Category: Nieuws

German is acquiring liquefied natural gas (LNG) terminals as part of its efforts to diversify away from Russian gas.

It leased four floating storage and regasification units (FSRUs) in May, capable of importing at least 5 billion cubic metres (bcm) of seaborne gas per year each. Two of them are due to become available this year.

Wilhelmshaven will become the first LNG hub and Brunsbuettel the second, to be developed by Uniper UN01.DE and RWE RWEG.DE, respectively.

The Elbe river port of Stade and Lubmin on the Baltic Sea will also receive an FSRU each.

Germany has also now formalised chartering of a fifth floating LNG ship for Wilhelmshaven, the economy ministry said on Oct. 25 for the first quarter of 2023.

WILHELMSHAVEN

Uniper in August received approval for the start of construction of an FSRU facility.

Later, facilities to import ammonia and set up an electrolysis plant for turning ammonia into clean hydrogen will be set up at the location.

BRUNSBUETTEL

An FSRU at Brunsbuettel is expected to deliver gas from the end of 2022 or early in 2023 and serve as a forerunner of a fixed LNG facility.

Dutch gas network operator Gasunie, which has a 40% stake in the FSRU project, is planning two related gas pipelines.

State bank KfW (KFW.UL) and RWE are stakeholders in the fixed facility. Shell (SHEL.L) has committed itself to some guaranteed purchases.

STADE

Project operator Hanseatic Energy Hub (HEH), due to receive an FSRU to go into operation from the end of next year, previously launched invitations to market participants to book regasification capacity at a planned land-based hub.

This could materialise in 2026.

It is backed by gas network company Fluxys (FLUX.BR), investment firm Partners Group (PGHN.S), logistics group Buss and chemicals company Dow (DOW.N).

EnBW (EBKG.DE) has committed itself as a buyer.

Applications for the terminal and port have been submitted. A final investment decision is expected next year.

LUBMIN

The operators of the state-leased FSRU destined for Lubmin expect it to be operational at the end of 2023.

Economy Minister Robert Habeck paid a visit on Sept. 19 and said the government would try to source LNG from the United Arab Emirates, among other possible origins.

Reuters by Vera Ecket, October 31, 2022

The United Arab Emirates believes that OPEC+ made the correct technical choice when it agreed to cut production and the unanimous decision had nothing to do with politics, energy minister Suhail al-Mazrouei said on Tuesday.

His comments came after several members of the oil producers group endorsed the steep cut to output targets agreed this month after the White House accused Saudi Arabia of coercing some other nations into supporting the move, a charge Riyadh denies.

“We fully trust and believe in the technical credibility of OPEC and OPEC+. We always meet and discuss the facts based on our analysis of the market and how we can all contribute to taking the right measures to balance the supply and demand, and that decision is always taken unanimously and the last decision was taken on the same logic,” Mazrouei told reporters.

“I would like to reiterate that there is nothing political about any decision we take in OPEC.”

Coming ahead of November mid-term elections in the United States, the move drew sharp criticism from the Biden administration which said there would be “consequences” for U.S. ties with Riyadh.

The United States has stressed that the cut would boost Russia’s foreign earnings and blunt the effectiveness of sanctions imposed over its invasion of Ukraine.

Mazrouei said the OPEC+ decision stabilised prices, rather than increasing them, adding that it was lack of stability that was driving investors away.

“Prices have been stabilising and actually if you look at October 2021 before anything — before all the crises, the geopolitical ones — you would see we are in the same price environment,” the Emirati minister said.

He voiced concern that many oil producers had lost capacity due to lack of investment.

Asked if the UAE plans to ask for a higher baseline as it works to build its own capacity to 5 million barrels per day by 2030, Mazrouei said there is a mechanism for any country to raise that request.

By Reuters, October 28, 2022

Saudi Arabia rejected as “not based on facts” statements criticising the kingdom after an OPEC+ decision last week to cut its oil production target despite U.S. objections, saying it serves the interests of both consumers and producers.

