Page 4 - AsianOil Week 38 2021
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Morgan Stanley warns of further
gas, LNG price volatility risk
PERFORMANCE INVESTMENT bank Morgan Stanley warned
this week that low inventories and the imminent
arrival of the winter heating season leave room
for further upside volatility for gas and LNG
prices.
This comes after gas and LNG benchmarks
have surged to multi-year highs as a result of
rebounding demand and constrained supply. In
particular, Asian LNG and EU gas prices have ral- In Southeast Asia, the bank has observed
lied tenfold to near $20 per million British thermal some switching to alternative fuels such as fuel
units ($553.20 per 1,000 cubic metres), the invest- oil and coal beginning to occur. This relates to
ment bank noted. They have set new seasonal and concerns that others have raised in the past over
all-time price records in the process. what will happen if the decarbonisation of LNG
US gas prices remain largely decoupled from becomes too costly, causing developing coun-
the rest of the world, but Morgan Stanley said that tries in particular to turn to cheaper alternatives
Henry Hub benchmark prices have nonetheless at the expense of the energy transition.
risen threefold to around $5 per mmBtu ($138.30 On the supply side, Morgan Stanley said export
per 1,000 cubic metres). The supply-demand pic- utilisation rates have remained weak, at around
ture for each market is similar, with low invento- 82% on average in July and August compared with
ries, constrained near-term supply and growing 90% normally. Supply from Qatar averaged 6.5mn
demand, according to the investment bank. tonnes over that period, down 5% year on year, the
Looking ahead, Morgan Stanley sees poten- bank noted, also identifying a lack of recent exports
tial for upside volatility, especially in the event of from Peru LNG and upstream issues in Nigeria and
colder-than-normal weather or further disrup- Trinidad and Tobago. Looking ahead, it warned of
tions to supply. maintenance in the US and Australia that could
China, South Korea and Brazil led the rise continue to weigh on global export capacity
in LNG demand in July and August, Morgan utilisation.
Stanley said. It noted that Chinese demand was Morgan Stanley said it expected prices to
underpinned by structural growth in consump- “re-anchor” with fundamental drivers such as
tion, but that in South Korea and Brazil, tran- supply costs and demand erosion thresholds by
sitory factors such as hot weather and outages mid-2022. It continues to anticipate a multi-year
among other energy sources had at least a partial upcycle until around 2025, though, as demand
impact. continues to outpace supply.
SOUTH ASIA
CIL signs CBM development
deal with Prabha Energy
PROJECTS & STATE-RUN Coal India Ltd (CIL) has reached metres per day once commercial operations
COMPANIES a deal with Prabha Energy for the commercial begin.
extraction of coal-bed methane (CBM) from one “Bharat Coking Coal Ltd (BCCL) on
of its coal tenements. Monday signed a first of its kind reve-
CIL said on September 20 that the roughly nue-sharing contract worth tentatively
INR18.8bn ($255.1mn) deal covered the com- INR1,880 crore for commercial extraction
mercial development of the fuel from subsidiary of coal bed methane with CBM developer
Bharat Coking Coal Ltd’s (BCCL) Jharia Block-I Prabha Energy, selected through a global
in the eastern state of Jharkhand. bidding process,” CIL said.
The 27-square km block is estimated to con- CIL said BCCL would cover roughly
tain around 25bn cubic metres of CBM and INR370mn ($5mn) in land costs, while Prabha
production capacity is projected to reach 1.3mn Energy is expected to cover the rest of the
P4 www. NEWSBASE .com Week 38 24•September•2021
