Asian Buyers Say Prices, Demand To Trump Politics As Lure For U.S. LNG

Reuters

Asian natural gas buyers are counting on higher prices and growing demand to lure most North American gas shipments their way, even as U.S. lawmakers consider speeding up export approvals to cut Europe's dependence on Russia for the fuel.

Russia's seizure of Crimea from Ukraine has revived European worries about energy supply security. EU leaders are eager to end decades of reliance on Russian gas, and later on Wednesday will press the United States for clear commitments on a new source of supply.

U.S. lawmakers are already weighing changes to energy policy that would allow natural gas exports to any country that belongs to the World Trade Organization, and a key senator said on Tuesday that U.S. shale gas should be used to counter Russian influence in Europe.

Asian buyers, who have been counting on the fresh supply source to meet rising demand, said that Europe's option of increasing imports of liquefied natural gas (LNG) at the expense of Russian piped gas is a long-term, costly solution that may never happen.

"That is not going to happen overnight. You have to build up receiving terminals, which will take millions in investments and five or maybe ten years," chairman of Taiwan's CPC, Sheng-Chung Lin told Reuters at a gas conference in South Korea.

"Unless European countries show such determination, it won't happen," Lin said.

UK To Start Buying Gas From Russia Despite Threats Of Sanctions Over Crimea

The Huffington Post UK 

Britain is set to start buying gas directly from Russia this year despite EU politicians threatening to bring in further sanctions against Moscow amid tensions over the crisis in Ukraine.

Centrica, the UK's largest energy firm that owns British Gas, will start importing Russian gas directly from this October in a deal signed back in 2012, Reuters reported.

Centrica's plan is still on track, despite diplomatic tensions over Ukraine pushing EU politicians to consider energy sources that make them less reliant on Russia.

David Cameron recently warned that sanctions could hit Russian oligarchs like Chelsea football club owner Roman Abramovich and tensions have seen Russian spending at UK shops plummet.

UK domestic gas production is falling by around 7% annually. The UK has so far not imported gas directly from Russia, as Russian supplies come to Britain through Germany and other European pipelines.

In 2012, Britain produced nearly half of the 91 billion cubic meters of gas it used domestically, with 29% coming from Norway, around 7% from the Netherlands, 3% from Belgium and nearly 15% from Qatar.

Tory politicians have been bullish about how the UK could cope if further sanctions are brought against Moscow. 

Conservative MP Brooks Newmark, a member of parliament’s influential Treasury Select Committee, told HuffPostUK: "We can economically hurt Putin and his cronies as well, we can put a huge amount of economic pressure on them. They have enormous business interests in the UK and bank accounts here, too."

"Russia recognises that they are no longer one of the great global powers anymore so the only way they can reassert themselves domestically is by going into countries like Georgia and Ukraine."

Russia's state-run energy giant Gazprom sells between 11 billion and 12 billion cubic metres of gas to the UK, which fulfills around 15% of the country's total need, as well as providing around a third of Europe's demand for gas.

Source: http://www.huffingtonpost.co.uk/2014/03/25/uk-gas-russia-ukraine_n_5026247.html?utm_hp_ref=uk

East Mediterranean Eyes EU And Global LNG Markets For Gas Sales

Reuters

Europe's efforts to reduce its reliance on Russian energy supplies and booming demand for shipped gas are pushing ahead the development of the East Mediterranean's gas reserves, which have so far been marred by the region's instability.

Israel and Cyprus are both well placed to help diversify Europe's Russian-dominated market by pipeline, while sending liquefied natural gas (LNG) tankers to the world's best paying customers in Asia and Latin America.

Russia's seizure of Ukraine's Crimea region has shaken political relations between Russia and the European Union, and Brussels is stepping up efforts to find new suppliers.

"With recent events in Europe... and the aspiration of different countries to diversify their gas supply, that puts another spotlight on our massive resources and transforms our story into a global one," said Gideon Tadmor, CEO of Avner Oil , a leading explorer in the region, at a conference in Tel Aviv on Tuesday.

