LNG

Once fringe players, Swiss traders grab $10 billion slice of LNG market

13 Sep 2017   LNG

Swiss trading houses are muscling in on the global market for liquefied natural gas, until now the preserve of energy giants, and expect to grab a $10 billion share of the rapidly growing business this year. Trafigura [TRAFG.UL], Gunvor [GGL.UL], Vitol [VITOLV.UL] and Glencore are all shaking up a decades-old system dominated by Western oil majors and state energy producers which sell LNG directly to large consumers on long-term contracts. They plan 2017 shipments that will be more than triple the 2015 level, according to Reuters calculations based on figures for the four traders provided by trade sources. “The trade houses … are not fringe players any more,” said Trafigura’s head of LNG Hadi Hallouche. “In the next four or five years there will be a significant amount of supply contracts expiring and that will open up the market.” In the short term, the Swiss traders […]

ExxonMobil slashes LNG price to India in bad omen for producers

11 Sep 2017   India, LNG

India has won a price cut on a 20-year liquefied natural gas (LNG) deal with global giant ExxonMobil Corp (XOM.N) in a rare contract renegotiation, a bad sign for producers in a heavily oversupplied global market. In a trade-off for ExxonMobil, India’s Petronet LNG (PLNG.NS) will increase its volumes from the Gorgon LNG project in Australia by an extra 1 million tonnes a year to about 2.5 million tonnes a year, but at cheaper rates than initially agreed in 2009. Long-term contracts are rarely revised in the LNG market, and for a big producer to cave in shows how supply from new plants in Australia and the United States over the past two years has transformed the market, analysts said. “This trend is overall a negative for sellers, as they are forced to provide more flexibility to buyers’ needs to maintain their markets,” said Saul […]

Russia’s Comeback In The LNG Race

1 Sep 2017   LNG, Russia

In a little more than a month’s time, Russia will formalize its claim for a bigger role in the ever-expanding global LNG market. Early October, when the Yamal LNG will see its commissioning and first cargo delivered, expect to hear “Russia” and “LNG” in the same sentence in increasing frequency. Yet in Yamal LNG, Russia’s bid to consolidate its claim as a gas stronghold and to garner at least 10% of the global LNG market, one can discern a quite unconventional project for Russia. Although led by NOVATEK, a non-state-owned company (albeit with multiple connections to the political establishment) and not the usual “suspect” Gazprom, it stands a good chance to propel Russia into the LNG vanguard. This being said, behind the viability of Yamal LNG stand several factors absent which the project would be commercially feasible only with gas prices strictly above $11-12/MMbtu – most importantly, large-scale government […]

First tanker crosses northern sea route without ice breaker

25 Aug 2017   Climate, LNG

A combined ice breaker and LNG tanker has crossed the northern sea route A commercial LNG tanker has sailed across the colder, northern route from Europe to Asia without the protection of an ice-breaker for the first time. The specially-built ship completed the crossing in just six-and-a-half days setting a new record, according to tanker’s Russian owners. The 300-metre-long Sovcomflot ship, the Christophe de Margerie, was carrying gas from Norway to South Korea. Rising Arctic temperatures are boosting commercial shipping across this route. The Christophe de Margerie is the world’s first and, at present, only ice-breaking LNG carrier. The ship, which features a lightweight steel reinforced hull, is the largest commercial ship to receive Arc7 certification, which means it is capable of travelling through ice up to 2.1m thick. On this trip it was able to keep up an average speed of 14 knots despite sailing through ice that […]

Blockade Can’t Stop Qatar From Suppling UK With Gas

24 Aug 2017   LNG, Qatar, United Kingdom

Qatar supplies 20 percent of Britain’s natural gas. Just in the past four weeks, British ports have received one million meters worth of scheduled gas orders, according to the Middle East Monitor. Doha dodged the worst logistical obstacles of the blockade by shifting its main export hub from the United Arab Emirates to Oman when the row first became public. Now, Qatar’s energy leaders are optimistic, feeling the ordeal has made the country’s logistics more robust. In mid-July , diplomats from Bahrain, Egypt, Saudi Arabia and the United Arab Emirates signaled that they no longer wanted Qatar to comply with 13 specific demands levied in June. Instead, they proposed six broad principles that they wanted Qatar to sign onto. The principles included denying safe havens and financing to terrorists, combating terrorism and extremism, stopping incitement of hatred and violence, and refraining from interfering in the internal politics of other […]

As U.S. Exports Gas to Europe, Russia Digs In

21 Aug 2017   exports, LNG

U.S. attempts to export natural gas into Europe’s energy market are facing stiff resistance from the region’s dominant player: Russia.  A tanker is scheduled to arrive in Lithuania this week carrying the first shipment of U.S. liquefied natural gas to a former Soviet republic. It follows a handful of other shipments of U.S. gas to Europe and comes in the wake of widespread predictions that American exports would help break Russia’s dominance of the European energy market.  But Russia is moving quickly to contain the new competition to its largest energy market. Its state-run energy companies are lowering prices, changing sales methods and developing their own LNG facilities. Moscow is also pushing ahead with a pipeline opposed by both Washington and Brussels.

While European governments are eager to reduce Russia’s chokehold, and its resulting political leverage, the region’s consumers are looking beyond politics for the lowest prices. That favors Russia. Last year, Russia exported record levels of gas to Europe, helped by lower prices and falling domestic production elsewhere in Europe.  “We are tracking the situation on the global gas market and the growth of U.S. shale gas production,” Russia’s energy minister, Alexander Novak, said in an interview last month. “Recently we have allocated a lot of efforts to boost our presence on the LNG market.”

