Sam Fletcher
Senior Writer
HOUSTON, Jan. 21 -- Energy futures prices jumped Tuesday with an explosion at the Skikda LNG complex in Algeria, threats of another strike by oil workers in Nigeria, and forecasts for extremely cold weather in the Northeast and Midwest US.
Officials at Sonatrach, Algeria's state-owned oil and gas company, initially blamed a faulty boiler for the explosion that left 27 people dead and 74 injured (OGJ Online, Jan. 20, 2004). However, officials Wednesday were investigating the cause of the mishap and the extent of damage. Officials said Tuesday that 3 of 6 production trains of the Skikda LNG complex were destroyed, and a nearby berth for loading LNG tankers was heavily damaged.
There were no initial reports of damage to an adjacent 300,000 b/d refinery, but officials said that facility was shut down following the blast. The complex exports about 15 million tonnes/year of LNG, crude, and refined products, primarily to European markets, officials said.
Chakib Khelil, Algeria's minister of energy and mines, said Wednesday that Algeria will honor gas delivery commitments to European customers through increased deliveries of natural gas through two existing pipelines to replace the lost liquefied natural gas supplies. He said the transportation capacity of the Maghreb-Europe gas pipeline from Algeria to Spain and then into Portugal would be increased by about 3 billion cu m within 2 weeks as a new compressor station goes into operation.
Algeria is the world's second largest LNG exporter after Indonesia. Primary customers for its LNG in 2002 were France, Spain, Turkey, Belgium, Italy, the US, and Greece, in that order.
Energy prices fall
Concerns about possible disruption of world supplies of oil and petroleum products as a result of a threatened strike by Nigerian oil workers and shutdown of the Skikda refinery, in the face of increased demand resulting from colder US weather pushed oil futures prices to a 10-month high Tuesday on the New York Mercantile Exchange.
The expiring February contract for benchmark US light, sweet crudes closed at $36.20 Tuesday, up by $1.13 for the day after trading in a range of $34.92-36.37/bbl. The March contract gained 87¢ to $34.87/bbl on NYMEX. On the US spot market, West Texas Intermediate at Cushing, Okla., advanced by 70¢ to $35.78/bbl.
Heating oil for February delivery jumped by 3.83¢ to $1.019/gal Tuesday on NYMEX. Unleaded gasoline for the same month rose by 2.1¢ to $1.016/gal.
The February natural gas contract shot up by 35.1¢ to $6.29/Mcf Tuesday on NYMEX, "driven by firmer crude oil futures and stronger physical (spot market) prices as forecasters call for more cold weather in the Northeast and Midwest," said analysts Wednesday at Enerfax Daily.
"It looks like a couple of cold weeks coming up, so there was some late fund buying, probably on the strength in oil," analysts said. "Forecasters were calling for below-normal temperatures for the Northeast and Midwest through January after frigid readings last week boosted natural gas and electricity use to record levels from Philadelphia to Quebec."
In London, the March contract for North Sea Brent oil increased by 66¢ to $31.23/bbl Tuesday on the International Petroleum Exchange. Gas oil for February delivery was up by $5.50 to $285.25/tonne. The February natural gas contract jumped by 15.6¢ to the equivalent of $5.21/Mcf Tuesday on IPE.
However, IPE oil futures prices declined early Wednesday after an appeals court in Nigeria ordered the Nigerian Labor Congress to suspend a national strike scheduled for Wednesday in protest over the government's fuel tax that was implemented Jan. 1. The court also ordered the government to rescind the controversial tax. An additional court hearing is scheduled Jan. 26.
The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes increased by 28¢ to $31.01/bbl Tuesday.
Contact Sam Fletcher at [email protected]
