Gas Malaysia, Petronas sign new agreement

Published: 2012/02/24

KUALA LUMPUR: Gas Malaysia Bhd yesterday signed a new agreement with Petroliam Nasional Bhd (Petronas) to supply an equivalent of 492 million standard cubic feet per day (MMScfd) of natural gas.

The 10-year contract will start from January 1 2013, with the option to extend for another five years.

The new deal will replace the existing agreement for a total gas supply of 382 MMScfd, which will expire on December 31 this year.

The contract is aimed at providing a long-term supply security of natural gas to Gas Malaysia's existing customers, the company said in a statement yesterday.

The additional 110 MMScfd will enable it to expand its supply to new customers, it added.

Gas Malaysia was incorporated in 1992 to sell, market and distribute natural gas as well as construct and operate the natural gas distribution system within Peninsular Malaysia. 

It is owned by MMC-Shapadu (Holdings) Sdn Bhd (55 per cent), Tokyo Gas-Mitsui & Co (Holdings) Sdn Bhd (25 per cent) and Petronas Gas Bhd (20 per cent).

Read more: Gas Malaysia, Petronas sign new agreement http://www.btimes.com.my/Current_News/BTIMES/articles/gess/Article/#ixzz1nFhoIvPU

Uncovering Oil And Gas Futures

Posted: Apr 28, 2011

James Vitalone

Contact | Author Bio

ARTICLE HIGHLIGHTS

• New information regularly disseminated to the market induces price volatility.
• Weekly oil and natural gas supply data is published by the EIA.

Prices for crude oil, crude oil products and natural gas futures constantly change in response to new information and reflect the adjustments being made to previous and prospective expectations. The relative size and duration of those adjustments often depend on the nature of the new information and the way it is received. Unanticipated new information quite often induces extreme price volatility creating a price shock. For example, the 1973 oil embargoby OPEC members caused oil prices to spike to historical highs.

TUTORIAL: Futures Trading 101

New information regularly disseminated to the market also induces price volatility, which can range from barely noticeable to extreme because even though the information is anticipated, its content may not be in line with the market's expectations. This is particularly true of the data periodically released on oil, petroleum products and natural gas inventories. Here we'll cover where the information for this industry comes from and when to expect it. (For background reading, see Oil And Gas Industry Primer.)      

Where the Data Comes from
Weekly oil and natural gas supply data is published by the Energy Information Administration (EIA), an independent agency of the United States Department of Energy. In fulfilling its responsibility as policy advisor to the Department of Energy, the EIA's job is to objectively collect, interpret and analyze all energy-related data.

The EIA schedules the weekly publication of data highlighting U.S. crude oil and petroleum products inventory levels each Wednesday through two separate reports. The first, called the Weekly Petroleum Status Report is distributed mid-morning and features raw inventory data along with recent commodity and product spot and futures prices. The second report, This Week In Petroleum, is available later in the afternoon. In addition to more extensive data points, this report includes commentary by the EIA about the most recent data.(To learn more about futures, see Futures Fundamentals and Fueling Futures In The Energy Market.)

The EIA makes its report on U.S. natural gas storage levels available each Thursday. Similar to its oil reports, it also releases two separate reports; the Weekly Natural Gas Storage Report is released mid-morning in the form of a much smaller "flash" report. It's similar to its crude oil counterpart in that only the raw storage data is included. Additional data points and the EIA's detailed analysis of the morning data is published in the Natural Gas Weekly Update in the afternoon.

These reports are available at no cost and can be received by email automatically each week once you sign up at the EIA's website.     

Like the Energy Information Administration, the International Energy Agency (IEA) serves as the energy policy advisor to the 26 countries comprising the Organization of Economic and Cooperative Development (OECD). Also like the EIA, it collects, interprets and analyzes data related to energy. However, unlike its U.S. counterpart, the IEA's data relates to global crude oil supply and is released with the publication of the monthly Oil Market Report. Data presented each month is given a detailed analysis and provides a perspective for the IEA's updated crude oil price outlook, which is also included in the report. A paid subscription is required to receive the current report when published.

Crude Oil Inventories 
Crude oil is the primary refinery input; therefore, any changes in the level of crude oil inventories from one reporting period to another not only impact the price of their underlying futures contracts, but will also affect the price of underlying futures contracts of associated refined products like gasoline. The petroleum inventory data showing the level of U.S. crude oil inventories first highlights the portion of current inventory produced within the U.S. then it highlights additional data indicating the portion of total crude oil inventory that was imported. (Fore more, check out Understanding Oil Industry Terminology.)


