Feb. 28
Statoil has long-struggled with low gas prices in Europe. But things are looking brighter now.
Statoil has long-struggled with low gas prices in Europe. But things are looking brighter now.
Market expert Trond Omdal at Arctic Securities is optimistic about the situation.
Statoil and Eni have now agreed to negotiate a new agreement on gas sales.
This follows allegations of overcharging and a NOK 60bn compensation claim.
The oil companies are to examine both price and volume.
The price dispute's backdrop is that Statoil's gas sales to Eni have been linked to oil prices.
Oil prices have risen sharply since the agreement was signed, however.
Meanwhile, US shale gas extraction has revolutionised the gas market.
Eni believes the consequence to be that they lose money on selling Norwegian gas.
A change in the Eni contract need not be negative at all, though, says Arctic Securities analyst Trond Omdal.
He expects that Statoil will now sell more gas at spot price in Northern Europe.
"In a fair number of contracts Statoil have renegotiated, we see that they have increased the degree of spot pricing. This while concurrently having become less flexible on delivery to the customer. Statoil can exploit this either by selling additional gas volumes when demand and prices are seasonably high, or due to a temporary drop in supply from other major exporters such as Russia, Algeria, and Qatar," says Mr Omdal.
Good prices elsewhere
The market expert points out that the European gas market is good - and that Norwegian gas is now being sold at near record-high prices.
The current price for one standard cubic metre of gas is 2.50 kroner.
Moreover, Statoil is now running gas production at full capacity, Mr Omdal mentions.
"So an amendment to the contract with Eni is not dramatic. Statoil will get good prices by selling gas elsewhere," says Mr Omdal.
Thus, American shale gas will not have dramatic consequences for Norwegian gas.
The reason is high demand for liquefied natural gas (LNG) in Asia, at 50 per cent higher rates than those of Europe's.
"Coal imports from the US put a cap on European prices. But at the same time, the situation in Asia means that there is also a bottom threshold for how low prices will go," Mr Omdal explains.
Source: http://www.aftenbladet.no/energi/aenergy/Gas-prices-finally-rise-towards-record-heights-3366709.html?#.UxCiavl5MrU
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