"The rise in global energy prices was helpful in signing a contract for exporting natural gas to Egypt," Leader Capital Markets analyst Yehonatan Shohat told "Globes" today. "Gas prices have risen sharply in most countries over the past two years, making the option of exporting gas from Israel more attractive."
In contrast to oil, which is produced the same way everywhere, and whose price is determined in stock exchange trading, natural gas prices vary according to the drilling and production conditions - the depth of the water, infrastructure, etc. At the same time, despite the great difference in natural gas prices around the world, a clear rising trend starting two year ago is visible. The exception to this rule is the US, where there has been no increase in price because gas there is a byproduct of oil production.
"In recent months, natural gas prices in certain areas of the world reached their highest level since early 2015," Shohat wrote in his review describing the trend. In Israel, on the other hand, due to the character of the contracts and the type of linkage, the increase has been slower. For the same reason, the price of gas also did not fall when global oil prices were dropping.
The main reason for the rise in gas prices is an increase in the price of crude oil, because the two products can substitute for each other. Over the past two years, the price of a barrel of Brent oil has risen by nearly 80%, putting upward pressure on gas prices. Another reason for higher gas prices is higher worldwide gas consumption, especially in China, the world's largest consumer of natural gas.
In Asia, although natural gas prices are still lower than they were in 2012-2014, prices for liquefied natural gas (LNG) have crossed the $10 per mmbtu barrier. The average price in January was $10.60 per mmbtu in China and $11 per mmbtu in Japan. "Natural gas consumption in China has been on the rise in recent years, and LNG imports are breaking records every month," Shohat wrote in his review.
Figures reported in the review show that natural gas prices also rose substantially in Europe. While Asia usually focuses on LNG prices, Europe is more interested in Henry Hub pipeline prices, which have gone up by 90% from their low point in 2016.
Published by Globes [online], Israel Business News - www.globes-online.com - on February 26, 2018
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