According to yomiuri.co.jp :

Indonesia has notified Japanese companies that it intends to halve exports of liquefied natural gas to Japan by as early as 2010, sources said Thursday.

The two sides have already entered into negotiations on the reduction plan, which will be implemented when current long-term export contracts expire, the sources said.

With the soaring price of crude oil, and growing concerns over environmental problems, countries including China, South Korea and the United States have started importing LNG. This increase in demand from other nations, and subsequent reduction in LNG imports from Indonesia, is likely to have a significant impact on Japan’s energy strategy, observers note.

LNG imports from the Bontang plant on Borneo Island, which account for more than 90 percent of overall LNG imports from Indonesia, will be reduced dramatically, according to the sources. Japanese companies such as Tokyo Gas Co. and Kansai Electric Power Co., which signed long-term deals to import a total of 14.54 million tons of LNG annually from the plant, will see contracts on about 12 million tons expire from 2010 through 2011.

Negotiations to renew these contracts began in earnest last year, but despite Japanese efforts the imports likely will still be halved from 12 million to 6 million. Such a reduction would account for more than 10 percent of the country’s overall LNG imports, which totalled about 58 million tons last year.

Japan hopes to compensate for the reduced amount with imports from other locations such as the Sakhalin-2 project plant in Russia. However, with the Russian government recently cancelling a permit for an oil and gas development project by an international joint venture, the prospects for domestic gas and electric company procurement have become increasingly gloomy.

Indonesia claims there are growing calls for greater domestic consumption of LNG, as production from gas fields near the Bontang plant has been declining and the country is short on energy supplies.

Indonesia signaled its new stance toward Japan earlier this year, indicating it would not renew some LNG business contracts set to expire in the next few years in order to reduce exports.

Japanese companies are currently negotiating with the Indonesian government on the assumption that imports will be cut by half in the renewed contracts. But with the Indonesian government suggesting it may call for further dramatic reductions, negotiations could become even more complicated, the sources said.

LNG imports from countries such as Indonesia, Malaysia and Australia largely went to Japan until the 1990s. In recent years, however, the United States, China and South Korea, among other nations, have sharply increased LNG imports as they seem excellent value in the wake of rising oil prices.

Indonesia plans to ramp up exports of LNG to China from 2009. “Cuts in [LNG] exports to Japan signal that global competitions over energy sources have been intensifying,” an oil industry source said.

- See also
Same news posted previously by marketwatch
Russia may face gas supply in 2 years
Asia Faces US buying power for spot LNG
Korea need to prepare for Global LNG War

According to Bloomberg :

Sept. 28 (Bloomberg) — OPEC members, seeking to halt a two- month plunge in oil prices, may cut production as of next week, led by a Nigerian decision to reduce supplies.

The reductions are “voluntary,” rather than a formal accord for each nation to restrain output, Secretary-General Mohammed Barkindo said today in a telephone interview from London. Nigeria, whose member is the president of the Organization of Petroleum Exporting Countries, will lower exports by 5 percent starting Oct. 1, an official from the state’s oil company said.

Oil prices in New York have tumbled 20 percent since touching a record $78.40 a barrel on July 14 as fuel stockpiles climbed and the risk of the United Nations imposing sanctions on Iran eased. OPEC President Edmund Daukoru has contacted other member-states to discuss falling prices, which touched a six-month low Sept. 25.

“OPEC has made some hawkish comments over the last week, which shows a commitment by them to protect the price,” said Katherine Spector, an analyst at JPMorgan Chase & Co. in New York.

The 11-member group agreed at a meeting on Sept. 11 to leave a production quota for 10 of its members unchanged at 28 million barrels a day. Since then, the group’s benchmark oil price has dropped to $55.90 a barrel from $60.70.

Nigeria’s Plan

“OPEC might go with this informal agreement and wait until the next meeting in order to get a full agreement on a cut in quotas,” said Jason Schenker, an economist with Wachovia Corp. in Charlotte, North Carolina. “OPEC is seeing a problem with a softening of demand and ample supplies, but prices are likely to rise if the cuts do come through.”

