by James Ikenna…….
As the Price of crude oil continues to dwindle and the price of natural gas expecting to double this winter and now the cynosure of the global market, experts are teasing and wondering if crude oil should be renamed “Associated”?
According to EIA forecasts natural gas prices is on the rise and there is anticipation of higher winter demand for heating and expectedly a revival of industrial activities post covid-19.
For instance at the start of April, gas was priced at just $1.64 per million British thermal units (MMBtu), the lowest it has been since December 2009.
However, Goldman Sachs analyst Samantha Dart expects gas prices to jump to $3.50 / MMBtu gas by winter 2020-2021 and avetage $ 3.25 / MMBtu by summer 2021. The lowest by 2021 is expected to be $ 2.45 / MMBtu.
As one industry observer put it, oil producers should now regard natural gas as their main source of income in coming months and oil as a by-product. Adding, perhaps crude oil should be renamed associated crude oil?
More importantly is the impact of higher natural gas prices which is expected to help hundreds of debt-burden small independent producers who constitute over 90 percent of gas output across the world to continue in business and not shutting wells.
Furthermore the attractive natural gas prices is also expected to be a factor that will incentivize Exploration and Production companies.
This price jump is also said to be a push for Nigeria to intensifies efforts to reduce flaring and venting of gas and sell this higher valued commodity and further domesticate the nation’s natural gas resources.
This is also part of the reason for the recent award of EPC contract for NLNG Train 7 by the stakeholder. This is the reason for the rush and completion of several gas projects and takeaway pipelines around the world and the opening of access to Gulf coast LNG processing plants and gas-hungry Mexico.