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Traders expect low uptake of 5-year Latvian gas storage

  • Market: Natural gas
  • 28/01/25

Market participants expect limited demand for a new five-year gas storage product that Latvian operator Conexus will begin offering later this year.

Conexus will offer a five-year product for its 25TWh Incukalns storage site for the first time ever on 11 February. This five-year offering will be in addition to the one and two-year products already previously offered by Conexus, along with the storage transfer and interruptible capacity products.

All market participants surveyed by Argus expect weak demand for the five-year product, mostly because of unfavourable summer-winter spreads and traders' lack of willingness to commit to bookings that far ahead. Several respondents highlighted that only a limited pool of firms would be interested in planning their activities five years out. Most traders "do not look to the so distant future in the gas storage business", one said. "Not so many market players are ready to tie themselves to local gas markets for five storage cycles in a row," another said.

Several respondents criticised the product's rules, with one noting that it could even lead to storage utilisation falling, "considering the fines for inventory transfer between storage seasons". Traders would try to "squeeze out the pipeline/LNG supply potential, rather than over-injecting", they added. Another said they were concerned that the share of the overall storage capacity allocated to the five-year product was "too high" and would make it possible for some market participants to "hijack this very much needed capacity in a similar way" to what happens at the Latvian-Lithuanian border point of Kiemenai. Several traders have expressed frustration that annual capacity at Kiemenai has been fully booked but only a small part is at times used, blocking other shippers from accessing the capacity and resulting in low utilisation rates.

Another trader highlighted the product's limitation of only allowing a user to transfer up to 50pc of the total booked capacity from one storage cycle to the next without having to pay additional fees.

The previous set of capacity products has been "tested for years and proven to be working", another market participant said, arguing that "imperfect but certain conditions are better than uncertain ones".

One trader pointed out that a lack of interest in the five-year product could increase demand for the traditional one and two-year products, increasing the premium at these auctions further. Two other traders pointed out that given prevailing inverted summer-winter spreads, there is little financial incentive to book any capacity products, let alone make a five-year commitment. Ultimately, the "behaviour of local players is and will continue to be influenced by the closest summer-winter spread and the difference between this spread and the one-year storage tariff, not by long-term storage capacity of injection/withdrawal limits," one concluded.


