Samsung releases its S6 before Apple begins its process of hyping up its most recent Smartphone releaseMarch 23, 2015 2:24
Letting go—Big oil companies may have to give up Iraq gas
Dry gas would be valued at around $5.78/mmbtu at current prices; 4 million tonne/year LNG export plant possible in seven years; Oil ministry may prevent rival bids to limit gas supplies
August 29, 2011 5:04 by Reuters
…then embargoed by the government of Iraq.
SIMPLIFIED PRICING AGREEMENT
A simplified official agreement presented to the Iraqi parliament and obtained by Reuters in early August indicated BGC would sell the dry gas back to SGC under a fuel-oil linked pricing formula.
The full draft contract shows that, once investments by the private shareholders have matched the value of assets transferred from state-owned SGC, BGC would sell dry gas back to SGC at a price based on the average daily high and low quotations of spot High Sulphur Fuel Oil (HSFO) 180 FOB Arab Gulf in the previous quarter from pricing agency Platts.
According to Reuters calculations based on an average daily closing price for Platts’ HSFO 180 CST FOB Arab Gulf in the second quarter of 2011 of $647.77 per tonne, the reference price for gas sold to SGC would be $5.78 per million British thermal units (mmbtu) for the present quarter.
This compares to current US front month gas prices of around $4.4/mmbtu and UK prices of around $9.2/mmbtu.
The Iraqi government has decided SGC will then sell the dry gas to Iraqi industry at just $1.04/mmbtu, according to the summary presented to Baghdad lawmakers, to ensure Iraq has cheap fuel it needs to be competitive in a region of subsidised gas supplies.
The price of any condensate BGC sells to SGC would similarly be priced off Platts’ spot Dubai crude assessments, while LPG prices would be based on Argus’ Asia Far East indices for propane and butane.
The monthly pricing of raw gas from the dedicated fields that BGC will pay SGC is complicated. It would take into account BGC fuel and any power sales in the previous month and include a windfall adjustment for the difference between BGC’s dry gas revenue and a dry gas base price linked to Brent crude. (By Ahmed Rasheed and Daniel Fineren; Writing by Daniel Fineren)
Pages: 1 2