The Wild World of Today’s Global Energy

0:00Tomi Dania: The views expressed in this podcast episode are solely those of the individual speaker and do not represent the official position of KBR Inc., its subsidiaries, or its affiliates. Hello, I'm John, and this is In Orbit.

0:35Tomi Dania: Welcome to the podcast one and all. Whether you're a first-time or long-time listener, we're grateful you're checking in and staying in our orbit. As you're probably aware, the world is, to put it very mildly, kind of topsy-turvy at the moment. We have wars, or the threats of wars. We have geopolitical upheaval. We have important elections happening around the world with massive implications on those nations' paths forward. We're all probably also aware of the chaos that is the current global energy market. I don't know about you, but it has me scratching my head and asking, what is going on? Fortunately, we've got an expert weighing in on this episode and helping clear the air about how various factors are affecting the global energy market, what the challenges are, and where the opportunity lies.

1:25Tomi Dania: And that expert is Tomi Dania, for the first time ever, a repeat visitor. Tomi is Senior Regional Director, Americas, for Sustainable Technology Solutions Advisory Consulting Business. Welcome back to the podcast, Tomi. Good to be back. I did not know I was your first repeat customer, so I feel honored. But no, it's good to be back. Yeah, we're happy to have you. You're our energy industry and advisory consulting insider. And I was checking back and you were last with us in April of last year. So we're very excited to kind of get the state of the energy industry around the world from you again today.

2:04Tomi Dania: But before we do that, why don't you just catch our listeners up on who you are and what your role is at KBR? Sure thing. So like you said, my name is Tommy Dania. I lead our advisory and consulting practice for the Americas. And effectively what that is, is helping our customers make decisions to develop their assets, develop their projects and deploy capital. So whether it's new facilities, existing facilities, whether it's new markets, whether it's entering new countries, deploying new technologies, effectively working with our customers to make the best of what they have. Excellent. Well, it seems like a busy time in the world of advisory and consulting.

2:46Tomi Dania: Just to get our listeners caught up to recap the last conversation that we had last year, you and I talked about the general state of the U.S. energy industry. We had a relatively new second Trump administration taking control. Tariffs were all anyone could talk about. We also talked about energy transition, which seems to have pivoted to energy security and resilience. So would you just catch us up on some of the major developments that are affecting or disrupting the energy sector right now since April of 2025? Yeah, no, absolutely. I think so. You know, when we last spoke, it was a relatively new time for this current administration.

3:24Right. And so they were setting their agenda, their energy agenda. They were really establishing some of the policies. They were signaling a lot of the priorities that this administration would take moving forward. And so then we really spent a lot of time, even though some things hadn't fully matured, we spent time talking through what we felt were the implications. Not only regionally in the U.S. and the larger America's region, but what we felt were the implications to global energy markets. So a lot's happened since then. Yeah. Fast forward to today, we've seen a lot of the themes we spoke about really drive impact and drive consequences.

4:07We spent a lot of time talking about how the geopolitical environment impacts energy markets. And so we've literally lived through some of those things. And so just a couple of examples, if you look at what's happening in the Middle East and especially in Iran, as far as impact to global markets, we're living through that now with the impacts on the flow through the Straits of Hormuz. I think everybody literally knows what the Strait of Hormuz now has become an expert in energy markets. So it's been fascinating to watch. In our backyard, so to speak, in Venezuela, we've seen what's happening there with the new president and with the exit of Maduro and what that has meant to not only the country of Venezuela, the impact to us in the US and the impact to global energy markets.

4:57So that's been a very fascinating development, especially given the massive potential the country of Venezuela has. And I think lastly, the key thing we spent a lot of time talking about last time, and it's still very relevant today, is the rapid growth and scale of artificial intelligence. And so what the technology itself means, what's impacting that technology as far as power supply and data centers, and what it also means for sort of the US's place in this AI arms race, if you will. So lots of exciting things happening. The world is moving and there's lots of things that are causing consequences to the energy markets.

5:36Tomi Dania: Yeah, it's a lot. And any of those could be a podcast episode on its own, right? Not to mention the implications behind Russia's energy tap perhaps being turned back on. So there's a lot to discuss and unpack here. But let's try to break them down, I guess, each one at a time. First, Venezuela. A lot of listeners might not know what the state of Venezuela's oil and energy economy was before the situation with Nicolas Maduro. What is the background on the Venezuelan energy economy? Yeah, so, you know, the story of Venezuela is really a story of untapped potential. Venezuela has the world's largest proven oil reserves.