Climate Change Opens Up Shorter Arctic Passage For LNG

19 Aug 2017   Arctic, LNG

The Cristophe de Margerie, an LNG carrier commissioned by French Total, has become the first tanker to pass the Arctic unaided and is now en route to its destination in Asia, the South Korean port of Boryeong, Total said as quoted by AFP. The route via the Bering Strait in the Arctic is 15 days—or 50 percent—shorter than the traditional route for tankers through the Suez Canal, but until recently it was impossible to make the journey without aid from other vessels. Now, climate change has melted some of the ice, making the shorter journey possible without the need for icebreaker escort. Christophe de Margerie, named after the previous chief executive of the French company, who died in a plane crash three years ago, is the first of a fleet of 15 LNG carriers that will carry gas extracted in Yamal, in northwestern Siberia, to Asia via the Northern […]

China sees apparent natural gas consumption rising by 10 pct in 2017

19 Aug 2017   China, LNG

China expects its apparent natural gas consumption to rise over 10 percent year-on-year to around 230 billion cubic meters (bcm) this year, the official Xinhua news agency said on Saturday citing a report from the National Energy Administration. The country’s apparent natural gas consumption reached 114.6 bcm in the first half of this year, up 15.2 percent from the same period a year earlier.

Clouds developing over U.S. LNG export potential

18 Aug 2017   LNG

A U.S. industrial trade group said Washington’s domestic focus should prioritize the retention of natural gas, rather than target it for the export market. As a candidate, Donald Trump ran under the slogan of “Make America Great Again.” As president, he’s steered efforts to put U.S. national interests first. Paul Cicio, the president of the Industrial Energy Consumers of America, said in a letter to U.S. Energy Secretary Rick Perry that stance should extend to liquefied natural gas. “It is time for the U.S. Department of Energy to put American residential and industrial consumers first by establishing a moratorium on further LNG export approvals to non-free trade agreement [NFTA] countries, and put consumer safeguards in place,” he said in a […]

Cheniere Energy sets up China office to expand sales: sources

15 Aug 2017   China, LNG

U.S. natural gas exporter Cheniere Energy Inc is setting up an office in Beijing to help it clinch long-term supply deals with Chinese buyers, four industry sources said. Cheniere, which held extensive talks with China earlier this year, will be the first operator of a U.S. liquefied natural gas (LNG) export facility to establish a presence in the country. The move follows an agreement in May between the U.S and China to boost trade under the so-called 100-day trade talks that will allow Chinese buyers to purchase long-term supplies from the U.S. directly. World LNG demand is expected to double to about 71 billion cubic feet per day (bcfd) (544 million tonnes a year) by 2040, up from around 32 bcfd in 2015, the U.S. Energy Department estimates, driven by the rapidly growing economies of Asia, particularly China and India. Cheniere is currently the only company […]

U.S. could be world’s No. 3 LNG exporter

10 Aug 2017   LNG, USA

The potential exists for the United States to become the third-largest exporter of liquefied natural gas in a few short years, a federal report finds. Photo courtesy of Cheniere Energy Aug. 9 (UPI) — The United States could be the third-largest exporter of liquefied natural gas in the world by the end of the decade, a short-term federal report found. Thanks in large part to shale operations, the United States in 2009 passed Russia to become the largest natural gas producer in the world. Most of the transport, however, is contained within North America. In 2016, the last full year for which the U.S. government reported data, natural gas made up about 34 percent of total domestic electricity generation, followed by coal with 30 percent. Renewable energy that year accounted for about 15 percent of the total mix, though renewable energy momentum has since accelerated. There’s only one facility […]

Pennsylvania Senate votes to tax natural gas production, consumption

29 Jul 2017   LNG, USA

Pennsylvania’s Senate approved a tax reform bill with provisions to tax both natural gas production and consumption in the state. Oil and gas trade associations there strongly criticized the July 26 action, which passed by a 26-24 vote. The amended bill, which apparently attempts to close a budget deficit, now heads back to the state House, where its prospects are uncertain.  HB 542 would impose an $80-million severance tax on unconventional gas production and a $400-million tax on gas consumption, according to the Pennsylvania Independent Oil & Gas Association. Sales of LPG and for generation of electricity would be exempt. “It is widely accepted that the Marcellus shale is a once-in-a-lifetime economic opportunity for Pennsylvania,” PIOGA Pres. Daniel J. Weaver said. “The development of this enormous resource—drilling and production—is the initial benefit that has already created significant job growth in the commonwealth. The much bigger and longer-term benefit that we are just beginning to realize is from the increased use of this enormous resource.  “The Senate action last night has struck a severe blow to both ends of this benefit spectrum,” Weaver said. Unconventional gas producers tapping Pennsylvania’s portion of the Marcellus shale formation are only beginning to recover from several depressed prices the last 2 years that resulted in significant job cuts and financial losses, he said.

