News Uncategorized
September 28, 2022 No Comments

Russia has halted gas deliveries to Germany

Russia has halted gas deliveries to Germany via a key pipeline for an indefinite period after saying Friday it had found problems in a key piece of equipment, a development that will worsen Europe’s energy crisis.

Russian gas giant Gazprom said Friday that the Nord Stream pipeline due to reopen at the weekend would remain shut until a turbine is repaired.

In a statement, Gazprom indicated it had discovered “oil leaks” in a turbine during a planned three-day maintenance operation.

Gazprom added that “until it is repaired… the transport of gas via Nord Stream is completely suspended”.

Resumption of deliveries via the pipeline which runs from near St Petersburg to Germany under the Baltic Sea had been due to resume on Saturday.

Gazprom said it had discovered the problems while carrying out maintenance with representatives of Siemens, which manufactured the turbine in a compressor station that pushes gas through the pipeline.

On its Telegram page, it published a picture of cables covered in a brown liquid.

Earlier in the day, the Kremlin warned the future operation of the Nord Stream pipeline, one of Gazprom’s major supply routes, was at risk due to a lack of spare parts.

“There are no technical reserves, only one turbine is working,” Kremlin spokesman Dmitry Peskov told reporters.

“So the reliability of the operation, of the whole system, is at risk,” he said, adding that it was “not through the fault” of Russian energy giant Gazprom.

Following the imposition of economic sanctions over the Kremlin’s invasion of Ukraine, Russia has reduced or halted supplies to different European nations, causing energy prices to soar.

The Kremlin has blamed the reduction of supplies via Nord Stream on European sanctions which it says have blocked the return of a Siemens turbine that had been undergoing repairs in Canada.

Germany, which is where the turbine is located now, has said Moscow is blocking the return of the critical piece of equipment.

Berlin has previously accused Moscow of using energy as a weapon.

The announcement by Gazprom comes the same day as the G7 nations said they would work to quickly implement a price cap on Russian oil exports, a move which would starve the Kremlin of critical revenue for its war effort.

Gazprom also announced the suspension of gas supplies to France’s main provider Engie from Thursday after it failed to pay for all deliveries made in July.

– ‘Much better position’ –
As winter approaches, European nations have been seeking to completely fill their gas reserves, secure alternative supplies, and put into place plans to reduce consumption.

A long-term halt to Russian gas supplies would complicate efforts by some nations to avoid shortages and rationing, however.

Germany said Friday its gas supplies were secure despite the halt to deliveries via Nord Stream.

“The situation on the gas market is tense, but the security of supply is guaranteed,” a spokeswoman for the economy ministry said in a statement.

The spokeswoman did not comment on the “substance” of Gazprom’s announcement earlier Friday but said Germany had “already seen Russia’s unreliability in the past few weeks”.

German officials have in recent times struck a more positive tone about the coming winter.

Before the latest shutdown, Chancellor Olaf Scholz said Germany was now “in a much better position” in terms of energy security, having achieved its gas storage targets far sooner than expected.

Europe as a whole has also been pushing ahead with filling its gas storage tanks, while fears over throttled supplies have driven companies to slash their energy usage.

Germany’s industry consumed 21.3 percent less gas in July than the average for the month from 2018 to 2021, said the Federal Network Agency.

Agency chief Klaus Mueller has said such pre-emptive action “could save Germany from a gas emergency this winter”.

Europe as a bloc meanwhile has been preparing to take emergency action to reform the electricity market in order to bring galloping prices under control.

Fear of shortages of natural gas has driven futures contracts for electricity in France and Germany to record levels.

European consumers are also bracing for huge power bills as utilities pass on their higher energy costs.

News
September 28, 2022 No Comments

Osinbajo: Why Nigeria should benefit more from its gas reserves

The use of gas as a transition fuel will not only help in stemming deforestation but advance Nigeria’s broader development goals, the Vice President, Prof. Yemi Osinbajo has said.

Stating that the country has one of the largest gas reserves in the world, he believes other developing countries will also benefit from the adoption of gas as a transition fuel.

Osinbajo stated this on Tuesday night when he received the U.S. Special Presidential Envoy on Climate Change, John Kerry, at the Presidential Villa in Abuja.

Kerry, who was on a working visit to Nigeria, had met with President Muhammadu Buhari prior to his meeting with Professor Osinbajo, the Vice President’s spokesman, Laolu Akande, said in a statement on Wednesday.