The OPEC+ decision was adopted through consensus, took into account the balance of supply and demand and was aimed at curbing market volatility, the Saudi foreign ministry said in a statement on Thursday.

President Joe Biden pledged earlier this week that “there will be consequences” for U.S. relations with Saudi Arabia after OPEC+ said last week it would cut its oil production target by 2 million barrels per day. read more read more

OPEC+, the producer group comprising the Organization of the Petroleum Exporting Countries (OPEC) plus allies including Russia, announced its new production target after weeks of lobbying by U.S. officials against such a move.

The United States accused Saudi Arabia of kowtowing to Moscow, which objects to a Western cap on the price of Russian oil in response to its invasion of Ukraine.

The Saudi foreign ministry statement, quoting an unnamed official, stressed the “purely economic context” of the oil cut.

The statement also referred to consultations with the United States in which it was asked to delay the cuts by a month.

The OPEC+ move has raised worries in Washington about the possibility of higher gasoline prices right before the November U.S. midterm elections, with Biden’s Democrats trying to retain their control of the House of Representatives and Senate.

“The Kingdom clarified through its continuous consultations with the U.S. administration that all economic analyses indicate that postponing the OPEC+ decision for a month, according to what has been suggested would have had negative economic consequences,” it said.

Saudi Arabia also said it views its relationship with the United States as a “strategic one” and stressed the importance of mutual respect.

Reuters by Ahmad Elhamy, September 27, 2022

U.S. oil major Chevron Corp (CVX.N) expects high European prices for liquefied natural gas (LNG) to attract a majority of U.S. LNG exports in the short term, a top executive told Reuters on Wednesday.

Europe is determined to wean itself off Russian gas imports following its invasion of Ukraine, a move that has thrown open the door to U.S. suppliers. Its commitment to building import terminals and regasification facilities shows the region’s demand for U.S. exports could last.

“We have seen a big uptick in demand from European customers so we are adjusting to that,” said Colin Parfitt, who oversees the company’s shipping, pipeline, supply and trading operations. Europe will not “” he said during an interview in London.

Chevron is a large natural gas producer globally, last year pumping more than 7.5 billion cubic feet per day with more than half of its gas production in the United States and Australia.

The major also produces LNG in Australia and Angola, and recently carved out a foothold in U.S. LNG through purchase agreements with LNG producers Cheniere Energy Inc (LNG.A) and closely-held Venture Global LNG. read more

The United States is the world’s top gas producer with output near 99 billion cubic feet per day (bcfd), but as consumption is lower, at about 89 bcfd,  there is room for rising exports with expanding production.

“Gas demand in the United States is roughly flat,” said Parfitt. “What’s growing in the United States is demand for exports,” he said.

Parfitt said Chevron’s oil and gas production in the Permian Basin, the top U.S. oilfield, increased 7% in the first half of 2022 from the same period a year ago, and is expected to grow by 15% in the full year.

Chevron is also studying options to “commercialise” more gas from an Eastern Mediterranean field, off the coast of Israel, either through existing pipelines or some LNG alternatives, he said.

By Reuters, October 21, 2022

Europe’s energy crisis has cooled efforts to lower the carbon intensity of liquefied natural gas (LNG) shipments, as buyers worried about a winter supply crunch prioritize securing shipments of any kind over burnishing their green credentials.

Natural gas can be certified as low- or no-carbon if its producers can prove they have reduced greenhouse gas emissions associated with getting it to market, or if they purchase carbon offsets to cut its net climate impact.

But the number of deals to ship carbon neutral LNG around the world has dropped to less than 10 so far this year, from 30 in 2021, according to energy research firm Wood Mackenzie. And demand for the greener fuel has dried up, according to Reuters interviews with nine LNG market analysts, industry officials and traders.

“Lower carbon or carbon neutral LNG cargoes have lost their appeal in the current high price environment,” said Felix Booth, head of LNG at energy analytics firm Vortexa. “Energy security and affordability is front of mind for all buyers.”

