Gas Matters Today | news roundup | w/c 4 May 2020

Analysis

Henry Hub prices rose last week above the indicative Asian spot price for LNG for delivery in June, giving US gas an ‘American premium’ over both European and Asian benchmarks and spurring more US LNG cargoes to be swapped in favour of cut-price cargoes from non-US Atlantic Basin producers.

International

Total became the latest energy major to deepen cuts last Tuesday after posting a Q1’20 consolidated net income of just USD 2 million, announcing a 25% capex reduction for 2020 with executives agreeing to pay cuts during the lower price environment.

Norwegian energy major Equinor is considering further activity reductions due to market uncertainty and government-imposed production cuts, the firm said on Thursday, when it posted a Q1’20 loss of USD 710 million.

Asia Pacific

China – State-owned giant PetroChina has reportedly discovered a new field containing more than 1 Tcm in central China in a find that could ease demand in a region targeted by Gazprom’s proposed Power of Siberia 2 pipeline.

Australasia

Australia – Over half of Woodside Petroleum’s shareholders have supported a non-binding resolution to disclose details on its efforts to limit emissions in line with the Paris Agreement, at the company’s first online annual general meeting.

Europe

Germany – Nord Stream 2 AG has hit out at a draft decision from network regulator BNetzA rejecting its request for derogation from the EU Gas Directive that prohibits Gazprom from owning the 55 Bcm/year pipeline and more than 50% of its capacity.

UK – The state-backed Oil and Gas Authority, which aims to maximise the recovery of upstream resources, intends to coerce industry players to help London achieve its ‘net zero’ climate emissions ambition by 2050 “as far as is reasonable in the circumstances”.

Mediterranean

Cyprus – The Total/Eni partnership in Cyprus has informed the government that it will not drill a planned well in Block 6 due to the fallout from the coronavirus pandemic, meaning the only exploratory gas drilling in the region will be undertaken by Turkey.

North America

Canada / US – Australia-listed North American liquefaction developer LNG Limited has appointed voluntary administrators to kick off conversations with creditors and its directors resigned en masse, after a planned takeover deal fell apart.

Canada – Midstream giant Enbridge posted a Q1’20 loss of nearly USD 1 billion last week, citing impairments on midstream assets, derivative losses and lower volumes on its network due to falling demand amid the Covid-19 pandemic.

US – Shale pioneer Chesapeake Energy is “highly likely” to file for bankruptcy or restructuring in the next few months, S&P Global Ratings has said, adding that a default was a “virtual certainty”.

Shell is to sell its entire upstream and midstream position in the Appalachia shale play to New York-based National Fuel Gas Company for USD 541 million in an all-cash deal with equity option – representing a multi-billion-dollar discount on the original price Shell paid.

Sempra Energy has delayed FID on the Port Arthur LNG project in Texas until 2021, citing concerns around its credit rating, low prices and challenges to project-finance the 13.5 mtpa facility in Jefferson County during the pandemic-fuelled crisis.

After weeks of deliberation, the Texas Railroad Commission has dismissed a motion to impose a state-wide cap on crude production, claiming the move would not have a significant impact on world supply.

Several large independent Permian producers posted startling Q1’20 results last week, with aggregate net losses totalling more than USD 25 billion so far in the current earnings season.

Russia & CIS

Russia – Russian investment firm A-Property is looking to challenge Gazprom and Novatek for a slice of Russia’s LNG export market after reportedly hiring TechnipFMC to design a 13 mtpa capacity LNG plant located close to the border with China.