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When sitting down years ago to decide on how to do a podcast, it never crossed my mind that conversations like today’s would be possible. I had the pleasure of sitting down with Robert Brooks, Founder and chairman, of RBAC, to cover the global LNG and natural gas markets.
Wow we had a great talk, and you can tell from the timeline that we covered the entire global market. RBAC is the leading Energy Market Simulation System to help in M&A, risk analysis, planning, and commodity trading. In order to understand the modeling tools, you have to understand the complex supply, demand, and geopolitical issues. Their tools are critical, but how do you put a price on energy security?
Thank you Dr. Brooks for stopping by the podcast again! This was a great discussion, and I can’t wait to get another update. – Stu
00:00 – Intro
01:08 – Dr. Robert Brooks discusses his optimism for African self-empowerment, acknowledging challenges like corrupt leadership and poverty but emphasizing the potential to utilize abundant resources for development.
05:47 – Tell us a little bit about what you do and the importance of your global market.
10:29 – Dr. Brooks shares insights from his presentation at a DMG conference in China, focusing on energy security. Highlights include China’s substantial natural gas production, extensive use of LNG import terminals, challenges in massive cities, and transportation systems.
16:04 – Description of Beijing’s cleanliness, green spaces, and cultural emphasis on aesthetics. Positive experiences with considerate people are mentioned, along with the evolving nature of China’s natural gas markets despite top-down control.
21:36 – How much are they trying to put in for natural gas versus coal in their mix? Do you know?
23:14 – China’s approach to energy security, highlighting their reliance on coal for domestic production, slow development of local gas resources, and a diversified strategy involving Central Asian pipelines, Russian gas deals, and LNG imports to mitigate challenges and ensure energy stability.
26:10 – Doesn’t Egypt have spare capacity to export out?
30:20 – Mention of France’s long-term natural gas contracts with Norway and considerations of LNG storage and transportation logistics, including the strategic use of tankers as floating storage.
32:39 – The logistics and cost considerations of LNG storage and transportation, noting the strategic use of tankers as floating storage to minimize costs and maximize profits based on market conditions.
35:48 – Don’t long term contracts go to more stable geopolitical scenarios?
37:36 – Is determining the viability of contracts, especially through pricing models, a core function of RBAC’s software for companies?
39:59 – Do you factor in if the country buys in a ton of LNG tankers, does that matter?
43:09 – How does a model take into consideration the the shifting of effort may go to natural gas as the princess at the ball if you would.
46:52 – Dr. Brooks discusses liquefied petroleum gas (LPG) as an energy solution, emphasizing its benefits in developing countries due to lower costs and job creation in the supply chain. The conversation touches on the humanitarian aspect of providing reliable energy sources, particularly in rural areas.
52:35 – Tell us any thoughts that you have. It can be wide open. Tell me what you’re thinking on the last thoughts here.
56:06 – Where people can find you?
5:21 – Outro
Follow Dr. Brooks on LinkedIn HERE: https://www.linkedin.com/in/robert-brooks-ph-d-8081231/
More information on RBAC HERE: https://rbac.com/
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The post #157 Dr. Robert Brooks – Insights from China on LNG, natural gas and the global energy security crisis. appeared first on Energy News Beat.
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ENB Pub Note: This LinkedIn article from Fei Xu has some great information about the market re-balancing of China’s reselling of LNG shipments. What she fails to cover in this article is the second-order magnitude impact. This again allows another avenue for Russia, Iran, and others to bypass Western sanctions placed on their energy exports rendering sanctions useless, and giving China even more power.
Independent Commodity Intelligence Services (China)
We believe Chinese LNG re-export activity will continue to grow this winter, as global volatility and arbitrage opportunities persist. As Chinese players become increasingly adept at LNG trading, in the aftermath of last year’s astronomical geographical arbitrage, China has grown its LNG re-exports to 14 cargos in the first ten months of 2023, from eight in the same period of 2022, according to ICIS’s LNG Edge trade flows.
