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.
The week ahead:
Monday 29 October: Deadline for expression of interest in supplying LNG to Klaipedos Nafta’s new offshore floating terminal in Lithuania; Shale Gas Environmental Summit, London (until Tuesday); Oil & Gas Finance, Texas (until Tuesday).
Thursday 1 November: Russia’s Finance Ministry to submit proposals to the government on a formula to calculate the natural resources extraction tax (NRET) for gas; Royal Dutch Shell Q3 results; BG Group Q3 results; ExxonMobil Q3 results
Friday 2 November: Pricing Bureau of Hunan to unveil a residential gas pricing tariff for the province’s three largest cities
Winners & Losers
Winner: BP has agreed to sell its 50% stake in its TNK-BP joint venture to Rosneft for $26.8 billion in a cash and shares transaction. The deal lays a new foundation for the British major’s work in Russia and takes it well beyond its $38 billion asset sales target to cover the legal costs from the Gulf of Mexico oil spill. BP will, as the result of the deal, hold a 19.75% stake in the Russian oil company and receive $12.3 billion in cash. BP then intends to use $4.8 billion of the cash consideration to acquire a further 5.66% stake in Rosneft from the Russian government.
Winner: Australia’s Woodside Energy is one of the bidders shortlisted to take a 30% stake in the 490 billion cubic metre Leviathan field off the coast of Israel. Peter Coleman, Woodside’s new chief executive, has been vocal about seeking opportunities to apply the company’s deepwater expertise to projects overseas and investment in LNG in Israel – which would have access to the European market, as well as Asia – would be an ideal complement to the company’s Asian-focused investments in Australia.
Loser: The Canadian government blocked a $5.32 billion bid from Malaysia’s Petronas for Calgary-based Progress Energy on Friday, sending shockwaves through the industry. “I am not satisfied that the proposed investment is likely to be of net benefit to Canada,” Christian Paradis, Canada’s minister of industry, said. The decision will come as blow to Petronas, which had hoped to expedite Canadian LNG exports to Asia’s gas-hungry markets. The news has also called into question China National Offshore Oil Corp.’s $15.1 billion bid for Nexen. Stocks in both Progress and Nexen fell on the opening of the Toronto and New York Stock Exchanges on Monday, with the former shedding nearly 12% and the latter 6% in the first few minutes of trading.
Loser: Gazprom has lost an arbitration case against Czech company RWE Transgas regarding the recovery of advance payments for unselected gas in the framework of a take-or-pay contract. “The arbitral tribunal decided a dispute between RWE’s Czech subsidiary RWE Transgas and Gazprom Export, in favour of RWE. The tribunal has confirmed that RWE Transgas is allowed within its long term, oil-indexed, gas supply contract with Gazprom export to reduce substantial offtake volumes under the existing take-or-pay obligations,” Sabine Jeschke, spokeperson for RWE Supply & Trading, told Interfax on Wednesday.
Loser: Eni is the latest company to declare force majeure on part of its operations in Nigeria, joining Royal Dutch Shell and Total in announcing disruption to supplies, including to the Nigeria LNG plant. Eni, through its subsidiary Nigerian Agip Oil Co., is one of three suppliers to the Nigeria LNG plant. The other two are Shell Petroleum Development and Total Exploration & Production Nigeria, both of which have declared force majeure in recent weeks on part of their gas supply to the plant. It is unclear how much of NLNG’s gas supply is affected by the disruptions.
Quotes of the Week
“Adding contracts does not make a market. People, prices and volumes make markets, and modern infrastructure is a must,” an Italian trader told Interfax. Italy’s gas exchange operator, GME, announced on Monday that it is considering offering the ability to trade futures contracts in the hopes of building liquidity at the hub.
“Many people talk about the world being awash with LNG and gas – I’m much more cautious,” Martin Houston, BG Group’s chief operating officer, told delegates at the Singapore International Energy Week on Wednesday. He believes the industry is over-optimistic about its ability to supply the growing demand for gas.
“It is hard to believe that Georgia was once considered the most corrupt country of the former Soviet Union. Now it is one of the best places to do business,” Giorgi Badridze, Georgia’s ambassador to the UK, said at a seminar on the Southern Gas Corridor in London on Wednesday. Georgia is now a crucial country for delivering Central Asian gas to Europe, he said.
Week in Numbers
10%: LNG’s share of global gas market.
14%: BG forecast for LNG’s share by 2025.
175 mt: BG forecast for LNG capacity required to meet demand by 2025.
Source: BG Group
$12.3 bln: Cash Rosneft paid for BP’s 50% stake in TNK-BP.
$4.8 bln: Cash BP will pay for Kremlin’s 5.7% stake in Rosneft.
19.8%: BP’s Rosneft stake after the deal.
Do the math
0.4%: Annual growth in US gas consumption from 2010 to 2035.
1%: Annual growth in US production in same period.
5%: Production surplus by 2035.
Source: US Energy Information Administration