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Europe gas market shows muted reaction to US Trump win
Europe gas market shows muted reaction to US Trump win
London, 6 November (Argus) — The European gas market showed only a limited downward reaction this morning to the US election result, and while some market participants expect a second Donald Trump presidency to ease geopolitical tensions, others see the potential for destabilising effects in the medium term. While vote counting was still ongoing at the time of publication and vice-president Kamala Harris has yet to concede defeat, the Associated Press and major US television networks have concluded that Trump secured enough votes in the Electoral College to win the presidency. European gas prices fell during morning trading, despite the US dollar strengthening by about two basis points against the euro. European gas prices typically move higher in euro terms when the US dollar strengthens to offset the higher cost of dollar-denominated LNG supply. Some market participants attributed the small price fall during morning trading to the expectation that a second Trump administration would seek de-escalation on several geopolitical fronts — such as in Ukraine and the Middle East — which, they say, had supported gas prices in recent weeks. But European gas prices reversed their limited gains by the 16:30 GMT market close. And the European gas price reaction was notably muted relative to the considerable volatility of less than a week ago when a media report had raised the prospect of an imminent deal between European buyers and Azerbaijan for gas transit through Ukraine. These European buyers later denied that a contract would soon be signed . Few market participants foresee a material effect on the gas market stemming from the US election result. "The impact is too vague to really price in," a trading firm said. "Given the tight global supply-demand balance, any setback will be short-lived," another market participant said. The result may fuel speculation that the war between Russia and Ukraine could come to an end sooner, but with the new president set to take office in late January, the change in presidency will have no effect on the possibility of reaching a deal that would allow Russian gas flows through Ukraine to continue beyond the expiry of the transit contract and interconnection agreements between the two countries at the end of this year. If a normalisation of relations with Russia leads a Trump administration to unblock sanctions preventing the use of the Novatek-led 19.8mn t/yr Arctic LNG 2 export terminal, this might bring more LNG supply to the market in 2025 than previously envisaged. Looking further ahead, Trump's pledge to reverse incumbent president Joe Biden administration's LNG licensing pause and speed up the approval of new liquefaction projects may have boosted expectations of global LNG supply towards the end of this decade. But other market participants expressed concern about a potential threat to US LNG exports to Europe in the medium term if the new administration opts not to co-operate with the EU on establishing a framework for monitoring, reporting and verifying methane emissions, which may hamper US-EU LNG trade flows once the EU methane emissions regulation is fully implemented. This, coupled with a "drill, baby, drill" policy in the US domestic market, may lead to a deeper gulf between the two markets, some said. Trump's pledge to impose tariffs on imports into the US, particularly against China, may trigger the risk of retaliation that could affect LNG flows from existing facilities — as was the case in 2019, when deliveries of US LNG to China fell to zero as a result of the trade war between the two countries, before rebounding sharply in 2021 after the two countries agreed on a preliminary trade deal. Only one Chinese buyer had US offtake at the time, but many more subsequently signed on for US LNG, totalling about 22mn t/yr from existing and planned liquefaction projects. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Q&A: French state auction for biomethane RGGOs
Q&A: French state auction for biomethane RGGOs
London, 6 November (Argus) — France's first auction for state-owned biomethane renewable gas guarantees of origin (RGGOs) is due to take place on 4 December. It will be run by European Energy Exchange (EEX), which also manages the French biogas registry. Argus spoke to Aude Filippi, director of business development gas and sustainability markets at EEX, about biomethane RGGOs in France and the new auctions. Edited highlights follow: How are RGGOs currently traded in France? All RGGOs for biomethane injected into the French gas grid are currently exchanged via the over-the-counter (OTC) market, and the transfer of ownership is done via the French biogas registry. The RGGOs are tradeable for 12 months and usable for 18 months, and are issued in monthly intervals. The market has been growing quite significantly. Between January and September 2024, 8.5TWh of RGGOs were issued and 7.2TWh cancelled, while in 2023 there were 9.6TWh issued. Almost all of the issued RGGOs are cancelled, with very few expiring after 18 months. Why are the biomethane RGGO auctions being launched now? The French state owns all the RGGOs from biomethane produced from subsidised plants where the contract was signed after 9 November 2020, and now the French state wants to sell them. Even though the contracts were signed in 2020, it takes time to put biomethane into production, so very few of the RGGOs have expired so far. But the volume being produced is growing so it is important that we now have the auctions. What size volumes are you expecting to be in the new biomethane GOO auctions? We expect over 80,000MWh in the first upcoming auction, with volumes likely to increase in the following sessions. What buyers are you expecting to