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LNG market faces supply strains

The IEA’s Q3 2024 report highlights supply constraints, Asian demand growth and rising freight rates reshaping global LNG trade and shipping dynamics

The latest IEA Gas Market Report for Q3 2024 presents a mixed picture of the global LNG market, characterised by supply constraints, volatile prices and growing demand centred around Asia.

The report outlines that LNG production underperformed in Q2 2024, while Asian demand surged, reshaping global LNG trade flows. These shifts, in turn, are having a profound impact on LNG shipping and freight rates.

In the first half of 2024, LNG supply growth slowed considerably, increasing by a mere 2% year-on-year. This marked the first contraction in LNG production since the global Covid-19 lockdowns in 2020.

According to the IEA, “LNG output fell by 0.5% in Q2 2024, driven by a combination of feed gas supply issues and unexpected outages.”

This shortfall was particularly evident in the United States, where production challenges at key liquefaction plants such as Freeport LNG hampered growth.

Similarly, African LNG supply contracted due to declining production in Egypt, where exports plummeted by 75% during the first half of the year.

Despite these supply challenges, the LNG market saw a surge in demand from Asia.

The IEA notes, “Asia accounted for around 60% of the increase in global gas demand in the first half of 2024,” with China and India leading the growth.

China’s LNG imports increased by 18%, setting the country on a trajectory to surpass its previous record for annual LNG imports. India followed closely, with a 31% rise in LNG imports, driven by lower spot prices.

These increases in demand have resulted in a reallocation of global LNG cargoes, redirecting flows away from Europe and towards Asian markets, leading to longer shipping routes and increased pressure on LNG freight rates.

The sharp rise in Asian demand comes at a time when European LNG imports have notably declined. Europe’s LNG intake fell by nearly 20% in the first half of 2024, a trend driven by lower demand, high storage levels, and an increase in piped gas deliveries.

As the report highlights, “The share of LNG in Europe’s total primary gas supply fell from 39% in H1 2023 to 33% in H1 2024.”

This reduction has been further exacerbated by geopolitical uncertainties surrounding Russian piped gas supplies, which continue to add volatility to the market. The redirection of LNG cargoes from Europe to Asia is shifting trade patterns and impacting shipping logistics, with carriers needing to optimise for longer voyages to meet the surging Asian demand.

Price volatility has also become a hallmark of the LNG market in 2024. While gas prices fell to precrisis levels during the first quarter of the year, they rebounded sharply in the second quarter due to tighter supply-demand fundamentals.

“Natural gas prices increased across all key markets in Q2 2024,” according to the IEA report.

This resurgence in prices has impacted LNG freight rates, with the demand for shipping services rising in tandem with increased Asian demand and extended shipping routes.

The need for more LNG carriers to meet these shifting market dynamics is likely to push up spot charter rates, adding further complexity to the global LNG shipping sector.

Looking ahead, LNG supply is expected to improve in the second half of 2024, with new liquefaction projects coming online in the United States and West Africa.

The IEA forecasts “Year-on-year growth in LNG supply is expected to accelerate during the second half of 2024.”

Notable capacity expansions include the Freeport LNG expansion and the start-up of the Tortue FLNG facility off the coast of West Africa. According to the latest IEA report, the LNG facility developments are anticipated to ease some of the supply pressures that have constrained the market and the anticipated rise in exports from new projects will be welcome news for LNG shipping companies.

The interplay between supply constraints and demand growth in Asia presents both opportunities and challenges for LNG shipping. While new liquefaction capacity will help address some of the supply issues, the market remains tight, and freight rates are expected to remain elevated due to the longer voyages required to serve the booming Asian markets.

The IEA’s outlook underscores the need for flexibility within the LNG shipping sector, as carriers must adapt to evolving trade routes and fluctuating market conditions.

As the IEA notes, “The limited increase in global LNG supply will restrain growth in import markets,” particularly in Europe, which continues to see declining demand.

By Rivieramm , Craig Jallal / 07 Oct 2024.

Enbridge, Shell to build pipelines to service BP’s Kaskida oil hub

Canada’s Enbridge , opens new tab said on Thursday it would build and operate crude oil and natural gas pipelines in the U.S. Gulf of Mexico for the recently sanctioned Kaskida oil hub, operated by British oil major BP (BP.L), opens new tab.

