Posts Tagged ‘LNG’

Vitol’s CEO sees up-and-down oil prices, but it isn’t an opportunity

The kind of crazy up-and-down movements of the oil markets in recent weeks and months is not a ripe opportunity for a major trading company like Vitol. In fact, its CEO and chairman Ian Taylor says that whipsaw activity is a nightmare for his company.

“A market that is up $3 in the morning, down at lunchtime and then back up again at the close is almost impossible to hedge,” Taylor said in a one-on-one interview this week as part of the Platts Global Energy Forum. “I don’t think the trading companies do particularly well in that environment.” (Full disclosure: I conducted the interview with Taylor at the forum’s luncheon.)

And contrary to some beliefs, a relatively calm market that goes on many months — like the first part of 2014 — isn’t quite as bad as it might seem. “You’re making an assumption that traders speculate,” Taylor said when asked whether the first relatively non-volatile part of the year was a difficult time for a trading company. “Hardly any trading companies in existence today speculate. Shell, BP, Vitol…we don’t do flat price trading. A predictable long-term trend is much easier to handle.”

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The great LNG indexation debate rumbles on

Almost three years since the first contracts based on Cheniere Energy’s tolling model were signed, the great LNG indexation debate continues to rage. Only this year, the focus has shifted to how competitive those US volumes will be in the wake of falling crude prices; a complete about-turn from the last few years.

With crude oil prices touching four-year lows of around $80/b, it’s not hard to imagine a world where US exports under Cheniere’s tolling model could become uneconomic, especially if US gas prices start to rise as many analysts forecast.

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Petrodollars: Figuring out what to do with PNG’s new LNG wealth

As Papua New Guinea enters the small fraternity of LNG exporters, it needs to figure out what do with the money the poor nation is going to earn. Christine Forster looks at the issue in this week’s Oilgram News column, Petrodollars.

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More twists coming for PNG’s emerging LNG industry?

It seems there might still be some twists and turns in the long saga of InterOil’s Papua New Guinea LNG project, with analysts speculating that arbitration proceedings launched by Oil Search are ultimately aimed at replacing joint venture partner Total with ExxonMobil.

Oil Search clearly sees itself as the key player in the Pacific nation’s emerging gas sector, by virtue of its 29% stake in the new ExxonMobil-led PNG LNG facility near Port Moresby and its significant equity position in the InterOil project. Oil Search, with its strong operating history at PNG oil and gas fields, also enjoys a good relationship with the PNG government, one of its major shareholders.

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When it comes to defining LNG in cars, patience is a virtue

When pushing for greater use of natural gas vehicles, advocates know patience is a virtue. A lot of patience.

One recent tangle, a regular Gordian knot, has been the question of how LNG used as a transportation fuel should be measured and taxed. Should it be by weight, like kilograms, or volume, such as diesel and gasoline gallon equivalents (DGE or GGE).

This is no small picky detail that excites policy wonks. It matters a great deal to current and future LNG vehicle owners and state tax collectors.

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Mexican LNG exports will not come soon

Recent reports say Japan wants to import LNG from Mexico after 2020. While Mexico could add liquefaction facilities at one or more of its three LNG import terminals, it would need to overcome some hurdles before it could export LNG.

Sempra’s Energia Costa Azul terminal on the Pacific Coast of northern Baja California rarely imports cargoes, but the hurdle for exports from Costa Azul would be access to gas. This import terminal would not have been built 15 miles north of Ensenada if there had been enough gas production nearby to meet demand.

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Peace agreement in gas-rich Mozambique sets the stage for elections

After two years of sporadic clashes, Mozambique’s Frelimo government and Renamo, the main opposition party signed a peace agreement in August, improving prospects for the October elections in the gas-rich southern African nation.

The presidential and parliamentary elections on October 15 will mark the end of president Armando Guebuza’s second and final term in office.

The election takes place as Mozambique becomes an attractive investment destination following huge gas discoveries by Italy’s Eni and US’ Anadarko. The discoveries, estimated at 100 trillion cubic feet have the potential to transform Mozambique into one of the world’s leading LNG exporters.

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India’s gas pricing dilemma: A ‘Modi’cum of liberalization?

The new Narendra Modi government in New Delhi prolonged the suspense this week over what tack it will take on the controversial domestic gas pricing issue.

It had been expected to signal which way it is inclined ahead of a September 30 deadline to announce its final decision on gas prices.

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Has the UK natural gas market’s year-long downtrend gone into reverse?

The UK gas market has been on a downtrend throughout the year after a mild winter left storage facilities entering summer already at high levels. Qatar has also kept up a steady flow of LNG cargoes throughout the year, sending daily gas prices down from the mid 60s pence/therm in January to the lowest point of the year at 34.60 p/th on July 11.

But the market now seems to have turned 180 degrees, with a sharp jump in prices since mid-August. With higher winter demands on the way, July’s lows may not be seen again this year.

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Regional price spreads: predicting the future of LNG

On March 11, 2011, a magnitude 9.0 earthquake and tsunami devastated a large portion of Japan’s eastern coastline killing nearly 16,000 people and causing infrastructure damage estimated at more than $225 billion. The consequent nuclear disaster at the Fukushima Power Plant ultimately resulted in the closure of all of Japan’s nearly 50 nuclear reactors.

In a move to compensate for lost electric generation capacity, Japanese imports of LNG jumped nearly 23% to 86.7 million mt during the 2012-2013 fiscal year, up from imports that totaled 70.6 million mt during the fiscal year just prior to the disaster.

The precipitous jump in demand for LNG from post-Fukushima Japan changed the global gas market irrevocably. Since March 2011, spot Asian gas prices have averaged roughly $15.65/MMBtu compared to prices that trended around $7.00/MMBtu during the two-year period from 2009-2011.

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