The bill’s gross receipts tax on gas is even more baffling, Weaver said. “Lower prices in Pennsylvania the past 5 years have not only reduced burner tip prices, but have caused massive reductions in the price of electricity across the commonwealth,” he said.  API-Pennsylvania Executive Director Stephanie Catarino Wissman said the bill targets creators and industry to pay more and families to take home less. “This punitive tax hike isn’t about paying one’s fair share or doing one’s part; the natural gas industry alone has paid over $1.2 billion in impact taxes since 2011, the bulk of which goes to local governments,” she said. “The real impact is on families who could be paying much more for living in Pennsylvania if the House doesn’t reject this measure.”  The American Petroleum Institute affiliate’s top official called HB 542 “a backwards approach that ignores economic reality, puts tens of thousands of good family sustaining jobs and money for groceries in peril, while jeopardizing the future prosperity of the commonwealth.  “We can continue to work together by making investments in Pennsylvania, and that begins with smart energy policy so that the benefits of energy development continue to flow,” she said.

A Worldwide Gas Glut Claims $27 Billion Victim in Canada

27 Jul 2017   Canada, LNG

A $27 billion energy project in Canada just became the latest casualty of a worldwide glut of natural gas. Malaysia’s Petroliam Nasional Bhd abandoned on Tuesday its plans for the Pacific Northwest LNG terminal, a plant that would have liquefied Canada’s gas and sent the fuel by tanker from the western shores of British Columbia to buyers in Asia. Petronas cited market conditions in its decision. Pacific Northwest LNG joins a growing list of projects that have been killed in recent months by plummeting LNG prices, throwing the economics of export terminals from Australia to Russia to Mozambique into question. Prices have crashed as increasing volumes of gas from Australia and America’s shale formations hit the water, inundating the market with so much supply that analysts say demand […]

After LNG project scrapped, TransCanada looks for more export options

27 Jul 2017   Canada, LNG

Canada stills needs to find ways to get its gas assets out of North America, TransCanada says after a project slated for British Columbia was scrapped. File photo by Stephen Shaver/UPI July 26 (UPI) — There’s still a need to get Canadian natural gas out of North America, energy company TransCanada said after an export option for British Columbia was scrapped. Malaysia energy company Petronas said that, as the head of a partnership, it was no longer pursuing a liquefied natural gas project at Port Edward in British Columbia. Anuar Taib, the company’s CEO, said the decision was made because of an “extremely challenging environment” brought on by a weak market. Pipeline and energy company TransCanada, which was involved with a Petronas affiliate on the project, said it was disappointed with the decision, but would be reimbursed for costs associated with the development. “There is still a strong need […]

U.S. on track to be world’s No.2 LNG exporter by end-2022: IEA

13 Jul 2017   LNG, USA

LONDON (Reuters) – The United States is on track to have capacity to become the world’s second largest exporter of liquefied natural gas (LNG) by the end of 2022, just behind Australia and ahead of Qatar, the International Energy Agency (IEA) said. Overall, global LNG export capacity would reach 650 billion cubic meters (bcm) a year by the end of 2022, compared to less than 452 bcm a year in 2016, the IEA said in its annual report on gas markets. Of that amount, Australia would have capacity to export 117.8 bcm a year of LNG, followed by the United States with 106.7 bcm a year and Qatar with 104.9 bcm a year, it said. Australia would stay top by adding 30 bcm a year of capacity by the end of 2022 to its existing capacity, but the United States, which has seen shale gas output surge, would add […]

The World’s Largest LNG Buyer Just Completely Reshaped The Market

1 Jul 2017   Japan, LNG

That’s Japan — home to some of the world’s biggest buyers of liquefied natural gas (LNG), including the world’s #1 consuming firm, Jera. And authorities here aren’t happy about the way LNG contracts have been run up until now. Here’s the crux: historically, many LNG purchase agreements included so-called “destination clauses”. Stipulating that LNG buyers had to use the supply in a single, stated export destination. That meant that LNG purchasers in Japan had to use their cargos in Japan. Even if it turned out they had too much supply, they couldn’t re-sell their LNG on the global market to reduce the surplus. But the Japanese Fair Trade Commission said Wednesday that won’t fly anymore. With the trade body saying destination clauses probably violate anti-monopoly rules — and therefore will be outlawed in any future purchasing contracts for Japanese buyers. Japanese firms are now bound by this ruling. Meaning […]

Russia’s Rosneft set for global gas tussle with Gazprom

1 Jul 2017   LNG, Russia

Russia’s Rosneft, the world’s top listed oil producer, wants to supply gas in parts of Europe where Gazprom is not present to avoid the risk of losing those markets to U.S. liquefied natural gas (LNG), a Rosneft executive said. Gazprom, the leading global gas producer, enjoys monopoly rights on gas pipeline exports from Russia. It has lost its exclusive rights to ship seaborne LNG overseas to Rosneft and Novatek, Russia’s largest non-state gas producer. Rosneft, headed by Igor Sechin, an ally of President Vladimir Putin, has long been vying for pipeline gas exports as it strives to grow globally. It has a memorandum with BP, which owns a 19.75 stake in the Russian company, to trade up to 20 billion cubic meters (bcm) of gas annually […]

Largest floating LNG facility sets sail for home field in Australia

30 Jun 2017   LNG

A floating production facility that will be used to tap into the natural gas reserves off the coast of Australia has left the shipyard, Shell said Thursday.  Shell’s aviation subsidiary in Australia sold in March to independent Viva Energy Australia for $250 million, in line with the Dutch supermajor’s efforts to streamline its portfolio. Shell keeps its brand name visible in the aviation refueling sector, as Viva Energy remains the licensee of its fuels.  Shell’s presence in Australia extends into the natural gas market, operating in the Browse reservoir in Western Australia. Its Prelude floating liquefied natural gas production facility is the largest vessel of its kind and can process an amount equivalent to Hong Kong’s entire demand for natural gas.  “The facility, constructed by Technip Samsung Consortium, is being towed to North West Australia, where the next phase of the project will begin,” Shell said in a statement.