Separately, Shell  announced the final investment decision for its Rome Pipeline, which would export the oil produced from the Kaskida project.

BP’s sixth operating hub, Kaskida, has oil production slated to start in 2029 and features a new floating production platform with a capacity to produce 80,000 barrels per day from six wells in the first phase.

The company’s U.S. Gulf of Mexico output averaged 300,000 barrels of oil and gas per day in 2023, with the company targeting 400,000 bpd by 2030.

Enbridge’s crude oil pipeline would be called the Canyon Oil Pipeline System, with a capacity of 200,000 bpd.

Its natural gas pipeline would be named Canyon Gathering System with a capacity of 125 million cubic feet per day and would connect subsea to Enbridge’s offshore existing Magnolia Gas Gathering Pipeline.

The pipelines are expected to be operational by 2029 and would cost $700 million, the Canadian firm said.

Shell’s Rome Pipeline, projected to begin operations in 2028, would increase access between the company’s Green Canyon Block 19 pipeline hub and the Fourchon Junction facility on the Louisiana Gulf Coast.

By Reuters / October 3, 2024

New Honeywell naphtha technology set to boost energy efficiency

Honeywell has unveiled a groundbreaking new naphtha to ethane and propane process, poised to revolutionise light olefin production globally and reduce CO2 emissions per metric tonne of olefin produced.

Ethane and propane serve as optimal feedstocks for the production of ethylene and propylene, key petrochemicals essential in various industries, including chemicals, plastics, and fibres. This innovation underscores Honeywell’s strategic alignment with significant megatrends, including the energy transition.

The NEP technology facilitates the production of ethane and propane from naphtha and/or LPG feedstocks. In a typical NEP-based olefin production complex, ethane is directed to an ethane steam cracking unit, while propane is allocated to a propane dehydrogenation unit. This approach enhances the generation of high-value ethylene and propylene while curbing the production of lower-value byproducts compared to conventional mixed-feed steam cracking units. Consequently, this novel approach yields substantial net cash margin increases ranging from 15 to 50 percent.

Moreover, an NEP-based olefins complex significantly reduces CO2 intensity per metric tonne of light olefins produced by 5 to 50 percent compared to traditional mixed-feed steam crackers. This advancement underscores Honeywell’s commitment to developing sustainable solutions amid growing demand for efficient petrochemical solutions.

Matt Spalding, vice president and general manager of Honeywell Energy and Sustainability Solutions in MENA, highlighted the significance of the technology, stating, “Our technology helps to enable more efficient production of ethylene and propylene, two chemicals which are in high demand, while also helping our customers lower their carbon emissions.”

This pioneering solution is a pivotal component of Honeywell’s Integrated Olefin Suite technology portfolio, representing a pioneering initiative in the industry to enhance light olefin production.

By: Storage Terminals Magazine / May 13, 2024

U.S. Refinery Activity Increases, Crude Oil Imports Decline in Latest EIA Report

The U.S. Energy Information Administration’s (EIA) latest Weekly Petroleum Status Report, released on February 28, 2024, shows positive signs for domestic refinery activity, but also highlights a decrease in crude oil imports.x

Key Findings:

Refinery Activity Up:

U.S. crude oil refinery inputs averaged 14.7 million barrels per day (mbpd) during the week ending February 23, 2024, an increase of 100,000 bpd from the previous week. Refineries operated at 81.5% of their capacity.

Crude Oil Imports Down:

Crude oil imports averaged 6.4 million bpd last week, a decrease of 269,000 bpd from the prior week. However, over the past four weeks, crude oil imports averaged 6.6 million bpd, slightly exceeding the same period last year.

Gasoline Production Up:

Production of both gasoline and distillate fuel increased last week, averaging 9.4 million bpd and 4.3 million bpd, respectively.

Inventories:

U.S. commercial crude oil inventories increased by 4.2 million barrels, but remain slightly below the five-year average for this time of year. Conversely, gasoline and distillate fuel inventories decreased and are currently below the five-year average.

Prices:

The price of West Texas Intermediate crude oil decreased by $2.05 per barrel compared to the previous week, while the national average retail price for gasoline and diesel fuel both declined slightly.

Overall, the EIA report indicates increased domestic refining activity alongside a decrease in crude oil imports. While gasoline and distillate fuel production rose, their inventories remain below the five-year average.