The Vice President, at the meeting with Kerry and the US delegation, highlighted the need for Nigeria to continue the exploration and use of gas as a way of arresting deforestation, transiting away from dirtier fuels like diesel, kerosene, and petrol, while at the same time ensuring that the country has the necessary energy baseload for industrialisation.

He pointed out that Nigeria has one of the largest gas reserves in the world and should benefit from its exploitation, and highlighted the significance of Nigeria’s Energy Transition Plan, which is the first in Africa.

Professor Osinbajo had discussed the Energy Transition Plan during his recent visit to Washington D.C., where he met with his American counterpart, Kamala Harris, at the White House, among other top US government officials.

Before the recent US trip, the Federal Government had launched the Energy Transition Plan at a global virtual event.

In addition to a review of the Energy Transition Plan, including a discussion about its implementation, both the Vice President and Kerry also discussed the issues of renewable energy sources and the global transition.

In his remarks, the US envoy praised the plan and the efforts already being made in Nigeria to step up the use of renewables, especially solar and hydropower, as major components of the energy mix.

While acknowledging that Nigeria ought to benefit from its gas reserves, Kerry urged an even more rapid adoption of renewables, especially electric vehicles which are certainly the next wave in auto manufacturing.

He observed that the technology of renewables keeps improving daily, adding that batteries are already in production which last far more than those that are now on the market.

Upon a request by the Vice President, the Special Envoy promised to assist Nigeria with the necessary expertise to scientifically determine the most appropriate energy mix that would move the country toward the goal of energy for all by 2030 and net zero carbon emissions by 2060, without compromising the country’s energy security.

He also affirmed the readiness of the US government to assist Nigeria in a bilateral partnership to realise its climate change adaptation and resilience capacity, thereby consolidating the nation’s place as a model for other countries on the planet.

Kerry said he looked forward to Nigeria presenting an inspiring position, which would no doubt attract all necessary global support at the upcoming COP 27 in Egypt later in the year.

He was accompanied by other US officials, including the American Ambassador to Nigeria, Ms Mary Beth Leonard.

Uncategorized
September 20, 2022 No Comments

Nigeria to produce additional 255,000 bpd

Nigeria is set to produce additional 225,000 barrels per day, bpd, as Shell Nigeria Exploration and Production Company Limited, SNEPCo, has completed the 2022 Turnaround Maintenance, TAM, of the Bonga floating production storage and offloading, FPSO.

The FPSO was shut down on October 18, 2022, due to the statutory inspections, recertifications and other critical asset integrity restoration activities.

In a statement, yesterday, the company confirmed that the TAM was completed on November 9, 2022, adding the commissioning and start-up activities are currently in progress.

It stated: SNEPCo is pleased to announce that the 2022 TAM of the Bonga floating production storage and offloading vessel (FPSO) has been completed.

“The 225kbopd capacity FPSO was shut down on October 18, 2022,  to carry out statutory inspections, recertifications and other critical asset integrity restoration activities.

“The 2022 TAM which was originally planned for 30 days was completed in 22 days on November 9, 2022,  thanks to the excellent front-end planning and flawless execution.

“Commissioning and start-up activities are in progress and will culminate in ramp up of oil and gas production in the coming days.”

However, in its latest report obtained by Vanguard, the Nigerian Upstream Petroleum Regulatory Commission, NUPRC, said that Nigeria’s dwindling average oil output, including condensate, dropped Year-on-Year, YoY, by 7.4 per cent to 1.37 million barrels per day, mb/d in the first 10 months (January – October) 2022, from 1.48 mb/d in the corresponding period of 2021.

This showed a shortfall of 317,940 barrels when juxtaposed against the 1.69 mb/d, which the 2023 budget was based on at $70 per

News Power
September 20, 2022 No Comments

NNPC, TotalEnergies commission model school project in Makurdi

The Nigerian National Petroleum Company Limited, NNPCL, TotalEnergies, operators of OML 130 and partners,SAPETRO, CNOOC & PRIME 130, have constructed and commissioned a model secondary school project at Government College, Makurdi in Benue State as part of their corporate social responsibilities to different communities in Nigeria.

The two floors model secondary school sits on 2,500m2 and is expected to provide the students access to modern-day learning and science experimentation tools.

The school facility is powered by an integrated power supply system consisting of a 35kva solar power generating system, and one 50kva soundproof generator to ensure continuous power supply.

In his welcome address, the Chief Upstream Investment Officer of the NNPC Upstream Investment Management Services, Mr. Bala Wunti, who was represented by Mrs Bunmi Lawson said that the project was part of efforts to mitigate various identified gaps.

