In this Issue:

EDITORIAL: FOLLOW THE MONEY

The year ended with the unexpected: Russia paid Ukraine’s arbitration award with interest, and the long-awaited five-year transit deal was signed with a good 24 hours to spare. Only a few days before, the winter gas price at European hubs had spiked on Ukraine’s announcement that the chances of a deal were vanishingly small. There was even an exchange of prisoners of war, hinting at a much-welcomed improvement in other relations between the two countries as well.

A FALLING MARKET

Natural gas had a difficult time in 2019, with a global oversupply keeping prices low, even though demand kept on increasing. Much the same is expected in 2020, with a glut of LNG threatening shut-ins.

In Europe, major changes are afoot with the European Green Deal expected by March, setting the framework for energy developments over the next 30 years, with net-zero emissions by 2050 to be enshrined into law.

In Asia, energy security forces and increasing reliance on domestic resources unleashed by the US-China trade war will continue to haunt LNG export markets, contributing to the global LNG glut and low prices.

EUROPEAN WINTER PRICES SLUMP AS RISKS RECEDE

European gas prices, like those elsewhere in the world, have been depressed over recent months. There had been some support for winter prices from the risk of an interruption to flows through Ukraine, which has encouraged high storage levels. But as of late December, the risk had gone and with the winter so far relatively mild, the support has gone. Prices have slipped close to LNG breakeven levels, despite recent crude strength. However, fresh US sanctions halted work on Nord Stream 2 December 21, which could hamper Russian imports later in the year, and may have helped Russia’s minds on the Ukraine transit deal.

2020S: THE DECADE OF GAS

The European gas industry will have a ‘major’ role to play in delivering the European Commission’s Green Deal, Eurogas secretary-general James Watson tells NGW. 

AUSTRALIA REVIVES RESERVE PLAN

As 2019 drew to a close the Australian government had a surprise in store for the country’s natural gas exporters. On December 5, while praising the government’s efforts to shore up domestic gas supplies, Australia’s natural resources minister Matthew Canavan quietly announced that the government would be working with local authorities to “implement a National Gas Reservation Scheme”.

CHEVRON EXPLORES GAS ASSET SALES

Chevron’s announcement of its capital budget plans for 2020 reflects its increasingly bearish outlook for North American natural gas. California-headquartered Chevron is planning to keep capital spending flat for the third consecutive year at $20bn. It warned, however, that it would reduce funding to certain gas-related opportunities, including its shale assets in Appalachia and its proposed Kitimat LNG project in British Columbia (BC), Western Canada.

CHINA’S GAS CHALLENGES

This year China’s natural gas demand has been experiencing rapid and challenging change. Whether driven by economic factors or energy supply security, during the last few months the rapidly-growing gas demand has become a thing of the past.

China’s National Energy Administration (NEA) and the State Council Development Research Center issued a natural gas development report on August 31 that raises a number of interesting issues on the future of natural gas in China.

UKRAINE CONTINUES GAS PUSH

Ukraine has offered dozens of production-sharing contracts (PSCs) and concessions to investors over the past year, under an ambitious push to become self-sufficient in gas. In its latest tender, authorities are now seeking bids for three more PSCs covering almost 3,600 km2 of the Dnipro-Donets basin in eastern Ukraine, which hosts many of the country’s largest gas fields.

“We expect new companies to participate; we expect real competition,” Roman Opimakh, the head of Ukraine’s state geological service, told NGW.

INDIAN CBM PRODUCER EYES SHALE

London-listed but India-focused coalbed methane (CBM) producer, Great Eastern Energy Corporation (GEECL), is expected to start shale gas exploration in its flagship Raniganj (South) block in the eastern Indian state of West Bengal by the middle of 2020, according to the company’s CEO Prashant Modi. GEECL is expected to invest $2bn for the full development of shale resources over the next five to seven years.