Daily Digest: April 7th, 2020
Gazprom Export Revenues Halve in Jan-Feb
Gazprom's revenues from gas exports slumped 51.3% year on year in January-February, data published by Russia's Federal Customs Service (FCS) on April 6 shows, landing at $5.05bn.
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The Big Picture:
- Rising LNG imports and warm weather drove down European gas prices last year. Gazprom has shifted towards more hub-based pricing in its supply contracts in recent years, increasing its exposure to these prices.
- Gazprom is looking to consolidate its position as Europe's top gas supplier with the completion of the 55bn m3/yr Nord Stream 2 gas pipeline to Germany. The project is now expected to come on stream in early 2021 – over a year behind schedule – after being targeted by US sanctions.
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ExxonMobil Takes Axe to 2020 Spending Plans
ExxonMobil announced it would cut its planned capital expenditure by 30%, and also target a 15% reduction in cash operating expenses, in response to bearish market conditions brought on by the Covid-19 pandemic.
The Big Picture:
- Hardest hit by the cuts will be ExxonMobil's operations in the US Permian basin. A decision on the Rovuma LNG project in Mozambique, expected this year, has also been delayed, giving the major time to work with its partners and the local government to optimise development plans.
- But its Coral floating LNG venture off Mozambique, operated by Italian Eni, remains on track. ExxonMobil will maintain its focus on major deepwater finds off Guyana, where the launch of Liza Destiny Phase 2 oil development will go ahead in 2022 as planned.
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Nearly Half Oz Gas Reserves 'Out of the Money': Rystad
At current gas prices nearly half of Australian gas resources will become uneconomical, a report published April 3 by Rystad Energy said.
The Big Picture:
- In Australia, close to 30% of gas production is derived from high-cost coalbed methane (CBM) sources.
- Though gas prices on Australia’s east coast historically have been high, from late 2019 they began to converge towards LNG netback pricing.
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Total Moves Ahead with Divestments
Total is pushing ahead with its $5bn divestment programme, announcing that it had closed a sale in Brunei and signed an agreement to shed additional assets in Sierra Leone and Liberia for a total $400mn.
The Big Picture:
- Total has completed the transfer of its 87% stake in the CA1 oil and gas block off Brunei to Anglo-Dutch Shell for $300mn, it said in a statement. Additionally, it struck a deal to sell its fuel marketing and services businesses in Liberia and Sierra Leone to local company Conex Oil and Gas Holdings.
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Total also announced it signed an agreement to charter its first two LNG-powered very large crude carriers (VLCCs).
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Neptune Hails Dutch Support for Offshore
Dutch offshore gas production might be in a state of managed decline, but Neptune Energy's country head Lex de Groot is optimistic that there is still life on the continental shelf for years to come.
The Big Picture:
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Neptune's Dutch assets, including transport facilities – it is the biggest offshore producer there – can be brought into play in the energy transition, extending the company's business, he told NGW in an interview early April. The company announced a carbon intensity reduction plan April 6.
- "Gas production can give way to carbon storage and other means of reducing emissions," it said. There are already some major Dutch CCUS projects, like Porthos and Athos.
Iran’s gas output stood at 267bn m3 in the fiscal year to March 20, NIGC announced April 5. According to official statistics obtained by NGW, this was up just 2.85% year on year, marking the lowest output growth rate since 2012.
The Big Picture:
- Iran’s oil minister Bijan Zanganeh had earlier claimed that production from South Pars – which accounts for a quarter of the country’s total output – surpassed 800mn m3/d.
- The company also said exports grew 26% yr/yr to 17.5bn m3. Iran exports gas to Iraq and Turkey, barters gas for Armenian electricity and swaps gas with Azerbaijan.
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Teekay Inks Term Charter for Two LNGCs
LNG carrier operator Teekay LNG Partners has secured new fixed-rate charters for two of its 52% owned LNG carriers, a 12-month charter on the Arwa Spirit and an eight-month charter on the Methane Spirit, it said April 3.
The Big Picture:
- The two carriers will start the charters upon completion and in direct continuation of their existing contracts.
- "With these two new fixed-rate contracts, our LNG fleet is now 98% fixed though 2020 and 94% fixed for 2021,” Teekay Gas Group CEO Mark Kremin, said.
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Energy Firms Appeal Against Balticconnector Shutdown
Energy companies have called on Latvia's government and the region's gas transmission system operators to delay the one-month shutdown of the Balticconnector gas link between Finland and Estonia, according to an appeal published by Estonian gas and power supplier Elenger on April 6.
The Big Picture:
- Balticconnector was commissioned in December, opening up the Finnish gas market, which until then received all its pipeline gas from Russia. The Baltic states can also use the pipeline to access Russian gas via Finland.
- The shutdown of Balticconnector will result in millions of euros of losses for market participants that rely on its gas, Elenger said.
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Permian Flaring Down in Q1: Rystad
Natural gas flaring in the Permian basin fell in Q1 2020, consultancy Rystad Energy said in an April 6 report, one of the few “bright lights” in the current market environment.
The Big Picture:
- “We estimate total gas flaring declined to 700mn ft3/day Q1, the lowest quarterly flaring rate since the third quarter of 2018,” it said.
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Permian flaring reached an all-time high of 750mn ft3/day in Q3 2019, Rystad said in a November 2019 report.
BP Calls FM on Golar FLNG Vessel
Shipowner Golar LNG has had notification from UK BP that it is invoking force majeure in their floating LNG vessel agreement signed February 26, 2019, the company said.
The Big Picture:
- It was due to start liquefying gas from the first phase of the Greater Tortue Area (GTA) project offshore Senegal and Mauritania in 2022 but this date has now slipped.
- BP claims that the recent global outbreak of the novel coronavirus (Covid-19) means it will not able to be ready to receive the floating liquefied natural gas facility Gimi when agreed.