The decline in international demand for the so-called “greener” gas is a potential setback in the fight against climate change because it removes a financial incentive for producers to reduce their climate impacts.

The market for such fuels had taken off a few years ago with a flurry of international deals that sparked industry optimism producers would be able to reliably cover their costs for cutting emissions or buying offsets – which can run into millions of dollars per shipload.

A 2021 study by Columbia University’s Center on Global Energy Policy pegged the premium on carbon-neutral LNG that year at about $1.75 million for a full cargo of around 100,000 cubic meters.

Several gas drillers, including in the world’s top gas producer the United States, told Reuters they have invested in finding and plugging greenhouse gas emissions associated with production, transport and processing.

But no LNG exporters in the United States have certified their facilities, according to both the liquefaction plant owners and certification company MiQ, which had hoped to land contracts with them this year.

Undermining the market are sanctions and disruptions stemming from Russia’s war in Ukraine. Since Russia’s Feb. 24 invasion of Ukraine, gas prices have soared about 25% in the United States and 32% in Europe .

While gas produces fewer emissions than coal when burned, it can still contribute significantly to climate change by leaking into the atmosphere from drill pads, pipelines and other equipment. The main component of gas is methane, a greenhouse gas more powerful than carbon dioxide during its first 20 years in the atmosphere.

More than 100 countries have pledged to slash methane emissions by 2030 and are expected to detail their plans at a climate summit in Egypt next month.

SOME DRILLERS FORGE AHEAD

Despite the drop in demand for greener LNG, many drillers are tamping down their methane leaks, under pressure from regulators, investors, and big customers.

About a quarter of gas drilled in the United States is being certified to reflect its improved emissions intensity, by companies like Project Canary and MiQ, according to those firms. About a third of U.S. supply should be certified by the end of the year.

Civitas Resources Inc (CIVI.N), a Colorado driller, for example, said it has continued to measure emissions from its operations and certify its facilities even though it stopped seeking price premiums.

“As this market evolves, we believe there will be long-term demand for certifiably cleaner natural gas products,” Civitas Chief Sustainability Officer Brian Cain said.

Drillers EQT Corp (EQT.N) and Chesapeake Energy Corp (CHK.O) are among the other U.S. gas producers certifying supply.

But exporters of gas appear to be lagging.

To export gas, the fuel must be supercooled into LNG and then shipped across the sea, a process that produces substantial additional greenhouse gas emissions.

MiQ early this year said it expected to be certifying U.S. LNG cargoes within months. To date, however, U.S. LNG companies have yet to certify their facilities.

Cheniere Energy Inc (LNG.A), the top U.S. LNG producer, said it has provided emissions information for all cargoes shipped since June, but has not partnered with third-party certification programs.

It declined to disclose the emissions details of its shipments to Reuters.

Other U.S. LNG suppliers, like Cove Point LNG and Cameron LNG, also told Reuters they are not certifying their cargoes.

Vincent Demoury, secretary general of the International Group of Liquefied Natural Gas Importers (GIIGNL), said LNG exporters may be hesitating because passing on the cost of carbon offsets is difficult in a high-priced environment. But he said he expected the outlook to eventually improve.

Reuters by Nichola Groom, October 21, 2022

On April 11, 2022, it was announced that a “heads of agreement” (HOA) was signed by TotalEnergies (Total) with Sempra Infrastucture, Mitsui & Co. ltd and Japan LNG Investment. Sempra Infrastructure owns 50.2% of the project while Total, Mitsui and Japan LNG Investment each own 16.6%

According to TotalEnergies’ Chairman and CEO Patrick Pouyanné: “The expansion of Cameron LNG will contribute to our LNG growth strategy by investing in low-cost, long-term competitive LNG projects with lower GHG emissions.” This statement from the CEO was given to the public as a way to justify expansion of the Cameron LNG project located in Louisiana, USA.

This HOA is significant because the companies agreed to jointly increase production capacity to more than 6.75 mn tonnes per year (tpy). They also agreed to add a fourth train to improve on debottlenecking of the plant. Moreover, the project is seen as a way boost exports of USA LNG in the wake of recent events by Russia to affect Europe’s energy supply.