Barkindo said he met with Saudi Arabian Oil Minister Ali al- Naimi this week and that the country, the world’s biggest crude exporter, is already paring production, Platts reported earlier, citing the acting secretary-general.

“I have spoken with the Saudis in Riyadh and they are continuing to cut,” the report quoted Barkindo as saying.

Kuwait won’t cut production based on current prices, an unidentified official from Kuwait Petroleum Corp. said, according to Platts. A Libyan OPEC official also said he didn’t see a reason for a reduction, while Algeria’s oil minister, Chakib Khelil, said he didn’t expect crude prices to fall much below $60 a barrel, the Platts report said.

Nigeria, the sixth-biggest producer in OPEC, downplayed its reduction. Levi Ajuonuma, a spokesman for state-run Nigerian National Petroleum Corp., said the nation’s decision was part of a “routine” seasonal change in supply. The nation in August produced 2.2 million barrels a day, according to Bloomberg estimates.

Peak Season

OPEC members normally raise production for the fourth quarter of the year, which represents the peak season for demand as refiners make fuels for the Northern Hemisphere winter.

Crude oil futures for November delivery on the New York Mercantile Exchange fell 0.8 percent to $62.48 a barrel at 9:31 p.m. London time. The price, up 2.4 percent this year, climbed as high as $64 after earlier reports of cutbacks.

OPEC doesn’t pay much attention to individual quotas for its members, with some pumping more than allowed, and the group didn’t mention quotas in the statement from its meeting earlier this month. Quotas for individual members have been treated with “benign neglect,” Daukoru told reporters on Sept. 11. Iraq is the only OPEC member without a production limit.

Daukoru, who is also the Nigerian oil minister, has been in contact with other members of the 11-nation producer group by telephone, as previously planned, OPEC spokesman Omar Farouk Ibrahim said today.

- The OPEC cutting oil production….should be in small phases…let’s see what is the next development in the oil prices

According to forbes.com :

SYDNEY (XFN-ASIA) – Liquefied Natural Gas Ltd said it has signed an agreement with a subsidiary of Galveston LNG Inc to supply 1.8 mln metric tonnes per year of liquefied natural gas to a proposed terminal in Canada.

The Norwegian-based Golar is the world’s largest independent owner of LNG transportation and listed on both the Oslo and NASDAQ stock exchanges.

- As mentioned previously in lowems article : Previously much of U.S. natural gas demand was met by Canada, easily shipped via pipeline. But Canada’s natural gas production, like America’s, is expected to be flat or slightly declining. Canada may export less natural gas as it is increasingly being used to extract crude oil from its massive tar sands reserve in Alberta.

So, now Canada had to IMPORT LNG to meet supply or to extract MORE crude oil from tar sands…what does that means to USA? LNG is going to be much more competitive in the future!

According to Yahoo!News :

LONDON (Reuters) – Oil rose above $63 on Thursday after a report that key OPEC producers, including Saudi Arabia, had agreed unofficially to cut production to stem falling prices.

U.S. crude rose 65 cents to $63.61 a barrel at 1624 GMT, adding to gains of almost $2 the previous session. London Brent was up 93 cents at $63.14 a barrel.

A Nigerian oil industry source told Reuters that Nigeria was joining Saudi Arabia, the world’s biggest oil exporter, and Kuwait to trim oil supply from October 1.

“Nigeria will cut by five percent from October 1 because of the unofficial discussions between OPEC members,” the source said, asking not to be named.

Oil prices have fallen about 20 percent from a peak of $78.40 in July, prompting uneasiness among some OPEC members.

Edmund Daukoru, OPEC’s president, had told Reuters on Tuesday: “something needs to be done to steady the price.”

But Kuwaiti Oil Minister Sheikh Ali al-Jarrah al-Sabah said on Wednesday that with U.S. crude above $61, most OPEC ministers were content with prices and not inclined now to cut output.

