buying opp, page-25

Re the gas glut, alot depends on whether the global economy can splutter back to growth, but I think the trend toward gas for stationary power generation is unstoppable and a few years of lower prices will only serve to accelerate the switch.

In this sense the talk of a massive gas glut is overhyped and based on the small percentage of LNG being traded as spot cargoes. While it is competitive to secure an offtake agreement and buyers are wanting more flexible terms (ie not linked to 90% oil price energy party) at the same time they require security of supply over 20 to 30 years in most cases and 20 years out from now most organizations know oil is unlikely to be keeping pace with demand. Furthermore they have to consider their security of supply routes over that period and beyond.

Australia is uniquely positioned in this sense. We can ship LNG to China securely, whereas Qatar cannot realistically guarantee supply over that sort of time frame with anywhere near the same level of certainty. That is CNOOC is in with BG and Petrochina with Shell.

The following link gives a pretty good description of the LNG gas markets at the moment.
http://www.businessweek.com/news/2010-04-14/merrill-cuts-lng-oversupply-forecast-on-recovering-economy.html

Also i would say it is easy to underestimate the demand growth we are going to see from the UK, Europe and the US and the effect of LNG project slippage on the supply scenario.
I don't think the nuclear renaissance will happen. They are just too damn expensive and renewables will only ever make up so much of the demand growth. Meanwhile thermal coal is going down. Banks won't finance new coal plants .In the UK over half of their coal fired power fleet are being retired in 2015..this may be extended as they face the grim reality of power shortages, but ultimately they are not going to start building more coal fired generators. And nukes while back on the agenda are out of their reach. In the US , Obama talks of nuclear reactors , but just one I looked at being proposed in Forida at 2000 MW is costed at USD 20 billion...the same facility in CCGT would cost USD 2b What is a cash strapped US utility going to do when gas is plentifull for the next 30 years.

To get back to the thread...BUL's latest update confirms the Monslatt coal extend South some 25km's from the Monslatt 5..market in worry mode completely missed it ofcourse, but they reported 34 metres of coal which is huge. And Saphire 2 is underway where previously BUL found something like 70m's at Sapphire 1...

Wouldn't worry too much about the Korean peninsula, we can expect more sabre rattling from both sides and I suppose some Sth Korean reprisal can be expected, but in reality what are they going to do, just like the cold war in Europe they both face 'mutually assured destruction'.