Category: Oil and Gas business

As additional capacity is required, decisions often have to be made as to whether to build a new LNG facility or expand an existing one. According to recent studies, expansions are more economical on a unit-by-unit basis. This is especially true because of the disconnect between the need for large upfront investments in basic infrastructure for new-builds and the time between initial gas flows, which penalizes new terminals versus existing sites that already have storage facilities in place

NIOC’s oil and gas in place reserves are 137 bn barrels and 28.17 trillion cubic meters. Current NIOC production capacities include 4 million barrels of crude oil and 437 million cubic meters of natural gas per day. Iran has had little exploration activity during the past 30 years, but that is changing as firms from several countries (including France, Italy, Malaysia, and the UK) have ignored US government sanctions to sign development agreements.

the Natural Gas Sector law mainly deals with the transmission, distribution and marketing of natural gas in Israel. The Law enacted by the Knesset in 2002 to create conditions for the development of the natural gas sphere in Israel, via the private sector and to encourage competition in this sphere in accordance with government policy in the fields of economics and energy; To regulate activity in the natural gas sphere so as to enable investments in it and to provide services at appropriate levels of quality, credibility and availability, and taking into account considerations of efficiency. The law and its amendments determine the provisions regarding the storage, transmission, distribution and marketing of natural gas in Israel and determines that the construction and operation of the transmission system, of distribution networks, of an LNG facility, of a natural gas storage facility require a license to be granted by the MNI Minister. An unofficial translation of The Natural Gas Sector Law, Sefer Hachukim 5762-2002, was last updated in April 2008 and can be found on the MNI website

A summary of all the costs associated with bringing one unit of oil/gas to the marketplace, and all of the revenues from the sale of all the products generated from that same unit.

The netback is calculated by taking all of the revenues from the oil, less all costs associated with getting the oil to a market. These costs can include, but are not limited to, importing, transportation, production and refining costs, and royalty fees.

Netbacks are calculated as follows (Platts):

Value of Volume for Sale minus Transport Costs equals Netback Price.

Value of Volume for Sale = (Gas Sales Price x Volume for Sale) / Volume for Sale

The value of the volume for sale is calculated based on the gas sales price in the destination market multiplied by the gas volume that arrives in the destination market – minus the volume that was used for fuel, or lost, along the way. The result is divided by the volume for sale to obtain a value in US dollars per MMBtu for the delivered gas.

Transport Costs = [(Terminal Costs x Unloaded Volume) + (Total Transport x Loaded Volume)] / Volume for Sale – (Hedging Cost + Buyer’s Margin)

Transport costs comprise all costs incurred to transport the gas volume from port of origination to the destination port including terminal costs, shipping costs, etc.

The sum of transport costs is divided by the volume for sale to obtain a transport cost in US dollars per MMBtu.

Netback Price

The netback price is the value of the volume for sale ($/MMBtu) minus the transport cost ($/MMBtu).

Parameter Definitions:

Gas Sales Price (GSP) ($/MMBtu)

The Gas Sales Price is an estimate of the prevailing spot market price for a particular region and varies daily. For Northeast Asia, the gas sales price is based on the World Gas Intelligence weekly assessment of the spot gas price for the region, based on a survey of traders. The weekly assessment is adjusted daily via the shift in the Brent prompt contract price.

For Southwest Europe, the gas sales price is based on the World Gas Intelligence weekly assessment of the spot gas price for the region, based on a survey of traders. This weekly assessment is adjusted daily via the change in the NBP day-ahead price. For the UK, the gas sales price is the NBP day-ahead gas price converted to US dollars via the current exchange rate. For Zeebrugge, the gas sales price is the Zeebrugge assessments done every week by WGI, adjusted for changes in NBP.

US Northeast gas price is the New England delivered-to-pipeline price as calculated via the Natural Gas Week survey.

Volume for Sale (VFS) (MMBtu)

Assumptions used in estimating volumes include a standard 155,000 cubic meter ship and a boiloff rate of 0.15% per day.

Multiplying by the heat content factor unique to each port (MMBtu/M3), gives the loaded volume (LV) at the point of origin.

Multiplying by the boiloff rate, assumed to be 0.15% per day, times the number of travel days, plus the number of Canal Days, if any, times the loaded volume (LV), results in the Unloaded Volume (UV) at the port of destination.

By then subtacting certain gas requirements at the port, the volume of gas for sale is derived.

Terminal Costs (TC) (US$)

Terminal costs are incurred when LNG is delivered into the terminal’s receiving system and re gasified. The cost is charged by volume.

Total Transport Costs (TTC) (US$)

Total transport costs include ship charter, port charges, bunker fuel cost, canal charges (if any), demurrage, and working capital. The total cost is then divided by the volume per sale to get a $/MMBtu cost for transport.

The components of the total transport cost are calculated as follows.

Natural gas is one of the most popular fuels for residential heating. Slightly more than 50 percent of homes in the US use natural gas as their main heating fuel.

A system giving customers a right of access to transmission and distribution systems on the basis of negotiated tariffs. It thus enables to provide spare capacity in pipelines to third parties upon payment of a negotiated tariff. Since tension often exists between the owners of fields and the owners of infrastructure, in many areas a code of practice has been put in place. This helps to streamline and facilitate the timely application of the processes of seeking, offering and negotiating third party access to offshore pipelines and processing facilities as well as onshore terminals. It helps to ensure that access is easy and fair, with terms offered on a negotiated but non discriminatory basis