Rough times

The extension to Rough’s injection unavailability until at least the end of June was priced into the NBP second-quarter 2017 market quickly, but the ripples along the curve have been much smaller.

Centrica plans not to have any obliged capacity for the 2017-18 storage year and said last week that it would update Ofgem as part of a consultation process.

Much of the focus was on the NBP second-quarter 2017 contract, understandably given that Centrica said explicitly that injection services would not be available in this period.

But reading last week’s update at the same time as December’s consultation document paints a much bleaker picture for the future of Rough.  Continue reading

Trump: ‘Ruse’ ruins Russian reset

US president Donald Trump says it has become much harder for him to make a deal with Russia because of “the false, horrible, fake reporting by the media.” But the real challenge to Trump’s proposed improvement in Russian relations is strong, bipartisan opposition on the Hill.

Trump on 13 February asked his national security adviser Michael Flynn to step down after revelations that prior to taking office Flynn had discussed possible sanctions relief with Russian ambassador to the US, Sergey Kislyak. The story is a “ruse,” Trump said in a press conference this week, even though he confirmed the substance of the discussion. Trump added that Putin must be thinking “it’s got to be impossible for President Trump to ever get along with Russia because of all the pressure he’s got with this fake story.”  Continue reading

Ukraine’s lack of perspective

Ukraine needs foreign investment, particularly in the energy sector – this mantra is repeated time and again by the authorities. Proven natural gas reserves of more than 1 trillion m³ and government plans to boost gas production to 27bn m³/yr in 2020 from the current 19.9bn m³/yr should draw the eye of investors. The obstacle is decisions made this week in parliament that militate against a healthy investment environment in the sector.

Parliament’s tax committee rejected a draft law to decrease subsoil taxes for gas producers for new wells to 12pc from a current 28pc of the price of gas sold. The decision was a bitter blow to gas producers who lobbied for the new tax rates over several months. “We failed to prove for foreign investors that Ukraine is a good place to invest in gas production and we are left on the world map as a country with one of the highest tax rates for gas production”, said head of Ukraine’s association of gas producers Daniel Maydanik. The tax committee argument that there might be a loss of state revenues was weak, given that producers asked for low rates only for future wells. Besides, the committee approved a drop in tax rates for crude production that will lop 2bn-3bn hryvnia ($76.5mn-$114.8mn) off the 2017 budget.  Continue reading