More specifically, U.S. petroleum product inventory data pertains to the level of refined products, such as motor gasoline, jet fuel, distillate fuel oil (source of diesel fuel) and residual fuel oil that are readily available. Like crude oil inventories, petroleum product inventories data also identifies the portion that is the result of imports. In addition to the impact on refined product futures prices caused by both changes in crude oil and refined product inventories, volatility in refined product futures prices can also be attributed to changes in the portion of total inventories that has been imported. Underlying contract price volatility is likely to increase upon evidence suggesting that the proportion of imported refined product to total inventories is increasing.

Natural Gas Data 
Published natural gas inventory, or "storage," refers to the network of more than 400 locations throughout the contiguous 48 states. It is designed to highlight the volume of natural gas that can be readily delivered to natural gas consumers, principally in the U.S. This includes power generation plants, industrial and commercial users, and households. Like crude oil and petroleum product inventories, natural gas storage data provides a look at absolute levels as of the reporting date as well as changes to those levels from prior periods. However, unlike crude oil and petroleum product inventories, owing to characteristics that largely prevent it from being transported over particularly long distances, storage level data represents natural gas coming only from U.S. production efforts. (Learn more in Natural Gas Industry: An Investment Guide.)

The Effect on Oil and Natural Gas Futures Prices             
Information concerning crude oil and natural gas supply levels will affect the price of underlying futures contracts as the market undergoes a process of reconciling and adjusting past expectations, as well as readying new ones based on the most recently reported data. Moreover, the extent to which some or all of the actual data departs from expectations is manifested by the degree of resulting price volatility. For example, energy future prices tend to rise following an inventory report that indicates that gasoline inventories remained unchanged, whereas analyst prediction may have expected that inventory to rise.

For related reading, see Price Volatility Vs. Leverage. 

by James Vitalone, CFA

James W. Vitalone, CFA, is an oil and gas investment banker with Oberon Securities in New York. He has more than 25 years of experience in the investment services industry. Previously, Vitalone was a buy- and sell-side securities analyst for 15 years, covering companies in the oil and gas, drilling, and oil service and natural gas industries. Prior to that, he was a portfolio manager working with institutional and high net worth clients.

Vitalone has a Bachelor of Business Administration in finance, an MBA in accounting, a Juris Doctorate degree and has served as chairman of the CFA Institute's U.S. Advocacy Committee.

Read more: http://www.investopedia.com/articles/optioninvestor/07/oil_gas.asp#ixzz1hcnuA9Id

The great natural gas conundrum

The great natural gas conundrum
Nebulous, drifting, volatile: all good ways to describe both natural gas and the conflicted outlook for the commodity among industry experts at the moment.

By Rowena Mason
Published: 9:38PM GMT 08 Nov 2009

A gas field exploration platform owned by China National Offshore Oil Corporation (CNOOC) in South China Sea.

On the one hand, a growing number of economists are the early-bird canaries in the mine, warning of a dangerous build up of natural gas on the verge of suffocating the market with an oversupply. On the other side, there is no shortage of energy companies dashing into the biggest gas extraction projects the world has ever known, proclaiming that a new era of burgeoning demand will be upon us.

So what has caused the commentators to float apart to such a degree? And whose sums look set to turn out to be an expensive mistake?

First, a look through the hazy clouds of forecasting at the fundamentals of the gas market. Henry Hub prices at the New York Mercantile Exchange have crashed 62pc this year. Reserves in the US are at historic highs. In fact, there's a glut of the stuff packed into disused fields and liquefied natural gas storage units across the globe. For many months now, producers have been hopefully waiting for gas prices to follow the oil price upwards, but the traditional connection – with a time lag between gas trailing oil – appears to have drifted out of kilter.

Part of this is the recession: Royal Dutch Shell, Europe's biggest energy company, warned two weeks ago that it had seen absolutely no increase in need for gas in Europe, and only a slight upturn in the US. In the short term, there has even been talk among Morgan Stanley analysts that the natural state of contango – where spot prices are lower than forward prices – could collapse causing the entire gas market to seize up next year.

