directly pay shipping costs. However, the high freight rates have forced them to adjust their product prices, affecting their competitiveness in the market.

The VMA has noted that the rate of direct bookings for import-export goods made by Vietnamese businesses is low. Most transactions involve purchasing under CIF (Cost, Insurance, and Freight) terms and selling under FOB (Free on Board) terms, accounting for over 80 percent. Foreign partners typically handle the logistics contracts and pay the shipping costs.

The VMA added: “Vietnamese businesses that sign long-term shipping contracts with carriers are typically large companies with stable import-export volumes. Their long-term contracts are unaffected by market price fluctuations and freight rates remain stable throughout the contract duration.”

WAM