The global gas market suffered a violent shock recently, due to a strike at two export sites in Australia, which raised fears of a scarcity of supplies, especially with the approaching winter. This caused prices to fluctuate.
Workers at the Gorgon and Wheatstone liquefied gas production plants in Australia, affiliated with the American company Chevron, went on strike, to protest deteriorating working conditions and to demand higher wages, according to what the energy platform reviewed.
The Gorgon terminal is the second largest LNG terminal in Australia and, along with the Wheatstone terminal, constitutes 5% of the global LNG market supply.
In contrast, the specialized energy platform believes that 4 Arab countries: Qatar, the Emirates, the Sultanate of Oman, and Algeria, have promising potential to save the global liquefied gas market – especially Asia and Europe – from the specter of supply shortages and high prices, due to their huge reserves and extensive experience. .
Australia’s influence on the global LNG market
Australia ranked second on the list of the world’s largest liquefied gas exporters, with an average of 10.6 billion cubic feet per day, according to the report issued by the US Energy Information Administration on September 12, 2023.
Most of the exports from Chevron’s Gorgon and Whitestone plants are headed to Asian markets, especially Japan, South Korea, China, and Taiwan.
In addition to the strike, which Chevron failed to resolve, a technical defect caused a decline in the production of the liquefied gas export terminal in Wheatstone by 25%, according to a report published by Reuters, and seen by the specialized energy platform.
Although the defect has not yet been resolved, a spokesman for the American company said that they have found the main cause of the problem, and are working to resume production at full capacity.
For his part, energy affairs analyst Saul Kavonek expressed his hope that the 25% halt in gas production at the Wheatstone station would not affect global liquefied gas markets.
However, this pause, even if it had a minor impact, coincides with the start of the workers’ strike in Gorgon and Whitestone a week ago, and it is scheduled to witness an escalation in the coming weeks.
Gorgon and Whitestone workers stopped working completely starting this morning, Thursday, September 14, 2023, according to a report published by Bloomberg.
On the other hand, Chevron says that the strike did not affect its exports of Australian liquefied gas.
Despite escalating tensions and disruption at the Wheatstone station, the Dutch TTF index – the European gas standard – fell 1.16% at 10.15 am GMT, as a result of demand – currently weak – exceeding the supply barrier, and due to maintenance at gas production facilities in Norway.
Commenting on gas prices, energy expert Robin Mills told the Arabian Gulf Business Insight platform:family), “Prices are volatile, and the energy market is currently exhausted.”
Analysts expect that there will be no major disruptions to production in the short term, due to the reserves stored at both the Gorogon and Whitestone plants.
Wheatstone LNG Export Terminal – Image from Chevron website
Rationale reasons to search for new suppliers
The strike in Australia opens the door wide for Qatar, the Sultanate of Oman, the Emirates and Algeria to seize the golden opportunity, expand the scope of their supplies, and get one step ahead of Australia.
For his part, energy expert Mills says: “No one in the liquefied gas market has excess production capacity, especially at the present time. Everyone is working to the maximum of their capabilities.”
Matt Stanley, an energy expert at the data analysis company Kpler, expects that new LNG projects will not enter production before 2026, so the disruption that has affected Australian LNG supplies clearly shows how fragile the global LNG market is.
The continuation of the strike will also lead Asian customers to embark on a journey to search for other suppliers, such as Qatar and the United States.
If Asian customers turn to US LNG to replace Australian supplies, gas prices in Europe will rise, Mills says.
In addition to the Asian market, Europe has emerged seeking to secure gas supplies to avoid a repeat of the energy crisis that struck its corners last year (2022), after cutting off Russian gas supplies, the main supplier to the Old Continent, before the invasion of Ukraine.
The West imposed economic sanctions that mainly targeted the Russian energy sector, the main supplier to the Kremlin’s treasury, to limit its ability to finance the war in Ukraine, which began in February of last year (2022).
“We have two months before European gas reserves start to be withdrawn,” says Mills.
Qatar
Kpler energy expert Matt Stanley says that increased competition for supply will bring benefits to liquefied gas producers, led by Qatar.
Qatar – which has the largest gas reserves in the world after Russia and Iran – came in third place on the list of the world’s largest liquefied gas exporters, with an average of 10.4 billion cubic feet per day, during the first half of 2023.
Last year, 2022, Qatar topped the list, after exporting 10.5 billion cubic feet per day.
Qatari LNG is seeking to sell its new production capacity, after the emergence of other more attractive export markets, and the changing dynamics of the global LNG market since the outbreak of the Russian-Ukrainian war.
In May 2023, Qatari Energy Minister Saad bin Sherida Al-Kaabi said that his country expects to conclude all long-term liquefied gas contracts from the two phases of the North Field Expansion Project by the end of this year (2023).
Germany concluded an agreement with Qatar Energy Company, in November 2022, to provide long-term supplies of two million tons annually of liquefied gas, with the American energy company ConocoPhillips.
China National Petroleum Corporation (CNPC), China Petroleum and Chemical Corporation (Sinopec) and Petrobangla of Bangladesh also concluded contracts to import Qatari liquefied gas.
On the other hand, Stanley says that most Qatari contracts are long-term deals, and therefore the price of gas in the spot market will not affect them, pointing out that Qatar is a fluctuating producer of gas, and may choose the higher offer.