The keel for the floating liquefied natural gas facility was laid in 2013. The vessel will allow Shell to pull natural gas from the Prelude field off the coast of Western Australia, process it into LNG and transport it on to its customers.  Large for a floating facility, it’s one-quarter the size of an equivalent inland plant. With LNG emerging in market share because of its diverse deliverability options, Shell said the Prelude FLNG vessel opens up new doors in new countries.  “Once secure, the hook-up and commissioning process will begin,” the company said.

Can U.S. LNG Challenge Gazprom In Europe?

13 Jun 2017   LNG

The first cargo of U.S. liquefied natural gas last week reached its destination in Poland. The country’s Prime Minister called this “a historical moment,” that brought the Central European country a step closer to breaking its energy dependence on Russian gas. At the same time, the Netherlands also received its first LNG delivery from Cheniere Energy, the only U.S. exporter so far. The U.S. gas industry has been quick to take advantage of growing LNG demand and abundant shale gas output to join the global LNG trade. Europe is a natural focus, not just because of stable demand, but because of the European Union’s energetic drive to diversify its sources of energy away from Russia. Gazprom holds a third of the EU gas market, which the EU sees as a dominant position. This is especially true for Poland, which has historical reasons to want to be as independent as […]

Long Promised, the Global Market for Natural Gas Has Finally Arrived

7 Jun 2017   LNG

One day in March, the Rioja Knutsen tanker, filled with liquefied natural gas, was traveling from the U.S. to Portugal. Suddenly, Mexico’s power company lobbed in a higher bid for its cargo. At the Bahamas, the ship abruptly made a starboard turn and headed south. How natural gas is bought and sold in the world’s scattered regional markets for the fuel is changing rapidly. Ships such as the Rioja Knutsen are stitching those regions…

America’s Unstoppable LNG Boom

7 Jun 2017   LNG, USA

Since Cheniere sent America’s first LNG cargo abroad in early 2016, U.S. gas exports have reached buyers in Latin America, Europe, Asia, and even the Middle East. The shale gas boom allowed the U.S. to send cargoes overseas, easing some of the domestic glut, with exports hitting a new monthly record in May. Last month, 18 cargoes departed from Sabine Pass—so far the only LNG export facility in the U.S.—totaling approximately 61 Bcf, a new monthly record, the EIA said in its Natural Gas Weekly Update for the week ending May 31. America’s LNG has reached the world fastest-growing LNG import market, Asia, and markets in the Middle East. In a few days, cargoes from Sabine Pass will call at Rotterdam for a first Northwest Europe destination, and to Poland—a first delivery to a country in Central and Eastern Europe, where Russia’s Gazprom reigns supreme. Since February 2016, U.S. […]

LNG traders evaluate impact of Saudi-led diplomatic blockade of Qatar

5 Jun 2017   LNG, Qatar

LNG traders are bracing for potential trade disruptions following moves from Saudi Arabia, Bahrain, Egypt and the UAE to cut diplomatic ties with Qatar, the world’s largest LNG supplier. Saudi Arabia’s decision Monday to break diplomatic ties, consular relations as well as land, air and sea contacts with Qatar over terrorism and extremism funding claims were followed by similar moves from Bahrain, the UAE and Egypt, according to media reports. Qatar is the world’s largest LNG supplier, having exported 78.8 million mt of LNG in 2016, more than 30% of a total global supply of 257.8 million mt, according to S&P Global Platts Analytics, and an increasing share of its production is being delivered to emerging Middle Eastern buyers, including Egypt, Jordan and the UAE. Any disruptions in Qatari LNG supply could have a significant impact on pricing, regional trade flows and energy security in Egypt, which imports most […]

5 Arab States Break Ties With Qatar, Complicating U.S. Coalition-Building

5 Jun 2017   LNG, Qatar

Hours after five Arab countries broke diplomatic relations with Qatar , a crucial United States ally, Secretary of State Rex W. Tillerson offered on Monday to broker the impasse in hopes of preserving the Trump administration’s efforts to create broad coalitions against Iran and terrorist groups in the Middle East. “We certainly would encourage the parties to sit down together and address these differences,” Mr. Tillerson said. “If there’s any role that we can play in terms of helping them address those, we think it is important that the G.C.C. remain unified,” he said, adding a reference to the Gulf Cooperation Council, a group of Persian Gulf countries. The remarks by Mr. Tillerson, who is in Australia with Defense Secretary Jim Mattis, came on the heels of dramatic announcements by Bahrain , Egypt , Saudi Arabia , the United Arab Emirates and Yemen that they were […]

Three US-based LNG terminal projects report delays to operational start dates

8 Apr 2017   LNG

Three US-based LNG export projects have delayed the planned start of their commercial operations, according to company updates on the US Department of Energy’s website. LNG terminal developers must provide semi-annual progress reports for their facilities in April and October, as required by the department. Some projects have not yet posted April reports. April updates published on the department’s website report later start dates for three projects: the Lake Charles Exports terminal in Louisiana, with a capacity of 16.2 million mt/year; Commonwealth LNG’s Cameron Parish, Louisiana, facility, with planned exports of 169 MMcf/d and 190 MMcf/d to free trade and non-free trade nations, respectively; and Strom’s Crystal River, Florida, facility, with export capacity of 80 MMcf/d. Lake Charles now anticipates that the first of its three trains will be operational in 2022. Trains 2 and 3 are scheduled for completion in six-month increments after the first train, the April […]

Is Natural Gas In The Midst Of A Boom-Bust Cycle?