Apart from monetary gains, the need to comply with Take-or-Pay (ToP) liability under strict destination clauses also supports re-export growth amid slowing domestic demand. In the longer term, the recently approved bonded LNG tanks (tax-free storage) at Ningbo and Dalian LNG terminals, and PipeChina’s latest third-party-access (TPA) service will enable more Chinese traders to reload LNG to international markets.
China LNG re-exports will eventually increase terminal utilization and flexibility in balancing Chinese demand and the wider Asia region.
Analysis
Chinese re-exports surged when lucrative arbitrage opportunities emerged in 2022.
Re-export activities in China ramped up significantly in 2022. A re-export is when traders reload an already discharged LNG cargo back onto a vessel for export to other countries. Chinese traders were facing stagnated gas demand due to COVID and economic slowdown at the time. Meanwhile, Asian spot prices soared well above the domestic sales price. As a result, the excess of contractual LNG in China became cost-competitive resources to be sold into other markets.
Prior to May 23, when spot prices fell and arbitrage narrowed, Chinese traders managed to resell 15 cargos since 2022, an equivalent to 0.9 million tonnes to the international market at an average price of $33/MMbtu. The estimated average margin for re-exports in 2022 reached as much as $62 million per cargo.
China’s muted domestic demand made it stand out as an obvious choice for LNG re-export supplier in Asia. The main buyers of Chinese re-exports were South Korea and Japan, accounting for 67% of the volume so far, followed by Thailand, Kuwait and Bangladesh.
Chinese re-exports remain profitable this winter.
In the near term, ICIS EAX, the North Asia spot index is estimated to hover around $16/MMbtu, whereas the estimated average term LNG cost into China would be $10 to $12/MMbtu. ICIS arbitrage calculator suggests that re-selling an LTC cargo to the Asian markets remains profitable at the Yangpu terminal in China, with margins varying from $1.5/MMbtu to $4/MMbtu. Thailand presents ample potential for achieving the highest profit margin, closely trailed by Singapore and Taiwan.
Strict ToP obligations with destination clause has forced Chinese players to turn to re-exports.
PetroChina International (PCI) has been the dominant player in the re-export activities so far, followed by JOVO Group, according to market comments. Both possess contracted volumes that exceed domestic demand.
PetroChina almost doubled its LNG Long-term contracts (LTC) volumes in 2019 to ensure the nation’s gas supply security. However, with the ease of the coal-to-gas switch and a slowdown of LNG demand growth, PetroChina has only imported less than 80% of its contracted volume in the same period, according to ICIS LNG Edge’s vessel tracking database. In the year 2022, we estimate PetroChina re-exported 2% of its total contracted volume. Similarly, Jovo’s Dongguan LNG terminal import peaked in 2020 and has been severely underutilized since. Since 2022, JOVO Group has been actively expanding its LNG business beyond the Southern market where the Dongguan terminal is located, including the international market.
Re-exports emerge as the ideal gateway to avoid financial losses and offset market volatility, meanwhile still in compliance with the strict ToP obligations and destination clauses.
As tax-free bonded LNG tank capacity increases so will re-export trades.
The re-export activities rely on the availability of bonded tank infrastructures. Due to its tax-free status, such facilities help to reduce the overall cost of LNG re-export.
Having experienced the substantial profit gains of arbitrage trades in 2022, the Chinese government and state enterprises swiftly expanded the nation’s bonded tank capacity by over 66% the following year. In the past few months, China has further approved another 2 bonded LNG tanks with a total capacity of 320,000 cubic meters. This will enable a bigger portion of import volumes to participate in re-export trades.
CNOOC Zhejiang Ningbo LNG terminal had its first re-export activity in September 2023, 3 months after its second bonded tank was approved. The PipeChina Dalian LNG terminal re-exported its first cargo in November 2023, delivered to Thailand in late November 2023, according to ICIS LNG Edge vessel tracking.
More market players will have access to the re-export with PipeChina’s new bonded LNG re-loading service starting in April 2024.
