Posts Tagged ‘LNG’

The UK may lose a large part of its gas storage, but does it matter?

It went largely unnoticed by the general media, but last week there was a significant announcement for the UK gas industry: the country’s main gas storage site may have its capacity cut by around a quarter, reducing the volumes that can be held in reserve next winter.

Just two years ago, during a cold winter, there were warnings that the country “was just six hours away from running out of gas.” So why would storage capacity be cut now, and does it matter? Read the rest of this entry »

Europe: The perennial LNG sponge

This winter saw record volumes of LNG arriving on the shores of Europe, as cargoes sought value in an environment of weak LNG spot pricing. Cargoes flowed in from not only Qatar, but also from production sites like Trinidad and Tobago as portfolio players sought to optimize volumes into Europe while purchasing Asia Pacific delivery cargoes elsewhere to fulfill existing commitments.

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At the Wellhead: Thailand’s oil, gas exploration under pressure

Thailand is in a difficult position when it comes to procuring enough oil and gas for its growing needs. Myanmar, a country that provided much of Thailand’s gas, needs to keep more of its production for its own needs, and production from Thailand’s declining reserves is being held up by the government. Mriganka Jaipuriyar explains the country’s position in this week’s Oilgram News column, At the Wellhead.

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Australian oil and gas producers tighten belts

Just as their bigger international counterparts have moved quickly and decisively to cut capital expenditure by around 25% in the wake of the recent rout in oil prices, Australia’s oil and gas players have also been tightening their belts and reassessing asset values.

Amid moves that have left some analysts mildly surprised at the speed of the global industry’s reaction to the current downturn, the major Australian players have hit the pause button on spending.

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Gazprom and Europe: the end of the road

Relations between Gazprom and the European Commission have sunk to an all-time low over the past year as Ukraine breaks up and the civilian and military death toll in the east rises.

Gazprom is too closely related to the government – and the president Vladimir Putin in particular – for it to be seen as a gas production, transport and supply company just like any other. Gazprom inevitably takes some of the heat for the activities in the Kremlin.

The EC has already imposed sanctions on Russian companies. But if an outright ban on Russian gas is too damaging for its own end-users, the EC can also employ other means – directives, anti-trust probes, exemption clauses and all the other weapons in its armoury – to limit Russia’s ability to profit from Europe.

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The crude price plunge and LNG, a tenuous link

Over the last several months there has been much discussion about the impact of falling crude oil prices on the liquefied natural gas market. The conventional argument goes something like this: lower crude prices are making oil-linked LNG contracts cheaper and are putting pressure on the spot market as these contracts increasingly undercut spot prices.

At first glance, this argument appears quite compelling. On January 14, 2015, the price of Platts-assessed Dated Brent was $45.73/b. For buyers using 14.5% slope to crude, not uncommon in the Asia-Pacific market, that would equate to an LNG price of just $6.63/MMBtu. By comparison, the Platts JKM price (a spot index for the Asian LNG market) was assessed significantly higher at $9.38/MMBtu on the same day.

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New Frontiers: Canada’s LNG projects get a sharp dose of reality

Canada has ambitious and expensive plans to become a major force in the LNG market. But it isn’t going to be easy, as Ashok Dutta explains in this week’s Oilgram News column, New Frontiers.

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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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