This week’s natural gas news reflected the industry’s global expanse: milestone deals with Iran, an international conference in Perth, Japan upping LNG, and fresh rules for offshore drilling in the US. Check out the highlights below.
Italy Inks Gas Deals with Iran. During a state visit to Iran this week by Italian Prime Minister Matteo Renzi, the two countries signed agreements between Italian gas company Enel and the National Iranian Gas Export Company, according to the New York Times. Enel revealed the MOU describes a cooperation involving gas and LNG information-sharing, analysis, and training as well as a look toward opportunities for long-term supply, says NYT. While no financial details were disclosed, Reuters reports the seven agreements signed between the two countries could equal billions. According to Reuters, the Italian oil company Saipem also finalized an MOU with the Iranian Razavi Oil & Gas Development Company to drill seven wells at the Toos Gas Field.
Italy has been working hard to get its foot in the Iranian market. The two countries already signed billions of dollars in agreements when Iranian President Hassan Rouhani visited Europe in January. France has had similar interest in Iran. On Wednesday Reuters quoted France’s Total CEO Patrick Pouyanné saying that the company’s priority in Iran was natural gas.
European business delegations will be travelling to Iran in the coming weeks. Do you expect more gas agreements will be signed? Leave us a comment.
LNG18 Conference Sees Encouraging LNG Future. Gathering in Perth, Australia gas leaders set the tone for the three-day conference agreeing that patience is the biggest virtue in LNG. Bloomberg cited Shell CEO Ben van Beurden explaining that decisions to slow development will cause demand to overtake supply in the future and prices to increase again. In his opening speech, Mr. van Beurden said that projects with the lowest production cost will be most competitive and new technologies and emerging markets are worth investing in, according to MarketWatch.
Woodside CEO Peter Coleman expressed similar optimism for a long-term upswing in demand saying LNG producers were in ‘pause mode’; Chevron CEO John Watson agreed, “Once you see that surplus absorbed, you will see that market re-emerge,” Bloomberg cited both leaders. Woodside and Shell decided to halt development on their $40 billion Browse LNG project last month, and Mr. van Beurden announced on Tuesday that Shell may sell some of its older North Sea assets to finance acquisitions, including newer ones in the North Sea, from BG Group, according to Reuters. Chevron has invested heavily in long-term LNG projects.
Indeed, at LNG18 the 2016 International Gas Union World LNG Report was released and predicts LNG will increase its share in the world’s future energy mix due to growth in global production capacity, Platts reported.
It seems the foundations for a truly expansive LNG network have been built. Are we just waiting for the market to fall into place as the CEOs described? Let us know below.
Japan to Invigorate LNG Market. In two moves this week that aim to take advantage of LNG market flexibility, Japan’s Tokyo Gas partnered with major utility Kansai Electric Power and Japan’s Ministry of Economy will announce a plan to create a Japanese trading hub, according to two different sources.
Reuters reported that two of the biggest LNG buyers in Japan, Tokyo Gas and Kansai Electric Power, will partner on LNG purchases and gas-fired power plants. Tokyo Gas group manager of corporate planning Takayuki Uenaka specifically noted that the two will pursue flexible LNG procurement, Reuters cited Mr. Uenaka.
Japan will unveil a plan to increase liquidity on the spot market and create a trading hub in Japan at the G7 energy ministers’ meeting in May, according to Platts. Japanese utilities, oil and gas companies, foreign companies, and government officials have discussed a hub and infrastructure improvements including third party access to LNG terminals, Platts quoted a Ministry of Economy official.
Japan is keenly interested in the flexible spot market. Is this a good thing for the future of global LNG?
US Announces New Offshore Drilling Rules. Six years following the BP oil spill, the US Interior Department released a final set of rules to improve safety requirements for underwater drilling and prevent equipment failures, according to several outlets. The NYT reported that the rules will especially regulate blowout preventers, the design and lining of undersea wells, and include live monitoring of drilling and spill containment.
According to the Wall Street Journal, the rules sought to strike a balance between oil and gas executives’ interests and those of environmentalists; reactions from either have been equally balanced. Implementing the new requirements is expected to cost the industry $890 million over the next 10 years, with an estimated $636 million in benefits during the same period, the Washington Post referred to the documents published on Thursday.
Is such regulation a step in the right direction or a hindrance for the industry? Leave us a comment.
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