6:18And, you know, Venezuela was at one time a very major player in the global energy markets and global oil production, oil and gas production. But, you know, if you look back as recent as the late 90s, Venezuela was producing something like 3 million barrels a day of oil, an oil equivalent. And that number has dropped significantly, has dropped circa, you know, a million as of late last year. And so lots of decline. A lot of that has had to do with really mismanagement, underinvestment, mismanagement into infrastructure. And obviously, the U.S. has had sanctions on Venezuela. And so that has played a role in their ability to really kind of tap into and maximize their reserves and export them into global markets.

7:05And so obviously we've seen a change with Maduro being pushed out and the new acting president in place. And so that's really creating a lot more opportunities for investment and is creating an environment to where Venezuela could potentially be a strong global player again.

7:22Tomi Dania: What are the implications specifically for the U.S. and for potential investors who want to get in early now? Yeah, it's a great question. I mean, so if you look at the U.S. specifically, Venezuela has what we call heavy crude. So it's a very heavy, thick crude. And there's really a specialized process to refine, produce, and export that crude. The U.S. and especially the U.S. Gulf Coast, the refineries in the U.S. Gulf Coast were built to process and produce and refine this crude. And so from a U.S. perspective and so from a crude slate flexibility, it has very strategic relevance to the U.S., especially at a time when there's pressure on refined products, especially diesel in the global market.

8:12So from a sort of supply chain resiliency perspective, it has tremendous implications to the U.S. and it has tremendous implications to U.S. refining capacity and refining uptime. And so I think that's a major perspective from the U.S. And then I think also if you think about just from a regional supply perspective and a regional energy security, that relationship between the U.S. is also a critical one in the Western Hemisphere because now, although the U.S. on its own is a strong global player and a major global exporter of oil and gas, the relationship and the tie-in with Venezuela also adds to sort of the U.S.'s energy dominance, if you will.

8:54and creating energy security for the region. And I think lastly, the hope is as these markets, and obviously it's not going to open up overnight, but as the flow from Venezuela and the production into global markets continues to progress, it will sort of help some of the pricing pressures we're seeing on oil and gas commodity prices. So tremendous potential for the country, tremendous potential to revisit some of the infrastructure they have, But it's going to take time because I think, like I mentioned earlier, a lot of this infrastructure has been, there's been a lot of underinvestment. And so what's happening now is due to some of the, you know, the private partnerships that the Trump administration has facilitated, a lot of the operating companies are now sort of going back in, inspecting what infrastructure is in place.

9:43There are some operators that were already there, like Chevron as an example. So there's a lot of effort to understand the state of affairs. There's a lot of effort to understand what investment will take to bring the existing infrastructure and allow it to produce like it was designed to produce. And then with time, you will see more investment into new development, new facilities. But a lot of the priority now is to really rehabilitate and revive existing infrastructure.

10:12Tomi Dania: Before we move on to Iran and AI and anything else we decide we want to talk about, what are some other themes that you are seeing right now in the U.S. and in the broader America's energy markets? Yeah, I think, you know, we talked about some of this during the last call. So and I think obviously the Venezuela theme also ties into this. But given a lot of the disruption in global energy markets, the U.S. has become an even more dominant and secure player in supplying oil and gas and energy to the global marketplace. So the U.S.'s position as far as energy dominance has become even more secure.

10:52If you look at other regions in the Americas, you look at Brazil, you look at Argentina, you look at Guyana, tremendous production coming from these regions supplying global energy markets. And so at a time when there's a lot of pressure on supply from the Middle East through the Strait, the US and the Americas are becoming even more relevant and even more credible. So with a lot of developments, like I said, I mentioned in the US, in Brazil, and some of the other regional countries. So it's a good time. It's a good time for the region. We also talked about LNG. The US is a major exporter of LNG.

11:32And we have abundant gas resources to supply LNG to global markets. And so that's a theme that's still very prevalent. And so we're seeing a number of projects moving forward to fill the gap that's been impacted from the Middle East. So that's a theme that continues to grow. You know, I think another key theme is just on electricity demand. During our last podcast, we talked about the implications of AI and the implications of the infrastructure, the electrical infrastructure. And so that's becoming an even stronger theme as the data center capacity continues to scale. So we're seeing a lot of data center build out.

12:13We're seeing power plant build out. We're seeing what that means as far as implications to some of these that are integrating into the existing grids and what that means for that infrastructure. Some of these projects are being developed outside of the grid. And so we're seeing a lot of a lot of focus on electricity demand beyond what was traditional. So that's been very interesting and that's been fascinating. And I think lastly, even though the energy transition and the pace of the energy transition has slowed down, we still need sustainable and clean sources of energy. And so as energy production is increasing, especially driven by either meeting the needs of global demand or AI, you know, developers and operators are still thinking about how to ensure that we're still being good stewards of the environment.

