The LNG World Summit 2014 takes place in Paris this week and we look forward to attending this important event. Risk management is a key topic. Energy Perspectives has now launched the advanced iGIS/LNG business intelligence solution developed to help companies make well-founded decisions in risky and complex situations.
Nuclear power plants have not restarted in Japan after the Fukushima Dai-ichi disaster, but events during 2014 have clearly signaled the end of a phase of oil and gas scarcity. First LNG vessel dayrates collapsed, then LNG and pipeline gas prices, and now oil prices. Long hedging due to political uncertainties has not stopped the decline.
Trading is no longer a matter of obvious allocation to the highest-priced market, but has become a fight to maintain operational continuity and sales volume. Two years ago, cost escalation started to threaten several expensive new projects, and a 25% reduction in oil prices has effectively now stopped many. Delays in final investment decisions seem inevitable.
With North Dakota and Williston Basin oil prices at 63.50 $/BBl on 17 November, even shale oil exploration will be reduced. North Dakota state taxes go from 6% to 2% at 52 $/BBl, but gives minor help at that price level. Even if most firms hedge 30-60% of their projected sales, activity declines are likely by January 2015.
Importantly, stressed balance sheets, shareholder impatience and the use of master limited partnerships mean that capital availability for oil and gas is likely to dry up. With increasingly stressed balance sheets also comes an unwillingness by companies to share information about their own activities. For the market, decisions can suffer from both reduced data access and data quality. Ultimately, shared misinformation.
iGIS/LNG is designed to give ultra-fast insight and comprehensive objective digests of LNG and natural gas markets using original real-time data. Instead of relying on third party analyses, companies in these uncertain times need direct access to relevant data and tools. Quality data empowers.
The current situation at the end of 2014 has many similarities to 1986 when oil and gas prices collapsed. Events from 1986 spawned a decade of major projects and commercial ventures, but largely within the familiar territory of long-term ventures. The new fast-moving global interconnected gas markets enabled by LNG can now quickly change business rationales.
The importance of having timely and correct information is never greater than in times of turbulence. iGIS/LNG has been created meet the needs of this demanding environment. Kjell Eikland from Energy Perspectives will be at the Paris LNG World Summit and can be contacted by email firstname.lastname@example.org or by phone +47-99517555 for more information or a live demonstration.