And after the report from Nigeria on Thursday, a Gulf oil source said Kuwait’s production was steady and there had been no orders so far to cut.

Last week, Ali al-Naimi, oil minister for Saudi Arabia — the world’s top oil exporter — also described a U.S. crude price of around $62 as reasonable.

OPEC speculation helped boost prices by almost $2 on Wednesday, even after a weekly report showed a big jump in U.S. fuel supplies.

“The market is astonishingly strong,” said Christopher Bellew, a broker at Bache Financial. “Really it seems to be buying by funds, either short-covering or adding to their length because they’d got rid of a lot of their length.”

Oil has fallen from its July peak because of rising U.S. fuel stocks, easing economic growth and diminishing tension over Iran‘s nuclear stand-off, the steepest drop since the 1991 Gulf War.

“We had such a continuous drop in prices, so at some stage it was obvious we would see some rebound,” said Frederic Lasserre, head of commodity research at Societe Generale. “It’s just purely technical.”

Swelling fuel inventories in the United States and talks between the European Union and Iran to resolve the dispute over Tehran’s nuclear work suggest the rally may be short-lived, analysts said.

European Union foreign policy chief Javier Solana said on Thursday he had failed to reach a deal with Iran’s chief nuclear negotiator on Tehran’s atomic ambitions, but they had paved the way for further talks.

Iran is the world’s fourth largest oil exporter, and an agreement to end the standoff could lead to more weakness for oil prices, analysts said.

- Let’s see how much oil will be cut by Oct 1st….and what is the impact on the oil prices. If Iran really have a agreement with USA on suspension of enrichment, will it lower it down further?

According to Lowem : channelnewsasia.com :

Electricity tariffs will go up by an average of 2.3 percent or 0.49 cents per KWh (kilo-watt hour) between October 1 and December 31 this year. SP Services explains that electricity price is pegged to the forward price of fuel, which is higher for the next quarter at $88.52 per barrel, compared to $87.49 per barrel previously.

The tariffs are reviewed every quarter and adjusted in line with fluctuation of fuel oil prices. The tariff adjustments have been approved by industry regulator Energy Market Authority. The next review will be in December.

- Thanks for the latest News Lowem! Do comment!!

According to Bloomberg :

Sept. 28 (Bloomberg) — Royal Dutch Shell Plc’s Sakhalin-2 joint venture has received more than 10 “expressions of interest” for liquefied natural gas supplies from a possible third production line.

Sakhalin-2 is studying an expansion to increase capacity to 16 million metric tons a year from the 9.6 million tons now under construction at two production lines, Ate Visser, commercial director for the Shell-led Sakhalin Energy Investment Co., told the Sakhalin Oil & Gas Conference. The potential buyers are seeking a total of as much as 14 million tons a year.

Japanese and South Korean utilities have signed contracts to take up almost all the output from the $22 billion Sakhalin-2 venture, which faces a Russian government probe over environmental breaches. Requests for additional supplies have come from companies in Japan, South Korea, Taiwan, the U.S., China and India, said Visser, without giving specific names.

“We could easily fill up the requests,” he said at the Sakhalin Oil & Gas Conference in Yuzhno-Sakhalinsk, seven time zones east of Moscow. “The project has substantial economies of scale to incorporate a third train.”

Most of the expansion would come for a third production line under consideration with a small amount available through streamlining operations at the first two lines, a process called debottlenecking, said Visser.

He declined to give a figure on the costs of a possible third production line.

West Coast

“I was called just this morning by someone from a company out of the U.S. west coast,” said Visser. “People are calling me regularly.”

The Shell-led venture faces a Russian probe over environmental violations amid calls by the government in Moscow to cede control of its fields to local companies. Russia’s Natural Resources Ministry yesterday gave Sakhalin Energy one month to propose changes or face losing the venture’s permit.

Sakhalin-2 will double crude oil production to 160,000 barrels a day by 2009, he said. The facility produces 80,000 barrels a day currently that is exported to Japan and China.

Sakhalin-2 only exports crude oil during the summer as ice blocks the mooring terminals for the tanker. The production figure is on an annualized basis for the period when it is possible to export, said Visser.

