Here is what is going on in the natural gas industry around the world:
Nigeria’s share in global Liquefied Natural Gas (LNG) market is being threatened by a seeming lack of drive to push through existing investments in LNG projects within the country.
Accordingly, the country is gradually losing grip of its position in global LNG market share with its current share now put at eight percent, which oil and gas industry operators noted is two percent slide away from its previous share of 10 percent.
Some of the operators, who spoke at the eight international gas conference and exhibition of the Nigerian Gas Association (NGA) last week in Abuja, noted that the delay in achieving the Final Investment Decisions (FID) on key LNG projects such as Brass LNG, OKLNG and NLNG Train 7 will further add to the country’s loss of key LNG export portfolios.
In their various presentations at the conference which concentration was on the anticipated status of Nigeria’s gas sector in view of the passage of the Petroleum Industry Bill (PIB), these experts decried certain contents of the bill in relation to the growth of Nigeria’s gas sector.
According to them, the fiscal terms in the PIB for gas will further stifle investment in the sector with about 87 per cent of gas projects becoming unviable when the bill comes into operation.
They, however argued for a balanced fiscal and regulatory gas framework in the new bill, which had crossed the critical second reading in the legislative procedure.
The U.K.’s government is expected to announce plans for a major expansion of gas-fired power plants, backing away from a previous plan to phase out fossil fuels altogether from electricity generation by 2030.
The boost for natural gas, which is a source of carbon dioxide emissions, comes as the two main planks of low-carbon energy suffer growing setbacks. Opposition to onshore wind power is increasing within the U.K. government and the cost of building new nuclear power plants in Europe continues to rise. Consumer groups have become increasingly vocal about the high cost to consumers of subsidizing low-carbon energy.
In his Autumn statement on the U.K. economy Wednesday, Chancellor of the Exchequer George Osborne will confirm the need for up to 30 new gas-fired power stations by 2030, according to a person familiar with the policy. That number could rise to as many as 43 gas power plants, or just under half the U.K.’s current generating capacity, if the government revises its long-term plans to reduce carbon emissions, the person said.
The U.K. government says more gas-fired power will ensure future energy supplies that are flexible enough to fill in the gaps when renewable energy supply falters, for example on windless days, and to replace old coal and nuclear plants due to close by the end of the decade.
The measures to promote natural gas are designed to compliment support for low-carbon renewable and nuclear energy, laid out in the government’s energy bill published last week. However, critics say such a major expansion in gas consumption will jeopardize climate change targets and inevitably slow the deployment of low-carbon energy by drawing away investment.
“While some gas in the U.K. will be needed for flexible generation capacity, higher levels of penetration will hold back the development of the low-carbon technologies,” said Ben Caldecott, head of policy at investment manager and advisory group Climate Change Capital.
The expansion of onshore wind power, hitherto the fastest-growing renewable energy source in the U.K., already faces resistance. Conservative Energy Minister John Hayes said recently that there was no need to build any more onshore wind farms, although he was soon contradicted by the more senior Liberal Democrat Energy and Climate Change Minister, Ed Davey.
Offshore wind energy faces less political opposition, but the high costs of the energy produced has been criticized by consumer groups striving to keep bills affordable.
The Italian oil company ENI said Wednesday that it had made new natural gas discoveries in the waters off Mozambique, a find that will help consolidate ENI’s position as one of the leaders in the hot new East Africa region.
Offshore Mozambique, where ENI’s discovery is located, ranked third in the world in terms of oil and gas discovered last year, after the Santos Basin in Brazil and Iraqi Kurdistan, according to Mansur Mohammed, an analyst at Wood Mackenzie in Edinburgh.
The finds—from the sixth and seventh wells that ENI has drilled—add an additional 6 trillion cubic feet of gas to what ENI has already found. That is a large amount of gas but is dwarfed by the 68 trillion cubic feet that ENI now says it has found in its exploration concession called Block 4, where ENI has a 70 percent shareholding.
Three other shareholders—Galp Energia of Portugal, Kogas of South Korea and ENH, the Mozambican national oil company—each hold 10 percent.
The total amount discovered is equivalent to about 12 billion barrels of oil. A high proportion is likely to be recoverable, ENI said.
According to industry estimates, ENI’s share of the Mozambique discoveries could be worth around $15 billion.
The ENI finds coincide with an effort by the company’s chief executive, Paolo Scaroni, to focus more on exploration and production. In an interview, Mr. Scaroni said that ENI’s exploration activities in Mozambique would come to about $700 million. When you make a business of exploration and are “successful you make a huge amount of money,” he said.
ENI first found gas in Mozambique last year, closely following a discovery by Anadarko Petroleum of the United States.
The two companies are now negotiating with the government on a development plan. The biggest money earner is likely to be exporting gas to Asia as liquefied natural gas. The Web site of the Mozambique Instituto Nacional de Petroleo, the energy ministry, has a presentation that indicates that as many as 10 LNG plants or trains could be built, which would make Mozambique a very large player in the world gas market.
Mr. Scaroni said there could also be a role for a floating LNG facility, a technology that Royal Dutch Shell is now developing for use off western Australia. Shell recently tried to buy Cove Energy, which had a small position in the Mozambique discoveries, but was outbid by Thailand’s PTT Exploration and Production.
Novatek, Russia’s second-largest natural gas producer, has reached a deal to deliver 27 billion cubic metres of gas, worth up to almost $4 billion, to Mosenergo in 2013-2015, the electricity generator said.
Novatek and top Russian oil company Rosneft have recently been taking domestic market share from Gazprom , Russia’s largest gas producer and the major supplier to Mosenergo.
The deal, approved by Novatek’s board, will be discussed at an extraordinary general meeting of shareholders (EGM) on Jan. 9, 2013, Novatek said on Wednesday. Mosenergo valued it at up to 121 billion roubles ($3.9 billion).
Novatek’s shares rose 3.3 percent on the news, outperforming the broader Moscow stock market, which was up 1.75 percent as of 1325 GMT.
Novatek said the deal would facilitate closer access to end-consumers.
“The contract will allow Novatek to considerably reduce the present volume of natural gas sold to wholesale gas traders in relation to the company’s overall natural gas sales volumes mix,” it said.
Mosenergo supplies power to the Moscow area, covering 60 percent of its electricity needs with 15 plants.
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