Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
US Presidential Election Forecast Matrix, Stock Market Uncertainty - 29th Oct 20
Stock Market Turning? Look For These Support Levels - 29th Oct 20
Silver: A Conceivable Dead-Cat-Bounce on the Cards - 29th Oct 20
Stocks are Strong but be Aware of this Continuing Pattern - 29th Oct 20
The Most Profitable Way To Play The Gold Boom - 29th Oct 20
Why You Should Hire An Accountant To Complete Your Tax Return - 29th Oct 20
Global Banking: Some Sectors Look as "Precarious as Ever" - 28th Oct 20
Silver Price Minor Dip Possible Before 2nd Major Upleg Starts - 28th Oct 20
�� How to Carve a Simple and Scary Pumpkin Face for Covid Halloween 2020 �� - 28th Oct 20
Gold Price One Last Dip Likely Then Major Upleg to New Highs - 28th Oct 20
Smart Money Is Going All-In On This New Gold Frontier - 28th Oct 20
Gold Stocks Still Correcting - 27th Oct 20
Gold and Crypto: Is This How Charts Look Before A Monetary Collapse? - 27th Oct 20
Silver's Coming Double Trigger Shotgun Price Explosion - 27th Oct 20
The $126 Billion Gold Opportunity in Australia - 27th Oct 20
Tips to Breeze through Your Spanish Classes Online - 27th Oct 20
Try The “Compounding Capital Gains” Strategy Today - 26th Oct 20
UK Coronavirus Broken Test and Trace System, 5 Days for Covid-19 Results! - 26th Oct 20
How the Coronavirus is Exacerbating Global Inequality, Hunger - 26th Oct 20
The Top Gold Stock for 2021 - 26th Oct 20
Corporate Earnings Season: Here's What Stock Investors Need to Know - 25th Oct 20
�� Halloween 2020 TESCO Supermarkes Shoppers Covid Panic Buying! �� - 25th Oct 20
Three Unstoppable Forces Set to Drive Silver Prices - 25th Oct 20
Car Insurance And Insurance Claims and Options - 25th Oct 20
Best Pressure Washer Review - Karcher K7 Full Control Unboxing - 25th Oct 20
Further Gold Price Pressure as the USDX Is About to Rally - 23rd Oct 20
Nasdaq Retests 11,735 Support - 23rd Oct 20
America’s Political and Financial Institutions Are Broken - 23rd Oct 20
Sayonara U.S.A. - 23rd Oct 20
Economic Contractions Overshadow ASEAN-6 Recovery - 23rd Oct 20
Doji Clusters Show Clear Support Ranges for Stock Market S&P500 Index - 23rd Oct 20
Silver Market - 22nd Oct 20
Goldman Sachs Likes Silver; Trump Wants Even More Stimulus - 22nd Oct 20
Hacking Wall Street to Close the Wealth Gap - 22nd Oct 20
Natural Gas/UNG Stepping GAP Patterns Suggest Pending Upside Breakout - 22nd Oct 20 -
NVIDIA CANCELS RTX 3070 16b RTX 3080 20gb GPU's Due to GDDR6X Memory Supply Issues - 22nd Oct 20
Zafira B Leaking Water Under Car - 22nd Oct 20
The Copper/Gold Ratio Would Change the Macro - 21st Oct 20
Are We Entering Stagflation That Will Boost Gold Price - 21st Oct 20
Crude Oil Price Stalls In Resistance Zone - 21st Oct 20
High-Profile Billionaire Gives Urgent Message to Stock Investors - 21st Oct 20
What's it Like to be a Budgie - Unique in a Cage 4K VR 360 - 21st Oct 20
Auto Trading: A Beginner Guide to Automation in Forex - 21st Oct 20
Gold Price Trend Forecast into 2021, Is Intel Dying?, Can Trump Win 2020? - 20th Oct 20
Gold Asks Where Is The Inflation - 20th Oct 20
Last Chance for this FREE Online Trading Course Worth $129 value - 20th Oct 20
More Short-term Stock Market Weakness Ahead - 20th Oct 20
Dell S3220DGF 32 Inch Curved Gaming Monitor Unboxing and Stand Assembly and Range of Movement - 20th Oct 20
Best Retail POS Software In Australia - 20th Oct 20
From Recession to an Ever-Deeper One - 19th Oct 20
Wales Closes Border With England, Stranded Motorists on Severn Bridge? Covid-19 Police Road Blocks - 19th Oct 20
Commodity Bull Market Cycle Starts with Euro and Dollar Trend Changes - 19th Oct 20
Stock Market Melt-Up Triggered a Short Squeeze In The NASDAQ and a Utilities Breakout - 19th Oct 20
Silver is Like Gold on Steroids - 19th Oct 20
Countdown to Election Mediocrity: Why Gold and Silver Can Protect Your Wealth - 19th Oct 20
“Hypergrowth” Is Spilling Into the Stock Market Like Never Before - 19th Oct 20
Is Oculus Quest 2 Good Upgrade for Samsung Gear VR Users? - 19th Oct 20
Low US Dollar Risky for Gold - 17th Oct 20
US 2020 Election: Are American's ready for Trump 2nd Term Twilight Zone Presidency? - 17th Oct 20
Custom Ryzen 5950x, 5900x, 5800x , RTX 3080, 3070 64gb DDR4 Gaming PC System Build Specs - 17th Oct 20
Gold Jumps above $1,900 Again - 16th Oct 20
US Economic Recovery Is in Need of Some Rescue - 16th Oct 20
Why You Should Focus on Growth Stocks Today - 16th Oct 20
Why Now is BEST Time to Upgrade Your PC System for Years - Ryzen 5000 CPUs, Nvidia RTX 3000 GPU's - 16th Oct 20
Beware of Trump’s October (November?) Election Surprise - 15th Oct 20
Stock Market SPY Retesting Critical Resistance From Fibonacci Price Amplitude Arc - 15th Oct 20
Fed Chairman Begs Congress to Stimulate Beleaguered US Economy - 15th Oct 20
Is Gold Market Going Back Into the 1970s? - 15th Oct 20
Things you Should know before Trade Cryptos - 15th Oct 20
Gold and Silver Price Ready For Another Rally Attempt - 14th Oct 20
Do Low Interest Rates Mean Higher Stocks? Not so Fast… - 14th Oct 20
US Debt Is Going Up but Leaving GDP Behind - 14th Oct 20
Dell S3220DGF 31.5 Inch VA Gaming Monitor Amazon Prime Day Bargain Price! But WIll it Get Delivered? - 14th Oct 20
Karcher K7 Pressure Washer Amazon Prime Day Bargain 51% Discount! - 14th Oct 20
Top Strategies Day Traders Adopt - 14th Oct 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Gazprom Eyes Cyprus' Offshore Natural Gas Deposits

