Gas Matters Today | news roundup | w/c 17 July 2023

International 

The International Energy Agency (IEA) forecasts that global gas demand will remain flat in 2023 followed by a steady 2% growth in 2024, thanks mainly to Asia. The forecast comes as global gas consumption contracted by 1.5% – or 65 Bcm – in 2022, amidst broader geopolitical and macroeconomic uncertainties. Four-fifths of the expected demand increase next year will originate from rapidly developing markets within the Asia Pacific region, IEA said in a report published last Monday. Despite stability in the region's natural gas demand in the first half of 2023, a projected 3% growth in full year 2023.

Fertiliser producer Yara said last week its Q2’23 energy prices had decreased by 55% on the previous year to USD 10.2/MMBtu against the global weighted average gas cost. The company said it expected its gas cost for Q3’23 to be USD 800 million lower than in 2022, depending on future spot prices. Yara’s total gas cost in Q2’23 was USD 475 million compared with USD 1.24 billion in Q2’22.The decrease is mainly related to European gas cost which decreased from USD 31.1/MMBtu in Q2 22 to USD 14.3/MMBtu in Q2'23. 

Australasia 

Australia – Australia’s Woodside reported revenues of AUD 3.08 billion (USD 2.08 billion) in the second quarter of 2023, down 29% on the previous quarter, due to lower realised prices and lower production, the company said last Wednesday. Woodside said its Australian LNG production stood at around 20.1 million boe in the quarter, which was lower than in the previous quarter but higher year-on-year. Total oil and gas production stood at 44.5 million boe in Q2’23, down 5% compared with the previous quarter.

Australia’s Santos reported an 18% drop in sales revenue in Q2’23 compared with the previous quarter, of USD 1.3 billion, owing to lower LNG sales volumes and lower commodity prices, the company said last Thursday. Running parallel, Santos said the suspended Barossa gas project to backfill Darwin LNG is now 60% complete and that it remained committed to the target of starting production in the first half of 2025 if environmental permits are granted. 

Asia Pacific 

Japan – Japan’s Prime Minister Fumio Kishida last Tuesday visited Qatar to discuss energy security and LNG supplies, his third stop in the region following meetings with leaders in the United Arab Emirates (UAE) and Saudi Arabia in recent days. Running parallel, the EU and Japan announced they had established an energy security partnership on global LNG supply, transparency and methane emissions. Energy security was high on the agenda when Kishida visited Qatar for the first time since taking office in October 2021.

Tokyo Gas, via its subsidiary Chiba Sodegaura Power, last week announced that it has reached a final investment decision (FID) on a combined-cycle gas turbine (CCGT) plant in Sodegaura, Chiba Prefecture. The move comes amid Japan’s push towards cleaner power generation and the new plant will be future-proofed to accommodate either hydrogen or carbon capture and storage (CCS). Tokyo Gas said it will build a 1.95 GW, high-efficiency, CCGT power generator capable of hydrogen co-firing, and plans to launch operations successively starting from 2029. 

North America 

US – Kinder Morgan (KMI) last week downgraded its 2023 revenue forecast, due to “expected lower commodity prices”, as the pipeline transportation firm posted a 7.7% year-on-year decrease in its Q2’23 income to USD 586 million. Meanwhile, technology and oil services operator Baker Hughes announced a 25% year-on-year revenue increase to USD 6.3 billion on the back of higher volume in its industry and energy technology (IET) and oilfield services and equipment (OFSE) segments. 

The US Department of the Interior announced last Thursday that it will hold the country’s first-ever offshore wind energy lease sale in the Gulf of Mexico next month, in line with the Biden-Harris Administration’s pledge to deploy 30 GW worth of offshore wind capacity by 2030 and carbon-free electricity by 2035. This comes as a number of international oil and gas companies have announced plans to invest in the US offshore wind sector. 

Central & South America 

Argentina – The EU and Argentina have signed a memorandum of understanding (MoU) on energy cooperation that could lead to tighter cooperation potentially benefiting development of Argentina’s LNG export industry. Running parallel, Argentina’s government is also drafting a bill which is aimed at promoting investment in LNG export infrastructure through incentives such as tax benefits The agreement, signed on 12 July but released this week, aims to strengthen cooperation in the energy sector, particularly in the development of natural gas and LNG, hydrogen, renewables and energy efficiency.

A shipment of Russian LNG was rejected last week by the Argentine government and state-owned energy company Energía Argentina (Enarsa). Argentina has not adopted sanctions against Russia and the country is facing energy shortages with LNG imports having risen by 0.8 Bcm in the first half of the year. Argentine authorities took the decision jointly with Enarsa’s president, economy minister Sergio Massa said during a live interview with Argentine television channel C5N.

UK 

UK electricity and gas TSO National Grid has agreed to sell a further 20% equity interest in its UK gas transmission and metering business National Grid Gas (NGG) to a consortium led by Australia’s Macquarie Asset Management, which already owns 60% of the business and which has the option to acquire the whole 100%. The sell-off is part of National Grid’s continued portfolio repositioning, which would see the firm more exposed to the UK electricity sector in a move to support the country’s net zero targets.

Europe 

The European Commission (EC) last Thursday gave state aid approval to two projects aimed at decarbonising steel production in Germany and France. The German and French subsidy schemes approved by the EC could amount to over EUR 2.8 billion (USD 3.11 billion) combined and will see natural gas and renewable hydrogen play a key role in the decarbonisation process. The EC said it has approved, under EU State aid rules, two German state aid measures to help ThyssenKrupp decarbonise its steel production and accelerate the uptake of renewable hydrogen.

Poland – Poland’s state-run energy companies PGE, Enea, Tauron and Energa have received offers from the Polish state treasury for a takeover of their coal-fired power plants as part of a wider planned overhaul of the energy sector. Selling off coal assets will make it easier for the companies to attract financing in order to carry out the energy transition, according to the Polish energy ministry. The offer was announced by Poland’s minister of state assets Jacek Sasin on his Twitter account last Saturday and then confirmed by the ministry in a Monday release.

Romania – The Romanian energy ministry last week published a draft which outlines a legal framework for the development, construction, and operation of wind power in the Black Sea with a combined capacity of 3 GW by 2035. This follows an announcement by Black Sea Oil & Gas (BSOG) earlier this month that it has launched a permitting process for an offshore power corridor in the Black Sea, providing the first-ever connection from offshore wind to grid.

Mediterranean 

Israel – Four consortiums of companies have submitted bids in Israel’s latest exploration tender for additional offshore natural gas fields, the country’s ministry of energy and infrastructure announced two weeks ago. What distinguishes this round from the three previous tenders is that companies already in ownership of existing reserves were not allowed to participate in the bidding. The ministry said that the four groups were made up of nine companies, which submitted six proposals in total as part of the tender to obtain licenses for natural gas exploration offshore Israel. 

North Africa 

Morocco – Morocco has signed a 12-year agreement with Shell for 0.5 Bcm/year of LNG deliveries for an undisclosed sum, the country’s energy ministry announced last Monday. In the first phase, the LNG will be supplied to Morocco via Spanish LNG terminals and the Maghreb Europe Gas Pipeline (GME) while the longer-term plan is to import the LNG directly. A statement published by the ministry did not confirm the financial terms of the agreement but referred to it as a Morocco’s first medium-term LNG contract and said it would apply over “the next 12 years”.