He noted that the projects aligned with sustainable development goals, adding that the partners would continue to champion the implementation of SDGs.

“These projects were borne out of the need to mitigate the various identified gaps in line with the relevant Sustainable Development Goals (SDGs). We will continue to consistently champion the implementation of Sustainable Community Development projects that will positively impact the lives of the citizens of this Country.”

Managing Director of TotalEnergies EP Nigeria Limited, Mike Sangster, who was represented by Mr. Lucky Deekor, revealed that in line with his company’s commitment to promoting youth education, TotalEnergies believe that the school project will provide students access to modern-day learning, science experimentation tools and ignite their interest in the study of the STEM courses.

Giving an overview of the project, Sangster said that the school project includes a well-designed administrative block with furnished offices, a sick bay, a first aid room and storage facilities.

“The project we are commissioning today includes all the necessary components for a modern school. These include a well-designed administrative block with 4 fully furnished offices, a sick bay, and a first aid room with all its appurtenances and storage facilities.

“Among other great features, the main school block has 2 floors, 10 offices for teachers and technical rooms, 12 furnished classrooms, 5 cutting-edge science laboratories, two libraries and 1 fully equipped ICT laboratory.

The principal of Government College, Makurdi, Mrs. Aumbur Agena, thanked Total Energies and all other partners for their support in the building of the facility, adding that the intervention to build the facility will provide a better learning environment for the students.

“I thank NNPCL, TotalEnergies and their partners for finding the school worthy to be part of the CSR project. Their commitment to the completion of the project is commendable. The project will solve one of our big problems: providing a better learning environment for the students. I also appeal to the government of Benue state to provide us with a school bus for easy student commute.”

News Production
September 20, 2022 No Comments

2023 budget threatened, as Nigeria’s crude oil output drops 7.4% to 1.37mb/d

Nigeria’s dwindling average oil output, including condensate, dropped Year-on-Year, YoY, by 7.4 per cent to 1.37 million barrels per day, mb/d in the first 10 months (January – October) 2022, from 1.48 mb/d in the corresponding period of 2021.

This showed a shortfall of 317,940 barrels when juxtaposed against the 1.69 mb/d which the 2023 budget was based on at $70 per barrel.

However, on Month-on-Month, MoM, the average oil output increased by 7.8 per cent to 1.23 mb/d in October 2022, from 1.14 mb/d, recorded in the preceding month of September 2022.

Oil theft, others

The Nigerian Upstream Petroleum Regulatory Commission, NUPRC, which disclosed this in its monthly Oil Production Status Reports, obtained by Vanguard, weekend, did not specify the cause of the trend.

But checks by Vanguard, yesterday, attributed it to prolonged pipeline vandalism, oil theft, and illegal refining in the Niger Delta.

It indicated that pipeline vandalism, oil theft and illegal refining would still continue next year, despite the efforts of stakeholders, especially the government and oil companies, to tackle them.

Case of Shell

In its briefing notes obtained by Vanguard, Shell, the biggest International Oil Company, IoC, in Nigeria, stated: “Shell companies in Nigeria have a track record of strong production. But in 2021, the combined production from the SPDC JV and SNEPCo (Bonga) fell to 493,000 barrels of oil equivalent per day from 614,000 in 2020.

“The SPDC JV produced 383,000 barrels of oil equivalent in 2021, compared with 497,000 barrels of oil equivalent in 2020. The fall in output was largely as a result of curtailed oil production because of heightened security issues, such as crude oil theft and illegal oil refining.

”Production numbers were also down as a result of divestment action, including the sale of SPDC’s 30% interest in OML 17 for $533 million.

“In the last quarter of 2021, crude oil theft from pipelines across the region increased ostensibly as a result of rising oil prices, which made the activity more profitable. Security risks have heightened and production in some areas has been put on hold.

”The situation is impacting operators across the Niger Delta. The Nigerian National Petroleum Corporation, NNPC, has reported that crude thefts in 2021 reached 200,000 barrels per day – a quarter of onshore production.”

Oil market

The checks also showed that although the Organisation of Petroleum Exporting Countries, OPEC, interventions would make a positive impact, the global oil market would continue to record instability in 2023 and beyond, thereby impacting negatively the economy of nations, including Nigeria.

In its October 2022 Monthly Oil Market Report, MOMR, obtained by Vanguard, OPEC painted a picture of an uncertain oil market when it stated: “For 2023, world oil demand growth is revised down to stand at about 2.3 mb/d.