Between November 2023 and January 2024, PipeChina will accept requests for medium to long-term terminal usage bookings from third parties. PipeChina has also announced that the three 160,000 cubic meters bonded LNG tanks in the Dalian and Hainan Yangpu LNG terminals can provide tax-free reloading services to the public. The minimum booking for the new reloading services is three years – to a maximum of 20 years, similar to the existing TPA service.
Conclusion
Re-exports will be a new leverage for Chinese traders to optimize terminal utilization and portfolio management. It will also benefit the Asian market, in the case of global supply disruptions and market balancing. Chinese re-exports are expected to significantly increase going forward if volatility and significant arbitrage opportunities persist. We also expect a greater number of Chinese market participants in international LNG trading through re-exports following PipeChina’s latest re-loading services at the Yangpu and Dalian LNG terminals.
Fei Xu, Senior Energy Market Analyst
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Investors are increasingly seeking a safe store of value amid economic uncertainty, according to Fundstrat
Gold prices could soon reach a record $2,500 per ounce, driven by safe-haven investor demand in the wake of global uncertainty and geopolitical tensions, some analysts are now projecting.
Futures have risen 3% in the past couple of weeks, briefly breaching the key psychological threshold of $2,000 per ounce on Tuesday.
The rise marked the highest daily close so far this month, and any move above $2,006.37 per ounce this week would make it the highest weekly close since the spring, researcher Fundstrat’s technical analyst Mark Newton wrote in a note on Wednesday seen by Business Insider.
“This is quite positive technically, and I expect that gold has begun its push back to new all-time highs,” wrote Newton. He believes a rise past $2,009.41 per ounce should lead to gold entering the $2,060-2,080 range.
Newton told Business Insider that a breach of resistance at $2,080 would signal a “definite technical breakout,” which he expects to quickly drive gold even higher. “My technical target for gold is $2,500/oz, and it looks appealing to be long precious metals given falling real rates, rising cycles and ongoing geopolitical conflict,” he said.
The analyst later clarified that his timeline for $2,500 isn’t necessarily for the end of the year but is an “intermediate target.”
READ MORE:
Gold outperforming stocks – MarketWatch
Bullion has been rallying since the attack by Palestinian armed group Hamas on Israel on October 7. Experts and traders expect the escalation and uncertainty in the Middle East to continue driving gold prices higher.
Investors traditionally turn to gold in times of market uncertainty to hedge risks and as a store of value. Bullion has been seen as a safe haven during periods of economic instability, stock market crises, military conflicts, and pandemics.
For more stories on economy & finance visit RT’s business section
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From its current location, the missile can reach London or Berlin in a matter of minutes…
Russian missile fueling tanker.
In a move designed to flex its nuclear muscle, Russia has redeployed its Yars intercontinental ballistic missile closer to Europe.
The missile, also known in the West as the “Doomsday missile,” has been moved to the Kozelsk military base in the western part of Russia, some 1,500 kilometers from Moscow and 2,400 kilometers from London.
Taking into account its over Mach 30 top speed, the missile can hit London in less than five minutes.
The Kozelsk regiment, where the new missile was loaded into a silo, was the first in Russia’s Strategic Missile Forces to begin upgrading with Yars missiles. The move came hours after Russian Defense Minister Sergei Shoygu said that his nation was paying “special attention to the formation of strategic naval nuclear forces.”
In a meeting with Russian military chiefs, the minister added that the share of modern ships in the naval nuclear force has reached 100 percent after three nuclear-powered ballistic missile submarines entered the Navy’s service.
Meanwhile, Russia also plans to test the world’s largest ballistic missile, known as Satan 2, in the Arctic region.
Last week, Russian missile forces loaded an intercontinental ballistic missile equipped with the nuclear-capable Avangard hypersonic glide vehicle into a launch silo in southern Russia.
The RS-24 Yars missile has a range of 11,000 kilometers and can carry up to 10 independently targetable warheads of 150 kilotons each. Designed to defeat current and future air defenses, the missile has a top speed of 36,800 kilometers per hour, meaning it is over 30 times faster than the speed of sound.
