Blog Categories
March 2015
06 Apr
Trending LNG News from March 2015
Here's my analysis of the news from the global LNG and natural gas industries from March 2015. Happy Easter!  

LNG Projects Still Growing

While you might have thought that the LNG industry would be taking a breather from its breakneck development pace for the past 4 years, this month saw a number of project announcements that hinted at the continuing growth of the industry. 
March 2015
02 Mar
LNG News and Analysis February 2015
 Here's my analysis of the LNG and natural gas industry news from the month of February, 2015.  

More Pipeline Sales Coming

 Remember how QGC sold off their transmission pipeline for a billion more than anyone expected? Well, no surprise, but the other projects are now contemplating spinning off their pipelines too. I've written about the potential for balance sheet restructuring before, and continued low prices should have a sufficiently nasty impact on industry economics that more and different assets should come to market. There are going to be a need for some creative footwork given the complex ownership structures and tax rules, and the different risk and value trade offs that the owners make about their stake in the assets. However, never underestimate the creativity of the tax and investment banking sectors to figure out creative ways to move assets around to create value. I expect more asset sales activity.
March 2015
02 Feb
Analysis of LNG News from January 2015
Here's my analysis of the LNG and natural gas industry news from the month of January, 2015

Egad, It's All About Oil

The global LNG media turned its attention to the world of oil pretty much all month. With most LNG priced as a derivative of oil prices, it's important to keep an eye on how the oil sector is faring, and to get a read on the depth and duration of the decline.
March 2015
08 Dec
News and Analysis – November 2014
Here's my analysis of the LNG and natural gas industry news and analysis from the month of November, 2014. 

Oil Drags LNG To The Basement

Far and away the biggest story of the month was the buildup to the OPEC meeting on November 27 and the fall out afterwards. All month the Saudis were passing the word that they were going to push prices down so it was no surprise, really, if you were paying attention. It's the biggest price drop in 6 years, and with it, any gas (pipeline or LNG) that is priced with reference to oil also went down. Oil and gas stocks took a beating (70% of the value of a stock in this sector can be statistically explained by just two variables – the daily price of oil and the number of barrels of oil and gas in reserves). With cash flow crimped, the global industry will pull back and cancel or trim capital spending, defer selling anything until better times, with parallel impacts on services companies (demand contraction, idle equipment, pricing pressures). M&A activity will pick up as everyone in the sector is now revalued lower, and the best way executives can now reach their performance goals is to acquire something. The LNG sector is not immune to this phenomenon and there's lots of stories that Australia's LNG projects might get taken out. Expect to see transactions in the services sector (like this big one between Baker Hughes and Halliburton). For a few more predictions, have a look at this blog on the topic.
When the going gets tough, the best balance sheets go shopping! #LNG
March 2015
03 Nov
LNG News and Analysis – October 2014
Here’s my analysis of the most interesting news from the world of LNG and natural gas from the period October 1-31, 2014. 

Methane A Questionable Solution To Climate Woes

Several stories this month on the ongoing debate about methane as a solution to climate change. This story, in the important journal Nature, concluded that low priced gas will displace high carbon fuels (oil and coal - good), but also high priced lower carbon alternatives (solar, wind and nuclear - bad), and will also drive up demand for gas as we simply consume more of it in everything and everywhere (growth in demand - bad). On balance, therefore, gas is bad for the climate and we need some policies to alter the outcome path we're on. So the policy requirement is how to offset the two bads without upsetting the one good. One clue to the puzzle is that this is a battle between extracted fuels (gas, coal, uranium) and technology (batteries, solar, wind). Therefore, policies need to favour technology advancement over extractive industries without actually halting the shift from coal to gas. How hard can that be?
March 2015
06 Oct
LNG News And Analysis – September 2014
Here's my analysis of the most interesting news from the world of LNG and natural gas from the period September 1-30, 2014. 

Feeling the Chill

As winter approaches, the pressure is ratcheting up on those European nations dependent on Russian gas supplies to get sorted. Gas shortages and high spot prices are on the menu as Greece gets around 70% of its gas needs from Russia, Bulgaria 100%, with Serbia, Hungary, Austria, Slovenia, Slovakia, Turkey and the Czech Republic also highly dependent. Perhaps it would be helpful to have Ukrainians pay market price for the gas that they consume. I was shocked to learn that a third of Ukrainian households pay US$2.40/month for unlimited gas consumption. With prices this low, for sure some Ukrainian households are overconsuming gas. Neighbouring countries (Hungary, Poland) have offered to ship gas to Ukraine, and are told by the EU that reshipping gas is legal under EU law, but contract restrictions, not to mention Russian annoyance (read retaliation), makes short work of any attempts to help out. So onto contingency planning via storage, FLNG supplies and industrial preparation. You can find an earlier blog about this story in my archives.
March 2015
18 Sep
News And Analysis – August 2014
Here's my analysis of the most interesting news about LNG and natural gas from the month of August, 2014 (drawn from my twitter feed @geoffreycann).

Gas, Australia and Market Impacts

The impacts of Australia's natural gas export projects continue to play out. Early in the month the Australia Industry Group issued a study (full disclosure: it was completed by my firm) on the impacts of high gas prices on sectors that use a lot of gas, including agriculture, mining and manufacturing, and it's not good news - these sectors will all experience considerable cost pressures that are hard to avoid, and will reduce country GDP by billions. A number of stakeholders have offered their views. On balance, the economy will be better off as gas exports drive investment and royalties.By capping gas development in Victoria and NSW, state governments have inadvertently given fresh impetus to a new pipeline project to move gas from the Northern Territory to gas hungry eastern markets. Media stories conveniently ignored the possibility that NT gas could end up in Gladstone for export, and that the pipeline would take years to reach fruition, long after the market will have adjusted to new gas prices. It would seem far easier and faster to change the rules to open up gas production.
March 2015
04 Aug
LNG News and Analysis – July 1 – 31, 2014

Here's my analysis of the most interesting news from the world of LNG and natural gas from the period July 1 to July 31, 2014.The LNG Shake Out ContinuesIn case it's not obvious, the LNG industry is a game that only really large companies can...

March 2015
30 Jun
LNG News and Analysis June 1 – June 28, 2014

Here's my analysis of the most interesting news from the world of LNG and natural gas from the period June 1 to June 28, 2014.Russian Pipe Digs OnRussia is building a massive gas pipeline that bypasses its troubled neighbour, Ukraine, en route to European gas...

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