Romania has filled only 42% of its gas storage deposits ahead of critical winter season
Romania has filled just over 40% of its natural gas storage deposits, despite the broad concerns related to the disruption in the supply of Russian natural gas during the coming winter season, Ziarul Financiar daily announced, adding that Poland, for instance, has already filled its deposits. Romania, the second-largest natural gas producer in the European Union, has a relatively small underground storage capacity of about 3 billion cubic meters. With one of the most difficult winters on the horizon, the timely filing of underground depots is a safety net in the context of the war in Ukraine. “We will store more gas this year. We are cautious,” assures Volker Raffel, CEO of E.ON Romania, a business focused on the supply and distribution of energy and natural gas. “Price volatility will remain constant. Thus, the role of natural gas storage will be increasingly important,” said Eric Stab, president and CEO of ENGIE Romania, the largest local natural gas distribution company. At the moment, however, Romania’s underground deposits are only about 42% full, with the EU average being 58%. Poland, for example, already stored 97% of its maximum capacity. Romania aims to reach a filling rate of only 80% by November.
European Gas Demand Set For Record-Breaking Decline In 2022
Soaring natural gas prices, demand destruction in the industrial sector, and energy-saving measures are set to reduce gas consumption in Europe’s developed economies by 10% this year, the biggest drop in European demand in history, the International Energy Agency (IEA) said in its quarterly Gas Market Report on Monday. The forecast of a 10% decline in natural gas demand in OECD Europe reflects the expectation of higher gas prices and the EU’s ambition to reduce gas consumption by 15% between August 2022 and March 2023 compared to its five-year average. “Assuming average weather conditions, gas demand in the residential and commercial sectors is expected to remain below 2021 levels,” the IEA said in its report. Due to sky-high high prices and a very tight gas market, natural gas usage in the power generating sector in Europe is forecast to drop by nearly 3% this year. Industrial gas demand is expected to plunge by as much as 20%, the IEA said. Energy-intensive industries in Europe, including aluminum, copper, and zinc smelters and steel makers, have already warned EU officials that they face an existential threat from surging power and gas prices. After a record slump in gas demand this year, Europe faces another year of gas consumption contraction in 2023, when OECD Europe’s demand is forecast to decline by 4% amid high prices, according to estimates from the IEA. The agency also noted that “Further potential disruption to the supply of Russian gas provides additional downside risk to this outlook.” Keisuke Sadamori, the IEA’s Director of Energy Markets and Security, commented on the report: “The outlook for gas markets remains clouded, not least because of Russia’s reckless and unpredictable conduct, which has shattered its reputation as a reliable supplier. But all the signs point to markets remaining very tight well into 2023.” The IEA’s Executive Director Fatih Birol said last week that the gas market could be even tighter next year compared to already tight LNG markets in 2022.
Eni Sounds The Alarm Over Further Russian Gas Disruptions
Italy’s Eni this weekend said it had not received any of the natural gas contracted for delivery with Russia’s Gazprom for either Saturday or Sunday and warned this could extend to Monday as well. The two companies told the media they were working to resolve the issue, which Gazprom says has to do with regulatory updates in Austria. The Russian state giant said on Saturday that Austria’s grid operator had refused to confirm transit nominations, prompting Gazprom to suspend the flow of gas via the country, Reuters reported. “Gazprom told us that it was not able to confirm the delivery of the volumes demanded for today, citing the impossibility of gas transport through Austria,” Eni said in a statement, as quoted by the AFP. The Austrian side, for its part, said that Gazprom had not signed the necessary contracts to continue transiting gas via Austria. “At the beginning of each gas year, various technical changes in the market model come into force,” the Austrian energy ministry said in a statement on Sunday, as quoted by Reuters. “Contractual changes are necessary for this. These contracts have not yet been signed by Gazprom. Transport nominations for today could therefore not be accepted. A solution is currently being worked on at the technical level at full speed.” The problem for Eni is that Russian gas enters Austria just fine but doesn’t leave it in the Italian direction, according to a spokesman for the company. A spokesperson for Austria’s energy major OMV confirmed the deliveries are stable. “The volumes nominated for today’s gas day were significantly higher for OMV today than of late,” the spokesperson said, as quoted by Reuters. Italy and Austria receive natural gas from Russia via the Yamal-Europe pipeline that passes through Ukraine and then via the Trans Austria Gas Pipeline.
