Rebuking criticism of the oil & gas industry, BG's chief executive Helge Lund has called for "courage to continue investing in difficult times," while ensuring shorter cash-flow returns. "Otherwise we're simply setting ourselves up for the next boom," he said at the Gastech opening in Singapore.
Gazprom's pricing strategy for exports to Europe is a wildcard that will determine how much US LNG will find a home there. It's revenue vs market share, analysts at the Gastech conference in Singapore agree.
Buyers, spoilt for choice, have adopted a 'wait & see approach' but QatarGas does not see itself challenged. "We're optimising our established position but are not competing with US LNG," Alaa Abu Jbara, COO Commercial and Shipping at QatarGas said in Singapore.
Exports of US LNG to Europe will not be a game changer so "I see us more as a price taker in Europe," Charif Souki, chairman and CEO of Cheniere Energy said, suggesting Russian gas will continue to dominate much of the region.
LNG buyers and sellers in Singapore will soon be able to trade gas domestically at a secondary market, allowing power producers to hedge their gas imports and rely less on oil-indexed contracts.
Northwest Europe, most notably the UK Isle of Grain terminal, has overtaken Spain as the key supplier of reload cargoes from Europe. Though US LNG seeking a market of last resort in Britain, analysts doubt it can absorb or re-channel all excess volumes.
Flexibility is the key value for Indian Oil Corporation (IOC) when it comes to signing new LNG supply deals. The Indian buyer is seeking more pricing flexibility, shorter duration of contracts of just 10 to 15 years as well as the right to divert cargoes.
Prospects of US gas exports have been boosted by a report of the Department of Energy (DoE), saying that the Utica Shale may hold almost 800 trillion cubic feet of natural gas, making it the largest gas field in North America.
Natural gas production across all major US shale regions are seen declining from a high in May at 45.6 billion cubic feet per day (Bcf/d) to just 44.9 Bcf/d in September. Production from new wells is not large enough to offset production declines from existing, legacy wells, EIA analysts stated in the EIA’s latest Drilling Productivity Report.
Though Canada and more recently Argentina and China are producing commercial volumes of gas from shale formations or crude oil from tight rock, EIA analysts see additional gas supplies impact global LNG prices, but don't see any serious challenge for the predominant stance of US shale gas drillers anytime soon.
Antero Resources, with stakes in the Marcellus and Utica Shales, said it signed a 10-year agreement with the US unit of Japanese utility Chubu Electric Power to provide 70,000 MMBtu/day of feed-gas for processing and export from the Freeport liquefaction plant in Texas.
Two Houston-based companies, Targa Resources Partners and Sanchez Energy Corp., are planning to build a liquefied natural gas processing plant and feed-gas pipelines in the first LNG project targeting resources in the Eagle Ford Shale of South Texas.
Gloomy predictions by Moody’s low global LNG prices anticipate that most of the 30 proposed liquefaction projects in North America will be cancelled. The collapse in oil prices narrows the price advantage of Henry Hub linked US LNG to long-term contracts indexed to the Japanese Crude Cocktail (JCC).
Collapsing Henry Hub gas prices have shed 30% since recent high, making the US LNG exports more attractive. According to Morgan Stanley analysis, the US LNG price still shows a differential of more than $0.50 versus East Asian LNG prices on a delivered basis.
LNG Ltd remains to standby to ship US cargoes to India and the UK
LNG Ltd. has substantially reduced its net losses as it is waiting in the wings to start building two fully-approved liquefaction plants amid preliminary agreements to ship cargoes to the UK and India. The Australian developer of two North American LNG export projects has fully approved plans to build the Magnolia LNG plant at Lake Charles in the US state of Louisiana and at Point Tupper in Richmond County in the Canadian Atlantic Coast province of Nova Scotia. The company recently posted a consolidated half-year net loss of$13.6 million, down substantially compared with $80.2 million in H1-2015. CEO Roger Whelan pointed out that “Project development expenditure decreased from $68.4M (2015) to just under $7M in the 2016 period, reflecting the company’s liquidity management plan and sole focus on completing the marketing of Magnolia LNG’s offtake capacity.”
British Columbia courts utilities to invest into LNG fuel use
The Canadian province of British Columbia is calling for investments by Canadian utilities and others to build liquefied natural gas fuel infrastructure to help establish BC as a marine bunkering centre on the Pacific Coast capable of providing LNG to an increasing number of vessels. “Amendments to the Clean Energy Act will enable utilities to increase incentives provided to shipping companies for the conversion of vessels to run on LNG, invest in LNG bunkering infrastructure and increase the supply and use of renewable natural gas (RNG),” Energy and Mines Minister Bill Bennet said referring to bio-methane and made from waste.”