Markets

The conversion Sasol’s coal-to-liquids plant in Secunda, South Africa, to a gas-to-liquids facility is one of two large-scale projects that drive the global GTL market. Sasol, an integrated energy and chemicals company, is working on getting its GTL plant started up by 2024, while a delayed GTL project in Uzbekistan is hoped to come online by 2021.

Growth in renewable power generation is forecast to be twice as large as that of natural gas and coal combined. According to projections by the International Energy Agency (IEA), the share of renewables in power generation will rise from 24% last year to exceed 30% by 2022.

Rising exports of “abundant US natural gas” is estimated to support up to 452,000 new jobs and give a $73 billion boost to the economy by 2040 – at a “minimal impact on the natural gas prices,” according to a study by the American Petroleum Institute (API). The resource base is now seen as “larger, less expensive and more price responsive,“ API Chief Strategy Officer Marty Durbin commented.

CEOs of the three gas liquefaction and export facilities near Gladstone in Queensland, Australia, have struck a deal with Prime Minister Malcolm Turnbull, promising to fill the expected shortfall and address any additional needs by offering gas on “secure and affordable” to domestic customers.

Ineos Group, the operator of Scotland’s Grangemouth oil refinery, has condemned a decision to ban shale extraction in Scotland saying the government “turned its back on a potential manufacturing and jobs renaissance.” Operations director Tom Pickering warned Scottland will miss out on an estimated 3,100 jobs – and “it will be England that reaps the benefits.”

Integrating North America’s abundant shale gas resources into global markets keeps prices subdued: NBP averaged at $10/mmBtu in 2011-14 and by 2016 lost more than half of its value, hovering around $4.63/mmBtu. According to Societe Generale analysis, natural gas is now in a unique position to help regions transition away from coal- and oil-fuelled power generation.

Coal-fired electricity generation in China, the world’s largest coal consumer, is expected to remain flat through 2040, according to EIA’s International Energy Outlook 2017 (IEO2017). Other fuels, such as renewables, natural gas, and nuclear power, are expected to make up increasing shares of China’s electricity generation.

Strikingly, South Korea’s year-to-date LNG demand has risen by over 4 million tons – contrary to expectations it would fall. Yet very little of this demand strength comes from the power sector; according to Energy Aspects, Korea’s LNG appetite this year has been more down to expansion of LNG import facilities with players having bought cheap spot cargoes on spec and put the gas into storage.

Growing economies in Asia-Pacific and the Middle East spur new power generation projects which drives up the market value of the global transmission tower market from $13.05 billion last year to $13.46 billion in 2021.The Asia-Pacific region led the market in 2016 in terms of market value witnessing $7.50 billion and is expected to reach $7.93 billion by the end of the forecast period. According to GlobalData analysis, the market in the region is “mainly driven by new investments to develop a ‘new age’ grid.”

The US$1.25 million acquisition of Origin Energy’s subsidiary, Lattice Energy through Beach Energy will be “positive for the eastern Australian gas market,” according to WoodMackenzie’s Australasia senior analyst Chris Meredith who expects Beach to step up its exploration effort to cash in on high regional gas prices. “The company is selling under long-term contracts,” he stressed, and “average portfolio price for 2018 will be above A$6.10/GJ.”

Vivid economic growth across the Association of Southeast Asian Nations (ASEAN) is driving up demand for electricity. The regions’ installed power generation capacity of 209 MW cannot meet burgeoning demand, and WoodMackenzie estimates about US$500 billion will be needed to build an additional 270 GW by 2035.

Barely three years after Alstom shrugged of a Siemens offer for its energy division in favour of bid from rival GE, the German engineering group is now taking over Alstom’s train division. The Franco-German rail merger is a breakthrough for President Emmanuel Macron, but has stirred up fierce opposition among trade unions and the French right-wing party.

Rising costs of fuels burnt for power generation have caused a substantial rise in residential electricity prices across the United States. The price of natural gas averaged $3.53/mmBtu in the first half of 2017 – a 37% rise compared with the first half of 2016; meanwhile the average delivered cost of coal dropped 2%, according to EIA figures.

Alarmed about the scale of gas shortages in Australia, Prime Minister Malcolm Turnbull is considering restrictions on LNG exports from Australia’s eastern coast. Santos, Shell and ConocoPhillips have been urged to help plug an estimated shortfall of up to 17% of market demand in 2018.

ABB announced the acquisition of GE Industrial Solutions, GE’s global electrification solutions business for $2.6 billion. Zurich-based ABB said it expects to realize approximately $200 million of annual cost synergies in year five, which will be "key in bringing the GE arm to peer performance”.

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