Almost one trillion cubic metres of recoverable natural gas has already been discovered in the eastern Mediterranean Levant Basin, enough to supply Europe with gas for over two years and worth between $370-$740 billion in current European or Asian market terms respectively.

Israel, which has so far found over 80 percent of all the gas, has said it would allow 40 percent of its reserves to be exported, while Cyprus will sell almost all of its gas abroad.

U.S. Lawmakers To Weigh Speeding Up LNG Exports To Help Europe, Ukraine

Reuters

U.S. lawmakers will hear testimony on Tuesday from those who favor loosening restrictions on liquefied natural gas exports so that abundant American supplies could help reduce Ukraine and Europe's dependence on Russian gas.

European worries about the security of energy supplies have grown since Russian forces seized control of the Crimean peninsula from Ukraine this month. Moscow has in years past cut gas supplies amid regional disputes.

Currently, the U.S. Department of Energy must give permission to export natural gas to all but a handful of countries with free trade agreements with the United States.

Opponents of unlimited gas exports have argued that shipping too much natural gas abroad could cause U.S. prices to rise, hampering the economy's ability to recover from the recent recession.

Hearings before the House and Senate energy committees come on the heels of the Energy Department's sixth approval of LNG exports from a U.S. plant in the past 10 months.

Turkey ‘earns $12 billion’ from Baku-Tbilisi-Ceyhan (BTC) Pipeline

AA

The Turkish Petroleum Corporation (TPAO) has earned $12 billion from the Baku-Tbilisi-Ceyhan (BTC) crude oil pipeline since 2005, when oil from Baku was first pumped, Turkish Minister of Energy Taner Yıldız has said.

During his speech in the southern province of Adana, Yıldız underlined the importance of the BTC pipeline for the region and trade volume created for the country.

He stated the TPAO has 6.5 percent of the shares in the BTC crude oil pipeline. British Petroleum (BP) and State Oil Company of the Azerbaijan Republic (SOCAR) hold the majority of the shares in the BTC pipeline, with 30 percent and 20 percent respectively. 

The pipeline has transported more than 1.8 billion barrels of crude oil to date.

Nearly 3 percent of the world’s oil trade is flowing along the BTC and Kirkuk-Yumurtalık crude oil pipelines through Turkey. The BTC pipeline has been transporting Azeri oil from the Caspian Sea to the Ceyhan Port of Turkey through the Georgian capital of Tblisi. The oil is then exported to European markets via the Mediterranean Sea.

Turkey on the frontline of Iraq's Kurdish oil row

AA

A move by Iraq’s Kurdish Regional Government to export 100,000 barrels of oil per day through Turkey is a tactical move brought about by U.S. pressure which could change after April 30 elections in Iraq, experts have told Anadolu Agency.

Baghdad has been opposed to the export of stored Kurdish oil from Turkey's south-eastern port of Ceyhan on the accusation that it violates Iraq’s constitution as it would bypass the country’s national oil company, SOMO.

Currently, 1.5 million barrels of oil are sitting in Ceyhan -- which has a total of storage capacity of 2.5 million -- and are awaiting Baghdad's approval to be exported. 

The KRG has been embroiled in a long-running row with the central government in Iraq over a proposed 17 percent share from oil revenues. The dispute has lead to political boycotts by Kurdish MPs over Iraq’s draft budget with the KRG refusing to withdraw demands, claiming it could never receive its fair share of oil wealth. 

Talks between Irbil and Baghdad have so far failed to find a solution. 

However, in a sudden move, following a phone call on Thursday between KRG President Masoud Barzani and U.S. Vice President Joe Biden, Kurdish authorities revealed that they would accept the export of 100,000 barrels of oil per day through SOMO from April 1 as a "gesture of goodwill" while negotiations for a permanent deal with Baghdad continued. 