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31/01/25

Trump tariffs on Canada, Mexico to include oil: Update

Trump tariffs on Canada, Mexico to include oil: Update

Updates with comments from Trump, plan for 10pc crude tariff. Washington, 31 January (Argus) — President Donald Trump said late Friday he will proceed with plans to impose 25pc tariffs on imports from Canada and Mexico on 1 February, with crude imports likely to be taxed at a lower 10pc rate. Trump separately plans to impose tariffs on imports from China on 1 February. Asked if his Canada tariffs would include crude imports, Trump said, "I'm probably going to reduce the tariff a little bit on that," he told reporters at the White House. "We think we're going to bring it down to 10pc." Trump, who previously tied tariffs on imports from Canada, Mexico and China to their alleged inability to stem the flow of drugs and migrants into the US, today insisted that the tariffs he plans to impose on Saturday in fact have a strictly economic rationale and are non-negotiable. The tariffs expected on Saturday "are not a negotiating tool", Trump said. "No, it's pure economic … we have big deficits with all three of them." Trump, in a wide ranging gaggle with reporters, separately mentioned that he would impose tariffs on imported chips and oil and natural gas. "That'll happen fairly soon, I think around 18 February," he said. It was not clear from his remarks if he meant that all oil and gas imports into the US would be taxed, or if he referred to supply only from Canada and Mexico. Trump said he would also raise tariffs on imported steel, aluminium and eventually copper as well. Trump brushed away criticism of potential negative impacts from his tariffs. "You will see the power of the tariff," Trump said. "The tariff is good, and nobody can compete with us, because we have by far the biggest piggy bank." The looming face-off on tariffs has unnerved US oil producers and refiners, which are warning of severe impacts to the integrated North American energy markets if taxes are imposed on flows from Canada and Mexico. Industry trade group the American Petroleum Institute has lobbied the administration to exclude crude from the planned tariffs. Canadian prime minister Justin Trudeau reiterated today that Ottawa would retaliate against US tariffs. Mexican president Claudia Sheinbaum also said her country has prepared responses to US tariffs . Nearly all of Mexico's roughly 500,000 b/d of crude shipments to the US in January-November 2024 were waterborne cargoes sent to US Gulf coast refiners. Those shipments in the future could be diverted to Asia or Europe. Canadian producers have much less flexibility, as more than 4mn b/d of Canada's exports are wholly dependent on pipeline routes to and through the US. Canadian crude that flows through the US for export from Gulf coast ports would be exempt from tariffs under current trade rules, providing another potential outlet for Alberta producers — unless Trump's potential executive action on Canada tariffs eliminates that loophole. Tariffs on imports from Canada and Mexico would most likely have the greatest impact on US Atlantic coast motor fuel markets. New York Harbor spot market gasoline prices are around $2/USG, meaning a 25pc tariff on Canadian imports could up that price by as much as 50¢/USG. This could prompt buyers in New England or other US east coast markets to look to other supply options. Canadian refiners could also start sending their product to west Africa or Latin America. US refiner Valero said that the tariffs could cause a 10pc cut in refinery runs depending on how the tariffs are implemented and how long they last. Gas, petchems, steel and ags threatened The tariffs may affect regional natural gas price spreads and increase costs for downstream consumers, but there is limited scope for a reduction in gas flows between the two countries — at least in the short term. The US is a net gas importer from Canada, with gross imports of 8.36 Bcf/d (86.35bn m³/yr) in January-October, according to the US Energy Information Administration (EIA). The US' Canadian imports far exceeded the 2.63 Bcf/d it delivered across its northern border over the same period, EIA data show. Tariffs on Canadian and Mexican imports also will disrupt years of free flowing polyethylene (PE) and polypropylene (PP) trade between the three countries, market sources said. North American steel trading costs could rise by as much at $5.3bn across the three nations, since Mexico and Canada are expected to issue reciprocal tariffs against the US, as it did when Trump issued tariffs in his first term. The tariffs could also disrupt US corn and soybean sales , since China and Mexico account for 48pc of US corn exports and 61pc of US soybean exports since 2019, according to US Department of Agriculture (USDA) data. By Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Canada’s tariff response will be ‘forceful’: Trudeau


31/01/25
News
31/01/25

Canada’s tariff response will be ‘forceful’: Trudeau

Calgary, 31 January (Argus) — Canadian prime minister Justin Trudeau is planning an immediate retaliation should US president Donald Trump impose a 25pc tariff on imports tomorrow, 1 February. "If the president does choose to implement any tariffs against Canada, we are ready with a response," said Trudeau at a meeting of the Council on Canada-US Relations in Toronto. "A purposeful, forceful, but reasonable, immediate response." "It's not what we want, but if he moves forward, we will also act," he said. Trump has accused Canada and Mexico of facilitating trafficking of fentanyl and illegal migration and has threatened tariffs to persuade the two countries to tighten borders they share with the US. "Our border is safe and secure," said Trudeau. "We're committed to keeping it that way by addressing current challenges and strengthening our capacity." Mexican president Claudia Sheinbaum said this week Mexico is also ready to respond to US tariffs. "We will always defend respect for our sovereignty and a dialogue as equals, but without subordination," she said. Canada in mid-December said it would spend C$1.3bn ($900bn) on border security measures over six years, which Trudeau reiterated Friday while highlighting recent progress. The 8,891-kilometre (5,525-miles) US-Canada border is the longest in the world. Trump has also railed against the US' trade deficit with Canada, which is on track to settle at about C$65bn in 2024 , according to TD Bank. The bank notes the deficit is largely a result of America's thirst for energy and should not be confused with a "subsidy". Canada has increased deliveries of crude to the US beyond 4mn b/d and supplied 8.36 Bcf/d (86.35bn m³/yr) of natural gas in January-October, according to the US Energy Information Administration (EIA). US refiners that process Canadian crude would not easily find alternative supplies, according to the American Fuel and Petrochemical Manufacturers (AFPM). "We won't relent until tariffs are removed, and of course, everything is on the table," Trudeau said of Canada's potential retaliation, a message that has drawn concern from the premier of oil-rich Alberta who wants the unfettered flow of energy. All told, the two highly-integrated countries exchange about C$3.6bn of goods and services each day, only slightly less than daily US-Mexico trade, TD Bank said last week. By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Trump tariffs to hit Canada, Mexico, China on 1 Feb


