Gas & LNG in Review: October 30 – November 04

Alexandra Marie Ferraro's picture
Alexandra Marie Ferraro, Energy Analyst, Guest Reporter
Comments: 0

Natural gas news this week reflected the industry’s strength and reach: two majors beat expectations in their quarterly profits, Japan made several moves in favour of an LNG future, a GE-Baker Hughes merger is big news in gas field services, and strong interest in the Greece-Bulgaria pipeline gives bidders another month to submit their offers. Check out our highlights below.

Japan Reveals Strong Stake in Natural Gas in Several International Moves: In a handful of distinct actions this week, Japan signalled its intent to invest in and develop natural gas for years to come. First, according to the WSJ, Japanese Prime Minister Shinzo Abe announced $7.7bn in private and public funds for Myanmar, a producer of natural gas. While the support is broadly dedicated to the overall development of Myanmar’s economy, we can expect Japanese investments in the country’s natural gas sector given Japan’s high demand for the commodity.

Separately this week, the Japanese government encouraged firms to invest in Russian natural gas projects, Reuters reported. Projects expected to benefit from the call for investment include Sakhalin-2 and Yamal LNG as well as Russia’s Rosneft, per Reuters.

Finally, Tokyo Gas signed a memorandum of cooperation with Malaysia’s Petronas LNG to further explore LNG projects in Southeast Asia this week, Platts said.

Shell and BP Post Robust 3rd Quarter Earnings: Shell and BP surprised forecasters this week when both firms posted higher-than-expected profits for the third quarter, several news sources reported. According to the Wall Street Journal, the results indicate successful strategies for both companies in adapting to low prices and global supply glut. Shell’s numbers, with $2.8bn net profit vis-à-vis anticipated $1.7bn by analysts, demonstrate an encouraging response to the firm’s efforts to lower costs and boost production after its significant BG Group acquisition, the Guardian discussed.

With respect to the BG takeover, Bloomberg quoted Shell CFO Simon Henry saying it was the impetus for, “positive earnings and small positive free cash flow in the third quarter.” By expanding Shell’s natural gas business, it appears acquiring BG is a silver lining for Shell amid an uncertain oil market. How could focusing more heavily on natural gas projects help these companies maintain profit and progress? Leave us a comment below.

GE to Merge Oil and Gas Unit with Baker Hughes: In a move that will create the world’s second-largest field services provider General Electric announced on Monday it plans to merge its oil and gas unit with drilling equipment leader Baker Hughes, Reuters reported. The resulting new company, whose projected sales by analysts are anticipated to be $24bn according to Bloomberg, will bring strong competition to the market.

Bloomberg detailed that the two companies had already undertaken discussions this year regarding a technology package that they could jointly offer to clients—the service reportedly garnered interest from North American onshore natural gas explorers. The merger is thus a natural step forward for both GE and Baker Hughes, especially as a way of cutting costs, streamlining operations, and increasing efficiency. The WSJ quoted Baker Hughes CEO Martin Craighead affirming that the combined company will be “far more resilient and cycle resistant.”

How will mergers and cooperative efforts such as these benefit natural gas developers and sellers in the near term? Share with us your thoughts on the latest trend by field service providers to pursue more partnerships.

Interconnector Greece-Bulgaria Sees High Interest, Still Accepting Bids: Companies seeking to transport gas through the pipeline between Greece and Bulgaria will have until the end of November to submit their offers, Reuters reported on Monday. Platts referred to the pipeline operator saying that “at the request of participants in the first phase” the deadline for offers has been extended. The project received 9 offers in the first phase of bidding, Platts detailed; Reuters revealed that four companies that had not submitted offers in the first phase are also interested. Others who have made their interest public include Austria’s OMV, Greece’s Gastrade, U.S. Noble Energy, and Azerbaijan’s SOCAR, according to Reuters.

Besides the bidding extension, all other phases of the project remain on schedule and construction on the 180-km pipeline is expected to begin before the end of 2016, Platts explained. Once underway, the Interconnector Greece-Bulgaria will supply Bulgaria, Greece, and European markets with gas from Azerbaijan. How will improved connectivity in south-eastern Europe thanks to the IGB change market dynamics? Let us know your thoughts below.

Subscribe to our  Newsletter Follow us @GasInteract

Interested in discussing the business critical needs of the international gas and LNG market? Join over 20,000 of your peers across the natural gas and LNG supply chain at Gastech 2017 in Chiba - Tokyo, 04-07 April. Book your delegate place today.