See also : Singapore hopes for Russian LNG Supplies

- Looks like Singapore is not listed in the article but maybe just one of the 10 “expressions of interest” for LNG. Singapore cannot sign any agreement yet since our LNG terminal is not even constructed compared to the rest of the 6 serious competitors namely Japan, South Korea, Taiwan, the U.S., China and India.

We need to build it quickly otherwise it will be inevitable that we do NOT get any of the natural gas contracts at all! The spot LNG prices that will come later possibly cost more then OIL prices does.

Reality check, if LNG costing more means higher electricity cost for all Singaporeans (80% Natural Gas for electricity generation) after Full Liberalizing of the electricity market. The worst is most of Singaporeans are still in the “Matrix” of unknown and does not prepare for a full black out of energy. I can only say, the day when there is higher bankruptcy and beggars on the streets or chaos and instability…the world will somehow survive but at what cost?

According to Bloomberg :

Sept. 28 (Bloomberg) — China’s natural gas output rose 15 percent last month to 4.8 billion cubic meters on increased demand as the government encourages the use of cleaner-burning fuels to cut pollution.

Production in the first eight months rose 22 percent to 38.4 billion cubic meters, according to a faxed statement today from China Mainland Marketing Research Co, which compiles data for the National Bureau of Statistics.

China, the biggest energy user after the U.S., wants to boost the share of its energy produced from natural gas to 8 percent by 2010 to cut pollution and reduce the country’s reliance on coal and crude oil.

Beijing on Sept. 1 increased retail natural gas prices as much as 10.7 percent for non-household users to reflect the rising cost of energy resources and encourage more efficient fuel use. Beijing’s city government raised retail prices by an average 0.15 yuan (2 U.S. cents) a cubic meter, including tax, the Beijing Municipal Commission of Development and Reform said in Sept. 1.

- This may signify the demand is going to be very high for natural gas and the highest bidder wins!

see also
Korea Needs to Prepare for global LNG Wars
Asia Faces US Buying Power for Spot LNG
Singapore hopes for Russian LNG Supplies
Is Liquefied Natural Gas (LNG) Feasible in Singapore?

According to Bloomberg :

Sept. 27 (Bloomberg) — Crude oil rose in New York on a report that OPEC President Edmund Daukoru said the group is discussing measures to stem further price falls this year.

“Something needs to be done to steady the price,” Daukoru said yesterday in an interview with Reuters in Abuja, Nigeria, when asked whether the Organization of Petroleum Exporting Countries will cut output at its next ministerial meeting in December. Members are talking about possible action, he said.

“It only takes a comment from OPEC that they’re not happy,” said Rowan Menzies, a commodities analyst at Commodity Warrants Australia Pty. in Sydney. “Then people start thinking that a potential decline in output may be happening in December.”

Crude oil for November delivery rose as much as 31 cents, or 0.5 percent, to $61.32 a barrel in after-hours electronic trading on the New York Mercantile Exchange. The contract was at $61.20 at 11:12 a.m. Singapore time.

Yesterday, oil fell 44 cents, or 0.7 percent, to $61.01 on expectations that a U.S. government report today will show fuel stockpiles in the country, the world’s biggest energy consumer, extended more than a month of gains.

Oil reached a six-month low of $59.52 on Sept. 25. Prices have fallen 22 percent since reaching a record $78.40 on July 14 as U.S. stockpiles rose and a United Nations deadline for Iran to stop its nuclear research passed without sanctions being imposed.

Oil’s Slump

The oil price is “very low and it’s not good for investors,” Daukoru said after a meeting with diplomats in Abuja, Reuters reported.

“OPEC is certainly not going to be happy at $60, it takes a lot of money away from them that they were probably enjoying,” Menzies at Commodity Warrants said.

A U.S. Energy Department report will probably show that gasoline supplies climbed for a sixth time last week, rising 700,000 barrels, according to the median of 11 estimates in a Bloomberg News survey. Supplies of distillates, including heating oil and diesel, probably gained another 2.5 million barrels, according to the survey.

