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 August 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

Kounalakis Joins OW Bunker N. America

OW Bunker, a reseller and physical supplier of marine fuels, announced the appointment of Georgia Kounalakis to its physical supply operation in North America.

HII Appoints Brenton as Corporate Director

Huntington Ingalls Industries (HII) announced today that Capt. Kevin Brenton (U.S. Navy, Ret.) has joined the company as corporate director of customer affairs for submarine programs.

Louisiana to Get Natural Gas Liquefaction and Fueling Facility

Tenaska Bayou LNG expected to meet growing marine, transportation and oil and gas exploration and production demand on the Gulf Coast Tenaska NG Fuels, LLC and Waller Marine, Inc.

Finance

Norvestor to Become PG’s Largest Shareholder

Norvestor VI, L.P., a fund advised by Norvestor Equity AS, announced it has signed an agreement to invest in Ing Per Gjerdrum AS including its subsidiaries PG Hydraulics AS and PG Construction AS.

GasLog Closes First Option Vessels Dropdown

GasLog Ltd.  announced today the closing of the sale of two modern liquefied natural gas (“LNG”) carriers, the Methane Jane Elizabeth and Methane Rita Andrea,

Brent Holds Above $97, Eyes Worst Quarter Since 2012

Brent crude futures hovered above $97 a barrel on Tuesday, aided by firm U.S. and Chinese data, but the oil benchmark was on track for its deepest quarterly drop

Energy

Louisiana to Get Natural Gas Liquefaction and Fueling Facility

Tenaska Bayou LNG expected to meet growing marine, transportation and oil and gas exploration and production demand on the Gulf Coast Tenaska NG Fuels, LLC and Waller Marine, Inc.

ABB WinsTunisia's Gas Treatment Plant Bid

ABB, the leading power and automation technology group, has been awarded a $216 million contract to deliver a gas treatment plant to the South Tunisian Gas Project (STGP).

GasLog Closes First Option Vessels Dropdown

GasLog Ltd.  announced today the closing of the sale of two modern liquefied natural gas (“LNG”) carriers, the Methane Jane Elizabeth and Methane Rita Andrea,

News

Kounalakis Joins OW Bunker N. America

OW Bunker, a reseller and physical supplier of marine fuels, announced the appointment of Georgia Kounalakis to its physical supply operation in North America.

Louisiana to Get Natural Gas Liquefaction and Fueling Facility

Tenaska Bayou LNG expected to meet growing marine, transportation and oil and gas exploration and production demand on the Gulf Coast Tenaska NG Fuels, LLC and Waller Marine, Inc.

New Simulation Tool for Collision Reconstruction

BMT ARGOSS and BMT Surveys, subsidiaries of BMT Group Ltd, the international design, engineering and risk management consultancy, announced an innovative new service

 
 
Maritime Careers / Shipboard Positions Navigation Pod Propulsion Port Authority Salvage Ship Repair Ship Simulators 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: 0.3592 sec (3 req/sec)