“Uncertainty about the geopolitical situation remains high, and there is potential for further US shale liquid production.”

Experts

However, commenting on the development, the National President of Oil and Gas Service providers Association of Nigeria, OGSPAN, Colman Obasi, said: “The government and other stakeholders have not done enough to address the various issues currently affecting the nation’s oil production.

”A lot can still be done, including the use of modern technologies, to monitor the nation’s oil and gas assets in the Niger Delta.”

Obasi, who attributed the vices partly to massive unemployment and desperation on the part of the youth to make a living, said: “If concerted efforts were made to industrialise Niger Delta, there would probably be no crude oil theft and devastation of the region. Oil theft has been with us for decades and seems to be gaining momentum.”

Similarly, Executive Director, Emmanuel Egbogah Foundation, Prof. Wunmi Iledare, said: “It seems the price of crude is demand determined. The likelihood to attain and sustain that output in 2023 is less likely. At best, that output may even be the potential because of insecurity, divestment, and onshore basin maturity.”

Manufacturing Power
August 23, 2022 No Comments

Leverage gas to power operations, NGA tells FG

President of the Nigerian Gas Association (NGA), Ed Ubong has asked the Federal Government to turn to gas to power daily operations.

Expressing optimism about the growing adoption of Compressed Natural Gas (CNG) as an alternative source of energy nationally, he said there is progress in deepening gas adoption.

Ubong made this observation during a panel session themed: “Harnessing Opportunities in the Nigerian Gas Sector” at the Nigerian Oil & Gas Conference in Abuja.

He acknowledged that despite the gas scarcity that the country is currently experiencing, progress is being made, adding that by working on the decade of gas’ holistic action plan involving all the critical stakeholders in the country, the narrative will change, and the investment made by all will yield dividends.

Ubong said: “We are making progress in deepening gas consumption across the country. The private stakeholders are doing their part as evidenced in the massive projects being commissioned. FG is also encouraging the adoption of gas as demonstrated in the launch of 20 gas-powered buses by the Head of the Civil Service to convey civil servants from their abodes to their offices in Abuja. There are still CNG input pricing concerns raised by CNG operators to enable the sector which need to be addressed urgently.

“The downside, however, comes in the form of the cooking gas scarcity that the nation is facing. We have been experiencing an acute shortage of gas for the past six months and its effect is keenly felt across all sectors, including cooking gas, gas to industries and gas to power plants for electricity generation. This poses a massive challenge to us in the gas sector as we need to accelerate the activation of initiatives that are in place to ensure that not only the domestic gas needs are met but also unlock the exportation of gas to other markets. These will undoubtedly boost the national economy as it will serve as a major source of revenue while reducing our oil dependency.”

He implored the government to fast-track clearing of the legacy gas supply debts in the power sector as it is an impediment to progress. Ubong maintained that as soon as the government removes this obstacle then it can hold private stakeholders accountable for the promises that they have made to bolster the sector with improved gas supply.

Ubong noted that while members of NGA in tandem with the government are seeking innovative solutions for the sector, end-users also need to adopt gas as a viable and clean source of energy during this decade of gas.

He commended the Nigerian Content Development & Monitoring Board (NCDMB) for embracing gas generators to power its headquarters office in Bayelsa.

He went a step further by asking FG to institutionalize gas-powered generator usage for public parastatals and private entities that use generators of more than 250 kva capacity.

Industry
August 23, 2022 No Comments

Five oil, gas companies grew revenues by 41 per cent in H1

Five leading indigenous oil and gas companies have posted N625.08 billion revenues in the half year (H1) of 2022, 40.7 per cent higher than their performance in the corresponding period of 2021 when they recorded N444.25 billion.

Although the revenue of these firms rose by 40.7 per cent, from 2021 figure data obtained from the Nigerian Exchange Limited (NGX) showed that their performances were negatively affected by both endogenous and exogenous challenges currently impeding the country’s business environment.

Ardova Plc posted revenue of N126.6 billion for the first half of the year 2022 up from N86.770 billion recorded in 2021, accounting for an increase of 45.96 per cent. Ardova closed its last trading day on August 10, 2022, at N13 per share on the (NGX). The company is the 76th most traded stock on the Nigerian Stock Exchange over the past three months (May 10 to Aug 9, 2022).

Also, Seplat Energy Plc sustained a rising profile during the half year ended June 30, 2022, as revenue rose by 82 per cent. The company reported a revenue of N219.203 billion in its half-year 2022 from N120.44 billion achieved in the previous year.