Politics / Natural Gas Mar 25, 2013 - 11:05 AM GMT

By: Andrew_McKillop

Politics

THE POTENTIAL IS THERE
Engaged players in unlocking the offshore gas potential of Cyprus at present only concern a few major energy corporations: Noble Energy of the US, Total of France, and Korea Gas. So far and to date, the single major find in 2011 by Noble Energy is estimated, by Noble, as holding about 0.3 billion cubic metres of gas (8 trillion cu feet). But Cyprus’ gas discoveries adjoin Israeli territorial waters where the discovery of the massive Leviathan gasfield (estimated at 425 billion cubic metres) and the smaller Tamar gasfield (250 billion cubic meters) have been enough to make foreign companies rush to cash in on this. European Union total gas consumption in 2012 was about 460 billion cubic metres, in decline for the second straight year, and EU 27 total gas production in 2012 was about 150 bn cu metres, also declining but not at the double-digit rates of annual gas demand in almost all EU countries.


Adding geopolitical spice to Cypriot gas prospects, Turkey disputes the exact extent of Cypriot offshore territory, and Turkey sent in warships to halt drilling in 2011, threatening to bar foreign companies which explore in Cypriot waters from any license opportunities in Turkey. In turn, this presently makes Israeli and other eastern Med waters a safer prospect. With Lebanese and Syrian offshore gas prospects also likely to be significant, but carrying their own major geopolitical risk, energy companies have a difficult but constantly evolving set of choices for eastern Med gas (and oil) exploration and development. Industry estimates presently and conservatively place Levant Basin prospects, excluding Israel, at around 125 billion cubic metres of gas and 1.75 billion barrels of oil condensate.

Staying in the region, Egyptian offshore and onshore drilling has had a string of successes to date, with major activity headed by BP, BG, Egyptian General Petroleum, ENI and until recently by Germany's RWE, as well as several junior energy companies, but as with Cyprus, both geopolitical and economic difficulties are holding back further exploration and development. Pace has slowed so much, that Egypt is at present no longer a net exporter of gas. Estimates of total potential gas resources are therefore very approximate, but are large. ENI's major Seth field, already in production, is claimed by ENI as able to attain 4.8 million cubic metres per day (1.75 billion cu metres/year). Egypt's Sequoia subsea project, which extends to offshore Palestine and Israeli waters, and West Nile Delta fields, are estimated by some industry analysts as being at least equal to resources of the Levant Basin minus Israel.

ENTER GAZPROM
Gazprom has heavily invested, and continues heavily investing in a multi-pipeline, multi-prospect strategy with one single target customer: Europe. Only since 2010, as European gas demand has shrunk, and shrunk, has Gazprom reconsidered and relaunched its equally high cost and longterm strategy for delivering and selling gas in east and south Asia, that is China and India. As we know today, the European and Troika "poker game" with the future of Cyrus's banks and the credibility of the Eurozone also includes the Gazprom wildcard. The international press reported, 20 March: "Russian energy giant Gazprom has offered Cyprus a plan in which the company will undertake the restructuring of the country’s banks in exchange for substantial control over the country’s gas resources".