Now the International Energy Agency is expected to warn this week that there is little chance of a recovery in demand before 2015, fuelled by a global drive to decarbonise with a new emphasis on renewable sources, nuclear power and energy efficiency.

But looking beyond the stagnant demand, oversupply has also been caused by technological breakthroughs in extraction techniques that mean so-called "tight" formations are getting cheaper to develop. The US was at one point speeding its way through natural gas reserves at an alarming rate, but over the past two decades, unconventional gas–from shales and coal-bed methane –has grown from 10pc to 40pc of the market.

Some commentators, including the Pulitzer Prize winning author of Daniel Yergin, The Prize: The Epic Quest for Oil, Money, and Power, have hailed this as a revolution in the fossil fuel industry that could change the world's whole gas balance if other countries follow America's lead. Technology has also given greater competition to the markets.

So why, if gas has become suddenly abundant, mobile and unwanted, are there still energy majors from BP to Shell to ExxonMobil keen to exploit expensive developments in far-flung, often hostile corners of the globe from Iraq to Russia's Yamal peninsula reserves?

The energy world still appears desperate to develop major gas developments like never before – the biggest being the massive Gorgon fields in Australia, where the energy giants have already signed multi-billion dollar contracts to supply China and India for decades to come. Frank Chapman, the chief executive of BG Group, even claims we will need "a Gorgon a year for the next 10 years" to meet ballooning global needs. Meanwhile, ExxonMobil, looking ahead, predicts that demand for gas in the West alone will grow by 2pc a year, or 30pc by 2030.

Part of the optimism is likely to be political: although countries are desperate to reduce emissions from fossil fuels, gas releases only half the carbon dioxide of coal when burned and is a much cheaper option than developing renewables. As the world also eventually weans itself off petrol and other oil-based products for transportation, electricity demand is set to double or triple.

One day in decades to come, cars and other modes of transport may all either be powered directly by natural gas or electricity generated by gas-powered and renewable power stations. Seizing on this opportunity, Tony Hayward, chief executive of BP, has recently been taking every chance to trumpet the potential of gas as the primary fuel of the medium-term future.

Some even believe the revolution in unconventional gas supplies will be unable to keep pace with this impending thirst for the commodity. Ofgem, the energy regulator, has taken forecast "tight" gas production into its estimates, but remains deeply concerned about the availability of gas in Europe over the next decade.

With all these shifting factors, one thing is for certain. Gas isn't behaving like ever before. And its future as a commodity is entirely interwoven with political decisions – highly unpredictable ones – about its reliability as a replacement for coal and oil.

http://www.telegraph.co.uk/finance/markets/6526528/Future-of-gas-linked-with-political-decisions.html

Fundamentals driving oil prices higher: BP economist

Fundamentals driving oil prices higher: BP economist

by

Cheow Xin Yi

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05:55 AM Aug 07, 2009

OIL prices are poised to climb higher in the coming years as consumption by industrialising nations are expected to outstrip that of the developed countries, predicted BP chief Asia economist Dr Zhang Chi.

Presenting the latest BP Statistical Review of World Energy report at a briefing yesterday, Dr Zhang pointed out that consumption of coal by industrialising nations have already surpassed that of Organisation for Economic Cooperation and Development (OECD) countries since 1998. And last year, these developing countries have also caught up with consumption on the natural gas front.

Dr Zhang believes it is a matter of time before developing countries will surpass OECD ones in terms of oil consumption.

When this happens "in the next few years", it will put pressure on oil prices to move higher, he said.

"Oil prices are affected by marginal demand ... and in the long term, the trend will put pressure on the margin and it depends on whether that price will bring in more oil on the supply side," he said.

Already, the primary energy consumption of non-OECD countries, including China, has - for the first time - exceeded OECD consumption last year. China alone accounted for nearly three-quarters of global growth in energy consumption, said BP in its report. World energy consumption is measured by the consumption of various fuels such as oil, natural gas, coal, nuclear and hydro power.

When asked how important are speculators in the energy markets, Dr Zhang said: "The fundamental drives the direction, the speculation may add on and follow that trend, rather than determining the trend."

"If you look at last year's fuel price volatility, coal prices were more volatile than oil (prices), but nobody was saying somebody was speculating in coal.

"So, in a sense, speculators look at the same data that we look at - they are not stupid - they look at the fundamental supply and demand trends and then they make their bets," he said.

