Wildcat’s Pick of the Week.

Every Monday, Wildcat will give you a headstart on the coming week, as well as a round-up of what mattered in the previous week.

Week Ahead

Monday 17 September: Austrian regulator to vote on gas transportation tariffs; the European Commission’s congestion management procedures come into force; Iraq Power and Electricity Summit, Istanbul (until Wednesday); the International Atomic Energy Agency’s general conference in Vienna (until Friday).

Tuesday 18 September: World Shale Conference & Exhibition, Texas (until Friday); FT Global Energy Leaders Summit, London (until Wednesday).

Thursday 20 September: EU-China summit in Brussels, Wen Jiabao, the Chinese premier, to attend;
European Commission’s public consultation on energy infrastructure projects ends.

Saturday 22 September: Norwegian maintenance on key gas export infrastructure ends

Winners & Losers

Winner: Italy’s Edison has added $575 million to its 2012 earnings following the successful conclusion of an arbitration dispute with Qatari LNG producer RasGas. The €450 million is a one-off award to compensate the Italian energy group for overpaying for Qatari LNG over the last two years. “It’s a breakthrough win as it paves the way for other European companies in the same situation to renegotiate the gas price with Qatar,” Edison said in a statement on Tuesday.

Winner: Demand for LNG in the shipping industry is expected to rise, after the European Parliament passed a law setting stricter standards for sulphur content in marine fuels. LNG is a cleaner alternative to the marine distillate or marine residual oil conventionally used to fuel ships. Switching to LNG could reduce sulphur oxide emissions from ships by between 90% and 95% and carbon dioxide emissions by around 20-25%, according to Germanischer Lloyd.

Winner: Offshore Western Australia (WA) and the Northern Territory – areas already supplying the majority of the gas that is driving Australia’s LNG boom – are still attracting strong interest from oil and gas explorers, with the Australian government receiving 16 bids for the seven new licences it tendered this year. The offshore permits will bring in an estimated A$289 million in new investment over the next three years, Resources and Energy Minister Martin Ferguson said in a statement on Thursday.

Loser: Santos and Australia’s leading resource industry group Australian Petroleum Production and Exploration Association (APPEA), have hit out at new legislation in New South Wales that tightly regulates CBM exploration in the state, arguing it will cause project delays and increase costs. “We are now, without question, one of the most heavily regulated industries in Australia. There is an enormous obligation placed on energy companies through this policy. This package of new regulations contains 27 elements that will lead to drawn-out assessment processes with increased security deposits and fees,” APPEA Chief Executive David Byers said.

Loser: Mexico’s state-controlled oil and gas explorer, Pemex, has admitted it does not have the capacity or expertise to develop the country’s vast shale gas reserves. “This is daunting, because the development challenges dwarf the potential of Pemex,” Pedro Silva, the company’s head of technical resources, said. “This is way, way beyond our capacity and potential.” Mexico’s shale reserves, estimated at around 8.4 tcm, will remain underground for over a decade even under the most optimistic drilling scenario, he said.

Loser: Tensions between Tokyo and Beijing increased after Chinese Maritime Surveillance ships arrived at a group of islands in the East China Sea claimed by both Japan and China on Tuesday. The maritime action came in response to a deal made by the Japanese government to buy three of the islands from their private owners. The seabed around the islands, which is controlled by Japan, is believed to contain significant deposits of gas and oil.

Quotes of the Week

“This is daunting, because the development challenges dwarf the potential of Pemex,” Pedro Silva, head of technical resources for the Mexican state-controlled company, said of developing Mexico’s vast shale reserves. Pemex expects to begin large-scale shale production in 2025.

“People, especially equity investors, don’t like Russian institutions, and that’s why the risk premium is quite high,” Evgeny Gavrilenko, managing director and chief economist at Troika Dialog, told Interfax, explaining why Russia’s accession to the World Trade Organisation will benefit the country in the medium to long term.

“This is not a perfect paper but it is an important first step,” European MEP Krišjanis Karinš said at a plenary session in Strasbourg on Tuesday, referring to new rules approved by the European Parliament that will increase transparency in energy contracts between member states and third countries.

Week in Numbers

28 years later

40%: Current proportion of European production to consumption.
21%: Possible proportion of production to consumption by 2040.
20%: Proportion of Europe’s 16 tcm of recoverable shale that is producible.

Source: European Commission

Poles apart

$500/Mcm: Price Poland pays for gas from Russia’s Gazprom.
$400/Mcm: A ‘fair’ price for a long-term contract, according to Polish treasury minister.
$360/Mcm: Spot market prices at Western European hubs.

Source: Interfax, Polish Treasury

Gulf stream

2.8 tcm: Low estimate of gas-in-place at Oman’s Khazzan-Makarem field.
4.2 tcm: High estimate of reserves at the field.
$24 billion: Initial investment needed in the field.

Source: Wood Mackenzie, Oman Oil and Gas Ministry