13:00And so these projects still include carbon capture. And these projects are still thinking about ensuring that we're developing with the most energy efficient technologies. And so, you know, lots, lots of broad themes and lots of interrelated themes.

13:14Tomi Dania: It's interesting to hear about the U.S. energy dominance, LNG dominance, the growth happening regionally in South America. And yet all anyone can seem to talk about is the way that the Iran situation is disrupting international supply. So the situation there seems to change from day to day. What has been the broad effect on global energy? Everyone knows that feels the, quote, pain at the pump. But what has been the general effect on the global energy economy? No, absolutely. And I think, like I said, I think everyone's become a global expert in sort of these geopolitical and energy impacts. But no, so what's – and we talked about this during the last podcast as far as how geopolitical impacts commodity prices and how geopolitical impacts supply and demand.

14:08And so effectively what's happened is the Strait of Hormuz, which a lot of trade from the Middle East flows through, about one fifth of the world's global and LNG trade moves through the Strait of Hormuz. And so when you take that into effect, that is a flow and a choke point that's now effectively been shut off. It's been closed. And so that has had significant impacts to the flow and supply of energy to global markets. And so as we talked about, we've had a shock to supply, but we haven't necessarily had a shock to demand. And you can argue that demand has gone up in certain markets. And so what that means is that it's significantly impacted prices of commodities.

14:53And then associated with that, you also have oil, you have gas, you have refined products that flow through the strait, and you also have LNG. Qatar is a major exporter of LNG with a lot of that flow going through the strait as well. And so what you've seen is a significant shock to global supply chains. And as a result, a shock to commodity and energy prices. So we've seen the prices of oil and gas rise. We've seen the prices of diesel rise.

15:24Tomi Dania: And so it's had significant impacts on global markets. And so, you know, it continues to be a factor. And so what's happening is other parts of the world are being forced to pick up the slack. And so like I mentioned, with Venezuela coming back on stream, that will play a role. You know, the US has released from the strategic petroleum reserves. That's going to play a role. So ultimately, we're looking for other sources of supply. I think you mentioned earlier about how with the recent agreement with Russia to bring some of their supply into markets as well. So again, all of these things are efforts that are being implemented to really combat the pricing pressures that we're seeing.

16:04But I think there's both short-term and long-term implications because unfortunately, who knows how long this conflict will go on for?

16:12Tomi Dania: Right, yeah. What we're seeing is our customers are sort of re-evaluating their capital, their capital deployment. And it's because people are thinking about where is their capital resilient. And so where maybe you would have seen a lot more investment in the Middle East, some of that capital flow might be moving to different regions. And so it's an opportunity for the US in our market for us to continue to be even more dominant in energy markets. Some of the other implications are parts of the world that rely on these imports but don't have their own natural resources. they will now need to start thinking about their own energy security and their own energy sovereignty, if you will.

16:56And I think that's where the energy transition could come back into the forefront, because if they can generate their own sources of energy, whether it be through renewables or with nuclear and solar. And so it's creating a lot of disruption and a lot of change into how energy and oil and gas has historically flowed. But it's definitely a very disruptive environment. It's very dynamic. I think, like you said, from a day-to-day basis, it's hard to kind of know when the end will be. But I think, like I mentioned, what our customers are having to do is just sort of reevaluate how they deploy capital and where they spend their money.

17:35Tomi Dania: Yeah, it sounds like there's a ton of opportunity. And I'm sure you and your teams, we're going to talk a little bit more about how KBR is helping customers navigate that in a moment. But first, we've mentioned AI. A couple of weeks ago, we heard from Mr. Amadei that they were encouraging, pumping the brakes a little bit on AI. We've also seen, of course, public discontent with the proliferation of data centers. How is that demand affecting energy? You mentioned a moment ago that just the data center capacity is growing. How is all this affecting the energy markets as well? Yeah, you know, it's sort of interesting that some of the companies at the forefront of AI development are the ones that are sort of calling for a slowdown.

18:20So it's a very interesting dynamic. And the reason is what's happening in the case you spoke of especially is some of these AI agents have effectively gone rogue. And so they've sort of escaped the boundaries were developed and they're sort of collaborating and coordinating with each other. And they've gone rogue and are sort of doing things that they weren't sort of programmed to do. And so there's definitely been concerns there because as these tools and as these AI systems become smarter and smarter and become super intelligent, I think even the developers themselves are calling for regulation to make sure that there's a smart pace at which we are developing AI.

19:01But it's a very competitive environment. We're effectively in an AI arms race with China. And so there's competing pressures to ensure that the U.S. is the winner in that arms race. But we also want to ensure that we are being smart and safe and have the right guardrails and regulation in place. So from a technology perspective, you have that angle. But I think like we mentioned earlier, you know, AI uses tremendous amounts of power and that has implications to electricity prices. Data centers use tremendous amounts of water for cooling. And so you're seeing you're starting to see some community pushback on what it means for their sources of water, what it means for the electricity prices.

