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Volume 3 Issue 205
Wednesday, 23 October 2013
Russian Prime Minister Dmitry Medvedev met Chinese Premier Li Keqiang in Beijing this week. (PA)
Colin Shek
China news editor
James Byrne
East Asia editor
Pricing problems
After a decade of delays and disappointments, there have been hopeful signs in
2013 that the 38 billion cubic metre per year
Russia-China pipeline deal which plans
to connect large untapped deposits in
Eastern Siberia to Chinas gas-hungry
northern provinces might close before
the end of the year.
Russian Energy Minister Alexander
Novak said at the World Energy Congress
last Wednesday that Gazprom and China
National Petroleum Corp. (CNPC) expected
to reach a final agreement by the end of the
year. The Kremlin confirmed the next day
that both sides were ready to sign an
agreement before 2013 draws to a close.
But with little time remaining, Gazprom
and CNPC still do not appear to have
agreed on important details, reportedly
differing over the pricing coefficient in
the contract a crucial determinant in the
final border price of Russian gas.
Looking to clear the final hurdle, another
high-level negotiation was underway in
Beijing this week. Senior representatives
Interfax Information Services Group
www.interfaxenergy.com
LNG
War of words breaks out over
Argentinas LNG
Page 11
Plus...
Gas Natural prohibited from
Argentine tender
NEWS
01
Ticking clock
It will take a little bit longer than the end
of this year, said Thompson. Theres just
getting the agreement on price and a
legally binding contract [to do], but in 12
to 24 months I think itll be done.
Thomson noted the potential demand
in northeast China, where up to 38 bcm/y
of Russian gas would enter the country
annually via the so-called eastern route.
The alternative is a lot of LNG through
Liaoning or extending the big cross-country
pipes up to the northeast, which just does
not make a lot of sense when youre so
close to a big resource in East Siberia,
he said.
Finalising the agreement after more
than a decade of talks would be a major
boon for Gazprom, which needs investment
Today on
interfaxenergy.com
Policy & Regulation
Wildcat Blog
Looking west
With Beijing and Moscow closing in on
the eastern deal, negotiators are turning
to the prospect of Russian gas entering
well-supplied west China. Gazprom will
begin negotiating deliveries via the western
route after it signs the contract for the eastern supplies, Miller told reporters in Beijing
on Tuesday.
Russian supply into Western China, which
already has significant infrastructure connecting Central Asia to the countrys eastern
provinces, could allow Gazprom to function
as a swing supplier in the gas market.
Most read
China needs greater supplies of natural gas to combat is chronic air pollution problem. (Gazprom)
www.interfaxenergy.com
A round-up of the latest news and developments in the LNG shipping sector
lng | argentina
The court claimed a conflict of interest in YPF buying LNG from Gas Natural. (GNF)
www.interfaxenergy.com
Romgaz will be partly privatised under a deal with the IMF. (Romgaz)
told Interfax.
Romgaz is the largest
producer of gas in Romania,
supplying 5.66 billion cubic
metres in 2012. The company
also operates six gas storage
facilities with a combined
capacity of 2.76 bcm.
in cost recovery.
The government now insists
cost recovery, which was obtained with respect to facilities
constructed to accommodate
much higher volumes, should
be reduced in proportion to the
actual production and currently
estimated recoverable reserves,
explained Bowman.
By attempting to recoup
money from Reliance, Bowman
suggested the Indian government had flouted the basic
relationship of a production
sharing contract (PSC), which
[details] that the operator takes
the exploration risk and if the
operator is unsuccessful then
that money is to lose.
The government doesnt
step in and say well pay
you a reasonable rate for
If sanctions are lifted, IOCs will return to exploit Irans huge gas reserves, such as the South Pars field (Statoil)
www.interfaxenergy.com
US hostility
However the biggest impediment to the
resurgence of the Iranian oil and gas industry
remains the US Congress, traditionally
hawkish on dtente with Iran. The shale
boom has made the US more self-sufficient
and entrenched Congressional hostility
towards the Islamic Republic. A growing
habit of brinkmanship between the
Republican party in Congress and President
Barack Obama has only the situation worse.
During the reportedly successful Geneva
talks between Iran and the P5+1 group (the
five permanent members of the UN Security
Council, plus Germany) 10 senators wrote an
open letter to Obama. We reaffirm that a
credible military threat remains on the table
and we underscore the imperative that the
current sanctions be maintained aggressively,
and call on you to increase pressure through
sanctions already in place, it said.
This weekend, as news leaked of a plan
by Obama to ease sanctions by releasing
millions of Irans petrodollars held overseas,
a group of Republican senators said it may
defy the president and fight for a bill to
increase sanctions against Iran.
Contact editorial at editorial.news@interfax.co.uk
Stability benefits
The Oxford Economics study also suggested
an increase in government revenue from
shale could be used to help balance Tunisias
wide disparities in regional welfare, lending
much-needed stability to the region. How the
country decides to allocate spending among
Italy
Northern
area
Tunisia
Malta
Rich reserves
Mediterranean Sea
Algeria
Southern
area
Libya
Shell, IHSE
www.interfaxenergy.com
ASIA PACIFIC
WA-496-P
Woodside Energy,
Mitsui E&P Australia
EPP43
Murphy Australia Oil,
Santos Offshore
Indian
Ocean
Australia
WA-495-P
Shell Development
(Australia)
Great Australian
Bight
Interfax/Department of Industry
mt
70
mt
Jan-Sep
60
6
4
50
40
Jan
2012
Feb
Mar
Apr
May
Jul
Aug
Sep
2013
4%
2%
0%
-2%
-4%
-6%
-8%
Jan Feb Mar Apr May Jun
30
-10%
Jun
20
10
Depressed by Prime
Minister Shinzo Abes
aggressive programme
of quantitative easing,
a weak yen has caused
significant pain for Japans
LNG importers. The cost
of LNG in yen per ton
has mushroomed as the
currency has weakened,
making Septembers
deliveries the 10th most
expensive on record.
