Asia becoming hot spot for oil and gas investment
Venezuela’s Hugo Chavez has recently courted Japanese and Chinese dollars to shore up the oil-rich nation’s petroleum development and infrastructure. Currently, energy ministers and officials from Mideast OPEC nations have gone east to meet with their largest Asian customers in Tokyo to seek oil and gas investment and to discuss energy security. The six Gulf Cooperation Council country’s energy ministers are also attending meetings.
Yota Ono, international affairs director of Japan’s Agency for Natural Resources and Energy, says about the talks, “Energy producing countries’ primary concern is global demand. They are saying they cannot keep investing if demand continues to fall.”
Mideast oil and gas producers’ interest in Asia’s energy importers is met by importers desire to purchase foreign energy assets. Until now, the Asian investors have focused on South America, the former Soviet Union and Africa. Their strategy has focused on deals for equity stakes in oil and gas fields. Any deals with Mideast producers will more likely come in the form of investment in downstream projects coupled with energy supply guarantees.
All this Asian oil and gas investment activity comes at a time when year-forward futures contracts are up substantially over the current price, recently recording a five-month high for December 2015 delivery of West Texas Intermediate at almost $80 per barrel. The far forward contracts are liquid and volatile, but they are currently at rates from a year and a half ago.
Some hedge funds are keeping a close watch on long-dated oil prices and preparing to make call options around $100 per barrel, says Harry Tchilingurian, senior oil analyst at BNP Paribas in London. Part of this outlook is based on supply-side forces will begin to appear beginning next year.
Sources for this post include the Wall Street Journal and the Herald.
Published Tuesday, April 28th, 2009 at 5:21 am and filed under Industry News.