Seplat closed its last trading day on August 10, 2022, at N1, 430.5 per share on the (NGX). The oil firm started the year with a share price of N650 and has since gained 120 per cent on that price valuation.

However, following financial and operational headwinds in the first half of the year, Caverton Offshore Support Group Plc, a provider of marine, aviation and logistics services to local and international oil and gas companies in Nigeria reported a 22.74 per cent drop in revenue for the first half of the year 2022 to N13.96 billion against N18.069 billion achieved in 2021.

The company closed its last trading day (Wednesday, August 10, 2022) at N1.05 per share on the (NGX). The Offshore Support firm began the year with a share price of N1.72 but has since lost 36.6 per cent off that price valuation, ranking it 154th on the NGX in terms of year-to-date performance.

Similarly, Conoil Plc also reported a decline of 16.83 per cent in revenue during the half year as the oil and gas firm battled to remain afloat in the operational environment amid volatility in the economy. Conoil reported revenue of N56.248 billion during the half year of 2022 as against N67.638 billion representing a drop of 16.83 per cent.

Conoil closed its last trading day on August 10, 2022, at N25.95 per share on the Nigerian Stock Exchange (NGX). It started the year with a share price of N22 and has since gained 18 per cent on that price valuation, ranking 32nd on the NGX in terms of year-to-date performance.

Total Energy Plc leveraged the higher oil prices to gain a 38.12 per cent increase in revenue during the review period. The company recorded a revenue of N209.014 billion in the half year 2022 from N151.33 billion in 2021, accounting for an increase of 38.12 per cent.

The growth in revenue reported by Total Energies Marketing Nigeria was driven by higher product prices and demand from consumers in the half year of 2022. The company closed its last trading day on August 10, 2022, at N234.50 per share on the (NGX). It commenced the year with a share price of N234.5 and has since gained more than 5.68 per cent in that price valuation, ranking 48th on the NGX in terms of year-to-date.

Reacting to the performance, the President of Investors Alternative Dispute Resolution Initiative (IADRI), Moses Igbrude, said: “It is a good performance and an excellent result.

This is despite the unfavorable economic environment where the government is a competitor and sole importer of petrol, coupled with forex shortage, kudos to them.

“To improve on this performance, the companies should focus more on their competitive advantage areas such as lubricant production, diesel import, insecticide production as well as car services business and any other areas where they can make good margins in their business operations. They should also manage their costs effectively,” he said.

Production
August 23, 2022 No Comments

Obaseki tasks stakeholders on cooperation at Edo maiden oil, gas forum

Edo State governor, Godwin Obaseki, yesterday, called for increased cooperation among stakeholders and host communities to foster prosperity in oil and gas-producing areas of the state.

Obaseki made the call during a one-day stakeholders’ forum organised by the Edo State Commissioner for Mining, Oil and Gas, Ethan Uzamere.

The event was aimed at rallying oil and gas stakeholders on effective implementation of the Petroleum Industry Act (PIA) and developing Edo State’s policy for the industry.

Obaseki, who was represented by the Commissioner for Local Government, Monday Osaigbovo, said the purpose of the engagement was to freely discuss the implementation of the PIA for sustainable peace.

He said: “The oil and gas sector, to date, is the mainstay of the Nigerian economy. And as such, there is a need to evaluate its contributions to communities and the state. This forum will afford stakeholders opportunities to discuss ways to strengthen the process of PIA implementation.”

Obaseki further reiterated the commitment of his administration to improving the lives of residents in the three oil-producing local councils of Orhionmwon, Ikpoba-Okha and Ovia North-East.

In his opening remarks, Uzamere said the state government is at the forefront in the implementation of the PIA and that the ministry is utilising the forum to set a foundation for the development of a comprehensive working policy for the sector.

He said: “The Act seeks to promote ease of doing business in the oil and gas industry, regulating the midstream and downstream sector, as well as making clear the roles of all players in the sector.

“It provides for fast approvals of licences to investors, removes bureaucratic bottlenecks to fuel importation and subsidies, while strengthening the value of the naira and creating job opportunities in the petroleum value chain, among

Factory Industry
June 1, 2022 No Comments

Oil regulator blames marketers, disburses N58b bridging claims

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) yesterday, in Abuja, said marketers of Premium Motor Spirit (PMS) have a hand in the delayed payment for petroleum equalisation.

The NMDPRA said while payment of the claims said to be responsible for ongoing PMS scarcity in some parts of the country takes time to be sorted, “some of the pending payments is due to the reluctance of marketers to reconcile their claims, in spite of the authority’s continuous appeal to come for reconciliation whenever there are discrepancies.”