If Norway’s Equinor took the initiaive to help and solve Europe’s energy crisis, then it seems France’s TotalEnergies is striving to take the lead in promoting Europe’s energy transition. The HOA is an indicator of how seriously the company is taking its ambitions to push Europe forward on the energy transition.

Per OilPrice.com, the French supermajor is the world’s largest exporter of USA LNG and the second-largest LNG trader.

With the final investment decison on the Cameron LNG project to come in 2023, Russia’s invasion of Ukraine has raised concerns of how more exports of USA LNG can be carried out in the present. On March 25, 2022, a deal between the USA and European Union (EU) was initiated for the USA to increase deliveries of LNG to EU markets in the amount of 15 billion cubic meters. This circumstance reveals how critical USA LNG is to the EU’s energy supply mix.

TotalEnergies has been in business with USA LNG since September 2016 when the company acquired 75% of the Barnett Shale assets in North Texas from Oklahoma City-based Chesapeake Energy. Due to declining production, the Barnett shale assets are set to bottom out around 2028. What’s important here is that the production capacity at Total’s Barnett shale fields will allow the company to regasify its natural gas reserves into LNG at Cameron, in order to transport and export the natural gas from USA to Europe, Asia and African markets.

TotalEnergies is also launching North America’s first Cabon Capture & Storage (CCS) project at the Hackberry Carbon Sequestration (HCS) project. According to Thomas Maurisse, senior vice president LNG at TotalEnergies:

We are pleased to join forces with our partners to significantly reduce CO2 emissions at Cameron LNG export terminal, thus enabling us to supply our customers with low-carbon LNG, a key fuel for the energy transition and a valuable asset for diversifying Europe’s energy supply

It’s essential to point out that even when the largest companies are pushing for ways to successfuly carry out Energy Transition around the globe, that committments to natural gas production and exports via LNG will continue to grow over time. TotalEnergies even highlighted in its 2021 Energy Outlook that natural gas and renewable energy sources would play complementary roles to achieving the energy transition toward Net Zero.

One of the concerns is how geopolitics and international events are going to affect the global energy outlook and prospects.

For instance, Algeria and Morocco have both announced plans to source more gas reserves to the benefit of TotalEnergies, Eni and USA exporters. But underlying political and territorial issues between those two countries are inevitably going to be a major problem. Algeria cut off Morocco’s access to its gas pipeline in 2021 after Morocco announced that it would develop LNG terminal capacity.

Upstream has been writing about energy companies that are exploring Africa’s potential for LNG pipeline infrastructure as an alternative to Russia and Persian Gulf producers. For instance, Siva Prasad of Rystad Energy said “Asian and European importers will need to consider African priorities as they develop projects, as many African producers are focusing on supplying energy locally as well as to intra-African markets, along with catering to global markets.” Prime examples include a a proposed natural gas pipeline from Tanzania to Zambia.

This summer is already signaling a competition for LNG tankers among the world’s largest energy companies — TotalEnergies, Shell, China Unipec — to stock up on LNG supplies ahead of the winter season in 2022. Because of this trend the price of LNG carriers is rising to the highest levels in 10 years, at around $120,000 a day, as LNG import demand is expected to grow higher and higher for developed countries.

Here’s another illustration of how more infrastructure investment is needed for FLNG. According to Spanish Energy Minister Teresa Ribera a gas pipeline from Portugal, through Spain, could be built in less than one year for the benefit of France, Spain and other European energy consumers. Calling it a “new interconnection” German Chancellor Olaf Scholz agreed that the pipeline would be beneficial to Europe’s energy supply dilemmas.

This is essentially an issue of increasing liquified natural gas (LNG) imports to Europe. With the capacity of Portugal to receive LNG at its terminals on the coastline, it is a perfect way for France to receive more imports of LNG.

However, this plan has been in the works since 2019 as the Spanish grid operator Enagas called for the pipeline to be abandoned.

By Medium, September 20, 2022