Qatargas, the world’s largest LNG producer, signed a five-year sales and purchase agreement with Petronas LNG UK on Wednesday . . . Under the agreement Qatargas will deliver 1.1 million tonnes of liquefied natural gas (LNG) per year to the UK-based venture until Dec. 31 2023, extending a current five-year contract that was due to expire on Dec. 31 2018.
Why are we importing a million tonnes of LNG from Qatar? Because we’re not producing enough gas of our own and as coal and oil fired power stations are shut down thanks to EU directives we’re becoming more reliant on importing the energy that we need.
Of course if the government stopped faffing about and got on with promoting fracking in this country we’d have a massive reserve of natural gas that we could tap into for years to come.
As a follow-up to my post from late August about the lack of joined up thinking within the EU for its gas pipeline plans, a more comprehensive article has emerged about the new relationship being forged between Russia and Turkey;
The article talks at length about how Russia will be able to increase its dominance in European gas markets – directly through a new TurkStream pipeline and indirectly through Turkey’s influence over the TANAP pipeline.
If this happens, Russia’s state-owned Gazprom will exercise high levels of control over both projects.
As a further embarrassment to the EU; Russia and Azerbaijan are looking to be involved with Iranian gas reserves (which are vast) and which were
also coveted by the West, which hopes to ship them into the EU as a hedge against Russia.
Far from reducing the EUs reliance on Russian gas “which supplies a third of the EU’s natural gas overall—though a much higher percentage to Germany and other northern EU nations” it seems that Russia is likely to increase its share unless another avenue can be found.
The most likely option at the moment is LNG from the US which has a glut of gas available thanks to fracking which has opened up new export opportunities as well as reducing domestic energy prices – too bad the EU (and previous UK governments) seem determined to ignore this fantastic opportunity on this side of the Atlantic.
Further to my last post, one way companies have tried to smooth out gas demand is by storage such as the Rough facility in the North Sea.
But as this articlepoints out, it’s not as easy or cost-effective as you might think and as a result we’re all going to be paying more.
Centrica Plc’s Rough, the U.K.’s largest natural gas storage facility 9,000 feet below the North Sea bed, unexpectedly closed for the summer and will probably remain unavailable for most of the winter.
Why does this matter?
Rough accounts for more than 70 percent of Britain’s storage capacity. Without the facility, the U.K. will be more dependent on imports in winter, potentially making energy more expensive. Gas for winter delivery advanced 4.3 percent since June 21, the day before the full outage at Rough was announced. Storage levels at Rough are less than half the five-year average.
You can read more of the why’s and wherefore’s in the article but suffice to say it’s not good news, especially if we have a cold winter;
Gas exporters from Norway to Russia, already pumping record amounts of gas to Europe may be able to sell even more fuel to the U.K. this winter. Exporters of U.S. liquefied natural gas may also benefit.
An interesting article from Hydrocarbon Processing about Scottish Petrochem giant, Ineos (owners of the Grangemouth refinery).
With natural gas prices in Europe more than double [the] costs in the US, INEOS Group has a novel solution: start fracking.
The world’s fourth-biggest petrochemical manufacturer bought a license last month to look for fuel around its refinery in Grangemouth, Scotland. That complements a deal by Ineos to import gas from the US, a step followed by other chemical companies in Europe such as Borealis and Saudi Basic Industries Corp. (SABIC). Scotland will next week vote on whether to stay in the UK.
That’s certainly an innovative solution to an increasing problem caused, in no small part, by the crippling cost of green taxes in Europe.
The article goes on to talk about the risk to Europe’s energy intensive industries unless cheaper supplies of fuel and power can be found quickly.