participate in the auctions? Essentially it will be the members of the French biogas registry that we have connected today. And some members connected to the French power GOO auctions at EEX might participate, so we expect that it will be a similar target group, but for gas. Will buyers be able to export the biomethane GOOs for use in other countries? Today we are not yet connected to a hub for the international trade of RGGOs. At the moment, we are working with the hubs to get connected. Why do the auctions have a mechanism for certain buyers to reserve volumes in the auction? The idea is that the operator of a production device will have the ability to buy the RGGOs produced from this particular device from the French state. They are then committing for one year at least to buy these RGGOs at the auction price plus a 30pc premium. By Emma Tribe Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Brazil’s Edge leverages RNG to get ahead
Brazil’s Edge leverages RNG to get ahead
Sao Paulo, 4 November (Argus) — Brazilian natural gas trading company Edge, a subsidiary of gas trading and distribution company Compass, has expanded its influence beyond the traditional gas market. Edge is responsible for the 14mn m³/d TRSP LNG regasification terminal, in southeastern Sao Paulo state, and the company's trading arm, including biomethane deals. Together with other companies in the Compass group — itself a unit of Cosan Group — Edge has become a dominant player in Brazil's biomethane market. Brazil's 2021 gas market law is aimed at keeping companies — namely state-controlled Petrobras — from owning multiple links in the gas market chain. But it also explicitly forbids distributors and pipeline owners from exploring, developing, producing, importing, carrying or selling natural gas. Despite this, companies in the Cosan group have been able to expand their influence at multiple links of this chain. Edge has successfully signed contracts to supply gas and biomethane buyers, effectively connecting supply and demand in the country. The latest example is Edge's newly announced deal with Brazilian subsidiary of French construction materials company Saint-Gobain , for 570,000 m³/d of biomethane and natural gas as of January. Prior to the deal, Edge had six clients with total contracted volumes of roughly 500,000 m³/d. Edge also holds 51pc of one of the biggest RNG plants expected to be built in the next few years. The Biometano Verde Paulinia plant is expected to have a 225,840 m³/d production capacity and should be operational in August 2026. Ownership of Sao Paulo distributor Comgas, as well as Compass' subsidiary Commit, Compass' gas distribution arm, complements Edge's strategy by paving the way for biomethane in the pipeline-connected regions. Commit has stakes in distribution companies in 11 different states. Through these distributors Compass can explore options to connect biomethane plants to the grid, on the supply side, and expand its pipeline reach. By using biomethane to deliver gas into regions not yet connected to pipelines, the company can try to create demand anchors supporting future pipeline expansions. In line with this strategy, Compass will acquire control of Parana-state distributor Compagas , which has one of the highest biomethane generation potentials in the country. Compagas aims to take advantage of the number of biogas plants in the state to include more biomethane into its gas mix, as part of its investment plan — reaching 15pc, or 100,000 m³/d of biomethane, by 2026. By Rebecca Gompertz Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Brazil biomethane production rises and widens
Brazil biomethane production rises and widens
Sao Paulo, 4 November (Argus) — Two new Brazilian biomethane plants started operating in the second half of 2024 and six more are ready to go pending final approval from regulators, increasing Brazilian output by 73.5pc from current levels and adding more states to the biomethane production map. Raizen-Geo Biogas, a joint venture between sugarcane ethanol producer Raizen and production tech company Geo, inaugurated a 130,370 m³/d plant in Piracicaba city, in Sao Paulo state, recently. Producer Essencis also added a 67,200 m³/d plant in Caieiras, also in Sao Paulo. Brazil can now produce 526,040 m³/d of biomethane from eight plants. Production is still concentrated in the southeast, with Sao Paulo state representing 54pc of national production and housing five companies: Cocal, Engesp, Essencis, Metagas and Raizen-Geo. Rio de Janeiro state — where producer Gas Verde has capacity for 204,000 m³/d of biomethane in Seropedica city — holds almost 42pc of national production. Northeastern Ceara state produces 110,000 m³/d. The six plants waiting for ANP authorization will add another 108,930 m³/d to the market and be the first such production in Goias, Mato Grosso do Sul, Minas Gerais, Parana, and Rio Grande do Sul states. Another four biomethane facilities, adding 343,000 m³/d to the market, are expected to complete construction this year. That includes waste management and biomethane company Orizon's 162,000 m³/d unit in Pernambuco state. Brazil expects to add another 20 plants — with combined expected capacity of 800,000 m³/d — by December 2026. The federal government expects biomethane production to grow further as the blending mandate outlined in the fuel of the future bill — approved in September — will unlock new demand. The mandate obliges gas producers and importers to buy biomethane or guarantee of origin certificates. National energy policy council CNPE will be responsible for setting the yearly target for the mandate, which will range from 1-10pc based on average domestic natural gas production and imports, excluding power demand, in the prior 10 years. By Betina Moura Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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