Corona-struck Italy has seen demand for natural gas plunge 8% from the previous week, with similar declines likely in other EU countries as national government impose lockdowns to contain the virus. Industrial demand is “particularly volatile,” while gas generators will “bear the brunt of demand loss,” Wood Mackenzie says, as a carbon price decline is bolstering coal.
Fallouts of the corona pandemic could slow South Korea’s electricity consumption by nearly 2% this year as manufacturing, exports and private consumption grind to a near-halt. Fitch Solutions says that Korea’s manufacturing sector is hit hard due to its large exposure to Chinese supply chains in the first half of 2020.
Volatility in oil and natural gas trading has risen sharply after OPEG and Russia failed to agree on production cuts – despite demand destruction due to the Covid-19 outbreak. Traded volumes for energy futures at the derivatives marketplace CME reached a daily record of 6.8 million as traders strive to hedge their positions.
Germany's largest coal power plant operator RWE has shifted to invest in renewables as earnings from its 2.9 GW lignite and nuclear portfolio may fall to €200 million, or even net zero from 2023 due to mandatory plant closures. RWE said it wants to add 4 GW of wind and solar capacity by 2022, at a cost of €5 billion.
Saudi Aramco is taking steps to rationalize its planned 2020 capital spending after posting a 21% plunge in 2019 net profits due to faltering oil prices and sluggish demand. CEO Amin Nasser underlined the “importance of agility and adaptability” while responding to the world’s “rising desire for cleaner energy.”
Nova Gas Transmission Ltd. (NGTL), part of the Canadian pipeline company TC Energy, has signed a letter of intent with Tidewater Midstream and Infrastructure and TransAlta to acquire the Pioneer Pipeline for C$255 million (US$185m). The pipeline supplies West Canadian gas to power generation units in wider Alberta, supporting coal-to-gas conversions.
Though the latest oil price crash hits U.S. upstream companies, for Asian buyers it’s a blessing as the pricing of oil-indexed long term gas contracts is bound to come down from late 2020. Sustained lower oil price will substantially lower the price of gas which could prompt large scale coal-to-gas switching for power gen in Japan, South Korea and parts of China.
Plummeting oil prices impact U.S. fracking activities. With Brent crude oil prices seen average $43 a barrel in 2020, down from $64/bbl last year, the Government expects shale oil and gas output to decline. Spot gas prices at Henry Hub are forecast to rise starting from April, amid higher demand from the power sector, exceeding $2.2/MMBtu in the third quarter of 2020.
Financials of Indonesia’s state utility PLN are burdened by excess electricity, notably on the Java-Bali grid, which could be oversupplied by 41.5% in 2020. PLN is facing mounting criticism that the ongoing construction of mega-projects is “unnecessary,” hence government targets to add 35 GW of new capacity by early 2020 have been pushed back to 2029/30.
German utility Uniper has lifted its full-year earnings outlook in reaction to the recent revival of the UK capacity market programme which compensates power producers for dispatching plants at short notice. Uniper, subject to a takeover bid from Fortum, said today it aims to achieve up to €950 million in EBIT, lifting targets from initially €850 million.
Crude oil prices have edged up some 10 percent and natural gas prices start to stabilize in reaction to President Trump’s promise of a “major” economic relief package to cushion the impact of the coronavirus crisis. Oil prices plunged nearly 30 percent yesterday after Saudi Arabia decided to flood the market with cheap fuel to recapture market share.