Now Turkish, Kurdish and American experts have given AA their analysis on the dispute’s likely outcome.

Ali Semin, from the Istanbul-based think-tank BILGESAM, said the decision was a result of intensified mediation last week by Biden and U.S. ambassador in Baghdad, Stephen Beecroft.  

10 bids for Leviathan export tender to Turkey

Globes     Amiram Barkat

Bidders include Zorlu Group and a joint bid by Turcas Petrol AS and German electricity utility RWE.

More than ten bids were submitted in the tender by the partners in Leviathan for the export of natural gas to Turkey. The bids for the purchase of natural gas ranged from 7 billion cubic meters (BCM) a year to 10 BCM, amounts that could generate $22-31 billion revenue, assuming a 15-year gas supply contract at $6 per million British Thermal Units (mmBTU), the price of natural gas in Israel's domestic market.

Sources inform ''Globes'' that the bidders in the tender include Zorlu Group, which has stakes in independent power producers in Israel, and a joint bid by Turcas Petrol AS and German electricity utility RWE AG.

Noble Energy Inc. owns 39.66% of Leviathan, Delek Group Ltd. units Avner Oil and Gas LP and Delek Drilling LP each own 22.67% and Ratio Oil Exploration (1992) LP owns 15%.

In January, "Globes" reported that the partners in Leviathan had invited several dozen Turkish companies to bid in a gas supply contract from the gas field. The deal would include laying a pipeline to Turkey from Leviathan's proposed floating production, storage and offloading (FPSO) ship, which deliver gas to Israeli and regional customers. The price in the bids is the purchase price of the gas from the FPSO. In addition to this price, the bids will be evaluated on the basis of their commercial terms, including the take or pay condition and the capacity of the gas purchased.

Some of the bidders are willing to build the pipeline themselves, while others prefer working in partnership with the Leviathan partners. After reviewing the bids in the coming weeks, the partners will hold separate negotiations with the finalists for signing a gas purchase contract.

Source: http://www.globes.co.il/en/article-10-bids-for-leviathan-export-tender-to-turkey-1000926526

Europe to find it difficult to wean itself off Russian gas

AFP

Europe will have trouble weaning itself off Russian natural gas, analysts say, as its faces declining production at home and Asian competition for supplies.

Even before the current flare up of tensions with Russia over its de facto occupation and possible annexation of Ukraine's Crimea peninsula, Europe has been trying to reduce its dependence on Russian supplies.

The diversification effort has been bearing fruit: imports of Russian natural gas fell from 45.1 percent of the EU's total to 31.9 percent over a decade to 2012, according to data from the EU's statistics agency, Eurostat.

"Europe has reduced somewhat its dependence on Russian gas, even if Gazprom remains a key actor in Europe," said Pascale Jean, a natural gas specialist at PriceWaterhouseCoopers.

However the Russian gas giant Gazprom has made no secret it aims to claw back its market share, having built a new pipeline to Germany and a second one under construction to southern Europe.

The share of Russian gas in European imports climbed last year, and its share in total consumption has remained relatively stable over the past decade at just under a quarter.

However, EU production which currently covers a third of consumption, is expected to fall by up to 20 percent by 2020 and up to 30 percent by 2030.

Gazprom Proposes Oil And Gas Development In Crimea

Reuters

Russian state-owned energy company Gazprom has proposed to develop Crimea's oil and gas sector, an official of the Ukrainian region which has applied to join Russia was quoted by RIA news agency as saying on Tuesday.

"Of course, Gazprom was the first to approach us (with a proposal)," said Rustam Temirgaliev, Crimea's first deputy prime minister.

He was asked if the Ukrainian region, which declared its independence and applied to join Russia following a weekend referendum, had received proposals from Russian companies to develop its oil and gas industry.

A Gazprom spokesman declined comments.

Last week, Temirgaliev said that the local authorities may sell the energy firm Chornomornaftohaz to a Russian company "such as Gazprom" once the region takes control the firm, which is now part of a Ukrainian state energy company.

