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Please note that blogs this week will be intermittent due to travel commitments
Today’s blog is a short “flash” blog only
The LNG shindig in Perth this week continues to generate news stories as various Super-Major, etc, CEOs make presentations and grant interviews. Much of comments continue the theme that the high cost of Australian LNG can be laid at the feet of “Joe the Welder” and is of course nothing to do with the decisions made by the CEOs providing this unbiased analysis.
(Australian readers will of course know who “Joe the Cameraman” is – for the benefit of our foreign readers he was a ridiculously obvious scapegoat used to cover up a Shane Warne indiscretion back in the 1990s).
Joe the Welder must have been a pretty busy guy – in his 2 weeks off each month he managed to:
- Decide to build Gorgon on an island nature reserve rather than negotiate a brown-fields main-land development as that might have involved giving up some control to those horrid “other” companies.
- Building 3 separate green-fields liquefaction plants on Curtis Island in Queensland so each CEO could personally cut the ribbon on his very own big fridge.
- Also in Queensland – have multiple transmission pipeline constructed – we don’t want to mix our nice clean gas with those other people’s nasty stuff.
- Build two new green-fields liquefaction plants next door to the long established North West shelf plant – again those CEOs love their big fridges.
- Build the world’s longest sub-sea gas pipeline to avoid a pesky State Government.
The pre-Doha meeting frenzy continues, with crude again running up significantly in overnight markets. Brent hit US$44.69 and WTI also went up ~4% to close at US$42.17.
Russian news agency Interfax reported that Russian sources were confident on a deal about a freeze at Sunday’s meeting.
We seem to be more bear-ish than most – but we ask ourselves what markets will think if a freeze is agreed and then everyone realises that daily over-supply still continues (albeit gradually reducing towards that golden “medium term” day) whilst Libyan and Iranian surplus capacity is straining to add to that.
The positive aspects of the Northern hemispheric summer should also help in a few months -the US driving season and the Saudi call on its own crude for air-conditioning driven power generation.
Henry Hub touched $US$2 again yesterday, closing at this price.
Quote of the day
Perennial oil market optimist Daniel Yergin on Doha (note the not immaterial qualification up-front):
“Were it not for the Iran issue, you could count on there being a freeze. I think with this meeting in Doha, there’s so much invested in it, there’s the likelihood it will end with some kind of agreement, though one that will have some sort of ambiguity in it.”