PIRA Energy: Industrials Continue to Feel Pain of High Priced Regional Gas

PIRA Energy Group reported that industrials continued to feel the pain of high priced regional natural gas. In the U.S., PIRA’s producer survey corroborates a downtrend in gas output. In Europe, Russian gas exports shift around.

Specifically, PIRA’s analysis of natural gas market fundamentals has revealed the following:

India’s fertilizer companies have been quoted prices 50% higher than the price at which the government subsidy is capped whilst a key Australian Industrial has elected to invest away from its homeland hoping to stem falling profits. Meanwhile gas-rich conglomerates are looking to buy up mothballed assets in a quest to find a home for gas currently deemed too expensive.

Producer Survey Corroborates Downtrend in U.S. Gas Output

Results of PIRA’s 1Q13 Producer Survey corroborated the quarter-on-quarter downtrend in U.S. gas output in 1Q13. The Survey again highlighted that gas market signals in the form of low prices had not fallen on deaf ears for the large majority of companies as of 1Q13, at least, with more than 70% of companies reporting lower gas production than the prior quarter. That said, some players in still growing shale plays — the Marcellus in particular — had an outsized impact on buoying overall output.

Russian Gas Exports Shift Around

PIRA expects an increase in Russian gas purchases by European buyers in the months ahead. Right now there is a major increase in Russian gas flows via Ukraine towards Baumgarten with most of this gas going on to Italy, where Russian imports are up year-on-year over the same period. Meanwhile, on the Czech border at Lanzhot, there is an immense year-on-year decrease in Russian flows during 2Q13.

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LNG World News Staff, May 22, 2013