Market Consolidation, Increased Focus On Black Sea a Way Out of Crisis?
While the Kremlin is strengthening its ties with a host of countries around the world, Western companies continue their negotiations that would lead to a consolidation of the gas industry. Majors and smaller players equally gave signals of interest in M&A operations on Thursday. According to Wood Mackenzie, this could come amid a renewed interest for Black Sea resources in the near future.
Statoil reportedly decided to cut investments less than any other oil major this year, committing to long-term growth and to existing opportunities in the gas industry.
"We as an industry tend to have a permanent bipolar disorder. We are either euphoric or depressed," Statoil Chief Economist Eirik Waerness said, as reported by Reuters.
Meanwhile, some movements emerged in Italy, where TerniEnergia signed a deal to acquire 85% of New Gas Trade’s shares. Despite the risible value of the transaction (€150,000), the deal suggests that the consolidation process is set to continue.
Also on Thursday, Wood Mackenzie said that the Black Sea could soon be ‘a hotbed of activity this year’.
‘Wood Mackenzie also says that the volumes in the area would fulfil a large proportion of the region's uncontracted demand, positioning Romania as a net gas exporter for the first time and leading to increased competition in Eastern European gas markets’ the company wrote in a press release.
According to the consultancy, Black Sea deepwater gas developments could lead to gas at a ‘significantly lower price than competing sources.’
“Black Sea gas from Domino, can be delivered in the early 2020s at a more competitive price than existing Russian contracts and new additional Azerbaijan gas imports. We believe this could even be improved if more gas is proven at Domino, or if new sources of gas are found in the surrounding areas” said Chris Meredith, Senior Analyst for Continental and Mediterranean Europe Upstream research at Wood Mackenzie.
As reported earlier this month, Romania is gradually unfolding its long-term natural gas strategy. It intends on becoming the major gas hub in the region and will exploit its domestic reserves.
The Azerbaijan-Georgia-Romania Interconnector (AGRI) project, oft-named the focal point of Bucharest's regional gas strategy, aims to open yet another diversification route for the Caspian reserves into the EU markets by passing not only Turkey but also Greece and Bulgaria.
Against this backdrop, Russia continues to step up diplomatic efforts.
‘Alexey Miller, Chairman of the Gazprom Management Committee and Miguel Galuccio, Chief Executive Officer of Argentine National Petroleum Company YPF signed a Memorandum of Cooperation in Moscow today’ Gazprom wrote on its website, referring to the deal signed in the presence of Vladimir Putin, President of the Russian Federation and Cristina Fernandez de Kirchner, President of the Republic of Argentina.