Oil Majors Shift to Natural Gas Becomes a Headache
EghtesadOnline: The world’s biggest oil companies have been steadily shifting investments toward natural gas, driven by an emerging globally traded market and environmental concerns. But right now they are taking a hit as prices tank.
Supermajor energy producers -- Exxon Mobil Corp., Royal Dutch Shell Plc, Chevron Corp., Total SA and BP Plc -- saw a steep drop in the prices they received for gas in the past quarter. Alongside a dip in refinery margins, weakness in gas skimmed off second-quarter earnings, Bloomberg reported.
Gas traded at the US benchmark Henry Hub in Louisiana is at the lowest seasonal levels in two decades as production from Appalachia and West Texas breaks records.
In Europe and Asia, spot prices for the liquefied form of the fuel have sunk thanks to a wave of new export terminals pumping new cargoes into the market, Financial Tribune reported.
Gas, a fuel for furnaces and power plants as well as a raw material for chemical makers, offers the best long-term demand growth among fossil fuels, particularly when it’s super-chilled to liquefy it for transport aboard ships.
Shell, a pioneer of the industry that’s been dealing in LNG for decades, and BP have pumped up their proportion of gas output in recent years. Exxon and Chevron, meanwhile, have bet tens of billions of dollars on a handful of massive LNG projects around the world.