5 Apr 2017   LNG, Shale Gas

After six decades of relying on outside sources, the United States is poised to become a consistent net exporter of natural gas . The shale boom and the rush to embrace LNG has fueled the shift, one that will have significant consequences for natural gas prices around the world. In 2016, total U.S. natural gas imports reached 3 trillion cubic feet, the bulk of which came via pipeline from Canada. Month to month, natural gas imports hovered around 250 billion cf, according to data from the EIA . Exports, however, have been shooting up from less than 60 million cf in 2006 to 269 million in January 2017. The ratio of imports to exports has been falling for years, and 2017 will be the year that exports officially exceed imports for the first time since 1957. That date is significant, as it was the year the United States imposed […]

Chevron makes LNG headway

30 Mar 2017   Australia, LNG

The third production facility at the Gorgon liquefied natural gas facility off the Australian coast is now in service, the regional subsidiary of Chevron said. “This is a key milestone for the Gorgon joint venture participants, our workforce, customers, government and all those associated with the project over its lifetime should be extremely proud,” Nigel Hearne, Chevron’s regional managing director, said in a statement . “We are committed to being a safe and reliable supplier and look forward to supplying cleaner-burning natural gas for decades to come.” Bringing the third production facility, or train, online means Chevron’s flagship LNG project in Australia is in full service. The first shipments of LNG left Gorgon in March 2016. The project will eventually produce 15.6 million tons of LNG […]

After six decades, U.S. set to turn natgas exporter amid LNG boom

29 Mar 2017   LNG

The last time the United States was a net exporter of natural gas was in 1957, when Dwight Eisenhower was president. That should change in 2018 when the country is expected to become the world’s third-largest exporter of liquefied natural gas (LNG). By the end of next year, U.S. LNG export capacity in the lower 48 states will top 6 billion cubic feet per day (bcfd), or 8 percent of the country’s domestic consumption, up from zero at the beginning of 2016. Six bcfd of gas can fuel about 30 million U.S. homes, or almost every house in California, Texas and Florida combined. That growth in U.S. LNG exports is set to transform world energy markets. Just a decade ago, before the shale revolution, the United States was expected […]

Gazprom’s Medvedev dismisses role of US LNG in European natural gas market

25 Jan 2017   LNG, Russia

Russia is the gas supplier of choice for European markets and will remain the most cost-effective and reliable source of gas in Europe, Alexander Medvedev, Gazprom’s deputy CEO, said Tuesday. Speaking at the European Gas Conference in Vienna, Medvedev said US LNG had been a “big hope” for Europe, but that the record flows of Russian gas to Europe in 2016 — almost 180 Bcm — were evidence of Russia’s position as the leading gas supplier to its European partners. “Russia is the only gas supplier that can reliably and flexibly supply gas in any amount. We can supply whatever Europe wants — we have the capacity to supply an additional 150 Bcm/year,” he said. In an apparent reference to US LNG exports starting up in February last year, Medvedev said Europe had chosen Russian gas despite there being newer supply options. “Our clients have a variety of diversification […]

Cruise Line Exec: LNG Represents the Future

12 Jan 2017   LNG

Carnival opting for LNG instead of marine diesel oil. As this series on natural gas utilization has shown, initiatives to develop new markets for abundant natural gas supplies are prompting significant changes within the realms of power generation and transportation . In some cases, the effects of these changes will be evident to end users. For instance, residents of communities previously isolated from the natural gas grid may soon notice new pipeline infrastructure or shallow-draft liquefied natural gas (LNG)-laden ships and barges. Also, employees of organizations switching to natural gas-powered vehicle fleets likely will detect some minor differences in how they refuel cars, trucks and buses with compressed natural gas or LNG compared to gasoline or diesel. A major player in one high-profile industry recently unveiled plans to begin switching to natural gas, but its customers likely won’t notice a difference – and that’s fine with the company devoting […]

US LNG makes negligible impact on European gas market

27 Dec 2016   Europe, LNG

The startup in February this year of US LNG exports based on cheap American shale gas had been expected to see a good proportion of cargoes heading across the Atlantic to Europe given the relatively short shipping route and Europe’s massively underused LNG import capacity. But with European gas prices staying stubbornly low for most of the year and the margins for US LNG having been largely eroded due to the slump in global LNG prices, in the end only a handful of cargoes ended up in Europe. As 2016 nears its end, more than 50 cargoes have left the Cheniere Energy-operated Sabine Pass terminal in the Gulf of Mexico for international markets. But of those cargoes, just three landed in mainland Europe — one in Portugal, one in Spain and one in Italy — while another two shipments were made to Turkey. According to industry sources, the two […]