Gasoline Prices Could Return To $5 Per Gallon
A short respite from rising oil and gasoline prices is about to end as 2022 comes to a close. The reasons are numerous, but almost all of them relate directly to the supply chain. Mainstream estimates suggest a return to $100 per barrel for the Brent which would inflate gasoline prices back to around $5 per gallon on average in the US. These projections are likely conservative. It should be noted that it’s unusual for the mainstream financial media or mainstream analysts to suggest the idea of a renewed energy price spike. With mid-term elections closing in, higher gas prices would put a damper on any chances democrats might have in maintaining a political majority. Stagflationary pressures already top the list of public concerns in the US, far above social issues and geopolitical conflicts. Higher energy costs would be more than unwelcome going into winter. This is the reason why Joe Biden has been so exuberant about releasing oil supplies from the US strategic reserves for the past several months. Biden’s plan unleashed 1 million barrels per day into the supply chain and is set to end in October. The reserves are now depleted to the lowest levels since 1984, with gas prices STILL nearly double what they were when Biden entered the White House. It is essentially market manipulation at the expense of US strategic readiness and for the express purpose of political gain. Biden’s ability to continue pouring oil onto the markets to keep gas prices down is dwindling. Even if he continues the strategy past October, a red sweep in November would bring challenges and a freeze on reserves anyway. Another factor is the failing attempts at a nuclear deal with Iran and the lifting of sanctions by the west. The free flow of Iranian oil will not be happening anytime soon, leaving western access to a major oil pool off the table. Europe’s desperate search for oil, coal and gas will siphon supplies away from the global markets leaving all other countries with less. The obvious result will be much higher prices for everyone. There is also the issue of the stronger US dollar. As the petro-currency, most oil worldwide has been purchased in dollars, allowing Americans to enjoy lower prices. However, sanctions and economic tensions between the east and the west have led to a rising trend of bilateral trade agreements cutting out the dollar as the reserve currency. Furthermore, the strong dollar has also led to turmoil in FX markets and in foreign currencies like the Japanese Yen, which may lead to increased dumping of US Treasury holdings by international creditors. We could soon be facing a coordinated effort by central banks to crush the dollar even as the Federal Reserve seeks to strengthen the Greenback through interest rate hikes. Barring a sudden crisis event such as an expansion of the war in Ukraine or a Chinese invasion of Taiwan, oil prices are still set to rise as supply chain issues multiply. The Department of Energy plans to replenish strategic reserves by purchasing oil stocks into the future at prices set today. The argument is that this will increase domestic oil production. The problem is that this discounts inflation in production costs for shale oil drillers. Set prices would only work as long as drillers can continue to make a reasonable profit. If they can’t, they will simply shut down. By extension, the plan also assumes that drillers will be able to produce excess beyond market demand to sell to the government. If the government gets a first purchase arrangement, then drillers will not be able to supply as much oil to regular consumers and prices will continue to spike. If the government does not get a first purchase contract, European buyers will probably snap up any excess. Either way, general consumers will not enjoy any benefits of increased drilling if it occurs, and Biden’s fraudulent green energy agenda will only restrict oil producers even more. All in all, every observable factor suggests high oil and gas prices in the near term.
Oil Prices Rally Into October As OPEC+ Plans A Production Cut
After several weeks of declines, oil began October trade with a gain driven by plans by OPEC+ to reduce production by a substantial amount. At the end of last month, the media reported that Russia had proposed a production cut of 1 million bpd. Later reports said discussions are underway for an even bigger production cut. “Anything less than 500,000 barrels a day would be shrugged off by the market. Therefore, we see a significant chance of a cut as large as 1 million barrels a day,” ANZ analysts said, as quoted by Reuters, today. Indeed, the reports follow a decision by OPEC+ last month to reduce production by 100,000 bpd in October—a move that failed to have any effect on markets, not least because of the cartel’s continued underperformance with respect to its own production targets. A cut of 1 million barrels daily or more, however, is likely to have an impact on prices, even though OPEC+ has been undershooting its target by over 2 million bpd since at least June. Oil prices, which had risen sharply since last year as oil demand rebounded faster than expected after the pandemic lockdowns, lost about a quarter of their value over the third quarter. The main reason was an increasingly gloomy outlook for the world economy as inflation continued pressuring economies and central banks turned aggressive to rein it in, risking a recession. The world’s inflation problem could become even worse if OPEC+ cuts production substantially, the Wall Street Journal reported this weekend. The cuts would push prices higher, adding to the inflationary burden and effectively increasing the risk of a recession. At the same time, a production cut would mean more spare capacity and this would mean downward pressure on longer-term prices, according to consultancy FGE. “If OPEC+ does decide to cut output in the near term, the resultant increase in OPEC+ spare capacity will likely put more downward pressure on long-dated prices,” the company said in a note last week, as quoted by Reuters.
