In this issue

 

Saudi Arabia, the world’s largest oil producer, is about to join Kuwait and the UEA in buying attractively-priced LNG. Khalid Al-Falih, the Saudi energy minister, did not rule out buying LNG from Russia although he sees it as “not the most economical option.” Rival and possibly more attractively-priced supply could come from East Africa and the United States. 

Tellurian Inc, developer of the Driftwood LNG project, has confirmed Bechtel Oil, Gas and Chemicals had made a $50 million investment in the company. The investment was made on the basis of a preferred equity investment with an implied Tellurian common share price of $8.16 per share. 

Record results in shale oil and gas output in Appalachia and the Permian basin have been helped by President Donald Trump’s latest changes to the US corporate tax law. Several shale gas drillers reported hundreds of millions in savings after being allowed to re-measure their net tax liabilities, and are now budgeting less tax expenses for the future. Production among American shale drilling companies, sampled by the consultancy Energy Aspects, grew by 1.6 Bcf/d, or 5% year-on-year and 0.5 bcf/d, or 2% quarter-on-quarter in Q4-2017. 

In 2018, three cargoes - each providing around 0.1 billion cm of liquefied gas - have come directly to British regas facilities from Yamal LNG in Russia. But as the UK is preparing for another cold snap, and there’s talk that the country is too reliant on Russia for LNG. Murray Douglas, research director, Europe Gas, evaluates if fears are overstated and where British gas buyers can turn to secure top-up supplies. 

The Panama Canal Authority said it expected LNG carrier traffic to increase by around 50% by the fourth quarter of 2018 as more US cargo export capacity comes on stream.

Open Season bidding for the second capacity extension on TransCanada’s Nova Gas Transmission Ltd. (NGTL) system has oversubscribed, with contracts awarded for an average term of 22 years. The NGTL system allows gas transport from the low-cost Montney shale gas play in northeastern British Columbia to the Empress-McNeill export delivery point and onward to the US border.

Tellurian Inc., developer of the Driftwood LNG export project in Louisiana, has launched an open season to secure shippers for a proposed Permian Global Access Pipeline (PGAP), connecting the Permian Basin in Texas to Southwest Louisiana.

Since the U.S. shale oil and gas revolution ended the need to import crude oil from Mexico, the trade balance shifted and U.S. energy exports have been exceeding imports from Mexico for each of the past three years. In 2017, overall U.S. energy exports to Mexico hit a record high of $25.8 billion in 2017, more than twice as much as the $11.1 billion value of imports from Mexico.

The first cargo to be exported from the new Cove Point liquefied natural gas export plant on Chesapeake Bay in Maryland has arrived at the UK port of Milford Haven and is only the second US shipment to be sent to Britain since US LNG exports began in 2016, while almost 40 shipments have been sent to other European nations, mainly in the South. 

Harvey Gulf International Marine, the US small-scale fleet owner and liquefied natural gas bunkering specialist, has filed for Chapter 11 bankruptcy protection, though the move would not affect LNG operations.

“Gemmata”, a tanker with 138,000 cbm capacity operated by Shell Shipping, has set sail from Cove Point LNG export facility in Maryland, lifting the first cargo. The tanker departed just after midnight on March 2, awaiting orders, according to shipping data which indicates Shell wants to sell it into the spot market. 

American shale gas exporters are beefing up their business with Chinese gas buyers: In February 2018, Cheniere and CNPC signed two contracts for longterm LNG offtake from Sabine Pass and Corpus Christi, a new facility under construction in Texas. These deals were preceded by preliminary export agreements from the Delfin LNG project off Louisiana’s coast, and the proposed Alaska LNG project. 

Paso Norte Pipeline Group (PNP), the developer of a new US-Mexico interconnector, has launched a 30 day open season inviting shippers to express interest in delivering natural gas from the Permian Basin in the western part of Texas to under-supplied markets in Central and Western Mexico. The bidding process and consultations will last until March 5, 2018. 

Bogged down by gas shortage and high electricity prices, Australia is re-evaluating the scale and speed of its next wave of LNG export projects. Any slow-down in project development would leave more room for US spot LNG cargoes finding a home in high-prices Asian markets.

News Nudges

Shell downstream LNG

Royal Dutch Shell updated investors on its downstream growth ambitions through 2018 and beyond. “Our unique downstream business is fundamental to delivering a world-class investment case,” said CEO Ben van Beurden. “Its unparalleled breadth, depth and the strength of our brand make our downstream business highly competitive, helping to generate strong free cash flows and returns,” added the CEO. Van Beurden said downstream was helping Shell to thrive during the global shift to a lower-carbon energy system. “We are making products from today’s technologies as good as they can be, with better fuels and lubricants. We are also helping to deliver tomorrow’s products, services and technologies. From battery-electric vehicle charging to next-generation biofuels and LNG for transport,” added John Abbott, Shell Downstream Director.


Russia clears US deal

US-based energy and LNG engineering companies McDermott International and CB&I said they had received antitrust clearance in Russia for their proposed combination. “With this clearance, McDermott and CB&I have received all the required competition authority approvals for the transaction,” they said. McDermott and CB&I agreed in December to combine in an all-stock transaction to create a company valued at $6 billion. Under the terms of the deal, McDermott stockholders will own around 53 percent of the combined company on a fully diluted basis and CB&I shareholders will own about 47 percent.


KBR refinancing

KBR, the Houston-based energy and LNG project engineering company, said it had launched a refinancing programme scheduled it to be completed by early April. “KBR expects that the refinancing will consist of secured credit facilities including a revolving credit agreement, a performance letter of credit Facility, and two term loans,” the company said. It also stated that it would not be issuing equity to the markets as part of this refinancing process.