Finding Work For The World’s Largest LNG Ship

26 Dec 2016   LNG

It is not just individual investors that are having to be patient and bide their time waiting for energy sector investments to pay off. Many corporations are making long term bets in the energy sector, and those bets are taking a while to show their value as well. Take one recent investment from Mitsui O.S.K. Lines – a massive $400 million floating liquefied natural gas factory. The enormous ship is different than most LNG tankers in that it not only carries LNG, but also turns it back into gaseous fuel avoiding the need for an expensive on-land terminal. The vessel is termed a floating storage regasification unit or FRSU. In other words, the ship is a complete end to end fuel delivery system. Mitsui’s ship is also enormous. It is more than 900 feet long – longer than 3 football fields – and it can store enough LNG to […]

Louisiana LNG Export Project Clears DOE Hurdle

2 Dec 2016   LNG

The U.S. Department of Energy (DOE) on Thursday granted authorization for a proposed liquefied natural gas (LNG) terminal in Lake Charles, La., to export LNG to countries with which the United States has not entered into a free trade agreement (non-FTA approval). “Our Magnolia project team is very pleased to have successfully received this final piece of the regulatory framework enabling our Magnolia LNG project to export U.S.-produced natural gas to the global energy market,” stated Greg Vesey, managing director and CEO of project developer Liquefied Natural Gas Limited (LNGL), in a press release announcing DOE’s non-FTA approval. LNGL’s Magnolia LNG, LLC is developing a four-train LNG export terminal at the Port of Lake Charles that will be capable of producing at least 8 million tonnes per annum of LNG using the company’s proprietary OSMR process technology. KBR is leading a joint-venture team with SKE&C that is conducting engineering, […]

More LNG exports possible from U.S. ports

1 Dec 2016   LNG

Sempra Energy said it filed the necessary paperwork to hasten the development of a port in Texas that could export liquefied natural gas, seen as a strategic asset. Sempra, which has its headquarters in San Diego, filed applications with the U.S. Federal Energy Regulatory Commission for exports and construction of the proposed Port Arthur LNG plant in southeast Texas. “Our experience in developing, building and operating energy infrastructure will help us deliver a cost-competitive project to the global LNG market,” Octavio Simoes, the president of Sempra’s LNG and pipeline unit, said in a statement. The project calls for everything from storage tanks to refrigerants and marine loading facilities at the proposed Texas plant. A potential site […]

OPEC Deal Is Bad News for U.S. Gas and Good News for LNG

1 Dec 2016   LNG

OPEC’s decision to shrink oil production is both a blessing and a curse for natural gas markets. It’s bad news for the U.S. gas bulls enjoying a rally that has propelled prices to the highest in two years. Crude explorers have more incentive to drill with oil futures surging on the promised cuts by the Organization of Petroleum Exporting Countries. And with every barrel of oil they pull out of the ground, they’ll inevitably pull out gas, a byproduct that threatens to add to a U.S. supply glut that’s already hit a record. “These guys will drill more, and you are going to get that extra gas at an inconvenient time,” said Jason Schenker, president of Prestige Economics LLC in Austin, Texas. “It’s bearish for U.S. gas for the next three- to nine-month window.” While the potential flood of so-called associated gas threatens to derail the rally in U.S. […]

U.S. LNG Is Changing The Global Gas Game

22 Nov 2016   LNG

In the emotion-laden aftermath of the U.S. presidential elections, the focus of all energy attention seems to be exclusively on crude oil and domestic production. Specifically, on whether energy independence is at all possible and whether cutting Saudi Arabia out of the importers’ list is a wise move or exactly the opposite. While some grieved and others rejoiced, Cheniere Energy, which launched its first export-bound LNG tanker this spring, continued to export liquefied gas. Those who follow the LNG market duly noted that exports from the Sabine Pass terminal are growing, but it took the IEA and its latest World Energy Outlook , released last week, to cause the media to stand up and take notice. The IEA said in its forecast that U.S. LNG will enable the United States to turn from a net importer of gas into a net exporter, with all the consequences stemming from it, […]

Is The U.S. Set To Become An LNG Powerhouse

17 Nov 2016   LNG

The LNG industry has been turned on its head by forces that could not been foreseen just few years ago. Continuous drop in demand for gas in Asian markets (down by 2 percent in 2015), excess supply from Australia and the United States, new pricing and a contractual framework have fundamentally changed the long-established LNG business model. Yet, in 2015 LNG global trade reached 250 million tonnes per annum (MTPA), making it a market worth more than $120 billion. Natural gas trade grew at 2.6 percent annually between 2000 and 2015, reflecting the overall trend of rising global demand for lower carbon energy. Today, these contradictions make the LNG business both unpredictable and full of uncertainties. A key question is how does U.S. LNG fit into this new global market? EIA forecasts that American producers will play a larger […]

Growing LNG supply glut redefining global flows, long-term contracts: PIRA

11 Nov 2016   LNG

Global flows of liquefied natural gas (LNG) are set to change as the growth in a supply glut will peak in 2018 because of new production from Australia and the United States, energy consultancy PIRA Energy Group said. The growth in Australian and U.S. LNG supplies means traditional trade flows such as Qatari exports to Asia could end up being diverted to other destinations, PIRA Energy’s head of global gas and power, Ira Joseph said in an interview. Mega projects such as Inpex’s 8.9 million tonnes a year (mtpa) Ichthys LNG plant in Australia will directly add to regional supplies. The project is scheduled to commence first production next September. Following the expansion in Australian production, a second phase of growth in 2018 will come from new U.S. LNG production that totals around 27 mtpa. “The Asian market is going to be long relative to the Atlantic basin market […]

Are Market Conditions For U.S. LNG Improving?