19:44And so there's a good amount of local and community pushback. And like I said earlier, you're also looking at the power to these data centers. So to combat some of that, what some of these data centers are looking to do is to develop behind the meter power. And so that's effectively developing power generation outside of the grid that's supplying and feeding directly to the data center. So the intent there is to sort of alleviate some of the pressure on the grid and thereby not impacting local electricity prices for consumers. But, you know, it's still a very dynamic environment. But, you know, the pace is rapid.

20:19You know, like I said, we're in a significant race with this technology. And I think it's appropriate and I think it's timely for putting some sensible regulation in place, making sure that everybody is developing to the right standards and ensuring that we're developing this at the right pace. But it's a very, very fascinating space. It's an area I spend a lot of time with my own sort of research to make sure we're understanding these markets and how we as KBR can also be of value to the industry.

20:50Tomi Dania: Let's talk then a little bit about how KBR is being of value to the industry. How are you, from the advisory consulting perspective, helping customers navigate all this? Because it is a lot. Like I said, each one could be a two or three part series on its own. Absolutely. I think for me, I love the chaos. Yeah. Because chaos, not just for us at KBR, but for our customers as well, chaos provides opportunities. And so as far as what we're doing, and it's really across all the things we've talked about so far. And so some of our customers are looking, for example, are looking to enter into some of these markets.

21:31And so given the disruptions in the Middle East, given the opportunities in Venezuela and the US, some of our customers are wanting to enter into these markets. So we're advising them on how to enter the markets, how to set up operations, and what's really the size of the price for them. You know, as far as energy supply, you know, we have customers that are obviously looking to either develop data centers, develop power plants, develop LNG facilities. So we're ultimately supporting them in how to develop those projects, how to scale and phase those projects, how to develop capital. And so there's a lot of activity into sort of filling the void as far as energy supply and continuing to develop new projects and new sources of energy.

22:16And additionally, like I mentioned earlier, to tap into and to take advantage of this environment, in some instances, you have to really take advantage of assets you already have. So whether that is revitalizing agent infrastructure, whether that's assessing the state of existing infrastructure and determining what's the quickest way to go to market for some of these projects. We're working with our customers on some of those sorts of opportunities. give you an example. We have some of our customers that were looking to retire some of the assets, but given the dynamics and given the economic environment, they're looking to maybe squeeze more out of these assets that they would have ordinarily retired.

22:56So we're helping them figure out how to extend the life of these assets and get the most out of that.

23:01Tomi Dania: So a lot of activity ongoing, very dynamic, but it's a very exciting time because KBR is pretty uniquely positioned to, especially as being a global company, to take advantage of a lot of these opportunities and really help our customers. That's awesome. And it really is across the entire journey. We're talking from early stage capital strategy all the way to, like you were just mentioning, facilities revamps, right? Absolutely. Yeah, absolutely. It's really across the spectrum of the project lifecycle. Awesome. Well, Tomi Dania, before I let you go, is there anything else that you'd like to leave our listeners with?

23:36Tomi Dania: Any insights? I think ultimately what I'd like to leave our listeners with is, you know, the energy markets are very dynamic. There are a number of things that drive that, whether it be geopolitical, whether it be new technology, whether it be sustainability and energy transition. So there's a lot of things that drive the energy markets. And we're living through a very dynamic time, a very fascinating time. And I feel honored and privileged to work at KBR because I think we bring a lot of capabilities to bear in this very dynamic time in the market. So stay tuned. Hopefully, you'll have me back for part two.

24:13And I think this time next year, it'll be a different and ever-changing time.

24:17Tomi Dania: Absolutely. So yeah, just thanks for having me and definitely enjoyed sharing some of my insights on the markets. Absolutely. We will definitely look forward to having you back, I'm sure in the next six months or so, to talk about whatever new thing has happened in the energy market and how KBR can help our customers capitalize on that opportunity. Toby Danio, we thank you very much and we'll talk to you soon. Absolutely. Thank you.

24:49Tomi Dania: Well, hopefully that clears the air a little bit about the goings on with today's Energy Outlook. Many thanks again to our friend Tomy Dania for taking some time again and joining us for this episode. If you're interested in learning more about KBR's advisory and consulting expertise, check out the website kbr.com. And we'd be remiss not to thank you, our listeners. We know there's a lot going on and many things competing for your attention. That's why we don't take it for granted that you're tuning in and keeping us in your orbit. Thanks again for listening. Until next time, be kind to each other and take care.

25:45Thank you.