LONDON, UK / ACCESSWIRE / December 27, 2017 / Active-Investors.com has just released a free research report on Royal Dutch Shell PLC (NYSE: RDS-A) (NYSE: RDS-B). If you want access to this report all you need to do is sign up now by clicking the following link www.active-investors.com/registration-sg/?symbol=RDS-A as the Company's latest news hit the wire. On December 24, 2017, Kuwait Petroleum Corp. (KPC) announced that it has signed an agreement with Royal Dutch Shell PLC (NYSE: RDS-A) (NYSE: RDS-B) for the long-term supply of liquified natural gas (LNG). KPC plans to use the imported LNG to meet the domestic energy demands. Register today and get access to over 1000 Free Research Reports by joining our site below:
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Details of the Deal
The LNG supply agreement has been signed by KPC with Shell International Trading Middle East Ltd, Shell Global's Kuwait unit. The agreement is for the duration of 15 years and actual supply will start in FY20. KPC has an existing LNG supply agreement with Shell which expires in 2020. Under this agreement Shell could supply 2 million to 3 million metric tons of LNG annually, but the exact quantity has not been disclosed by either company. According to a confidential source from the Company, the price of LNG under this contract has been fixed at 11% below a Brent benchmark. However, this has not been officially confirmed. The financial details and other terms of the agreement have also not been shared any of the concerned companies. The LNG sourced from Shell will be used to power the country's power stations.
Shell and KPC have been working together for a long time and Shell has been supplying super-cooled fuel since 2010. Kuwait has also been moving towards clean energy sources to meet its energy demands so that it can reduce emissions and improve quality of local air.
The Company has been increasingly looking at natural gas as a viable energy option and has been making efforts to increase its production capacity. LNG is being looked at as an energy source that could help meet Kuwait's domestic demand for power to run air conditioners during hot summer months. This will help the country to reduce the consumption of crude oil for domestic needs and the excess crude oil can be sold via exports for profit.
The Kuwait government aims to increase the domestic production of natural gas to 1 billion cubic feet per day by FY23. To reach this goal, Kuwait plans to build three early production units the last of which is expected to be commissioned in January 2018. These three facilities are expected to increase Kuwait's natural gas production to approximately 500 million cubic feet per day. Kuwait is also planning to launch two gathering centers north of Kuwait in March 2018. Kuwait is also developing the Jurassic gas fields located in north of Kuwait, which will help increase natural gas production to 1 billion cubic feet per day by 2023. Kuwait is also working on the new Zour Refinery project, which will provide LNG as fuel for the country' power plants and water desalination stations. The first phase of this project is expected to start in May 2019. Meanwhile, permanent LNG terminals are being constructed at Al-Zour facility to meet domestic energy demands. Additionally, Kuwait has also acquired oil and gas assets in Norway and Australia to increase its LNG supply from other sources.
However, Kuwait has been facing difficulties to reach its domestic LNG production targets due to frequent changes in parliament. The parliament's consent is essential for sanctioning energy projects. In November 2017 KPC cancelled tenders for the development of the Jurassic gas terminals' project. The reason for the cancellation was not disclosed. Hurdles like these have forced Kuwait to look at importing LNG to meet its domestic energy requirements. Import of LNG is also a cheaper alternative as it frees up more crude oil for exports. According to an estimate by the International Group of Liquefied Natural Gas Importers, Kuwait imported 3.49 million metric tons of LNG in 2016
About Kuwait Petroleum Corp.
KPC is a state-owned oil and gas company. The Company along with its subsidiaries is focused on petroleum exploration, production, petrochemicals, refining, marketing, and transportation.
About Shell Kuwait
Shell Kuwait is the unit of Royal Dutch Shell PLC, a global group of energy and petrochemicals companies.
Shell Kuwait has been a long-term partner of KPC. Shell has been involved in the development of Jurassic Gas project with Kuwait Oil Company (KOC) and has been supplying LNG to KPC under a supply agreement since 2010. Shell Kuwait has joint ventures with Kuwait Foreign Petroleum Exploration Company (KUFPEC) and Kuwait Petroleum International (KPI). Shell Global Solutions has been working in partnership with Kuwait National Petroleum Company (KNPC) to develop its refineries.
Stock Performance Snapshot
December 26, 2017 - At Tuesday's closing bell, Royal Dutch Shell's stock advanced 1.20%, ending the trading session at $66.54.
Volume traded for the day: 1.44 million shares.
Stock performance in the last month - up 6.57%; previous three-month period - up 10.68%; past twelve-month period - up 22.97%; and year-to-date - up 22.36%
After yesterday's close, Royal Dutch Shell's market cap was at $276.76 billion.
Price to Earnings (P/E) ratio was at 25.67.
The stock has a dividend yield of 5.65%.
The stock is part of the Basic Materials sector, categorized under the Major Integrated Oil & Gas industry. This sector was up 0.9% at the end of the session.
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