Today’s Blog – Friday 26th August 2016

Travel commitments over the next week or so will render blogging services somewhat intermittent

Editorial

Although crude markets have recently taken comfort from recent “OPEC whispering” (including overnight – see below) about discussions over a potential production freeze, many industry commentators are more cynical about the ability of this body to actually deliver anything substantial.

This was illustrated well in an article in this week’s The Spectator magazine, in which columnist Martin Vander Weyer asked the topical question “how many Olympic medals did OPEC win?”  (Answer – 15 – compared to e.g. the UK’s 67).

He followed up with the following conclusions, with which we tend to agree:

“Resource rich OPEC is p*ss-poor at managing its affairs to advantage: the indolent leadership of the Saudis (Rio medals: zero) and their permanent stand-off with Iran means timely and coordinated decisions rarely happen.”

“OPEC is no more likely to agree sensible measures to steady the market than to field a wining bob-sleigh team in the 2018 Winter Olympics.”

Commodity prices

As noted above, crude prices rose by >1% overnight on the back of stories that Iran will attend the mooted informal OPEC meeting in Algeria.  Brent closed at US$49.68 and WTI at US$47.38.

Henry Hub was also up, closing at US$2.83.

LNG and international gas

US shale gas has now reached China – with the first delivery of a Sabine Pass sourced LNG cargo made this week.  This was another first as well – the first US LNG passing through the Panama Canal.  US LNG has now reached South America, Europe, the Middle East and Asia.

This sort of activity has prompted analysts in Citibank to speculate that a global LNG futures market might well have a pricing node in the Gulf of Mexico (rather than e.g. in Singapore or Japan as being promoted by those countries).

Company news – APA Group (APA)

As APA already owns more than half of Australia’s mature gas pipeline network, it is now said to be considering investment opportunities in the US mid-stream patch.

An Australian company jetting over the Pacific to do deals with the good-old-boys in the Yankee oil patch – what could possibly go wrong?

Company news – FAR Ltd (FAR)

No news on FAR’s pre-emptive rights battle with Woodside today, unfortunately.  For those who can’t get enough of the topic – turn to on-line brawl-zone Hot Copper for a few hundred comments a day on this – some of which occasionally are based on some pretty good information (but if only we could tell which ones those were).

Quote of the day

A recent quote from energy industry analyst David Leitch on what may be a key psychological motivator for APA:

“Mick McCormack’s pride and joy, the pipeline map of Australia. However, length is not the main indicator of value.”

 

 

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