31/01/25
News
31/01/25

Trump tariffs to hit Canada, Mexico, China on 1 Feb

Washington, 31 January (Argus) — President Donald Trump will proceed with plans to impose 25pc tariffs on imports from Canada and Mexico and 10pc on imports from China on 1 February, the White House said today. The White House pushed back on reports that the tariffs would be delayed and declined to confirm whether Trump made a decision on whether to exclude Canadian and Mexican crude from the tariffs. "Those tariffs will be for public consumption in about 24 hours tomorrow, so you can read them then," the White House said. The looming face-off on tariffs has unnerved US oil producers and refiners, which are warning of severe impacts to the integrated North American energy markets if taxes are imposed on flows from Canada and Mexico. Industry trade group the American Petroleum Institute has lobbied the administration to exclude crude from the planned tariffs. Trump on Thursday acknowledged a debate over the application of tariffs to oil but said he had yet to make a decision on exemptions. The White House dismissed concerns about potential inflationary effects of Trump's tariffs. "Americans who are concerned about increased prices should look at what President Trump did in his first term," it said. Canadian prime minister Justin Trudeau reiterated today that Ottawa would retaliate against US tariffs. Nearly all of Mexico's roughly 500,000 b/d of crude shipments to the US in January-November 2024 were waterborne cargoes sent to US Gulf coast refiners. Those shipments in the future could be diverted to Asia or Europe. Canadian producers have much less flexibility, as more than 4mn b/d of Canada's exports are wholly dependent on pipeline routes to and through the US. Canadian crude that flows through the US for export from Gulf coast ports would be exempt from tariffs under current trade rules, providing another potential outlet for Alberta producers — unless Trump's potential executive action on Canada tariffs eliminates that loophole. Tariffs on imports from Canada and Mexico would most likely have the greatest impact on US Atlantic coast motor fuel markets. New York Harbor spot market gasoline prices are around $2/USG, meaning a 25pc tariff on Canadian imports could up that price by as much as 50¢/USG. This could prompt buyers in New England or other US east coast markets to look to other supply options. Canadian refiners could also start sending their product to west Africa or Latin America. US refiner Valero said that the tariffs could cause a 10pc cut in refinery runs depending on how the tariffs are implemented and how long they last. The tariffs may affect regional natural gas price spreads and increase costs for downstream consumers, but there is limited scope for a reduction in gas flows between the two countries — at least in the short term. The US is a net gas importer from Canada, with gross imports of 8.36 Bcf/d (86.35bn m³/yr) in January-October, according to the US Energy Information Administration (EIA). The US' Canadian imports far exceeded the 2.63 Bcf/d it delivered across its northern border over the same period, EIA data show. Tariffs on Canadian and Mexican imports also will disrupt years of free flowing polyethylene (PE) and polypropylene (PP) trade between the three countries, market sources said. By Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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DeepSeek undermines AI power demand forecasts