2012
2013
-2.5%
$25
$20
$15
$10
$5
2005
2006
100,000
2007
2008
2009
2010
2011
2012
2013
2011
2012
2013
Brent price
/ton
80,000
60,000
40,000
20,000
2005
2006
2007
2008
2009
2010
www.interfaxenergy.com
CHINA
Editorial
Chief editor
Therese Robinson
therese.robinson@interfax.co.uk
News editor
James Batty
james.batty@interfax.co.uk
FSU editor
Tom Washington
tom.washington@interfax.co.uk
Brussels correspondent
Annemarie Botzki
anne.botzki@interfax.co.uk
Research analyst
Andrew Walker
andrew.walker@interfax.co.uk
INTERNATIONAL CORRESPONDENTS
Almaty Elena Preobrazhenskaya Baku Anar Azizov, Nigar Abbasova
Beijing Rainy Lee, Li Xin Berlin Joshua Posaner Hong Kong Robert
Sullivan Kiev Alexey Egorov, Roman Ivanchenko Moscow Alexey Novikov,
Svetlana Savateeva Nairobi Jessica Hatcher New Delhi Siddharth
Srivastava Shanghai Dave Lore (bureau chief), Hang Dong, Colin Shek, Tang
Tian Washington Margaret Ryan
Production
Chief sub-editor Rhys Timson
Sub-editor Doug Kitson
Sub-editor Rob Loveday
Art editor, China Katarzyna Bulik
Website & art editor Joseph Williams
Sales
Subscriptions customer.service@interfax.co.uk
Managing Director Henry Pettit
Head of Sales
James Morton
james.morton@interfax.co.uk
+44 (0)20 3004 6209
Sales Manager
Cynthia Wong
+852 2537 2262
cynthia.wong@interfax-news.com
Sales Manager
John Bulmer
john.bulmer@interfax.co.uk
+44 (0)20 3004 6202
Gas will be fed from the CMGP pipeline through the WEP pipeline network. (CNPC)
www.interfaxenergy.com
Natural Gas Daily is published daily except during the last week of December by Interfax
Ltd. ISSN 2048-4534. Copyright 2013 Interfax Ltd. All rights reserved. No part of this
report may be reproduced or transmitted in any form, whether electronic, mechanical or
any other means without the prior permission of Interfax. In any case of reproduction, a
reference to Interfax must be made. All the information and comment contained in this
report is believed to be correct at the time of publication. Interfax accepts no responsibility
or liability for its completeness or accuracy.
4,800
Inner Mongolia
Jilin
4,400
Xinjiang
5,800
5,600
Hebei
3,700
3,600
Gansu
4,550
Shanxi
Ningxia
4,500
4,800
4,400
4,300
Tianjin
5,500
4,600
Shandong
5,300
Shaanxi
Sichuan
Henan
Yunnan
Jiangsu
5,500
4,800
4,700
Anhui
Chongqing
5,500
5,300
5,300
5,100
5,500
4,800
5,100
5,100
5,500
4,800
4,450
Qinghai
5,500
5,400
5,100
5,450
5,300
RMB/ton/km
1.0
RMB/ton/km
0.9
1.0
0.8
0.8
0.7
0.6
North
East
South
0.6
Southwest
North
East
The cost of shipping LNG by diesel-fuelled trucks remained unchanged in the third week of October. Rates for transporting a ton of LNG
within a distance of 1,000 km ranged from RMB 0.80/km to RMB 1.10/km by diesel-fuelled truck, compared with RMB 0.78-0.95/km for
LNG-fuelled trucks.
tons
150
100
50
0
Available volume
8 Oct
9 Oct
Transacted volume
10 Oct
11 Oct
12 Oct
14 Oct
15 Oct
16 Oct
17 Oct
18 Oct
No major spikes were recorded on the Shanghai Petroleum Exchange last week. Shenergy Group put up 700 tons for trade between
12 and 18 October, all of which sold for an average of RMB 5,201 per ton. Volumes sold during the third week of October will be delivered
daily to buyers between 16 and 23 October, except for 20 October.
www.interfaxenergy.com
AMERICAS
The UCA says YPF has flouted a court order by awarding LNG supply contracts to Gas Natural Fenosa. (GNF)
Top bidders
The latest tender involved around 24
companies and received 12 bids from
top international companies, according to
YPF. Previous Argentine LNG tenders have
attracted around five or six bidders. The
tender was successful, with Buenos Aires
meeting the quotas sought for both the
countrys terminals, Bahia Blanca and Escobar.
Enarsas tender requirements were different
for Bahia Blanca and Escobar. A total of 48
cargoes were requested for delivery to the
3.9 mtpa Bahia Blanca over the next two years,
with 25 required in 2014 and 23 the following
year. Enarsas specifications for the 4.6 mtpa
Escobar terminal mean as many as 75 tankers
could arrive over the next 24 months as part
of the deal (see Argentinas imports become
political football, 7 October 2013).
BP picked up 40 cargoes in the tender,