By: Barchart / Hedder , March 8, 2024

Computer Vision, Edge Computing Can Shape the Future of Oil and Gas

Edge computing is propelling computer vision into a new era, catalyzing the development of smart devices, intelligent systems, and immersive experiences.

Within information technology (IT) today, a significant trend revolves around the empowerment of artificial intelligence (AI) and the Internet of Things (IoT) through edge computing, expediting the time to value for digital transformation initiatives. Santhosh Rao, a senior research director at Gartner, notes that, presently, approximately 10% of enterprise-generated data is created and processed outside a traditional centralized data center or cloud. Looking ahead, Gartner anticipates this figure will surge to 75% by 2025.

Expanding on this, edge computing is propelling computer vision into a new era, catalyzing the development of smart devices, intelligent systems, and immersive experiences. The inherent benefits of edge computing, including expedited processing, increased security, and real-time insights, have positioned it as a pivotal tool across various computer vision applications.

The past 12 months has seen a noticeable uptick in interest in critical applications for computer vision on the edge, signaling a growing demand for fault-tolerant-based solutions. The capabilities of cameras to perceive such things as thermal and infrared imaging — beyond the human eye’s capabilities — render them indispensable for identifying inconsistencies or vulnerabilities in diverse industrial processes, ultimately contributing to enhanced work flow efficiency and operational excellence.

This article delves into the leading applications of computer vision on edge devices within the oil and gas industry, presenting distinctive opportunities for seamlessly integrating edge computing and computer vision.

Enhancing Health, Safety, and Environment (HSE)

In the oil and gas sector in particular, the synergy of edge computing and computer vision is proving to be critical in addressing HSE concerns. Vision systems now can discern issues traditionally assessed by human personnel, including perimeter security concerns. This extends to the monitoring of flares and processes to detect hazardous conditions such as leaks or alterations in flare chemical composition through temperature and color analysis. This plays a critical role in fire prevention and detection and facilitates emergency responses to catastrophic events such as explosions. Flare monitoring aids operators in achieving smokeless flaring, thereby improving their carbon footprint and minimizing overall environmental impact.

Furthermore, real-time cameras can be installed to monitor usage of personal protective equipment, ensuring the safety of workers in hazardous environments. These AI-enhanced systems can even identify injuries and promptly alert response teams and authorities, ultimately enhancing overall safety standards in the industry.

Operations and Reliability

Vision systems also can benefit the oil and gas sector by improving operational and reliability metrics. For example, a terminal can use vision systems to watch traffic flow and quickly identify if certain pumps, vehicles, lanes, or operators are creating bottlenecks or slowing down when compared with how they operated in the past. Engineers often struggle to identify why some assets perform better than others when all the equipment seems to be equal. Vision systems can help identify and quantify the human element by observing the behaviors of top preforming operators and allow those best practices to be taught to the rest of the team.

The best reliability engineers know that correlating data is key to identifying root causes and failure modes. Although many reliability departments include thermal and visible light imaging, these are snapshots in time and could fail to identify key events that have affected equipment. Including vision systems can bolster reliability by identifying these key events, correlating them with other reliability data, and quantifying the effect on reliability metrics. Vision systems offer the incredible ability to identify things you never knew affected your operations before.

Operationalizing Computer-Vision-Based Insights With Edge Computing

Today, there are three options to help incorporate these innovative and highly dynamic systems into operations to begin gaining valuable and actionable operational intelligence.

Smart Vision Systems With Integrated AI Models. This involves using intelligent camera systems and the vendor’s accompanying software to train the camera to detect a specific target scenario. While out-of-the-box functionality is highly beneficial for fast deployment for individual sites or targets, several challenges must be considered. Some of those detracting factors include high cost and vendor lock-in. The most notable issue with this approach, though, is the limited scalability of the trained model, meaning the model must be trained on one camera before it is manually moved to every other camera for them to learn from one another.

Standard Cameras With Cloud-Based AI Model. This is where raw video is streamed to the cloud, then the models are trained in the cloud to detect predetermined targets. This comes with data quality and cost challenges and cloud egress fees and can be difficult to integrate meaningfully into work flows. The upside, however, is that it provides good scalability, many options for open vendor tools for improved serviceability, and a wide variety of targets to train for to help improve the flexibility of the technology.