A Moscow-backed referendum in Crimea on Sunday showed overwhelming support for joining the Russian Federation.

European leaders seek ways to curb dependence on Russian gas

Reuters

European leaders will seek ways to cut their multi-billion-dollar dependence on Russian gas at talks in Brussels on Thursday and Friday, while stopping short of severing energy ties with Moscow for now.

Russia's seizure of Ukraine's Crimea region has revived doubts about whether the European Union should continue to rely on Russia for nearly a third of its gas, providing Gazprom with an average of $5 billion per month in revenue. Some 40 percent of that gas is shipped via Ukraine.

EU powerhouse Germany is among those with particularly close energy links to Russia and has echoed comments from Gazprom, Russia's top natural gas producer, that Russia has been a reliable supplier for decades.

Russian supplies of gas to the EU were disrupted in 2006 and 2009, but only because of knock-on effects when Moscow cut off Ukraine for not paying its bills. Although those incidents resulted in EU attempts to diversify its energy sources, contracts to the bloc have always been honoured.

EU officials said the current Ukraine crisis, however, had convinced many in Europe that Russia was no longer reliable and the political will to end its supply dominance had never been greater.

"Everyone recognises a major change of pace is needed on the part of the European Union," one EU official said on condition of anonymity.

"At the back of people's minds, there will always be the doubt that if the relationship goes sour, Russia has that weapon and it's not something it should have," another official said, referring to Russia's option of severing supplies.

Trans-Anatolia Gas Pipeline ‘to create15,000 jobs across Turkey’

AA

The Trans-Anatolia Gas Pipeline (TANAP), the gas pipeline project that will carry Azerbaijani natural gas to Europe through Turkey, will create 15,000 jobs in 20 provinces in Turkey, the energy minister has said.

Speaking to reporters on Feb. 28, Energy Minister Taner Yıldız said the TANAP was slated to be carried into effect as of 2018 and would create employment in the cities it will pass through and for the domestic steel pipe makers that will take part in the project.

Yıldız said the total amount of investment planned to be poured into the pipeline is around $45 billion, nearly $30 billion of which will be injected into construction at production sites over a four-year construction period, expected to be started in 2015.

Local steel pipe makers, who have been struggling with tough trade conditions abroad, have pinned their hopes on the project.

The Turkish part of the pipeline will require approximately 1,800 km and approximately 2 million tons of steel pipes. Six of the 18 steel pipe suppliers involved in the project are from Turkey.

The TANAP is planned to carry 16 billion cubic meters (bcm) of gas from Azerbaijan’s Shah Deniz II field in the Caspian Sea, one of the world’s largest gas fields.

“We have two hats in the TANAP pipeline: A carrier and a consumer,” Yıldız said.

The energy-hungry Turkey will receive six bcm of natural gas, while 10 bcm, equal to about 1.5 percent of Europe’s total consumption, will flow to Europe.

Iraq Oil Exports Hit 25-Year High In February

AFP

Iraq exported 2.8 million barrels of oil per day in February, a top minister said Saturday, a sharp month-on-month gain and the highest such figure in at least a quarter-century.

Production, meanwhile, reached 3.5 million bpd, the deputy prime minister for energy affairs, Hussein al-Shahristani, told reporters in the southern port city of Basra as he inaugurated a refinery.

"Production in February was 3.5 million barrels per day, and we exported 2.8 million barrels per day," he said.

The export figure was the highest since then dictator Saddam Hussein invaded Kuwait in 1990, triggering a crippling embargo and international sanctions that massively restricted Iraq's energy industry.

In 2012, when average daily exports reached 2.5 million barrels per day, the oil ministry said it was the highest such figure since 1989.

Shahristani said February output would have been significantly higher if not for energy disputes with the country's three-province autonomous Kurdish region.

Most of Iraq's crude is exported via its southern terminals near Basra, but a significant portion goes through a northern pipeline that is periodically bombed by militants.