Total predicts sharp increase in gas prices by 2010
Total’s Gas Market Outlook predicts a strong market on page 5 here which is entitled “Sharp Increase in Gas Prices.”
It pretty much matches the 2008 market price of $11.00 that my friend looked up for me. Yet Yemen LNG (with 43% ownership by France’s Total) sold neraly all natural gas production in 3 twenty year contracts. One contract was under $4.00. One contract was to Total Gas and the sale price is unknown.
Total notes “Average spot gas prices multiplied by 3 since 2000.”
They call Yemen LNG “a giant project” and it seems its very important to them in securing their supply “Long term growth sustained by giant gas projects” (page eight)
Total is the second largest international producer in the Middle East. They have participation in nearly 40% of worldwide LNG capacity. I wonder how Yemen’s contract stracks up against Totals contracts with other suppliers.
Yemen accounts for about a third of Total’s current development projects (page 12). They are expecting 12% a year growth. Yemen will account for 40% of Total’s Middle East gas production. (page 14)
On page 18 Total notes the gas prices are highly leveraged to hydrocarbon prices, which they call “strong value creation over the long term,” Yet in Yemen LNG’s sale to Kongas, there is the unusual feature where the sale price is only leveraged by 30% to oil prices.
Here’s another report by Total, page 19. “LNG growing by 12% per year through 2010″ I think they mean demand, but price cant be far behind.
In this report< Total analyzes the intability and capacity of the oil markets and notes the "giant gas projects" as a main part of their future strategy for growth.