Gas Producing Countries Try to Be More Like OPEC

With Russia’s Help, Gas-Producing Countries Try to Be More Like OPEC

new_york_times:
http://www.nytimes.com/2008/12/24/business/worldbusiness/24gas.html

By ANDREW E. KRAMER
Published: December 23, 2008
MOSCOW — With Russia’s support, a dozen large natural gas-producing countries founded an organization Tuesday that will study ways to set global prices for the fuel, much as the Organization of the Petroleum Exporting Countries does for crude oil.
The development seems likely to further unnerve European Union nations, already wary of their dependence on Russian energy and what critics say are efforts by Moscow to use oil and natural gas exports as leverage to reassert sway over former Soviet nations.
Russia’s foray into energy diplomacy affecting natural gas producers from the Middle East to South America also underlined its ambitions to assert itself on the world stage despite the slump in energy prices.
Initially, officials from member countries say, the group will focus on coordinating investment plans to dissuade countries from flooding the market with gas.
But if its longer-term goals are realized, the Forum of Gas Exporting Countries holds the potential to extend an OPEC-like model of price modulation to another basic commodity, even as natural gas is expected to play a larger role in global energy supplies.
The forum “will represent the interests of producers and exporters on the international market,” Russia’s prime minister, Vladimir V. Putin, told the gathering of energy ministers. “The time of cheap energy resources, and cheap gas is surely coming to an end.”
Formation of the group was a coup for Russia, the world’s largest producer of natural gas and oil. But most members also belong to OPEC, which has been at odds with Russia over its reluctance to reduce crude oil output in coordination with OPEC.
Shokri Ghanem, the oil minister from Libya, told the new group that Russia should first reduce oil output if it wants to support natural gas prices, which are linked to the price of crude oil. “We are still waiting for a declaration from the Russian Federation that they are cutting their production,” Mr. Ghanem said, referring to OPEC.
The countries in the forum have been meeting informally since 2001; what was new Tuesday was the group’s adoption of a charter that would establish a permanent secretariat. Doha was chosen as the group’s headquarters.
The Russian government, in a statement, said falling energy prices had impelled members to quickly formalize their organization. As in OPEC, the ministers in the new group espoused an ideology of defiance to the industrialized countries that are the primary customers, and stated the rights of commodity exporting nations to coordinate efforts to improve the terms of trade.
That Russia decided to join forces with the petroleum-dependent nations is a bellwether of Russia’s economic trends. As its Soviet-era scientific and industrial accomplishments fade, the country is relying more heavily on natural resources exports and associated boom-and-bust cycles.
Russia, which also belongs to the Group of 8 industrialized nations, said the group was not a cartel, like OPEC.
A deputy chairman of the Russian gas monopoly Gazprom, Aleksander I. Medvedev, said the natural gas business, which relies on long-term contracts, would make the use of production quotas, the backbone of OPEC’s pricing policies, impossible.
But the energy minister of Venezuela, the country that initiated the formation of the original OPEC in 1960, was not coy about his hopes for the new group as liquefied natural gas traded on spot markets is projected to become a more important fuel in the global energy mix.
“We see this organization as OPEC,” Rafael Ramirez said on the sidelines of the meeting. “We are producer countries and we have to defend our interests.”
But OPEC has not had a good track record of being able to control prices over the year. Despite pledges of cuts this year totaling 4.2 million barrels a day, or nearly 12 percent of OPEC’s capacity, oil prices, which topped $145 a barrel this summer, continue to fall. Prices settled Tuesday at $38.98 a barrel in New York.
A study that the group commissioned said natural gas prices would inevitably remain linked to the price of oil.
However, the study said that the environmental benefits of natural gas, including lower releases of greenhouse gases, are not priced into the fuel, offering room to negotiate higher prices.
The study also concluded that the market for shipborne natural gas is transforming the fuel into a global commodity, suggesting the industry will transform from one modeled as a utility serving pipeline customers to one built around trading.
The forum members include: Algeria, Bolivia, Brunei, Venezuela, Egypt, Indonesia, Iran, Qatar, Libya, Malaysia, Nigeria, the United Arab Emirates, Russia, Trinidad and Tobago and, as observers, Equatorial Guinea and Norway.
More Articles in Business » A version of this article appeared in print on December 24, 2008, on page B3 of the New York edition.