Australian average wholesale gas prices remain below Asian average

(APPEA Media Release (extract), 5 July 2017).

Average wholesale gas prices in Australia remain lower compared to the average in the Asia‑Pacific region, according to a new report. The International Gas Union’s Wholesale Gas Price Survey 2017 shows that the average wholesale gas price in Australia last year of around $US4.29/MMBTU was around one-third less than the average price for the Asia‑Pacific region. By comparison, Australia’s leading trade partners Japan, South Korea and China all paid average wholesale gas prices between $US7 and well over $US8/MMBTU. Australia also enjoyed lower wholesale gas prices than its two regional LNG export competitors, Malaysia and Indonesia. Globally, Australia’s average wholesale price ranked 26th in a survey of 52 nations.

https://www.appea.com.au/media_release/australian-average-wholesale-gas-prices-lower-than-asian-average/

Woodside Petroleum CEO Peter Coleman says gas industry ‘out to lunch’

Sydney Morning Herald, July 2017.

Woodside Petroleum chief executive Peter Coleman has raised the hackles of his rivals, telling the industry it has been ”out to lunch”, taking years to build LNG projects that ran well over budget and only has itself to blame for failing to capture a bigger share of the fossil fuel market. Mr Coleman pointed to the $200 billion figure that is cited for investment in liquefied natural gas over the past 10 years in Australia and said it was nothing to be proud of, given that the original budgeted figure was so much lower.

“Whilst we may wax lyrical about the $200 billion, it actually started as $100 billion,” he told the APPEA oil and gas industry conference in Brisbane on Tuesday. “We didn’t deliver on our promise. We delivered a very expensive energy source,” he said, taking the industry to task for losing discipline in investment, making projects too complex, and losing touch with gas markets.

Some industry executives privately took issue with the criticism, pointing out that Woodside has little recent track record of delivering growth. But others interpreted the comments as a positive call to re-examine established processes and business models, and resolve to do better in future.

Russia’s Rosneft set for global gas tussle with Gazprom

(MOSCOW, Reuters, by Vladimir Soldatkin and Olesya Astakhova on 6/30/2017 ).

Russia’s Rosneft, the world’s top listed oil producer, wants to supply gas in parts of Europe where Gazprom is not present – or Moscow risks losing the market to U.S. liquefied natural gas (LNG), a Rosneft executive said. Gazprom, the leading global gas producer, enjoys monopoly rights on gas pipeline exports. It has lost its exclusive rights to ship seaborne LNG overseas to Rosneft and Novatek, Russia’s largest non-state gas producer.

Rosneft has long been vying for pipeline gas exports as it strives to grow globally. It now wants permission to export to the parts of Europe in which Gazprom does not operate. The Russian producer has a memorandum with BP, which owns a 19.75% stake in the Russian company, to trade up to 20 Bcm of gas annually in Europe. Rosneft V.P. Vlada Rusakova, a former Gazprom executive, said the company wants to conduct “an experiment” in supplying gas to new markets “in coordination” with Gazprom. She added that as part of the “experiment”, Rosneft could supply gas to markets where Gazprom is not present and into which U.S. LNG could be imported. Rusakova did not identify any such European countries. “Of course, this should be done in close coordination with Gazprom, in order to avoid competition between Russian gas suppliers.”

Gazprom targets $32-34 billion in revenues from exporting more than 180 Bcm to Europe and Turkey this year. Rosneft produced almost 70 Bcm of gas last year, earning 208 billion roubles ($3.5 billion) in revenues from gas sales at home. Rosneft, like Novatek, is winning some of Gazprom’s clients at home thanks to a more flexible gas pricing policy. But unlike Novatek or Gazprom, Rosneft plans to have an LNG plant only in Russia, as it eyes Russia’s Far East and Asian markets. The company wants to export gas to China, where Gazprom plans to start shipping gas in 2019-2021 via the Power of Siberia pipeline, currently under construction. It also wants access to China’s domestic gas market and end-users via swap deals. “There are significant gas resources in Russia’s East, while no infrastructure has been built. And that’s why we are interested in gaining access to the future Power of Siberia pipeline,” Rusakova said.

Rosneft plans to produce 100 Bcm of gas per year by 2020 and become the world’s third-largest producer of natural gas sometime later, thanks to a number of international projects. Last year, Rosneft agreed to buy a stake of up to 35% in Egypt’s Zohr offshore gas field from Italy’s Eni. The Russian company also plans to expand in gas projects elsewhere, including Mozambique and Venezuela.