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Guest Post: Asian Gas Market Starting To Heat Up
Submitted by www.oilprice.com
Asian Gas Market Starting to Heat Up
Asia is one of the more interesting gas markets in the world.
Places like Thailand and its southeast Asian neighbors have seen phenomenal demand growth over the last several years. Total has said they're in Thailand for gas. (Part of the reason I believe Thai shale gas may become an interesting play over the coming years.)
Asian LNG demand has also been strong. Japan, China and Korea have helped pick up (a little of) the slack in the LNG market created by booming U.S. shale gas production displacing LNG imports.
But a developing gas market brings challenges. Especially when it comes to pricing.
In parts of the world where gas demand is low, any company discovering natural gas is usually forced to sell on long-term contracts, often at relatively low prices. (Leading to the old oilman's joke that the only thing in frontier exploration worse than a dry hole is a gas discovery. A dry hole you can plug and abandon. If you find gas, the host government usually wants you to foot the bill and test it. Even if there's no hope of selling the gas profitably.)
But in areas where significant amounts of gas are discovered, increased demand usually follows. Gas-fired power plants are built. Industrial facilities spring up.
And as demand ramps up, pricing gets more complex. With more users vying for supply, prices become a key control on rationing and allocating supplies. Those who need the gas most are generally willing to pay more. Supply goes to the highest bidder. If people need it really badly, prices spike and exploration activity increases. Hopefully growing output.
Today, we're seeing signs of maturing in the Asian gas market. Pricing is becoming more complex as demand grows and different users jockey for supply.
Just this week, the Asia-Pacific Economic Cooperation Business Advisory Council has urged Asian energy ministers to look at implementing an Asian gas futures market. APEC ministers are meeting next month in Japan.
Futures are needed in complex markets. The introduction of such a system would allow Asian gas users to queue up for supplies months in advance, allowing for proper planning and coordination.
Pricing evolution is also happening in India. Last week, the Indian government announced an unprecedented increase in the domestic sale price of gas. To around $4.20 per thousand cubic feet, up from a previous $2 per mcf.
India has been struggling with pricing for some time. The government doesn't want to upset consumers who've grown used to $2 gas. But at the same time, the nation needs new supply. Higher prices are necessary to encourage exploration.
(As a side note, the government appears to be trying to play both sides of this coin. Although gas producers will now receive a higher price, it looks as if gas distribution companies will be barred from passing on the entire cost increase to end consumers. In effect, the government is simply shifting losses from one part of the supply chain to another.)
Countries like Argentina are facing similar issues. Price controls have killed domestic gas exploration. Turning the nation from a gas exporter to an importer. Something will have to give here, sooner or later.
These evolving markets can be great for investors. Using a little foresight, it's easy to see areas ripe for price appreciation and liberalization. Buying in before the price increases makes for good returns. India's Oil & Natural Gas Corp, for example, jumped 10% on news of the gas price hike.
Keep an eye on Asia. This is a gas market just getting started.
Source: http://oilprice.com/Energy/Natural-Gas/Asian-Gas-Market-Starting-to-Heat-Up.html
By Dave Forest for OilPrice.com who offer detailed analysis on Crude oil, Natural Gas, Geopolitics, Gold and most other Commodities. They also provide free political and economic intelligence to help investors gain a greater understanding of world events and the impact they have on certain regions and sectors. Visit: http://www.oilprice.com
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I encourage you to visit GW's post, something is up with the Oil leak.
http://www.zerohedge.com/article/either-bp-oil-gusher-has-just-blown-out...
It's blown out three times in the last 24 hours. The folks over at theoildrum.com are following and are going half out of their minds trying to figure out why and how someone thinks dumping barium laced mud in a oil gusher with 4000 PSI two feet across is going to get filled.
So far with pumping junk into the well has cracked the pipe open in a couple more places (go figure, like shooting a tin can with bb's).
