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European gas prices slump as risk of Australian strike recedes

Dec 18, 2023

Woodside Energys potential merger with Santos, and a recent deal to secure volumes in Mexico, are part of a strategy to continue to optimise its LNG portfolio and increase margins in its LNG division. Rather than simply producing and shipping gas under long-term contracts between pre-agreed sources and destinations, portfolio players can optimise their portfolios, taking advantage of market volatility and enabling them to better respond to shorter-term demand spikes. Traders have taken an interest in this position, just as BP, Shell and TotalEnergies have. Woodside is yet to scale its portfolio to the size of those firms. In 2022 the firm sold just over 11 million tonnes of LNG. This is far less than Shell at 66mn tonnes, TotalEnergies at 48mn tonnes and slightly less than BP, which sold 19mn tonnes. Evolution Over the last few years, Woodside has progressively expanded its supply portfolio and loosened its contract structures. This will enable it to get closer to the volumes and margins of the major portfolio players. We have adjusted our strategy to LNG marketing over the last, probably, five years to move away from project specific contracting to portfolio contracting, said CEO Meg O Neill at the firms recent investor day. Woodside no longer sells any project-specific LNG. Instead, everything is sold on a portfolio basis under contracts that allow flexibility of both source and destination. As the market has grown and evolved and become more sophisticated we re no longer source specific and the customers are often no longer destination specific as well, said O Neill. During 2022, Woodsides increasing portfolio optimisation allowed it to capture margins from stronger oil and gas prices averaging $98.4 per barrel of oil equivalent. This is up 62% on the year before, the firm said in its annual results. For the pure trading part of our business the margins normally are quite slender, but where we can really make a big difference is in the optimisation, said O Neil, presenting the results. Portfolio planning A successful portfolio player needs uncommitted volumes in the portfolio from a geographically distributed network of supply sources. They also need a long shipping position, enabling flexibility to respond to short-term opportunities. Woodside CEO Meg O Neill Woodsides LNG shipping fleet now includes six vessels under long-term contracts and multiple vessels on short-term charter. The company chartered an additional five newbuild LNG ships in 2022 to be delivered between 2024 and 2027 to support the delivery of Scarborough LNG cargoes and the growth in its trading activities. .

European gas prices slump as risk of Australian strike recedes

Aug 25, 2023

European natural gas tumbled on signs that a labour dispute at Australias biggest liquefied natural gas export plant will be resolved, easing fears about one out of three possible strikes in the key exporting nation. Benchmark futures settled 13% lower, finishing another turbulent day. They collapsed as much as 21% in the morning, the most since March 2022. Prices pared some losses later as unions representing workers at the other two facilities in the country voted in favour of industrial action, though strikes are still not guaranteed to go ahead. Gas markets have been extremely volatile this month as labour disputes in Australia threatened a tenth of global LNG supplies, and European prices at one point surged as much as 40% intraday in response to the risks. Unions representing workers at Woodside Energy Group Ltds North West Shelf LNG operations are considering a strong offer from the company after negotiations that ran through Wednesday night. Details of the settlement are due to be released after a meeting with members on Thursday, said Offshore Alliance, a group that represents two major unions. All indications at the moment look promising that strike action at the North West Shelf will be avoided, ING Groep NV said in a note on Thursday. The resolution to the dispute would remove some of the strains facing the market. Europe, still recovering from the worst of the energy crisis that pushed prices to records last year, has been highly reactive to supply disruption risks. Even with ample stocks, the region needs a continuous flow of LNG from global markets. Any prolonged shutdown of Australian facilities, which supply Asia, could risk shifting US or Qatari LNG away from Europe. With inventories nearly full well before the start of the heating season and industrial demand subdued, the continent for now remains well supplied. Chevron talks Even if a deal is agreed with Woodside, talks with Chevron Corp. on disputes with workers at two of its Australian LNG plants are still ongoing. That puts 24.5 million tons of annual supply at risk, or about 5% of global liquefaction capacity. Unions on Thursday voted to endorse taking industrial action at Chevron Gorgon and Wheatstone Downstream facilities if the company fails to provide an appropriate offer during negotiations, the Offshore Alliance said in a statement. The ballot is yet to be completed on Aug. 28 at Wheatstone platforms. The market is not out of the woods yet, said Leo Kabouche, an analyst at Energy Aspects Ltd. in London. Price swings are likely to continue until there is more clarity on the state of affairs at the Chevron-operated facilities. Dutch front-month futures, Europes gas benchmark, settled at Euro 31.94 a megawatt-hour, the lowest level since Aug. 8 a day when initial reports on potential strikes appeared. The UK equivalent contract also fell 13%..

Australias Finder Energy estimates 206 million boe at North Sea Boaz prospect

Dec 18, 2023

Australian oil and gas explorer Finder Energy (ASX:FDR) has outlined details of its Boaz gas prospect in the Central North Sea. The North Sea Transition Authority awarded the Perth-based company licence P2610, which covers Boaz, alongside Norways state-owned Equinor. Finder said the Boaz prospect contains 748 billion cubic feet (bcf) of gas and 81 million barrels (MMbbl) of condensate. Together, Finder estimates potential resources for Boaz to be as much as 206 million barrels of oil equivalent (boe). However, Finder estimates the geological chance of success for Boaz at just 22%. Finder Energy managing director Damon Neaves said the companys portfolio in the North Sea has undergone rapid growth since landing its first North Sea licence in 2021. Boaz is the second major resource announcement made by Finder this month resulting in a four-fold increase in the total 2U [mid-range] prospective resources in Finders UK North Sea portfolio, Mr Neaves said. Boaz has the potential to contain significant volume of natural gas and is well-positioned to access gas markets in Western Europe that attract premium pricing. Finder expects to make a drill decision for Boaz prior to the end of 2027. Possible Boaz tie-back to Sleipner? Outlined its potential strategy for the Boaz prospect, Finder pointed to partner Equinors plans to extend the life of the nearby Sleipner and Gina Krog facilities. Finder said Equinor are actively exploring and developing around this area and this forms part of their motivation for participating in our joint bid for the Licence. Finder also pointed to Equinors recent announcement of a Pounds 300 million plan to develop the Eirin gas field located 250km west of Stavanger, which will connect to Sleipner via Gina Krog. Equinor said the Eirin development will extend Gina Krogs productive life from 2029 to 2036 While Finder did not confirm whether it is considering a Sleipner tie-back for Boaz, the prospect is located close to both the Eirin gas field and the Gina Krog platform. In addition to the P2610 licence, Finder Energy also holds a 60% stake in each of the P2527, P2528 and P2530 licences alongside Aberdeen-based Dana Petroleum, which holds the remaining 40% of each licence. Earlier this month, Finder said it had potentially uncovered a 150 million-barrel field next to the UKs giant Buzzard project in the Central North Sea as part of the P2528 licence, although the find had a modest 26% geological chance of success.