Gas & LNG in Review: October 09-14, 2016

Alexandra Marie Ferraro's picture
Alexandra Marie Ferraro, Energy Analyst, Guest Reporter
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This week’s natural gas news saw the Russia-Turkey pipeline deal solidified, a doubling of output from Cheniere’s Sabine Pass, optimism from BHP Billiton regarding the resource’s future, and a valuable asset sale on the horizon for Chevron. Take a look at our highlights below.

Russia, Turkey Approve Construction of TurkStream Pipeline: Russian President Vladimir Putin and Turkish President Recep Tayyip Erdogan signed an agreement on Monday to move forward with the construction of the TurkStream pipeline following extensive talks between the two leaders last week, the Financial Times reported. The pipeline, Bloomberg detailed, will consist of two links, one serving the Turkish market and the other Southern Europe. It will have a combined capacity of 30bn cubic metres, according to the FT.

Growing demand for gas in Turkey will likely secure the future of one line, while the other represents a diversification of Gazprom’s options for sending gas into Europe. Bloomberg quoted analyst Emily Stromquist who expressed that TurkStream will play a role in, “reducing transit dependence on Ukraine.”

The commitment comes at a time when Russia and Turkey are seen to be rekindling diplomatic and trade ties following political tensions; Reuters reported that during discussions for this pipeline agreement, the two delegations had demonstrated “political will” to present a serious deal. How do you think this pipeline agreement and a revitalized relationship between Russia and Turkey will benefit natural gas in the region? Leave us a comment below.

Cheniere Gets Green Light for Train 2 at Sabine Pass: Cheniere Energy, currently the sole exporter of LNG from the contiguous United States, received approval from the US Federal Energy Regulatory Commission on Wednesday to begin loading LNG from its second liquefaction train at Sabine Pass in Louisiana, Bloomberg reported. The second plant has been producing LNG since July, Bloomberg further detailed.

The approval allows Cheniere to effectively double its output from Sabine Pass, thus also doubling US LNG exports nation-wide. Each train has a capacity of around 650 million cubic feet of LNG per day, Bloomberg informed. According to Argus Media, LNG from train 2 is expected to be sold to Spanish firm Gas Natural Fenosa. Now that another train is fully online, what additional firms do you think will sign contracts with Cheniere for LNG supply? Join our discussion below.

BHP Billiton: Natural Gas to Flourish in Low-Carbon Future: BHP Billiton signalled this week that it is optimistic about the future of natural gas, even as climate change awareness grows and emissions caps become more likely. Reuters referred to a review of climate risks released by the firm on Monday which asserted that, “fossil fuels will continue to be a significant part of the energy mix for decades.” Furthermore, the company expects natural gas to thrive post-Paris Climate Agreement as demand for lower-carbon-emitting fuels is likely to go up.

The Financial Times presented a similar line of analysis this week reporting that BHP Billiton has invested heavily and long-term in US shale gas and oil. The firm believes its investments in US shale are sure to bring returns in the long-run, especially as demand for coal is expected to slow, the FT cited BHP Billiton’s President of Operations for Petroleum Steve Pastor. Will the emissions rules of climate change agreements in fact bolster the natural gas industry? Will oil maintain its standing in the hydrocarbons markets or increasingly give way to natural gas in such a scenario? Give us your take on the story below.

Chevron Eyes $2 Billion Sale of Bangladesh Gas Assets: Chevron confirmed to news sources this week that it is in discussions regarding selling its natural gas interests in Bangladesh. Bloomberg reported the sale could be worth up to $2 billion and has received interest from Indian and Chinese oil firms, citing people familiar with the matter. Chevron told the Financial Times on Wednesday that, “We will only proceed if we can realise attractive value for Chevron.”

According to Reuters, Chevron’s Bangladesh assets consist of three fields from which the company produces natural gas. The FT detailed Chevron’s net daily production from these fields rounds out at 720m cubic feet of gas. A successful sale would further the company’s strategy to sell assets to offset the burden of low oil prices, raising a significant amount of capital for Chevron. What do you predict the outcome of this asset sale to be? Who are likely to be the top contenders for the portfolio? Let us know your thoughts below.

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