Germany builds new gas terminals to succeed Russian pipelines
Germany’s most strategically important building site is at the end of a windswept pier on the North Sea coast, where workers are assembling the country’s first terminal for the import of liquefied natural gas (LNG). Starting this winter, the rig, close to the port of Wilhelmshaven, will be able to supply the equivalent of 20 percent of the gas that was until recently imported from Russia. Since its invasion of Ukraine, Moscow has throttled gas supplies to Germany, while the Nord Stream pipelines which carried huge volumes under the Baltic Sea to Europe were damaged last week in what a Danish-Swedish report called “a deliberate act.” In the search for alternative sources, the German government has splashed billions on five projects like the one in Wilhelmshaven. Altogether the new fleet should be able to handle around 25 billion cubic metres of gas per year, roughly equivalent to half the capacity of the Nord Stream 1 pipeline. – New platform – At the site in Wilhelmshaven, the half-finished concrete platform emerging from the sea sprays workers in fluorescent yellow vests with a fine mist. Back on solid land, a constant stream of lorries delivers sections of grey pipe, which should relay the terminal to the gas network. LNG terminals allow for the import by sea of natural gas which has been chilled and turned into a liquid to make it easier to transport. A specialist vessel, known as an FSRU, which can stock the fuel and turn LNG back into a ready-to-use gas, is also hooked up to the platform to complete the installation. Unlike other countries in Europe, Germany until now did not have an LNG terminal, instead relying on relatively cheap pipeline supplies from Russia. But since the invasion of Ukraine, Germany has set about weaning itself off Moscow’s gas exports, which previously represented 55 percent of its supplies. To diversify its sources, secure enough supplies of the fuel and keep its factories working, Berlin has bet massively on LNG to fill the gap left by Russian imports. Chancellor Olaf Scholz last week signed an agreement with the United Arab Emirates for the supply of LNG, while touring Gulf states in search of new sources. Renting five FSRU ships to plug into the new terminals has also set Berlin back three billion euros ($2.9 billion). – Environment – Following the outbreak of the war in Ukraine, Germany passed a law to drastically speed up the approval process for LNG terminals. In Wilhelmshaven, the work is coming along rapidly. The terminal should be finished “this winter”, says Holger Kreetz, who heads the project for German energy company Uniper. The strategic importance of the terminal has seen building work advance surprisingly quickly. “Normally, a project like this takes us five to six years,” Kreetz tells AFP. The arrival of the new terminal has been welcomed by many residents in Wilhelmshaven, where deindustrialisation has pushed the unemployment rate up to 10 percent, almost twice the national average. “It’s good that it’s in Wilhelmshaven… it’ll bring jobs,” Ingrid Schon, 55, tells AFP. Opposition comes from groups who fear the accelerated timescales for approval and construction could come at a cost to the environment. Young activists from the group “Ende Gelaende” managed to block the site in Wilhelmshaven for a day in August. The German environmental organisation DUH said the works would “irreversibly destroy sensitive ecosystems as well as endanger the living space of threatened porpoises”. The source of the fuel has also been a sore point, with concerns raised that natural gas produced from fracking in the United States could be imported via the new terminal. Criticism of the project has been dismissed by Economy Minister Robert Habeck, a Green party politician, who has emphasised the importance of “energy security”. By 2030, the site is set to be converted for the importation of green hydrogen, produced with renewables, which Berlin has backed as part of its energy transition.
India’s gasoil, gasoline sales surge on festive
Gasoline and gasoil sales by Indian state refiners rose sharply in September from a year earlier, signalling a pick-up in industrial activity ahead of the festive season from this month, preliminary sales data showed. Local fuel demand – a proxy for oil demand in Asia’s third largest economy – regularly slows during the four-month monsoon season from June. State-refiners’ average daily gasoline sales rose 1.3% from August and was up 13.2% from a year earlier, the data showed. Sales of gasoil in local markets increased by 4.6% from the previous month and by 22.6% from a year ago, the data shows. India’s gasoil consumption, which accounts for about two-fifths of the country’s fuel demand, typically increases during the month-long festival season that ends with the celebration of Diwali as diesel-guzzling trucks hit the road and industrial activity gathers pace. State retailers Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum Corp Ltd own about 90% of the country’s retail fuel outlets.
India makes strong pitch to US firms for investing in oil and gas production
Favourable geology, open data access, supporting policy regime and ease of doing business were the major drivers to attract potential US players to invest in India’s energy and petroleum growth wave during a two-day investors meet held here. The investors meet from September 28-29, showcasing the lucrative fiscal policies and conducive environment of energy and petroleum (E&P) sector, that has seen a paradigm shift in policies aimed at attracting investors for investment was organised by Directorate General of Hydrocarbons (DGH) under the aegis of Ministry of Petroleum and Natural Gas (MoPNG) and facilitated by Houston Consulate General of India. MoPNG Secretary Pankaj Jain, in his keynote address to potential investors from over 50 companies; oil and gas majors, financial institutions, private equity firms, service providers and academicians, made a strong pitch to investors interested in doing business with India. He discussed India’s strength and role in the global energy ecosystem and highlighted India as the destination of energy opportunities. Jain spoke on the latest offering of discovered fields, ease of doing business for bidding and assured an open-door policy to resolve any issue faced by the industry as he sought foreign and private investments to boost domestic oil and gas production. “India is the world’s 4th largest oil importer and the demand is expected to rise driven by an increase in India’s per capita consumption of energy which currently stands at one-third of the global average. India wants to be the new destination for global energy players. Oil producers worldwide are eager to gain a foothold in India, where fuel demand is expected to keep rising as the country’s economy grows,” he said.