Standard Cameras With Edge AI Model. This presents an opportunity to have the best of both worlds. Among the key advantages is having a variety of vendors to choose from (i.e., no vendor or software lock-in). You own your data and infrastructure, with a wide variety of targets to train for, very scalable models, quick deployment for individual sites and targets, and local integration into work flows. Conversely, the biggest challenge is getting multiple departments to collaborate around a single edge computing platform (e.g., operations, IT, and procurement).

Perhaps most important when comparing vision system architecture models, however, is the integration of insights into work flows and actions. Owner/operators within the oil and gas industry can only achieve demonstrable gains in their digital transformation initiatives when they can react to what the vision system identifies. Using edge computing platforms, owner/operators can quickly and efficiently integrate into alarm systems, supervisory control and data acquisition systems, and enterprise resource planning systems; trigger work orders; and connect data historians among other critical applications.

This is the key to deriving value from a computer vision system. If you cannot quickly act on what your vision system detected, then there is little value in having a vision system at all.

Conclusion

In the oil and gas industry, transformative shifts are underway, propelled by computer vision systems. The adoption of edge-native deployments, however, is imperative to fully harness the potential of this technology. The speed, security, and real-time insights facilitated by edge computing position it as an indispensable tool for applications in this sector.

Crucially, vision systems alone do not instigate change; rather, they provide the insights necessary to drive informed action. Effecting true change requires the seamless integration of these insights into real-time work flows at the local level. As technology advances, ongoing innovations in edge computing and computer vision promise a future characterized by safer, more efficient, and smarter systems and devices. This trajectory is set to transform daily lives both now and in the years to come.

By Rudy De Anda / jpt.spe, January 25, 2024

Port of Rotterdam’s Throughput Drops Amidst Global Challenges

The Port of Rotterdam is feeling the impacts of global geopolitical and economic upheavals, posting a decline in total cargo throughput and recording a near-flat change in revenues last year. For Europe’s busiest port, Russia’s war in Ukraine and the resultant sanctions, changing energy needs dynamics in Europe, weakening economic growth and faltering global trade have conspired to create a slump in performance.

In 2023, Rotterdam recorded a 6.1 percent decline in total cargo throughput, moving 438.8 million tons compared to 467.4 million tons in 2022.

The fall was mainly seen in coal throughput, containers and other dry bulk. The port still had a “stable year financially” after revenue posted a marginal increase of 1.9 percent to $909 million.

For Rotterdam, the clouds of uncertainty that started gathering in 2022 continued last year. After demand for coal rose sharply in Europe due to concerns about energy security and large increases in gas prices in 2022, last year saw more stability and a transition to LNG.

Coal throughput at the port fell by 20.3 percent to 23.1 million tons, mainly because of low demand for coal for power production. Decline in coal had the biggest impact on dry bulk throughput, which plunged by 11.8% to 70.6 million tons compared to 80 million tons in 2022.

Slowing economic growth in Europe also hit the segment, causing a striking decrease of 49.4 percent in other dry bulk.

In liquid bulk, overall throughput was 3.4 percent lower last year, down to 205.6 million tons compared to 212.7 million the previous year. Crude oil fell by 1.4 percent with the discontinuation of ship-to-ship transshipment.

On the flipside, increase in LNG imports as Europe moved to replace pipeline imports of Russian natural gas saw throughput increase by 3.7 percent to 11.9 million tons from 11.4 million tons the previous year. The port also saw more LNG bunkering activity.

Container throughput was noticeably down. Owing to lower consumption, lower production in Europe and the discontinuation of volumes to and from Russia due to sanctions, the number of TEU handled fell by seven percent to 13.4 million, down from 14.4 million the previous year. Roll-on/roll-off traffic fell by five percent, with the weak UK economy and lagging consumption being the main causes.

“2023 saw ongoing geopolitical unrest, low economic growth due to higher interest rates and faltering global trade, all of which had a logical effect on throughput in the port of Rotterdam,” said Boudewijn Siemons, Port of Rotterdam Authority CEO.

Despite facing a turbulent year, which the authority expects to continue this year in what is already shaping up as unpredictable, Rotterdam is advancing investments to transition the port to a sustainable facility. Last year the Port Authority invested a total of $319.5 million on key projects. Key investments are also lined up for implementation this year, some of which are critical in Rotterdam’s energy transition ambitions

BY THE MARITIME EXECUTIVE / February 21, 2024

ARA oil product stocks rise further (Week 4 – 2024)

Independently-held oil product stocks at the Amsterdam-Rotterdam-Antwerp (ARA) trading hub rose significantly, in the week to 22 February, according to consultancy Insights Global, as overall demand in the region remains muted.