31/01/25
News
31/01/25

DeepSeek undermines AI power demand forecasts

Gas and power suppliers predicting an AI demand boom hope that greater efficiencies could still underpin their plans through wider use, writes Julian Hast New York, 31 January (Argus) — Unexpected efficiency achievements by Chinese artificial intelligence (AI) firm DeepSeek have cast a shadow over a bullish narrative on booming US electricity demand in the coming decade to power data centres running AI software. Share prices for US independent power producers, natural gas producers and gas pipeline companies fell sharply at the beginning of the week as investors feared DeepSeek's achievement implied significantly less electricity might ultimately be needed to run and train AI models than has been expected. This greater efficiency "calls into question the significant electric demand projections for the US", as the investment case for independent power producers and integrated utilities is "dependent on data centres", US bank Jefferies says. DeepSeek's apparent ability to achieve comparable results to some major US AI companies using far less computing power — and so far less electricity — may also be bad news for what is widely expected to be the main fuel source to generate incremental power for AI this decade — natural gas. EQT, a leading US gas producer, has called growing power demand from planned data centres the "cornerstone" to its "natural gas bull case". Large US gas pipeline companies such as Williams, operator of the Transcontinental pipeline, have also touted recent forecasts showing surging demand for gas-fired power, as greater gas generation would require greater pipeline capacity to move those incremental volumes from wellhead to generator. Even the US oil majors are getting in on the act. Chevron announced this week a team-up with investment firm Engine No 1 and energy firm GE Vernova to build gas-fired generation plants to power data centres. DeepSeek's achievement could even cast doubt on the investment case for nuclear power, which has been recast as a silver bullet for US technology giants looking to secure zero-emission electricity to enable AI development. Revise the revisions? News of DeepSeek's efficiency achievements are a shock to prevailing expectations for surging US power demand in the coming decade, when those expectations have already been substantially revised over the past year, following decades of stagnant power demand. PJM, the largest US grid operator, on 24 January released a report showing significant upward revisions in its peak seasonal power demand projections. Peak summer power demand in PJM's territory in the mid-Atlantic was projected to surge to 210GW in 2035 and 229GW in 2045, substantially steeper than PJM's load forecast just one year earlier, which showed peak summer power demand rising to 177GW in 2034 and 191GW in 2039. Consultancy firm McKinsey recently forecast US data centre power demand to reach 606TWh by 2030, up from 147TWh in 2023. Under this scenario, data centres at the end of the decade would comprise 12pc of total US power demand. If efficiency gains in AI reduce power demand as much as some investors fear, those big forecasts might require big revisions. But efficiency improvements can go two ways — they can reduce demand for fuel, or simply increase output. In the case of AI, more efficient operations could be exploited to accelerate the development of more powerful models — using the same amount of power that was previously expected, but to greater effect. That latter explanation is why, "despite uncertainties", data analytics firm FactSet's head of power markets Matthew Hoza tells Argus he remains "bullish" on power demand growth in the coming years. "With AI's increasing integration into company tech stacks and its growing presence in daily life through AI agents, we anticipate continued growth in AI adoption and the resulting power needs," Hoza says. Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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TTF front-month gas price highest since October 2023


31/01/25
News
31/01/25

TTF front-month gas price highest since October 2023

London, 31 January (Argus) — The TTF front-month gas price on Thursday reached its highest for any day since 23 October 2023, driven by the forecast for cooler and stiller weather in northwest Europe, as well as buying in Ukraine and flooding in Malaysia. Argus assessed the benchmark TTF front-month at €51.81/MWh on Thursday, up from €51.25/MWh at the previous close. The contract had already jumped on Wednesday, rising by nearly €3/MWh from Tuesday. Traders pointed to recent forecasts for colder weather as key drivers, after February had been projected to be mild for much of January. ECMWF ensemble forecasts at midday on Wednesday showed much lower minimum temperatures across key population centres in northwest Europe than those from the previous day. The projection for overnight lows in Amsterdam fell most sharply, particularly from 7 February, dropping as much as 3°C below Tuesday's outlook and the 10-year average. Similarly large day-on-day drops in London, Essen and Berlin are forecast for the second week of February. Minimum temperature forecasts on Thursday edged slightly higher for most of these cities, but remained lower than they had on Tuesday. And forecasts were for a significant drop in wind generation, with load factors as low as 2pc over the coming weekend and on Monday in Germany. Gas-fired generation would probably have to ramp up to offset any up drop in wind output. Still weather pushing up power-sector gas demand and colder weather increasing heating demand would boost gas consumption. Weather aside, traders pointed to support from news that Ukraine's Naftogaz is seeking to import gas in February , having previously said it had no plans to import this winter. While it is unclear how much Naftogaz is seeking, several traders said it could be looking for up to 3bn m³ in preparation for the next heating season. Additionally, the breakaway Moldovan region of Transnistria is expected to start receiving 2mn-3mn m³/d from the beginning of February, although it is unclear which country will supply this. Purchases for Naftogaz and Transnistria will tighten supply in eastern Europe following the end of Russian gas transit through Ukraine, providing price support throughout Europe as firms in the east may be forced to source gas from the west. Traders also noted the risk of problems at Malaysia's 30mn t/yr Bintulu LNG export terminal as a result of flooding. Operator Petronas said operations had not been disrupted, and several vessels were loading at Bintulu on Thursday, although one analyst noted that it is difficult to judge the extent of any damages "until you have seen stable loadings excluding what was [already] in the tank". Another trader said if the previous outlook had been for stable production, the floods at least present a risk for LNG supply. This follows news earlier in the week that Indonesia might stop cargoes from being exported to cover shortfalls at home, which could further tighten the balance in Asia. Traders also pointed to continued price reaction to THE's plans to subsidise injections into German storage over summer — which many have taken to mean that storages are likely to be filled ‘at any cost' — as well as generally low inventories going into February across the EU. By Brendan A'Hearn Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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