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Analysis

US ethane: finding the path to market 3


US winter reveals grid shortcomings 5
BG open to asset sales to revive fortunes 7
Storage market relaxed about Russia 9
Figuring Israels long-term demand 10
Sanctions avoid Russias energy giants 11
News
NSW regulator flags price rise 14
Falcon finds partners for Beetaloo 14
Victoria consults on onshore gas 15
Thailand buys Hess local assets 15
Petronet leases out storage 16
Chinese price still low for Russia 16
Tethys drills 3rd good Kazakh well 17
Ukraine to take gas from Slovakia 17
Ukraine suffers without Crimea 18
Gazprom to keep gas flowing 18
Electrabel to shut gas-fired plant 19
UK shale could see $55 bn spend 19
French shale benefits minimal 20
Polish shale well flows strong 20
Israel drugs giant switches to gas 21
Blue Stream expands in 2015 21
Algeria re-elects Bouteflika 22
Seven Energy aims to raise output 22
Rosneft eyes Africas upstream 23
CFTC delays record-keeping rule 23
Henry Hubs days are numbered 24
High-spec US land rig orders roll in 24
$1m for nosebleeds, migraines 25
Alaska clears role in pipeline/LNG 26
YPF reverses reserves slide 26
Mexico eyes $2.25 bn of pipelines 27
PNG LNG project starts up early 27
S Koreans visit Australia, PNG 28
Gazprom eyes Kara Sea LNG 28
Bontang goes long: Indonesia 29
Canada okays Triton LNG 29
Gail brings flexibility to its mix 29
Sui Southern signs LNG deal 30
Enagas reloading opportunity 30
Rosneft aims investment eastward 31
OMV stands by reliable Gazprom 32
Improving the shale recovery rate 32
Salamander invites bids 33
Barclays follows the exit signs 33
MOL eyes billion-dollar deals 34
Premier makes more Asian finds 34
Utica shale costs BP $521m 35
Repsol splits leadership roles 35
Markets and prices
Market softens in oversupplied spring 36
Issue 748 / May 5, 2014
www.platts.com
[NATURAL GAS ]
INTERNATIONAL GAS REPORT
As Australian Woodside and Tel Aviv
remain at an impasse over a tax matter,
the possibility of pushing ahead with the
first phase of the Leviathan project
without an LNG element has arisen.
Subsidiaries of Israels Delek Group
are pinning their hopes on a $2 billion
bond offering to help meet the cost of
developing the giant Leviathan gas field
off the coast of Israel.
The placement, set to be one of
Israels biggest, comes amid growing
uncertainty and tensions surrounding the
entrance of Australias Woodside
Israelis reconsider LNG plan
Petroleum into the gas export project
(IGR 742/1).
The Australian company would have
to pay as much as $2.7 billion for a 25%
stake, depending on various milestones
being met.
But Noble Energy CEO Charles
Davidson has said that the Leviathan
partners are prepared to develop the
offshore field without Woodside.
Together with their Leviathan
partners the US Noble Energy and
Israels Ratio Oil Exploration the
(continued on page 2)
Moscow starts WTO complaint
Russia has initiated a consultation
process under WTO rules over the EUs
third energy package that could lead to
the WTO adjudicating over Moscows
concerns.
Moscow notified the WTO that it had
requested consultations with Brussels on
the reforms, which regulates the energy
market and particularly pipeline access.
The state-owned export and pipeline
giant Gazprom has made investments in
grids in some EU countries where it is
the sole or dominant supplier, such as
the Baltic States. It has been ordered to
sell these stakes and is unlikely to
recover anything like as much as it
invested, in the circumstances.
It is also having to fight for its pipeline
capacity and contractual rights as the
European Commission moves trade
towards hubs. It is facing challenges to its
long-term ship-or-pay contracts in Slovakia,
for example, which it signed to ensure gas
flows to its major markets in Italy, France
and Germany. There is pressure on it to
allow reverse flow, which would run counter
to the companys investment strategy.
Russias request relates to EU
measures on the production, supply and
(continued on page 2)
Leviathan partners focus now on local demand
Source: Platts European Power Alert
UK NBP and Dutch TTF (Month +1)
($/MMBtu)
7
8
9
10
30-Apr 23-Apr 14-Apr 07-Apr 31-Mar 24-Mar 17-Mar
NBP TTF
2 INTERNATIONAL GAS REPORT / ISSUE 748 / MAY 5, 2014
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Issue 748 / May 5, 2014
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LEADS
Delek units are now facing the prospect of having to
fund the entire $4.5 billion cost of developing the first
phase of the field.
But the consensus among energy industry analysts is
that even if Woodside drops out the partners will have no
financial difficulty in developing the field.
For a start, the growing likelihood of gas sales to
Turkey and Egypt from Leviathan appear to have reduced
the importance of prompt LNG exports from the field.
Woodside was largely seen as the provider of LNG know-
how to the Leviathan table and any re-phasing of LNG
export plans could reduce upfront development costs.
Without Woodside there is not likely to be an LNG
component in the first stage of Leviathan and this will
give the partners more time to consider how to proceed
with the second phase, said a Tel Aviv energy analyst.
The next few weeks are likely to be crucial. Regional
pipelines combined with strong domestic demand
eliminate the dependence on LNG and hence the need
for Woodside, said Chen Herzog, vice president at
Economic Models Ltd, a Tel Aviv based consulting firm
(see separate report inside).
The partners have said that commercial production
could begin in late 2017 and Herzog said it looks now
as if there were will be not LNG exports before 2022 at
the earliest.
Deleks efforts to raise up to $2 billion in bonds from
US and European institutional investors will to add to the
$1 billion already raised from asset sales. The
proceeds from the bond offering and the asset sales will
be more than enough to cover Deleks share of
developing Leviathan, said Roni Biron, analyst at UBS.
The cash from the bond offering is expected to leave
it with around $1 billion for Leviathan and other projects.
Neal Sandler
transmission of natural gas or electricity, the alleged
discriminatory certification requirements in relation to
third countries [...] and the requirement in respect of
granting access to natural gas and electricity network
capacity by transmission service operators, the WTO
said in a statement.
According to Russia, these measures are
inconsistent with a number of obligations and specific
commitments of the EU and constitute an infringement
of these obligations and commitments.
Under the WTO system, a request for consultations
formally initiates a dispute in the WTO. It provides a
chance for parties to discuss and resolve their differences
without litigation, failing which the complainant can
request adjudication 60 days after the original request.
Gazprom said in December it had reached a deal
with the EU on OPAL, the southern onshore extension of
the Nord Stream pipeline, but it has still to find out how
much capacity it can book. Differences also remain over
the intergovernmental agreements on the South Stream
pipeline project signed between Gazprom and individual
EU countries. The EC says that they must be
renegotiated.
The timing of the WTO complaint is striking: the
European Commission is expected to announce this
summer its findings on Gazproms gas supply business
in Europe, and perhaps issue rulings on steps Gazprom
must take to avoid a possible fine.
The Commission launched a probe on competition
grounds in September 2012, following allegations that
Gazprom was abusing its position.
EU competition commissioner Joaquin Almunia said
in February that he was also considering proposals from
Gazprom to change its behavior or sell assets and avoid
a formal judgment. Nick Coleman, William Powell
Israelis reconsider LNG plan
...from page 1
Moscow starts WTO complaint
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