All and any discussion on Gazprom strategy and spending, tightly controlled by the Kremlin, also has to include gas pricing - over which Kremlin and Gazprom control is weakening, as the global, European and Asian gas markets change, both radically and rapidly. The onrush of US shale gas, able to reach formerly "secure high price gas markets" for Gazprom - that is Europe - and Asian markets through LNG shipment, and the global pace of massive offshore stranded gas discoveries and development, notably off Australia and east Africa, which will also feed global LNG trade, has radically changed the outlook this decade.

The IEA forecasts global gas prices, outside the US, will fall 25%-33% by 2020, but this timetable is almost certainly too long. Prices are likely to fall 25% from current levels, by end-2015. This will tilt global traded gas prices, whether it is delivered by pipeline or as LNG, towards current US natural gas prices, still below US$ 4 per million BTU (equivalent to oil at $23.20 per barrel). This will have revolutionary effects on Gazprom and Kremlin thinking! Their "gas rent" like that of the mini-emirate Quatar habituated them to "offer" their gas at a barrel-eqivalent energy price near $90 per barrel.

Potential, as well as proven onshore and offshore gas resources, outside the Mediterranean basin but accessible to Europe include massive fields in Azerbaijan, as well as Iraq, Kurdistan and Iran. Current existing Gazprom-led pipeline developments in the Caucuses, west Asia and SE Europe could enable some of these resources to be delivered into Europe, but this again depends on the combination of price and politics being right. In turn, this would also require European gas import needs to remain as high as they are today - at present about 60% of all gas consumed in Europe is imported.

None of these 3 conditions are sure and certain. Global gas trading is rapidly shifting from a sellers market to a buyers market. European gas demand is declining.
 
All this is well known to Gazprom, which is facing major technical and industrial challenges over and above the financial, economic, political and gas-price issues. Developing "European local" gas offshore Cyprus, for Gazprom, would be a highly rational strategy - if the price and the politics are right. Offshore Syria would naturally also be attractive to Gazprom, but apart from major political and geopolitical issues, timelines for developing firstly Cypriot gas, before any action with Syrian and Lebanese offshore gas, set this as more than 6 years forward from 2013, even under the most favourable conditions. Between times plenty of water will flow under the bridges, but more important a lot more global LNG supply is going to be available. Gas prices will fall!

EXIT GAZPROM
The Cyprus bank crisis may have been just one more sideshow in the process of European and Eurozone de-integration and non-convergence, as the Union and Commission controlled fantasy economy and society falls apart. A fantasy world where "good Europeans are terrified by global warming", almost as much as depending on Russian Gazprom, Rosneft and Arab suppliers for their oil and gas! The Dec 2008 European climate-energy package voted by the European parliament mandates huge spending by European member countries, whatever the state of their economy, to cut their dependence on imported gas and oil, while curiously saying almost nothing about coal. The master slogan was, possibly still is "decarbonizing", but in any case European demand for all three fossil fuels is declining - for oil, gas and coal.

LNG imports by Europe are however increasing at double-digit rates: the Eurogas group reports that imports grew by close to 50% in the 2 years 2010-2012. Pipeline supplies, dominated by Gazprom but also including Algerian and Norwegian state-controlled and state-owned gas suppliers, have declined. Total gas consumption in Europe, which was expected to grow at high annual rates as recently as 2010, has much more than simply flattened: national demand, by country, fell at typical rates of 12%-20% in 2011-2012.

Most certainly "The Gas Bonanza That Wasn't".

Sadly enough for the declining band of Global Warming hysterics this has little or nothing to do with Europe's relatively normal long-term average winter conditions, called "record warm winters" by the hysterics and their tame media touting junk science. Falling gas demand was due to the double pincer effect of economic stagnation or, in many countries outright economic contraction, and the continuing fast growth of windpower and solar electricity supply, as well as energy saving.

As a direct result, any future necessarily high cost, long-maturing gas supply or transport investment by Gazprom, targeting Europe, is increasingly risky and unsure. The recent claimed "offer by Gazprom" to exchange present Cyprus debt for future Cypriot gas is highly unlikely to have been serious. The predictable near-instant rejection of this supposed offer, by Angela Merkel and every other Me Too politician in the playact, was of course treated by the media as "political". The real world gas outlook for Europe, and the world, paints an entirely different picture.

By Andrew McKillop

Contact: xtran9@gmail.com

Former chief policy analyst, Division A Policy, DG XVII Energy, European Commission. Andrew McKillop Biographic Highlights

Co-author 'The Doomsday Machine', Palgrave Macmillan USA, 2012

Andrew McKillop has more than 30 years experience in the energy, economic and finance domains. Trained at London UK’s University College, he has had specially long experience of energy policy, project administration and the development and financing of alternate energy. This included his role of in-house Expert on Policy and Programming at the DG XVII-Energy of the European Commission, Director of Information of the OAPEC technology transfer subsidiary, AREC and researcher for UN agencies including the ILO.

© 2013 Copyright Andrew McKillop - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisor.

Andrew McKillop Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules