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Chart of the Week
China Locks In Term LNG Deals
- China has become the single most important buyer of LNG supplied under long-term agreements, increasingly becoming a crucial intermediary in trading cargoes of liquefied natural gas.
- Despite China’s reopening, the country’s LNG imports did not see any major uptick, in fact, its January imports are 15% down year-on-year, totaling 6.07 million tonnes according to Kpler.
- Roughly one-sixth of all term agreements that will begin delivering LNG through 2027 have been concluded with Chinese firms, with China overtaking Japan as the main term buyer.
- Attesting to the growing Chinese clout on LNG trade, Chinese firms are assumed to have resold at least 5.5 million tonnes of LNG last year, roughly 6% of the spot market, as sellers benefited from Europe’s runaway gas prices.
Market Movers
- UK energy major BP (NYSE:BP) has reached a deal to buy U.S. truck fueling provider TravelCenters (NASDAQ:TA) in a deal worth $1.3 billion, sending the latter’s shares soaring by 70%.
- Energy firm Shell (LON:SHEL) completed the purchase of Nature Energy, the largest producer of renewable natural gas in Europe, taking over its 14 plants producing biomethane across the continent.
- ADNOC, the national oil and gas company of the UAE, will sell 4% of its gas business in a 2023 IPO, seeking to garner $2 billion from the upcoming sale preliminarily set for March 13.
Tuesday, February 21st, 2023
Oil prices have remained rangebound this week with ICE Brent hovering around the 84 per barrel mark. As the US saw its trading activity halted due to Presidents’ Day, the market is still trying to decipher how and when will China’s return to the markets materialize. Provided the US Fed minutes see no unexpected development, oil trading will stay on its current choppy course.
Europe to Refrain from Nuclear Sanctions. As the European Union is finalizing its 10th sanctions package against Russia, Brussels has indicated it would not target the nuclear sector and focus on trade bans and technology export controls instead, worth an estimated $12 billion.
IEA Warns of Tight Supply Next Winter. IEA head Fatih Birol warned that European nations might face energy shortages over the upcoming winter as very little new LNG capacity is coming to the market this year, while China’s consumption of gas is bound to increase in 2023.
Refiners Warn of Military Procurement Risks. The Biden administration’s draft regulation requiring government contractors to disclose their emissions and set decarbonization targets might disrupt the US military’s 250,000 b/d oil demand and compel refiners to no longer bid for state supply deals.
Guyana Wants to Reclaim 20% of Stabroek. Guyana’s vice president Bharrat Jagdeo said the South American country wants to take back 20% of the prolific Stabroek block operated by ExxonMobil (NYSE:XOM), corresponding to its unexplored segments, and remarket it by 2024.
Iran In the UN’s Crosshairs Again. Top officials at the International Atomic Energy Agency said they’ve detected uranium enriched to 84% during one of their recent inspections, close to weapons grade, prompting the UN agency to demand an explanation from Tehran.
Baghdad and Erbil Give Diplomacy a Try. The Kurdish Regional Government (KRG) and the federal authorities in Baghdad formed a joint committee to draft a new oil and gas law for the country that would integrate Kurdistan’s needs, marking a huge step forward in their 15-year tug of war.
EU Nuclear Rift Widens. The European Union failed to adopt a comprehensive set of policy conclusions on climate amidst a deepening spat over the role of nuclear in the transition towards renewable energy, pitting France against the likes of Germany and Spain who oppose nuclear.
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ICE Launches Parallel Gas Futures. The London-based Intercontinental Exchange has launched a new market for TTF gas futures and options to provide an alternative to the benchmark Dutch TTF contract, to be used to avoid the European Union triggering its market correction mechanism and setting gas prices. Related: Norway’s Oil Production Dropped In January
Carbon Prices Soar on Colder Weather. The European carbon contract hit an all-time this week as it was one cent away from reaching the €100 per metric tonne threshold in intra-day trading, spurred by lower wind generation across the continent and forecasts of cold weather next week.
Tesla Rumored to Buy Metal Miner. US electric vehicle carmaker Tesla (NASDAQ:TSLA) is rumored to be mulling a takeover of Canada-based battery metal miner Sigma Lithium (NASDAQ:SGML), a company that focuses on spodumene production in Brazil and has a market cap of $3.2 billion.
Absent Renewable Roll-out, Australia Faces Blackouts. The Australian Energy Market Operator (AEMO) announced that the country needs to ramp up renewable power capacity as the closure of several coal-fired power plants in 2025-2027 cuts off some 13% from current electricity provision.
Chinese Demand Maintains Iron Ore Strength. The price of iron ore is rising again as higher demand from China combined with lower steel output from Brazil and Australia heat up spot trading globally, with the 62% delivered ex-China quotes already back at $129 per metric tonne.
South African Miner Launches Takeover Bid. South Africa’s mining giant Sibanye-Stillwater (NYSE:SBSW) launched an unsolicited takeover of Australian zinc miner New Century Resources (ASX:NCZ), already owning 19.9% of the firm, arguing the NCR is losing value and direction.
By Michael Kern for Oilprice.com
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