Thursday, July 31, 2014

Saudi Aramco cuts August propane to $780/T, down $40 from the July Level

State-run Saudi Aramco has cut its August contract price for propane to $780 a tonne, down $40 from the July level, an industry source said on Thursday. Butane prices for August 2014 were also cut to $800 a tonne, down $40 from July level of $840. The prices provide a benchmark against which Middle East sales of liquefied petroleum gas (LPG) to Asia are priced. Following is a table of Saudi Aramco's contract prices of propane and butane per tonne in U.S. dollars. 

Product   August 2014  -   July 2014     Change 

Propane  $780                  $820               -40
Butane     $800                 $840               -40


Saudi Arabia February CP Price

The key energy commodity price trends of U.S. in 2013
Japan Energy Report
Saudi Arabia Energy Report
India Energy Report

Tuesday, July 22, 2014

U.S. natural gas inventory growth resumes

Working gas in storage was 2,129 Bcf as of Friday, July 11, 2014, according to EIA estimates. This represents a net increase of 107 Bcf from the previous week. Stocks were 608 Bcf less than last year at this time and 727 Bcf below the 5-year average of 2,856 Bcf. In the East Region, stocks were 338 Bcf below the 5-year average following net injections of 65 Bcf. Stocks in the Producing Region were 303 Bcf below the 5-year average of 1,030 Bcf after a net injection of 29 Bcf. Stocks in the West Region were 86 Bcf below the 5-year average after a net addition of 13 Bcf. At 2,129 Bcf, total working gas is below the 5-year historical range.

natural gas storage of U.S

The net injection reported for the week ending July 11 was 107 Bcf, 42 Bcf larger than the 5-year average net injection of 65 Bcf and 45 Bcf larger than last year's net injection of 62 Bcf. Working gas inventories totaled 2,129 Bcf, 608 Bcf (22.2%) less than last year at this time, and 727 Bcf (25.5%) below the 5-year (2009-13) average.

Storage build is higher than market expectations. Market expectations called for a build of 100 Bcf. When the EIA storage report was released at 10:30 a.m., the price for the August natural gas futures contract decreased 8 cents to $3.97/MMBtu on the Nymex.

From the week ending on April 4 through the week ending on July 11, net storage injections have totaled 1,307 Bcf, versus 1,037 Bcf for the same 15 weeks in 2013, and 1,042 Bcf for these weeks between 2009 and 2013, on average. The average unit value of what storage holders put into storage from April 4 to July 11 was $4.55/MMBtu, 16% higher than the average value for the same 15 weeks last year of $3.94/MMBtu. The highest winter-month Nymex price (for the January 2015 contract) in trading for the week ending on July 11 averaged $4.40/MMBtu. This is 16 cents more than the current Nymex August contract price. A year ago, the difference was 33 cents/MMBtu, providing a bit more financial incentive to buy and store gas in the summer for sale in the winter.

Working gas storage of U.S

There are currently 16 more weeks in the injection season, which traditionally occurs April 1 through October 31; although, in many years, injections continue into November. EIA forecasts that the end-of-October working natural gas inventory level will be 3,431 Bcf, which, as of July 4, would require an average injection of 81 Bcf per week through the end of October. EIA's forecast for the end-of-October inventory levels are below the 5-year (2009-13) average value of 3,837 Bcf. To reach the 5-year average by October 31, average weekly injections through the end of October would need to be 107 Bcf.

All three regions post larger-than-average builds. The East, West, and Producing regions had net injections of 65 Bcf (21 Bcf larger than its 5-year average injection), 13 Bcf (5 Bcf larger than its 5-year average injection), and 29 Bcf (17 Bcf larger than its 5-year average injection), respectively. Storage levels for all three regions remain below their year-ago and 5-year average levels.

Temperatures during the storage report week were normal.Temperatures in the Lower 48 states averaged 74.7 degrees for the week, similar to the 30-year normal temperature and 3.0 degrees cooler than during the same period last year.

Thursday, July 3, 2014

Egypt: A new natural gas importer?

During a June 25 state visit by Egypt's President Abdel-Fattah el-Sissi to Algeria, the Algerian state-owned oil company, Sonatrech, agreed to deliver 5 liquefied natural gas (LNG) cargoes (equivalent to about 15 billion cubic feet of natural gas) to Egypt later this year. The demand for natural gas in Egypt has been growing faster than production since 2010. As a result, the domestic market has been experiencing gas shortages.

Egypt is highly reliant on natural gas for power generation, and power outages have been common over the past few years, especially during the summer cooling season. Recent outages are due mainly to a lack of natural gas or other fuels, not to a lack of generation capacity. Additionally, the Egyptian Natural Gas Holding Company (EGAS) has had to cut gas supplies to some industrial consumers, mainly producers of methanol, cement, and fertilizer, in order to make more gas available to electric generators. In Egypt, natural gas and electricity consumption are subsidized. Residential and small commercial consumers pay less than $2 per million British thermal unit (MMBtu) for natural gas.

To minimize domestic gas shortages, natural gas originally intended to be exported as LNG has increasingly been diverted to domestic consumers. Natural gas exports peaked in 2009 and have been steadily declining since then. Egypt has two LNG export facilities. The facility at Damietta has been idle since 2013 because it has not had enough natural gas to continue to operate. More recently, in January 2014, BG, the operator of the second export facility, declared a force majeure on LNG exports because of a lack of gas. Revenue from exports of natural gas and its derivatives was down 81% in April 2014 versus April 2013 according to Egypt's Information and Decision Support Center. Egypt continues to export small volumes of pipeline gas to Jordan.

In addition to the LNG imported to alleviate domestic gas shortages, Egypt's LNG export facility operators have pursued preliminary agreements to import gas via pipeline to their underutilized LNG export plants. In June, BG signed a preliminary agreement with partners in Israel's Leviathan field to potentially import about 250 billion cubic feet (Bcf) of gas per year for 15 years. This follows a similar preliminary agreement signed by the partners in the Damietta export facility to potentially import 160 Bcf of gas per year from Israel's Tamar field.

There are still significant hurdles before any gas can be imported into Egypt. Before imports from Israel could begin, the companies involved would have to negotiate final, binding agreements, which would require government approvals in both Egypt and Israel. Additionally, new underwater pipelines would need to be built in order to move the gas from the production fields to the LNG export terminals. Imports of LNG from Algeria also face hurdles. Egypt does not currently have any facilities to import LNG, but it has been negotiating with Höegh LNG to lease a floating storage and regasification unit (FSRU). While negotiations are going on, Egypt plans on having the terminal in place and operating by the fourth quarter of 2014.