Russia Is Flaring Natural Gas While Choking Supply To Europe
Russia is flaring natural gas at the Portovaya plant near the Finnish border while drastically cutting gas flows via the Nord Stream pipeline to Germany, a Rystad Energy analysis shared with BBC News showed on Friday. The plant northwest of St. Petersburg is flaring an estimated around $10 million worth of natural gas per day—gas that would have gone to Germany otherwise. The Portovaya plant is near the compressor station of the same name where the Nord Stream route to Germany begins. Since June, Russia has significantly cut flows via Nord Stream, first to 40% of the pipeline’s capacity and then to just 20% of Nord Stream capacity after a ten-day regular maintenance period ended on July 22. At the same time, analysts, residents, and satellite imagery have detected and seen more heat from the Portovaya plant. Researchers tell the BBC they think the jump in heat coming out of the plant was the result of gas flaring. “They don’t have other places where they can sell their gas, so they have to burn it,” Miguel Berger, the German ambassador to the UK, told BBC News, commenting on the possible reason for the significant increase in flaring. According to Dr. Jessica McCarty, an expert on satellite data from Miami University in Ohio, “Starting around June, we saw this huge peak, and it just didn’t go away. It’s stayed very anomalously high,” she told BBC News. Meanwhile, gas prices in Europe hit fresh records this week after Russia’s Gazprom said last week that it would halt all deliveries via Nord Stream to Germany for three days. The reason for the 3-day suspension of gas flows via the pipeline would be due to maintenance work at the Trent 60 gas compressor station, which would be carried out with Siemens, according to Gazprom. This announcement raised renewed concerns in Europe that supply via the pipeline could be further cut or halted altogether after the three-day unplanned maintenance at the end of August.
Fake News Or Fundamentals: What’s Driving Oil Prices?
Following the Saudi Energy Minister’s comments about the “disconnect” between oil fundamentals and oil prices, more OPEC officials have spoken out about what they suggest is fake news that is misleading the markets. In its latest report, Standard Chartered describes OPEC ministerial concerns about oil price volatility as “primarily straightforward appeals for higher prices”. At the same time, Standard Chartered’s bull-bear index for U.S. oil data has fallen week-on-week to -43.2 due to disappointing demand. On August 22nd, Saudi Energy Minister Prince Abdul Aziz bin Salman told Bloomberg that “extreme volatility” was “undermining the market’s essential function of efficient price discovery”. That, in turn, made it impossible for physical users to manage the costs of hedging or navigate the inherent risk. “This vicious circle is amplified by the flow of unsubstantiated stories about demand destruction, recurring news about the return of large volumes of supply, and ambiguity and uncertainty about the potential impacts of price caps, embargoes, and sanctions,” he said. Several days later, on August 25th, Libyan Oil Minister Mohamed Oun stated that the recent heightened volatility in oil markets was “largely the result of misleading news and stories about global oil demand and supplies”. Fake news, Oun alleged, was sending the “wrong signals to all market participants”. OPEC members Iraq, Algeria, Bahrain, Kuwait, Equatorial Guinea, and Venezuela also followed suit with similar statements, Bloomberg reported. Standard Chartered notes that “when oil ministers talk of volatility sometimes they just mean falling prices”. However, the report also notes that the current 30-day realized Brent crude volatility is only at 44% – a figure that is “not particularly high”, and in fact, only 4 percentage points higher year-on-year. From Standard Chartered’s perspective, the case for weakening demand is not necessarily misleading, as OPEC ministers have claimed. A case in point is U.S. gasoline demand, which represents 9% of global oil demand. U.S. gasoline demand, according to Standard Chartered, has weakened for five consecutive months. Standard Chartered’s U.S. oil data bull-bear index has been bearish in 10 of the past 12 weeks, leading to the assessment that “fundamentals have clearly been far weaker in Q2 and Q3 than they were in Q1”, warranting the conclusion that fundamentals – not fake news – have been the key drivers of prices.
ONGC Videsh gets 2 year extension for Vietnamese oil block in South China Sea
India’s flagship overseas firm ONGC Videsh Ltd has got the seventh extension to explore for oil and gas in a Vietnamese block in the contested waters of the South China Sea, officials said. OVL, the overseas arm of state-owned Oil and Natural Gas Corporation (ONGC), has secured extension of the exploration phase upto June 15, 2023, they said. The company has not found any commercially recoverable oil and gas reserves in the block in the 16 years it has been exploring there but has continued presence there because of India’s strategic interest in the South China Sea. Vietnam too wants the Indian firm to counter China’s interventions in the contested waters. OVL had signed a production sharing contract (PSC) with Vietnam’s national oil firm PetroVietnam for deepwater exploratory Block- 128 having an area of 7,058 square kilometres in Offshore PhuKhanh Basin, Vietnam in May 2006. An investment licence was issued to it on June 16, 2006, thereby giving effect to the PSC. The firm has completed the licence requirement of shooting 3D seismic data and reprocessing of 2D seismic data as well as drilling of the committed one well. Officials said PetroVietnam has agreed to share some of the technical data pertaining to the nearby area of the block for petroleum system modelling and other related studies for better geological understanding. The firm has received the data and is now carrying out petroleum system modelling to mitigate the exploration risk and review the prospectivity of the block. OVL first took a two-year extension of the exploration period till June 2014 and then another for one year. A third extension was granted on May 28, 2015, and a fourth in 2016. It got the fifth extension for two years in 2017 and a sixth from June 16, 2019 to June 15, 2021.
India talks to Russia about restarting its LNG supplies
According to GAIL chairperson Manoj Jain, India is now in discussions with Russia to restore gas shipments under the long-term import agreement between Russian state energy behemoth Gazprom and India’s state-controlled GAIL. Since May, GAIL, the nation’s main gas distributor and pipeline operator, has been unable to receive the pre-arranged imports and has been obliged to reduce customer deliveries. He commented on Friday during an annual shareholder meeting, “there are some immediate issues which we are trying to tackle both at the company level and also at G2G [government to government] level.” Jain emphasized that the Russia and Ukraine war has had an impact on the volumes under the Gazprom arrangement, which make up nearly a fifth of GAIL’s total offshore gas portfolio of 14 million tons per year. The impact on local supply is decreased to roughly 7-8 percent by the injection of domestic gas, the senior management added, “so, overall it is not affecting us in a significant way. The only affect is to the extent of ten to 15 percent.”