14 Oct 2016   LNG

As Cheniere Energy shuts down its LNG terminal at Sabine Pass for a month of repairs, it seems like a good time to take stock of the global LNG situation. With pundits and politicians increasingly pointing to LNG as proof of a new golden age in American energy production, it’s necessary to measure how those predictions may pan out. Since coming on-line in February, Cheniere’s facility at Sabine Pass has shipped 33 cargoes of LNG. In the first six months of 2016 total LNG exports totaled 63.5 billion cubic feet (bcf) against total U.S. imports of 53.1 bcf, according to Argus Media. An analysis found that those shipments ended up in diverse markets world-wide, with the conspicuous absence of East Asia, where the bulk of LNG demand is situated. The U.S. won’t easily find markets in Japan, China or South Korea (not to mention India, where LNG […]

Big Break Through For Small Scale LNG

14 Sep 2016   LNG

With the price differential between oil and LNG sending mixed signals to the market, is the time right to look at Small Scale LNG (SSLNG)? Below we outline six key reasons why the outlook is positive. ( 1) The LNG market is currently in surplus , with global demand in 2015 only increasing by 700 MMcf/d while supply increased by 2.2Bcf/d. Volume upside from existing markets is limited, which opens the opportunity for new demand markets further downstream to soak up the growth in LNG supply. As a result of this oversupply, global LNG prices are low. Estimated landed LNG prices as of May 2016 were $1.78/MMBTU in the United States, $4.34/MMBTU in Europe, and $4.55/MMBTU in Asia (Figure 1). Is it possible for LNG to get any cheaper? The buyer’s market will last only as long as the oversupply dynamic lasts. Tides turn, and U.S. Henry Hub spot […]

The First U.S. LNG Shipment To China Arrives

2 Sep 2016   China, LNG, USA

The fist LNG shipment to China from the lower 48 states arrived last week, marking the official entry of the U.S. into the Asian LNG market. The shipment was chartered by Royal Dutch Shell (ticker: RDS) and originated form Cheniere Energy’s (ticker: LNG) Sabine Pass LNG facility in the Gulf of Mexico. The cargo was purchased by China National Offshore Corp as part of a long term contract, and was delivered to the Yantian Port near Hong Kong last week. The Maran Gas Apollonia was the 19th cargo of LNG to load from the Sabine Pass export facility in the U.S. Gulf of Mexico, but the first to reach northeast Asia since the first loading in February this year. The cargo traversed the newly improved Panama Canal to reach China, and was the first LNG tanker to transit the newly expanded canal. Improvements to the Panama Canal have allowed […]

Gas Leak Has California Preparing for LNG Imports, Capping Use

State recommends monitoring refiners’ gas use, pump prices Agencies say state should also prepare for LNG imports California is looking at capping the amount of natural gas burned by power plants this winter, exploring the potential for liquefied gas imports and monitoring oil refiners’ use of the fuel as a historic leak last year continues to threaten the state with supply shortages. The state needs to take such measures immediately to help avoid service disruptions during the winter heating season, the staffs of the state’s utilities commission, energy commission and power grid operator said in a joint report . The Los Angeles Department of Water and Power also helped prepare the plan. Source: U.S. Energy Information Administration While Sempra Energy plugged a massive gas leak near Los Angeles in February, use of its Aliso Canyon complex, California’s biggest gas storage field, remains restricted. The state has warned that the […]

Cheniere’s first LNG export cargoes: A contrarian indicator for U.S. natural gas prices?

17 Aug 2016   LNG

Cheniere Energy has long been my favorite contrarian indicator in the U.S. natural gas market. For those unfamiliar with the term, a contrarian indicator is an event which suggests that a broadly and firmly held view–in this case, the view that U.S. natural gas supplies will grow and remain cheap for decades–is about to begin a reversal. As the company shipped its first cargo of U.S. liquefied natural gas (LNG) for export earlier this year, the glut of cheap U.S. natural gas seem to vindicate Cheniere’s plans. I, on the other hand, imagined that the shipment was not confirmation of Cheniere’s assumptions, but a contrarian signal that natural gas production was about to dip and that prices were finally going to turn higher in a sustained way. I say this based on the timing of Cheniere’s last scheme, a U.S. natural gas import terminal that now sits unused next […]

UK’s Brexit vote leads to bearish impact on LNG as currencies weaken

27 Jun 2016   LNG

The UK’s Brexit vote is expected to have a bearish effect on the global LNG market due to the weakening of European currencies, several trading sources said Friday. News of the UK’s decision to leave the EU on Friday caused both the pound and the euro to weaken against the dollar, the currency in which LNG is traded. This in turn has reduced the value that regasified spot LNG at western European gas hubs, which have traditionally been considered as a pricing floor for the global LNG market. The UK’s National Balancing Point is often used as a reference for the relative value of spot LNG transactions, with prices at the Dutch Title Transfer Facility also used as relative marker. Article Continues below… LNG Daily is essential reading as LNG supply dynamics continue to change in big markets like Japan, China, India and the U.S. This premier independent news […]