A fluctuating producer means someone who reduces his production if prices fall below the required level, and increases his production if prices rise above this level, according to what the specialized energy platform reviewed.
Stanley says that the strike in the Australian liquefied gas sector holds an additional advantage for Qatar. They will be seen as a more trustworthy supplier, adding: “This type of strike would never happen in Qatar.”
He also expected that Qatar, along with the United States, would provide about 50% of the needs of the global liquefied gas market, within 10 years or by 2030.
LNG producers in the Gulf
Matt Stanley, an energy expert at data analysis company Kpler, says that liquefied gas producers in the Gulf, especially the UAE and the Sultanate of Oman, can benefit from the situation in Australia.
He expected them to continue their investments in order to sell as much LNG as possible, and to gain strength from the global LNG market.
But he said that the only challenge is that most of the Gulf supplies are heading to Asia in the form of long-term contracts.
The UAE
UAE gas production reached 5.61 billion cubic feet per day last year (2022), according to data from the British Energy Institute.
Research firm Wood Mackenzie expects the UAE’s gas production to rise by 2028, with the start of operation of the new liquefied gas facility in the Ruwais area.
The UAE has been relying on Qatar since 2008, to meet about 1.9 billion cubic meters (67 billion cubic feet) of its needs, through the 364-kilometre Dolphin pipeline, in addition to Dubai’s imports to meet peak demand, especially during the summer.
But the UAE’s energy strategy aims to achieve self-sufficiency in gas by 2030, that is, two years before the expiration of contracts for the Dolphin Line, which transports gas from the North Field.
The Abu Dhabi National Oil Company (Adnoc) deal with Japan was on the list of the largest liquefied gas deals during the month of August 2023, as the Emirati company seeks to obtain a share of the global liquefied gas market, especially in Asia.
On August 17, 2023, ADNOC Gas announced the signing of a 5-year agreement to supply gas with Japan Oil Exploration Company Limited (JAPEX), with a value ranging between 1.65 billion dirhams ($450 million) and two billion dirhams ($550 million). dollar).
ADNOC Gas also announced in July 2023 the signing of an agreement to supply liquefied gas to the Indian Oil Corporation for a period of 14 years, with a value ranging from 7 to 9 billion dollars.
In early September 2023, ADNOC Gas signed an agreement with the Chinese company PetroChina to supply liquefied gas at a value ranging between 1.65 billion dirhams and 2 billion dirhams ($450-550 million).
In May 2023, ADNOC Gas signed a 3-year LNG supply agreement with French company TotalEnergies worth $1.2 billion.
ADNOC Gas manages 95% of the total gas reserves in the UAE, which has the seventh largest gas reserves in the world.
Sultanate of Oman
The Sultanate of Oman has emerged prominently in the global liquefied gas market recently, and has succeeded in quenching the thirst of many countries for low-emission fuel.
Omani liquefied gas exports rose to their highest historical levels in 2022, according to data from the Organization of Arab Petroleum Exporting Countries (OAPEC).
Omani LNG exports reached 12 countries during the past year 2022, namely South Korea, Japan, India, China, Thailand, Taiwan, Spain, Kuwait, Puerto Rico, France, Italy, Pakistan and Turkey.
During the first quarter of 2023, Oman’s exports of liquefied gas increased by 6.9%, becoming the second largest Arab country exporting liquefied gas after Qatar.
In the first eight months of 2023, Oman concluded 9 deals to supply liquefied gas, amid competition between European and Asian countries to win the largest share of the cake of long-term purchase contracts with the Sultanate.
The infographic below – prepared by the specialized energy platform – shows Omani LNG deals until August 2023:
Algeria
Algerian gas emerged as an alternative to Russian gas after the war on Ukraine. In particular, the North African country is distinguished by features that are not found in others, including geographical proximity to the Old Continent and gas pipelines between the two ends of the Mediterranean Sea.
Algeria succeeded in extricating Europe from the energy crisis last year, and European markets received all Algerian liquefied gas shipments in 2022.
Algerian gas export revenues to the European Union in 2022 jumped by about 82%, as the country exported 10.2 million tons (13.87 billion cubic metres).
Algeria ranked second after Norway on the list of pipelined gas imports, pumping 92 million cubic meters per day.
Algeria also snatched the title of the largest exporter of liquefied gas in Africa from Nigeria on a monthly basis last January (2023).
Algeria produces about 100 billion cubic meters of gas annually, but half of this production goes to domestic consumption, while the volume of Algeria’s gas reserves reached 159.05 trillion cubic feet (4.5 trillion cubic meters) by the end of last year (2022).
The government company Sonatrach intends to pump more than $30 billion into exploring new fields and increasing production, and has allocated $7 billion for refining, petrochemical and gas liquefaction projects, to support increasing Algeria’s exports to the global liquefied gas market.
On July 11, 2023, Sonatrach supplied the first commercial shipment of Algerian liquefied gas to the Italian company Eni via the new floating port for converting liquefied gas into natural gas in Piombino.
On July 9, it concluded a deal to supply liquefied gas with the French company Total.
The following infographic – prepared by the specialized energy platform – illustrates Algeria’s ambition to seize new export opportunities and enhance energy security:
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2023-09-17 22:02:27
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