Here is what is going on in the natural gas industry around the world:
Iraq has approved the construction of a natural gas pipeline across its territory that will connect Iran to key ally Syria. The move likely to strengthen Tehran’s influence over its neighbors.
The Iraqi Cabinet said in a statement Tuesday evening that it has instructed the country’s oil minister to sign a framework agreement for the $10 billion project, allowing the pipeline to move ahead.
The project is designed to supply gas from the giant South Pars field to Syria as well as other export markets.
Iran signed a preliminary deal to build the 1,500-kilometer (750-mile) pipeline in July 2011 as Syrian rebels were stepping up their fight to topple President Bashar Assad. Work on the project started in November.
After Russia, Iran has the world’s second-largest natural gas reserves.
Southeast Asian countries will drive overall Asian liquefied natural gas demand through 2025, a new report says.
Represented predominately by Indonesia, Thailand, Malaysia and Singapore, the region will account for one-third of that demand growth, increasing 45 million tons annually, the report from global research consultancy firm Wood Mackenzie says.
Of particular interest are Indonesia and Thailand, which have been making sizable investments in developing their LNG infrastructure both domestically and overseas.
“Indonesia will increasingly require LNG as we expect domestic demand to outpace domestic supply,” Wood Mackenzie Senior Gas Market Analyst Nicholas Browne said in the report.
The third-largest LNG exporter, Indonesia accounted for approximately 9 percent of global LNG exports in 2011, behind Qatar and Malaysia.
Indonesia aims to establish coal bed methane exploration and production technology, but Browne said that early CBM pilot well results in South Sumatra indicate that production won’t meet previous expectations, thus providing more room for LNG.
While the rate of India’s LNG market growth is likely not to be as sizeable as previously thought, it is expected to grow 20 million tons per annum by 2025, the report states.
“In India, we are now seeing faltering domestic gas production and this is expected to limit the development of the gas market,” Browne said. “Perhaps counterintuitively to some, reduced gas production will also lower the rate of LNG market growth in India.”
For example, production from Reliance’s D6 block fell to 11 billion cubic meters last year from a peak of 20 bcm in 2010.
This decline in gas output will constrain gas availability to the Indian market, mainly affecting the power sector in the medium term, Browne said.
Like the truth, US natural gas will come out — provided Washington doesn’t block it.
US natural gas trades for a little over $3/MMBtu, while in Europe the price is closer to $12. A supply boom coupled with a lack of export options has kept gas prices low in America. Europe, meanwhile, depends on imports from countries, such as Russia, that demand prices linked to those of oil, which is relatively expensive.
Cheap stuff attracts buyers, and gas is no different. French utility EDF has announced plans to develop floating barges that could liquefy North American gas to be shipped overseas. In theory, this could offer a cheaper, faster way to get US gas on the high seas than some land-based projects.
That remains to be seen. The bigger point to draw from this move is that Europe needs cheaper energy, and its companies are getting creative in how to tap it. In December, Austria’s Voestalpine announced plans to build a facility in North America to use cheap gas to make a precursor to steel that will then be shipped back home for final processing.
Europe needs the help. Its power stations are burning more US coal these days, which has been displaced by cheap gas at home. That helps with costs but does nothing for Europe’s carbon emissions targets.
Ukraine is counting on direct gas deliveries from Turkmenistan starting this year, Energy and Coal Industry Minister Eduard Stavytsky said at a press conference in Kyiv on Wednesday.
Turkmenistan has about ten billion cubic meters of natural gas not contracted for with Russia or other countries, and that is what Ukraine is reckoning on, Stavytsky said. “Production in Turkmenistan is growing,” he said. “The approximate volume for delivery through Russia amounts to around ten billion cubic meters of gas,” he said, adding that negotiations are underway with Russia over the possibility of Turkmen gas transiting its territory to Ukraine. In particular, a compromise on this issue is planned in the context of a free trade area agreement. The amount of Russian natural gas Ukraine imports this year will depend on price, Stavytsky said. “Negotiations are underway on price reduction, and the volume [of gas bought from Russia] will depend on it. We are in tandem negotiating over diversified deliveries from Europe, so in the near future we will settle with our colleagues in Europe and in Russia on the amount of delivery to Ukraine,” he said. As for the possible price for Ukraine on Turkmen gas, Stavytsky said that a fair price would be the spot market price less the transit component. “If we take the spot market price and deduct the transit component, then we reach a price that would be fair for Ukraine,” he said.