“I’m betting that we’ll see a little build across the board,” said Mark Waggoner, president of Excel Futures Inc. in Huntington Beach, California. “We do have high stockpiles. As long as they remain around 11 and 12 percent above average, that’s going to put a cap on prices.”

- The OPEC is giving out very strong signals about Dec 14 Meeting…be ready on that date!

According to Canada.com :

Some observers predict a social and economic meltdown as severe as the Great Depression

Crude oil makes Kjell Aleklett think about wild strawberries.

Aleklett, a Swedish professor of physics, sees inescapable similarities between the steady depletion of the world’s most coveted energy source and the foraging habits of berry afficionados.

“In Sweden we have strawberry fields where you can go out and pick for yourself. If you go out there in the morning there is a possibility that you can pick a big volume of strawberries. But the first picker picks the big ones. The last one is left with the small ones. It’s very much the same thing when it comes to the production of gas and oil.

“The goodies, the big ones, have been picked. It’s true all over the world. Now we have to stick to the small ones. That means it’s harder to fill the basket.”

Aleklett made his comments during an interview in Vancouver, where he recently gave a speech on the future of global crude oil supply to the annual conference of the international Pulp and Paper Products Council.

Aleklett is a sought-after speaker on this topic — he is founding president of an ad hoc group of academics, geologists and politicians who have formed the Association for the Study of Peak Oil (ASPO for short).

The U.S. House of Representatives is among the groups that have invited Aleklett to present his message.

The basic notion is that the world’s oil producers are close to an absolute peak in terms of the volume of oil they can put onto the market in a given year.

Once that moment arrives, annual crude oil output will begin a long decline — with grim consequences for national economies.

Aleklett believes the peak could arrive as soon as 2008 — and that the struggle to adjust to the new energy reality could take 20 years, posing enormous challenges for developed nations.

Some observers suggest that the decline will prompt an economic and social meltdown on a scale last experienced in the Great Depression — or perhaps when the Black Death swept across Europe in 1347.

Even the International Energy Agency, which mulls global oil issues on behalf of Canada and 25 other developed countries including the United States, Great Britain and Japan, is exploring “barbarization” scenarios in which billions of people starve, national governments collapse, economies are forced to deindustrialize, and many regions of the world return to “semi-tribal or feudal social structures.”

“Oil wars are certainly not out of the question,” says the U.S. Army Corps of Engineers.

Each day the world gulps down 82 million barrels of oil — virtually the same amount that is produced.

The United States Energy Information Agency projects consumption to increase to 103 million barrels per day in 2015, and 119 million barrels each day by 2025.

That means global production must increase by 45 per cent — about five times the maximum annual output available from Alberta’s oilsands — just to keep pace with ordinary economic growth.

There’s just one problem.

No one can say with confidence where all that extra oil will come from.

It has been 57 years since Shell Oil senior geologist M. King Hubbert asserted in the journal of the American Association for the Advancement of Science that the dominance of fossil fuel in the global energy mix is just a tiny “pip” in the course of human history.

 Read the full article at Canada.com

According to The Hindu Business Line :  

The crude oil price may have dipped in recent days, but that is no cause for long-term cheer. In estimating the future production of oil and gas, of particular importance is the lack of transparency in the reserves as well as field-by-field production data that permit accurate extrapolations. From a situation where almost 85 per cent of reserves were under the control of international oil companies during the 1950s, today these companies control less than 16 per cent. The rest are controlled by national oil companies, which are not subject to the same set of disclosure rules as the international oil companies are. In fact, it is in the interest of the national oil companies to maintain as much opaqueness as possible.

With those caveats in mind, it is probably a good time to present an estimate of the future production profile. The most detailed and methodical estimation comes from ASPO (Association for the Study of Peak Oil and Gas). It shows the combined package of hydrocarbons (Oil and Gas – Conventional + Non-Conventional) peaking by 2010.

- See more at The Hindu Business Line