The longer they work on the more it's turning into quick sand. The only thing right now keeping it down to a 9000 bb leak instead of a 21000 bb is them countering the stream with mud. So far they've gone through two tankers of mud being pumped.
Appearently the ROV unit go beaten up a bit as well while filming the junk kill because the blow back threw shrapnel all over the place.
ON a lighter note, NYC should see the oil drift in about a month, currents have started to push it around the penisula. England by September.
now GW took the article down and PBS is streaming a loop from yesterday. shit hit the fan.
Yup, with Simmon's (the whack a doo) mentioning they should drop a nuke on it (really, really dumb idea). This is getting rediculious. They should be floating in rigs that aren't pumping to hook them up to contain the spill. They won't though because they are in production.
On a sad note I ended up getting a couple of pics from one of my readers in Mexico on dolphins washing up all over the place. Out of the bunch of them only one was recognizable as a dolphin. The rest of them looked like yellow and black balloons.
http://x3etfhell.blogspot.com/2010/05/history-of-douche-bags-may-29th-20...
here is the cache of the GW article that was taken down
http://cc.bingj.com/cache.aspx?q=I+took+a+break+from+work%2c+site%3azero...
I would like to know your view on Eastern Europe gas exploration, LNG terminal being built in Poland. Americans are in there exploring apparently. I think Germany-Russia baltic pipeline is a bit selfish. Maybe the reason why Poland has allowed foreigners in, trying to break Russia's monopoly.
I think natural gas will be the best energy investment over the next 10 years. Its abilty to bridge the gap between oil and green fuel (solar, wind etc...) makes it the best canidate available for growing GDP. Its cost and abundence make it the only viable solution besides nuclear which has other issues. (spent fuel storage, scare factor)
You need to build infrastructure to support it. It's the same problem with developing electrical.
80 years of developing our universe around oil doesn't change overnight.
"You need to build infrastructure to support it."
Can someone else do it. I really don't have the time ;-)
Seriously CPL, good point. I think it will be necessary to build the infrastructure, otherwise the world will go into a long period of no to negative growth.
Regardless, the inevitable slowdown has already begun, but in order to expect any growth, there will need to be an abundence of enregy that is cheaper and more abundent than oil.
I have always wondered what was the purpose of helping all those third world countries develop, because as they develop they begin to consume more and more of natural resources, that is less left for us. This is plain insanity to grow economies in Asia as those billions of extra consumers will simply kill the prosperity by driving energy and food prices to the moon for the rest of us. It is in our best interest to have left them to their own devices as they remained for thousands of years. Life would be much cheaper and happier.
Go back from whence you came (and change your avatar to Balrog so its easier to spot you in a thread.)
what a fucken crackpot, and you sell them CDo's for their natural resources?
India gave the world modern Mathematics and discovered/invented Zero not to mention the treatise on statecraft by Kautilya and the treatise on Mathematics by Aryabhatta. The Chinese were building the Great Wall and running a state of the art society when the west were in caves and creating their own treatise on statecraft, war and diplomacy..just to name two Asian countries. All the great philosophies of the world originated in Asia,.....and I'm not even scratching the surface yet.. Get yourself an education
I was in Kuala Lumpur, Malaysia last year and all their buses and taxis run on natural gas. A taxi driver told me that they do it because it's so cheap, but if prices go up much then a lot of people there will go bankrupt.
I once went to a dinner party with a bunch of Chinese.
Talk about a lot of Asian gas afterwards!
Interesting EURO chart :
http://stockmarket618.wordpress.com
http://www.zerohedge.com/forum/latest-market-outlook-1
My 8 ball says natural gas is the future. Look for a mandate to move the trucking industry to nat gas. Diesel engines can be modified fairly easily to run on ng but the tanks will be unconventional. When the truck/bus is designed to run on ng from day one, it is very doable. Since I'm old, I'm just buying ng utility stocks such as vectren energy, vvc.
Updated DOW charts :
http://stockmarket618.wordpress.com
http://www.zerohedge.com/forum/latest-market-outlook-1
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