Cheap LNG May Lure 50 More Nations to Gas From Oil, WoodMac Says

24 Jun 2016   LNG

The number of liquefied natural gas importers may more than double as a glut damps prices and encourages nations to ditch crude, according to Wood Mackenzie Ltd. More than 50 countries may switch to LNG, with demand from new importers accounting for about 150 million metric tons per year (7.2 trillion cubic feet of gas) by 2025, amid an oversupply of the fuel and tankers to carry it, according to Noel Tomnay, vice president research global gas and LNG at the consultant. That’s about 61 percent of the current global market. “You’ve got easy access to shipping and you’ve got easy access to supply, and you’re going to get, we believe, further rises in the oil price whereas LNG prices, at spot level, are probably going to be quite flat,” Tomnay said in an interview in London. “The opportunity is going to become increasingly compelling for markets to switch […]

US set to become major global natgas supplier as exports soar: DOE official

Demand for US natural gas for export — including both pipeline and LNG exports — is set to skyrocket through the next few decades, a US Department of Energy official said Thursday, adding the country was on a path to become a top supplier to the international market. “We’re going to have substantial increase in pipeline exports to Mexico and LNG exports are going to explode,” Carmine Difiglio, DOE deputy director for energy security, said at Hart Energy’s DUG East Conference in Pittsburgh. US gas production peeked last year at an average of around 80 Bcf/d before beginning to decline somewhat. However, the production drop-off is expected to be short-lived as demand for gas for export increases, Difiglio said. “We expect the growth will resume on a fairly steady basis and reach 83 Bcf/d by the end of 2017,” he said. Difiglio noted that the dramatic increase in shale […]

Shell And Gazprom Set To Sign A Deal On LNG Development In The Baltic

Shell has plans to ink a deal with the Russian gas company Gazprom sometime this week. The deal is related to Gazprom’s plan to begin a liquefied natural gas project at the port of Ust-Luga in the Baltic Sea. Yuri Ushakov, a Kremlin aide, confirmed the deal on Tuesday. Shell was reported to be interested in picking up 25 to 30 percent of the project. That project is expected to include a two-train LNG plant as well as a pipeline that will connect with the Gazprom network. The plant could be finished by the year 2021. Gazprom plans to share the $10-billion-dollar cost, along with the risks with Gazprombank. A floating storage and regasification unit is slated for Kaliningrad. The unit will be able to store 170,000 cubic meters and have a regasification capacity of 13.2 million cubic meters of gas per day. Ushakov noted that the […]

LNG Players to Seek New Markets, IEA Says

9 Jun 2016   LNG

Major traders and sellers of liquefied natural gas will begin to look to new markets over the next five years as demand from traditional centers wanes, the International Energy Agency said in a report. In parallel, global supply is set to grow exponentially, putting pressure on prices in the spot market. Cheaper prices for alternative fuels, such as coal, will also soften gas prices, while more carbon-efficient technologies could push demand away from natural gas and toward renewables. The market will likely find strength in China, India and Southeast Asia as Japan and South Korea buy fewer volumes, the IEA said. Chinese gas demand slowed to around 4% in 2015, leading to fewer purchases on the spot market. But demand is likely to recover, as the country diversifies its energy sources away from dirtier […]

Cheniere completes Train 1 commissioning at Louisiana LNG terminal

1 Jun 2016   LNG

Cheniere Energy Partners has completed the commissioning of its first liquefaction train at the Sabine Pass liquefaction project in Cameron Parish, Louisiana, the company said in a statement Tuesday. Bechtel, the contractor on the project, completed construction work on Friday and turned over care, custody and control of Train 1 to Cheniere Partners. Cheniere is taking control of Train 1 “months ahead of the guaranteed completion date and on budget,” CEO Jack Fusco said, noting staff had “worked tirelessly since 2012 to complete this significant milestone.” Sabine Pass LNG shipped its first LNG export cargo in February, with the sailing of the tanker Asia Vision to Brazil loaded with the LNG equivalent of 3.44 Bcf of gas. Article Continues below… LNG Daily is essential reading as LNG supply dynamics continue to change in big markets like Japan, China, India and the U.S. This premier independent news publication for the […]

LNG industry tension to rise as price breaks link to crude oil: Russell

26 May 2016   LNG

The price of spot cargoes of liquefied natural gas (LNG) in Asia has broken its long-standing link to crude oil this year, a development likely to fuel tensions in an already unsettled market. Spot LNG was assessed at $4.65 per million British thermal units (mmBtu) in the week to May 20, which is 35 percent down from $6.90 at the end of last year, although slightly higher than the low so far this year of $4, reached in mid-April. In contrast, global benchmark Brent crude pushed above $50 a barrel on Thursday, up around a third from the start of the year. Although LNG and crude aren’t competing fuels there has traditionally been a strong link between them, given that long-term LNG contracts have been linked to oil prices, and this has in […]

International Markets Prove Hard To Conquer For U.S. LNG

20 May 2016   LNG

Marcellus Shale Tower The latest drilling productivity report from the Energy Information Administration (EIA) has shown that the Marcellus shale continues to be the largest source of natural gas in the U.S. by a wide margin, with daily amounts that put it on par with leading international producers such as Iran and Qatar. This is despite a serious dip in production that began last year as the market became saturated and prices plunged. The domestic gas market is still saturated, according to the EIA, which has projected that gas output in the Marcellus and elsewhere will continue to decline. International markets are the natural alternative for shale gas producers, but there are a few issues with this alternative, and these issues mean that the huge output in the Marcellus is not such good news. First, there is the competition. The European market is an attractive destination for U.S. gas […]