Russia, Nigeria Cut Gas Sales, Raising Importer Costs

Russia is forcing Exxon Mobil Corp. to abandon plans to export natural gas to China. Nigeria is requiring explorers to share output with its citizens. Indonesia will cut sales to Japan.

Countries holding almost half the world’s gas are curbing shipments to meet growing domestic use, hurting importers from the U.S. to Japan. Prices for the heating fuel may rise 50 percent within five years on the New York Mercantile Exchange as a result, said Chris Jarvis, president of Caprock Risk Management in Hampton Falls, New Hampshire. He anticipated the rally in gas prices during the past month.
While raising energy costs, the policies will limit opportunities for Exxon Mobil and Royal Dutch Shell Plc, who are struggling to reverse a five-year production decline of 23 percent in the U.K. North Sea and 42 percent in the U.S. Gulf of Mexico. Natural-gas use is rising 2.5 percent a year, three times the rate for oil, according to BP Plc statistics.

“All the gas is concentrated in places where you don’t have access,” said Frank Harris, co-head of the natural gas practice at the Edinburgh-based Wood Mackenzie Consultants Ltd., an adviser to 24 of the world’s 25 biggest oil and gas companies. It’s “a major concern for oil majors,” he said.

In Russia, the energy ministry told Exxon Mobil in August that gas from the $17 billion Sakhalin-1 project off the nation’s eastern coast should be sold into the domestic market, not exported. Russian President Vladimir Putin wants the gas to feed an economy that’s growing 7.6 percent annually. Putin two days ago said his successor, Dmitry Medvedev, will also be a “nationalist.”

Bloomberg