Scarcity of PMS, otherwise called petrol, had surfaced in the Federal Capital Territory (FCT) earlier this week as marketers blamed it on the inability of the Federal Government to settle over N100 billion equalisation payment as well as a breakdown of key storage and distribution infrastructure may spread the development across the country.

Coming barely two months after the country experienced a similar situation, most motorists have had to wait for hours as only a few stations are dispensing.

Like the Nigeria National Petroleum Company Limited, NMDPRA said in a release recently that the country has sufficient PMS to last over 47 days, translating to about 2.65 billion litres.

“There is no need to panic as the current situation being experienced in some parts of the country will soon stabilise,” the statement said.

NMDPRA disclosed that the administration of bridging payment is a continuous process as hundreds of trucks load and discharge products daily thereby adding to the claims.

“Since December 2021, the NMDPRA has made several payments to marketers whose claims have been verified. So far, over N58 billion has been disbursed to oil marketers out of which about N34 billion went directly to members of the Independent Petroleum Marketers Association of Nigeria (IPMAN),” the regulator said.

NMDPRA further disclosed that the total amount disbursed so far remained the highest ever paid within a 6-months span by previous fund administrators.

It noted that the reimbursement of marketer’s transportation differentials for petroleum products movement from depots to sales outlets remained a priority.

Production
June 1, 2022 No Comments

Nigeria to miss out as LNG contracts gain momentum

Investment, infrastructure challenges as well as historic government-induced bottlenecks may continue to make Nigeria miss out as demand for long-term LNG contracts continue to soar.

While Nigeria’s proven gas reserves already moved to 208 trillion standard cubic feet, policies, according to the Nigerian Upstream Petroleum Regulatory Commission, investment and infrastructure to make the reserves of economic benefits remain in limbo.

Although the Nigeria LNG train seven project is on track, most LNG projects that should have improved the country’s LNG portfolio and revenue like the Brass LNG and Olokola LNG have been elusive for decades without positive signs of final investment decisions.

Instead of economic benefits, the World Bank, last week, named Nigeria as the seventh on the list of top 10 countries worldwide involved in gas flaring in 2021.

While there are hopes from the Federal Government’s decade of gas policy and provisions in the Petroleum Industry Act, electioneering activities stand in the way despite the opportunities and changing dynamics created by the Russia and Ukraine war.

This is coming as a report released Monday by Wood Mackenzie, a Verisk business, noted that large volumes of LNG have been signed as prices for oil-linked deals under negotiation are rising.

Long-term contracting is off to a fast start this year with more than 10 million tonnes per annum (mmtpa) signed to end-market users. In 2021, the group noted, while adding that the volume of long-term LNG contracts signed to end-user markets returned to its highest level in the last five years.

Wood Mackenzie principal analyst, Daniel Toleman said: “The Russian invasion of Ukraine has had a dramatic impact on long-term LNG contracts. Many traditional LNG buyers will neither procure spot gas or LNG nor renew or sign additional LNG contracts with Russian sellers. Spot prices have also been high and volatile, pushing many buyers towards long-term contracts. Additionally, some buyers are returning to long-term contracting on behalf of governments to protect national energy security.”

According to the report, the prevailing situation will result in rising prices for long-term oil-linked contracts under negotiation. Between 2020 and early 2021, WoodMac said long-term oil-linked contract prices fell into the 10 per cent range, levels not seen in the last 10 years.

Toleman said: “The Russian invasion of Ukraine has pushed prices higher. Middle East sellers are now asking for deals above 12 per cent. These deals have limited flexibility, seasonality and are fixed to a market so the slope of a ‘normal’ contract is higher, between 12.5 per cent and 14.0 per cent.

“There has been news about sellers wanting 16 per cent or 17 per cent for 10 years, but we have not been able to substantiate this. Short-term deals can attract these rates. We believe that sellers can get 16 per slope for two- or three- year deals with volumes ending before the end of 2024. The range is slightly lower at 14-15 per cent for four- or five-year deals with volumes that end in 2026.

“That said, prices vary greatly based on the terms, tenure and start date of new deals. The market remains bifurcated with contracts starting before or after 2026, attracting premiums or discounts to this range, respectively.”

The report further stated that Chinese buyers continue to dominate the market signing more than 8 mmpta of new LNG sale and purchase agreements this year.

It added that most new contracts are from US supply as operators move projects forward. All these contracts are linked to North American prices.

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