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Storm warning in the U.S. oil & gas sector

Posted in Analysis, Country Report, Natural Gas Market, Press release on

The new CEDIGAZ report, U.S. Natural Gas Update and Outlook*, analyzes the consequences of the oil price decline on the U.S. oil and gas sector as well as the implications for production and hydrocarbon prices.

The oil price decline has left American producers in a situation like that of 2009 following the collapse of the Henry Hub gas prices. At the time, shale gas production was growing fast but demand was depressed due to the effects of the subprime mortgage crisis. Producers reacted by redirecting their investments towards liquid-rich deposits (containing oil or natural gas liquids) and were thus able to benefit from the oil price recovery. This strategic reorientation did not penalize gas production, which continued to grow, thanks to the gases associated with oil production which, in recent years, have been responsible for almost all growth in gas production. Today, more than 50% of the shale gas produced in the United States comes from liquid-rich deposits. Consequently, any decrease in liquids production occurring in reaction to falling oil prices is bound to have major repercussions on domestic gas production.

The European LNG market in H1 2015: imports grew, reloads dwindled

Posted in LNG Markets, LNG Service, Natural Gas Statistics on

European LNG net imports: + 27.8% year on year in H1 2015

LNG Gross Imports in EuropeLNG net imports increased significantly to 15.9 million tons in the first half of 2015 against 12.4 million tons in H1 2014 due to more deliveries and less reloads. Gross imports showed a two-digit growth rate or even more in all countries but France and Spain – where they decreased by 5% and 15.3% respectively – thanks to the capacity of liquid markets of Northwest Europe to absorb the LNG left available by Asian buyers. Overall, gross imports grew by 11.9%, mostly driven by imports in Belgium, the Netherlands and the United Kingdom. Together, these three countries received 6.88 million tons of LNG in H1 2015 against 5.04 million tons in H1 2014 (+36.7%), mostly from Qatar. The latter, which is diverting flexible LNG from Asia, exported 9.8 million tons of LNG to Europe in H1 2015 against 7.85 million tons in H1 2014 (+24.9%).

Long-Term Pipeline Supply Contracts in Europe dominated by Russia

Posted in Long Term Contracts, Natural Gas Market, Supply contracts by pipelines on

The recently disclosed update of Cedigaz’ database on Long-Term Pipeline Supply Contracts in Europe shows limited contractual activity during the past 12 months. Since the database’s last update in June 2014, only 3 new contracts, all with UK buyers, have been identified by Cedigaz for a total volume of 6.56 bcm/yr. with durations ranging from 6 to 10 years. This contrasts with the 18.3 bcm/yr. contracted or renewed in 2013, including 10 bcm/yr. of Shah Deniz contracts and the extension for 4 years (until the end of 2017) of the 6.2 bcm/yr. between Gazprom and Panrusgaz (Hungary).

Contracts in force in Europe[1]

At the beginning of 2015, Cedigaz’s database lists 110 contracts in force in Europe representing 410 bcm/yr. (including intra-European contracts), of which 60 contracts (263 bcm/yr.) with countries outside Europe (Algeria, Azerbaidjan, Iran, Libya and Russia), 25 contracts with Norway for a total 87 bcm/yr. and 25 contracts (61 bcm/yr.) with other countries inside Europe (mainly Dutch contracts).