Gas & LNG in Review: May 22-27, 2016

Alexandra Marie Ferraro's picture
Alexandra Marie Ferraro, Energy Analyst, Guest Reporter
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This week’s natural gas news included national, market, and corporate level updates. We saw higher UK gas prices, hesitancy surrounding deals with Iran, French protests disrupting energy sources, and a no-go on climate-related proposals. Check out the highlights.

Uncertainty Shrouds Iranian Gas and Business Deals. The optimism that ran high for investments in Iran following the lifting of international sanctions, particularly in natural gas, is waning, several news sources indicated this week. The hesitancy comes as Iran faces challenges in securing financing from banks and fierce competition in global gas markets.

Bloomberg reported this week that Iranian officials say the threat of U.S. sanctions continues to make European and Asian banks unsure of their involvement with Iran; the U.S. estimates it is holding $52 billion of frozen assets that are to have been returned to Iran, Bloomberg says.

This newfound doubt has affected gas analysts’ predictions saying Iranian gas is unlikely to hit European markets in the next 10 years, according to Platts. But the National Iranian Gas Company wants to raise its exports to 350 mcm/day and has its eyes on Europe; Platts quoted Azizollah Ramazani, NIGC director of international affairs, “We need more investments in order to gain a firm toehold in the LNG market and win more share in the international markets.”

Will the financial uncertainty clear up soon or will continued strain by the US and competitive gas prices make it difficult for Iranian businesses to get off the ground? Leave us a comment.

UK Gas Prices Rise in the Face of Undersupply, High Demand. Spot gas prices in the UK went up on Wednesday as it saw a decrease in LNG regasification and lower imports from Norway, according to Platts. Platts cited National Grid data which predicted that the UK gas system was 6 million cubic meters short of supply on Wednesday.

Reuters reported that gas imports from Norway had fallen to 32 mcm/day and that UK LNG terminals were unable to keep up with the increase in demand, producing 37 mcm/day. The UK is largely dependent on imports from Norway to meet its gas needs.

Higher demand is also responsible for the price increase, but higher temperatures later this week should ease demand, and a rise in gas production from Teesside PX and Teesside BP sub-terminals should help level out prices, Platts wrote. How volatile is the energy situation in the UK? Should we be worried about security of supply? Let us know your opinion.

France Energy Sector Protests Threaten Oil, Nuclear, Gas. French labor unions responded to a recent labor reform this week by launching strikes at energy facilities across the country in a move that is threatening oil, natural gas, and nuclear output, several news sources reported. The BBC reported that strikes took place at 16 nuclear stations and six oil refineries in France, as well as the ports of Marseille and Le Havre.

On Monday Reuters reported that France’s major labor unions would also strike at LNG terminals, including three LNG terminals owned by Elengy. Reuters also cited the unions said they intended to ramp up the protests until the French government rescinded the labor reform law. According to the BBC French Prime Minister Manuel Valls said on Thursday that while the reform would not be withdrawn, it may yet be modified.

The protests are likely to continue through the week, and could last longer. What decisions do you expect to see from the companies that own the affected refineries and terminals, such as Total? Let us know.

Chevron, Exxon Shareholders Say No to Climate Change Proposals. Chevron and Exxon shareholders rejected several climate-related proposals this week, including efforts to conduct risk assessments and curb exploration, according to the WSJ and Bloomberg, respectively. In an overwhelming 96% majority, shareholders at Exxon and Chevron voted against measures to redirect investments in field exploration to higher dividends and share buybacks, Bloomberg said. The anti-drilling proposal, strongly backed by environmentalists, was turned down for a second year in a row.

In more narrow votes that showed a preliminary 41% and 38% support at Chevron and Exxon, respectively, the WSJ reported that the shareholders rejected resolutions calling for risk assessments to determine the impact that climate change mitigation efforts would represent for the businesses. This narrow margin is an indication that mainstream shareholders may be making greater climate-related demands of fossil fuel companies in the future.

Still, Chevron CEO John Watson was quoted this week by MarketWatch hinting that climate change was good for his business as the global market looks more toward natural gas, “I hope to gain market share in some areas,” he said. Will big fossil fuel companies bend to the demands of climate change, or cash in on it? What are your thoughts?

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