Two deals announced today highlight the importance of gas as a future energy source. Both of the two Super-powers are involved, a pointer to the rest of the world. This also highlights that there will be increased competition and mergers between gas suppliers.
1) Chinese President Hu Jintao and his counterparts from Turkmenistan, Kazakhstan and Uzbekistan Monday jointly put into operation a natural gas pipeline linking the four nations.
The 2000 km China-Central Asia gas pipeline starts at the gas plant near this border town in Turkmenistan and runs through central Uzbekistan and southern Kazakhstan before entering China It connects with pipelines inside China that carry natural gas produced in Turkmenistan to major Chinese cities like Shanghai, Guangzhou and Hong Kong.
The pipeline is a major blow to Russia’s GAZPROM, in that it intrudes into what Russia believes is in its normal sphere of influence; it’s own backyard..
2) ExxonMobil Corp. has agreed to buy XTO Energy Inc., the USA’s largest domestic natural gas producer, for $41 billion. The deal will boost ExxonMobil holdings to 45 trillion cubic feet of natural gas in the U.S.A.
This is the largest merger in the energy industry in years, and Exxon’s first since acquiring Mobil 10 years ago, and takes advantage of depressed gas prices, kicking off speculation around the industry about other possible merger targets.