Although the top speed of the world’s current fastest anti-ballistic missile, the U.S.’s GBI (Ground-Based Interceptor), is classified, estimates range from Mach 16 to Mach 20, which, taking into account the Yars’ speed and the reaction time for detection and targeting would make the Yars practically untouchable.
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Western sanctions have so far failed to halt Russia’s economic growth, which is now projected to outpace that of the Eurozone, the Guardian reported on Thursday, citing investment firm Amundi.
According to the company’s forecast, Russia’s gross domestic product (GDP) will grow by 1.5% in 2024. In contrast, the Eurozone economy is set to expand by mere 0.5% next year, according to Amundi, Europe’s largest fund manager in terms of assets.
“It means that the United States, Europe, Japan, Australia – the major developed countries – are unable to sanction a country effectively… We can deplore it, but it’s a reality,” Amundi CIO Vincent Mortier said at a news conference in Paris.
Mortier noted that while sanctions have had some impact on certain Russian individuals and entities, whose assets have been frozen over the past 20 months, Russia’s imports and exports remain virtually unaffected. After losing access to Western markets, Russia successfully reoriented most of its trade to its BRICS partners (Brazil, India, China and South Africa) and countries such as Türkiye and Kazakhstan, which have greatly benefited from the boost in trade with the sanctioned country, Mortier said.
“It’s a reality check. In the end, if we take stock of the war in Ukraine: Europe has suffered directly and strongly; for the United States [the impact is] neutral; but Türkiye, Central Asia and Asia more generally have benefited,” he added.
Russia has faced unprecedented economic sanctions from the West over the Ukraine conflict since last year, pushing the economy into a 2.1% contraction as of the end of 2022. However, recent data shows that the country has since largely adapted to the restrictions, with the Russian Finance Ministry forecasting growth of 3% by the end of the year.
ir economic forecasts for Russia. The European Commission expects Russia’s GDP to grow by 2% this year on the back of “stronger-than-earlier expected domestic demand underpinned by fiscal stimulus,” and to expand by 1.6% in both 2024 and 2025.
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Tesla stock performance in 2023 has been a big question as Elon Musk bets on the Cybertruck and autonomous driving.
The post Is Tesla Stock A Buy Or A Sell With All Eyes On Cybertruck Deliveries Beginning Next Week? appeared first on Investor’s Business Daily.
The post Is Tesla Stock A Buy Or A Sell With All Eyes On Cybertruck Deliveries Beginning Next Week? appeared first on Energy News Beat.
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Tesla stock performance in 2023 has been a big question as Elon Musk bets on the Cybertruck and autonomous driving.
The post Is Tesla Stock A Buy Or A Sell With All Eyes On Cybertruck Deliveries Beginning Next Week? appeared first on Investor’s Business Daily.
The post Is Tesla Stock A Buy Or A Sell With All Eyes On Cybertruck Deliveries Beginning Next Week? appeared first on Energy News Beat.
Energy News Beat
Tesla stock performance in 2023 has been a big question as Elon Musk bets on the Cybertruck and autonomous driving.
The post Is Tesla Stock A Buy Or A Sell With All Eyes On Cybertruck Deliveries Beginning Next Week? appeared first on Investor’s Business Daily.
The post Is Tesla Stock A Buy Or A Sell With All Eyes On Cybertruck Deliveries Beginning Next Week? appeared first on Energy News Beat.
Energy News Beat
Tesla stock performance in 2023 has been a big question as Elon Musk bets on the Cybertruck and autonomous driving.
The post Is Tesla Stock A Buy Or A Sell With All Eyes On Cybertruck Deliveries Beginning Next Week? appeared first on Investor’s Business Daily.
The post Is Tesla Stock A Buy Or A Sell With All Eyes On Cybertruck Deliveries Beginning Next Week? appeared first on Energy News Beat.
Pecos Country Operating, LLC is a privately owned oil and gas exploration and production company headquartered in Fort Worth. We own and operate wells across the South Central United States with our predominant means of production coming out of West and North Texas.
