NYC-based PIRA Energy Group reports that Qatari LNG pushes to Europe to support Asian prices.
Increases in European LNG buying are largely centered on Qatari firms pushing more volume into their equity-owned terminals. With more Australian LNG coming, Qatari volumes to Europe will go up unless the two Qatari firms make a stronger push for market share in Asia through lower prices, PIRA said in its report.
In the United States, despite drilling efficiency gains, 2Q15 production was tempered by price-driven curtailments in Appalachia. As a result, overall U.S. production sustained growth but at a decidedly slower pace than in the prior quarters. Output within the PIRA Group grew, but was unimpressive compared with considerably larger 1Q15 and 4Q14 year-on-year gains.
Weakness on the front end will continue to be an issue with seasonal gas demand in Europe, reaching its low point for the year. Over the next six months, gas demand will more than double from current levels to nearly 2-bcm/d if the weather emerges under a normal pattern. In this context, PIRA sees underlying demand growth as well, although through the second and third quarter PIRA ran through a string of downward revisions. Germany has been an exception to this slowdown in demand growth.
Following recent LNG reforms in Mexico, floundering domestic production continues to underscore the critical need for new outside capital to stymie this downtrend. Given this reality, PIRA found the results of Mexico’s first upstream tender troubling (only 2 out of 14 blocks awarded). The Mexican government has recognized the importance of relaxing fiscal/operating terms to avoid similar results in subsequent rounds, but Mexico runs the risk of seeing deeper production losses in the years ahead unless those changes in terms prove to be effective.
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Image: Qatargas