By Duncan Sutherland – Exclusive to Heavy Oil Investing News

Welcome to the first edition of the Parse! This space hopes to provide a weekly digest of news, trends, and quirks in the global natural gas sector.

It is fitting that this week saw major news concerning the gas field from which this column takes its name. Total S.A. (NYSE:TOT) backed out of investing in Iran’s side of the South Pars gas field in the Gulf. (The field straddles the maritime border between Iran and Qatar). Total announced this after Iran bellicosely tested missiles, including the Shahab 3 MRBM.

Iran is particularly incensed at the withdrawal because development of the Qatari side of the field has expanded rapidly and profitably. Total’s move drew plaudits from American politicians, many of whom are pushing for harder sanctions on the Islamic Republic. If you are an investor who has holdings in European companies doing business in Iran, expect fuller divestment in the near future.

The North Sea gas fields also saw activity when Centrica (LSE:CNA) obtained some of Marathon Oil’s (NYSE:MRO) Norwegian holdings. The purchase includes currently producing plots as well as exploration rights. European markets also saw Gas Natural (MCE:GAS) purchase Pitta Costruzione SpA for just under $47.5 million to expand its supply system in the Italian peninsula.

Alarm bells were ringing in European capitals this week when Russia’s Gazprom announced it was negotiating with Libya to purchase all of the Arab republic’s gas exports. Libya’s reserves are underdeveloped due to United Nations Sanctions imposed in the early 1990s. In the past five years, leader Muammar al-Qaddafi has been the architect of a rapprochement with the West, so his response to Gazprom’s offer will in many ways indicate where his foreign policy priorities lie. Mr. Qaddafi’s boycott of the Mediterranean Union Summit this weekend in Paris does not bode well for European gas consumers.

Though only time will tell if this deal is feasible, it offers a potent reminder of how dependent Europe has become on Russian-controlled natural gas. Gazprom already manages a plurality of Europe’s gas consumption, and has been courting other major suppliers and potential suppliers like Algeria, Nigeria, Azerbaijan and Iran. Gazprom’s activities are certain to be a regular feature of this column.

Mozambique’s government signalled it will be aggressively shifting its energy infrastructure towards natural gas in a bid to lower energy imports. South Africa’s Sasol (NYSE:SSL) is helping Mozambique’s hydrocarbon company supply South Africa’s rising energy needs. The Department of Minerals and Energy also announced a tender on more exploration permits for natural gas.

As expected, the New York Mercantile Exchange (NYMEX) updated its margins on a variety of futures contracts. Full details can be found here. A volatile week saw the Amex Natural Gas Index (XNG) seesaw from a high approaching 720, bottoming out at almost 655 only to close the week at 690.19.

Futures contracts on the NYMEX chilled on indications that supplies were likely to be more abundant than expected through the summer and heading into the autumn. LNG inflows to America are down by almost two-thirds from this time last year. However, the NYMEX indices remain high after six months of an overall upward trajectory.

Under intense Congressional scrutiny over trading in oil futures, the American Commodity Futures Trading Commission hired a new acting enforcement director during the search for a new permanent director. It is likely that Stephen Obie and his successor will be more active than Gregory Mocek, if only to keep the election-year Congress sated.

In Canada, the Magdalen Islands saw interest from Gastem Inc. (TSX-V:GMR), which attained exploration licences.

Overall, high prices and significant market volatility seems to be the order of the day for natural gas.

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