Naphtha stocks rose on the week, after an increase the previous week. Increased blending interest for gasoline supported stock draws. But petrochemical demand was seen to be waning in the week compared with earlier in the month, which is likely to have increased storage at the hub.

Market participants have continued to indicate increased blending demand for gasoline in anticipation of higher exports to the US in the coming months, but gasoline stocks at the ARA hub declined in the week. There was some increase in export volumes out of the region. Volumes leaving for west Africa up from the previous week, indicating an increase. Departures to the US were also up on the week, according to Kpler data.

Gasoil stocks fell, pressured by longer delivery periods from the east as well as lower demand from Germany. Independently-held jet fuel stocks rose in the week, with cargoes coming into the ARA from the UAE as well as India.

By Atishya Nayak

Refiners Pledge to Invest $4.5 Bil. into Eco-Friendly Fuels

The country’s major refiners have pledged to invest a combined 6 trillion won ($4.5 billion) until 2030 in developing eco-friendly fuels to counter the environmental regulations that are increasing worldwide and improve a new growth engine for local oil companies and consumers, according to the Ministry of Trade, Industry and Energy, Wednesday.

With the pledge, the companies and the ministry have agreed to bolster the country’s refinery industry and stabilize the local consumer market amid rising uncertainties and geopolitical risks to the global energy market.

SK Energy CEO and President Oh Jong-hoon, S-Oil President of Corporate Strategy and Services Ryu Yul, HD Hyundai Oilbank CEO Chu Young-min and GS Caltex Executive Vice President Kim Jung-su on the same day met Second Vice Minister of Trade, Industry and Energy Choi Nam-ho in Seoul. The meeting was arranged by the ministry to discuss with the country’s big-four refiners how to improve national competitiveness in the global oil market.

The vice minister and the private firm leaders agreed to secure a stable supply of petroleum and maintain the price within a consistent range. Choi referred to petroleum as an “essential consumer product that takes up a significant portion of the public economy,” and said that its price must be stabilized to prevent public concerns.

Choi said that stabilizing the price requires the companies’ commitment to further investment and a spirit of mutual growth.

“A recent revision to the country’s Petroleum and Alternative Fuel Business Act has ushered in a legal, fundamental ground to further spread the use of eco-friendly fuels,” Choi said in the meeting. “And we want you companies to respond to the legal change by making bolder investments.”

Choi said the ministry is open to sharing problems the companies might experience during any part of the process, from importing petroleum to exporting their products.

“We expect the companies to pioneer new markets and come up with new products to keep their export momentum going,” Choi said.

The company representatives said their businesses need government support for their imminent grievances like securing fuel, tax exemption incentives, technological advancement and regulatory sandbox.

CITGO Petroleum Corporation Prices $1.10 Billion Senior Secured Notes

CITGO Petroleum Corporation (“CITGO”) has priced $1.10 billion aggregate principal amount of 8.375% senior secured notes due 2029 (the “notes”) in a private offering exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). The closing of the offering is expected to occur on September 20, 2023, subject to customary closing conditions.

CITGO intends to use the total net proceeds from the sale of the notes for general corporate purposes and to pay all fees and expenses in connection with the sale of the notes.

In addition, CITGO intends to pay a dividend to CITGO Holding, Inc. (“CITGO Holding”) of approximately $1.120 billion to fund the pending redemption of the $1.286 billion aggregate principal amount of CITGO Holding’s 9.25% senior secured notes due 2024 (the “CITGO Holding notes”).  The redemption of the CITGO Holding notes is contingent upon the consummation of the notes offering.

This press release does not constitute an offer to sell or the solicitation of an offer to buy the notes, nor will there be any sale of the notes in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful.  This press release does not constitute a notice of redemption with respect to the CITGO Holding notes.

The offer and sale of the notes have not been and will not be registered under the Securities Act, or the securities laws of any other jurisdiction, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

The notes are being offered only to persons reasonably believed to be qualified institutional buyers under Rule 144A under the Securities Act and to non-U.S. persons in offshore transactions in compliance with Regulation S under the Securities Act.

By PR News, September 29, 2023