Wildcat’s Pick of the Week.

Week Ahead

Monday 9 July: Workshop on Safety of Offshore Oil and Gas Activities, European Parliament, Brussels; EU-China strategic dialogue, Beijing (until Tuesday); Norwegian continental shelf production to shut from midnight

Wednesday 11 July: Deadline for Cove Energy to accept takeover bid from Shell

Thursday 12 July: ASEAN Regional Forum, Cambodia (until Friday)

Friday 13 July: Galp Energia trading and sales update; Deadline for Cove Energy to accept takeover bid from PTT Exploration and Production

Winners & Losers

Winner: The shale gas industry in the UK received a boost from science and engineering academies this week, with a joint report arguing that hydraulic fracturing (‘fracking’) can be managed effectively in the UK as long as operational best practices are implemented and enforced robustly. The report concluded that fracking is an established technology that has been used for decades and that the risk of it causing earthquakes and polluting drinking water was very low.

Winner: Origin Energy and ConocoPhillips have reached a final investment decision (FID) on a second train for the Australia Pacific LNG project on Queensland’s Curtis Island, they announced on Wednesday. The partners estimate that the entire 9 mtpa project will cost A$23 billion ($23.6 billion), up by $3 billion from the first FID reached in July 2011 as a result of shifts in the foreign currency exchange rates. However, Origin and Conoco are looking to reduce their stakes from 37.5% each. Sinopec holds the remaining 25%.

Winner: China National Offshore Oil Corp. (CNOOC) has made a “breakthrough” gas discovery deeper than 5,000 m in the Bohai Sea, marking the first deepwater discovery in the area since 1965, CNOOC announced on Thursday. The company plans to drill more test wells to determine whether further development would be commercially viable. The discovery is CNOOC’s latest in a string of finds over the past few months, as the company moves into deepwater areas to boost production.

Loser: Nigeria continues to flare close to a quarter of the gas it produces, according to new figures from the Nigerian National Petroleum Corp. The country produced 5.8 bcm in February 2012, but flared 1.28 bcm of it. Nigeria is one of the worst offenders of gas flaring, ranking second in the world after Russia in 2010, according to data from the US National Oceanic and Atmospheric Administration. The government has set several deadlines for producers to cease flaring, but those have had limited effect so far.

Loser: Mexico’s oil and gas industry is unlikely to see any immediate liberalisation after Enrique Peña Nieto’s centre-left Institutional Revolutionary Party claimed victory in the country’s presidential elections on Sunday. Peña Nieto promised to bring increased foreign and private investment in Mexico’s energy sector during his election campaign, but he does not yet have sufficient capital to do so, according to analysts.

Loser: Norway braced for a production shutdown this week, after the Norwegian Oil Industry Association announced it would impose a lockout on striking workers by shutting off all Norwegian Continental Shelf production from midnight on 9 July (11 pm GMT). The lockout follows a breakdown in talks over the ongoing 13-day strike carried out by Norwegian trade unions. A full shutdown could take as long as four days, according to Statoil.

Quotes of the Week

“The General Court rejects most of the companies’ arguments and confirms the main points of the [European] Commission’s decision,” the European Court of Justice said in a statement last Friday after reducing the fines imposed on E.On and GDF Suez in an antitrust case.

“My feeling on those LNG projects is that they are quite risky in terms of the CBM supplies,” a geologist working on a CBM project in Queensland, Australia, told Interfax. CBM leases are becoming more costly because of lower gas content, thinner coal seams, greater depths and other unfavourable properties, he said.

“With western and southern gas export routes less likely, Turkmenistan’s geopolitical orientation may shift north or – more likely – east,” Alex Jackson from London-based consultancy Menas Associates told Interfax at the Caspian Forum in Istanbul this week. He argued Turkmenistan is unlikely to export gas south to Afghanistan, Pakistan and India or west through the Trans-Caspian Pipeline.

Week in Numbers

Mexican’t

-4.7%: Year-on-year decrease in Mexican production in 2011.

57 bcm: Estimated 3P reserves of Pemex discovery in Gulf of Mexico this week.

$1.90/MMBtu: Mexican wholesale gas prices in May, at a 10-year low.

Source: Interfax, BP, Pemex

Eight-year itch

300 bcm: Estimated maximum resources in the Absheron discovery in the Caspian Sea.

2015: Likely date for conclusion of Total’s development plan for Absheron.

2020: Likely date for start-up of production.

Source: Total

Return to coal

4%: Forecast gas demand growth in Asia Pacific until 2030.

43%: Power sector’s share of gas demand in Asia Pacific in 2011.

38%: Power sector’s share of gas demand in Asia Pacific in 2030.

Source: FACTS Global Energy