Emerging foreign markets allowing oil majors to close the gap | OutPut by Rig Lynx – OutPut
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Emerging foreign markets allowing oil majors to close the gap | OutPut by Rig Lynx

Several oil majors, including Royal Dutch Shell and BP, are boosting their share of natural gas output. A Bloomberg report said these two oil companies, by increasing gas production, are trimming the lead between them and ExxonMobil, the world’s largest publicly traded oil company. ExxonMobil has a current market cap of $348 bn, while Shell has market cap of $317 bn, and BP at $156 bn.

BP expects by 2020 to produce about 60 percent gas and 40 percent oil, a reversal from 2014 when it was the opposite – a pivot that many other oil companies will likely follow. ExxonMobil for its part currently produces about 55 percent oil and 45 percent gas and remains the largest natural gas producer in the US. Shell’s acquisition of UK-based BG Group for $50 bn in 2016 boosted the share of natural gas to 50 percent of its global fossil fuels output and made it the world’s largest natural gas trader.

Steve Hill, executive vice president for gas trading at Shell said recently “we see the market growing rapidly, with gas demand growing faster than overall energy demand,” adding that “we don’t see renewables as being a threat to gas.”

Brian Youngberg, an analyst at Edward Jones & Co., based in St. Louis, said in reference to gas that “in the fossil fuel area, it’s the one clear growth part of the business.”

LNG is also increasingly taking a larger share of gas trade. LNG’s share of total gas trade is forecast to rise from a third last year to almost 40 percent in 2023, with much of this increase attributed to LNG demand growth in China. According to the Paris-based International Energy Agency (IEA), Chinese demand for natural gas will rise by almost 60 percent between 2017 and 2023 to 376 billion cubic meters (bcm). This includes a rise in its LNG imports to 93 bcm by 2023 from 51 bcm in 2017.

Emerging markets in Asia, including Vietnam, the Philippines, Thailand and Pakistan, will account for about half of global LNG imports by 2023. This continued and sustained rise in LNG demand will have significant impacts on trade flows, LNG pricing structures and global gas security. (continued on page 2)

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