Statoil Sells 75% of Gas to Europe at Spot Prices

Posted by Eric Haun
Friday, August 29, 2014

Norway's Statoil, Europe's second-biggest gas supplier, now sells around three-quarters of its gas at spot prices, its gas trading head said, in a shift from oil-linked prices that has helped it win market share but hit revenue this year.

By contrast, market leader Russia's Gazprom has stuck with traditional pricing indexed to oil prices. Spot pricing accounts for 7 to 15 percent of its contract sales volumes, analysts at Thomson Reuters Point Carbon estimated.

At Statoil, oil-linked pricing currently accounts for about 15 percent of its sales volumes, down from around 45 to 50 percent a year ago and about 70 percent four years ago.

"About three quarters of our European portfolio is now indexed towards the gas market," Rune Bjornson, Statoil's head of gas sales and trading at Statoil, told Reuters in an interview.

"In those markets, where you have ... liquid price quotation, we don't have oil-indexation, even on the long-term contracts," he added.

Since some gas volumes sold to Europe are pegged to other indexes such as coal or electricity, the share of sales linked to oil prices now accounts for only about 15 percent of the total, Bjornson said.

European spot gas prices have fallen sharply this year, helping Statoil sustain its share of a shrinking market but also hurting its earnings.

Some analysts expressed concerns that the pricing shift has made Statoil more vulnerable to market swings, particularly after it posted a 15 percent fall in second-quarter adjusted operating profit to 32.3 billion crowns, below market expectations.

But Bjornson defended the strategy, citing the need for more transparent pricing in the market.

"It was the right move ... We needed to make sure that gas is competitive and that consumers and buyers feel that gas is priced correctly," he said. "We can't sell oranges at a price of bananas."

In Germany, its biggest market, Statoil now sells all of its gas at spot prices. Its other major markets include France, Britain, Italy, the Netherlands and Spain.

Gaining, Losing
In 2012, the firm benefited from the switch to spot prices as its sales rose to a record of 87.5 billion cubic metres, and Norway nearly overtook Russia as the main gas supplier to the European Union.

Gazprom came back in 2013 by paying billions of dollars in rebates to European clients who had complained about its expensive prices, while spot prices on European hubs rose by 12 percent.

Statoil also was held back by technical problems at its largest gas field, which reduced production.

Russian gas sales to Europe, excluding Turkey, rose to 133 bcm in 2013, while Norway's fell to 102.5 bcm.

Statoil's total European gas sales, including third-party gas, eased to 84.1 bcm in 2013, about 80 percent of all Norwegian sales.

This year, spot prices are down about 30 percent in Germany so far.

As part of its results report earlier this week, Statoil forecast a recovery in prices in the coming year.

Chief Executive Helgen Lund said at the time, "We believe and the market believes that gas prices are going up ... and we are fortunate enough that we can push gas production from 2014 to 2015."

For the first eight months of 2014, Norway's total gas exports were at 63 bcm, down 6 percent from the same period in 2013, preliminary data from gas system operator Gassco showed.

Russian sales to Western Europe, where Statoil sells the vast majority of its gas, were not much higher at 64.2 bcm over the eight months, Point Carbon data showed.

(By Nerijus Adomaitis; Editing by Balazs Koranyi and Jane Baird)

Maritime Reporter March 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

USCG Flush Ice down River Systems to Facilitate Shipping

The Coast Guard cutter fleet is flushing ice through the Great Lakes river systems to prevent ice jams and facilitate commercial shipping as the shipping season

Austal Graduates 48 4-Yr Apprentices

Austal USA combined two classes to graduate a total of 48 members of Austal’s cutting-edge four-year apprenticeship program yesterday at a formal ceremony held at the Arthur R.

Chile Desert Rains Sign of Climate Change

The heavy rainfall that battered Chile's usually arid north this week happened because of climate change, a senior meteorologist said, as the region gradually

Finance

Viking Bags Charter Deal for AHTS Brage Viking

Viking Supply Ships has entered into a contract with an Oil major for the charter of “Brage Viking” commencing 1stof April 2015. The duration is for 2 years and 8 months firm,

NORDEN CEO: Bulk Market Challenges to Continue

Klaus Nyborg, interim CEO at Denmark-based dry bulk and product tanker shipping company Dampskibsselskabet NORDEN A/S, expects difficult dry cargo market conditions

Turkey Maritime Sector Alive & Kicking

Located on the periphery of two great continents, Turkey has benefitted from being in a favored position right at the center of an assertive and fast growing economic area.

Energy

Austal Graduates 48 4-Yr Apprentices

Austal USA combined two classes to graduate a total of 48 members of Austal’s cutting-edge four-year apprenticeship program yesterday at a formal ceremony held at the Arthur R.

Mexico Unveils National Strategy ahead of Paris Climate Talks

Mexico on Friday said it will cap its greenhouse gas emissions by 2026, becoming one of the first countries to formally submit its national climate plan the

Advanced Drillships a Burden for Owners as Business Slows

Not so long ago, advanced drillships costing more than half a billion dollars each and capable of operating in ever-deeper waters practically guaranteed big profits for oil-rig operators.

News

USCG Flush Ice down River Systems to Facilitate Shipping

The Coast Guard cutter fleet is flushing ice through the Great Lakes river systems to prevent ice jams and facilitate commercial shipping as the shipping season

Viking Bags Charter Deal for AHTS Brage Viking

Viking Supply Ships has entered into a contract with an Oil major for the charter of “Brage Viking” commencing 1stof April 2015. The duration is for 2 years and 8 months firm,

Transit Waiting Times for Panama Canal

Non-booked regular sized vessels wishing to transit the Panama Canal face a wait of approximately 5-6 days. There has been a dramatic increase in the transit

 
 
Maritime Security Maritime Standards Naval Architecture Pipelines Pod Propulsion Salvage Ship Repair Shipbuilding / Vessel Construction Sonar Winch
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1763 sec (6 req/sec)