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Surprise Reliance Industries withdraws from the shale gas business in United States

Reliance Industries (RIL) has withdrawn from all upstream shale oil and gas businesses in the United States.

Reliance Industries Eagleford Upstream Holdings announced the signing of an agreement with Ensign Operating III, a Delaware limited liability company, to divest Reliance Industries equity in some upstream assets in the Eagleford shale block.

Reliance Industries “Through this transaction, Reliable Group divested all shale gas assets and withdrew from its shale gas business in North America.”

Reliance Industries

Reshi said that REUHLP and Ensign signed an agreement for sale and purchase on November 5, 2021. The cost of selling is higher than the current book value of the asset. Reliance Industries

RIL officials refused to disclose the price of the transaction. The company is now not interested in American shale assets. A part of Eagleford assets were sold to Sundance Energy for about $1 billion in March 2018.

Asian LNG traders are rushing to obtain transportation from the United States. Although the price of LNG in the United States has reached its highest level in 20 years, the United States is still one of the lowest liquefied natural gas prices in the world.

Traders familiar with this said that companies in two largest importing countries, such as Japan, are seeking to purchase liquefied natural gas exclusively from the United States and are discussing with exporters and portfolio participants to lock in the delivery date in March.

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These companies hope that LNG will be linked to the benchmark price of the Henry Hub. The benchmark price of the Henry Hub is the benchmark of the United States, and the current trading price is only a small part of Asia and Europe.

Global energy constraints have caused gas and coal prices to soar from Australia to the Netherlands. Before winter in the Northern Hemisphere and the surge in heating demand, utilities were busy storing fuel.

Although the price of natural gas in the United States has more than doubled this year, it is still much cheaper than overseas markets, in large part because of the richness of shale oil and gas fields in North America.

According to Bloomberg Finance’s analysis, liquefied natural gas from the United States shipped to Asia this winter can bring attractive profits, about $25-26 per million British thermal units, which is almost the highest in history, which is also in sharp contrast to last summer, when the United States did not transport LNG to Asia and Europe. Profitability, because the coronavirus pandemic has hit the demand for this fuel.

Traders said that profit margins were so high that a batch of goods from the United States was exchanged as many as 8 times, because companies were eager to resell the same batch of goods and get a share of it. will that affect Reliance Industries operations ?

Traders said that Asian LNG buyers were eager to buy American natural gas by loading from the Gulf Coast Pier and then charter their own shipping, which led to higher charter rates in both the Atlantic and Pacific regions and increased concerns about congestion in the Panama Canal during peak winter shipping.

Maybe more companies such as Reliance Industries return or leave within 2022.

As a large amount of natural gas is exported abroad, the United States is facing the highest natural gas price in many years, and American utilities that are stockpiling large amounts of natural gas for winter are complaining.

In March, U.S. natural gas exports reached a record 19 billion cubic feet per day, an increase of about 71% from the beginning of the epidemic and about 17% from the pre-pandemic peak. Since then, the export volume of U.S. natural gas has remained at the maximum amount supported by LNG export equipment.

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