Low-cost LNG imports gains attractiveness in the United Arab Emirates (UAE) as gas-burn for power generation is outstripping domestic production, while upstream investments stall. Abu Dhabi now resorted to chartering an FSRU in July, following Dubai’s example – yet while “Dubai is expected to source more LNG cargoes from the US, Abu Dhabi gets all its requirement this year from ADGAS’s Das Island plant – and that is domestic gas supply” says Priyank Srivastava, oil & gas analyst.
LNG cargoes from Sabine Pass going to Argentina face challenging economics on a purely point-to-point basis, data released by the US government and Argentine state energy firm Enarsa show. A free-on-board (FOB) price of $4.51/mmBtu was paid for each of the six cargoes sold by Cheniere from its Sabine Pass liquefaction plant, according to figures by the US Department of Energy (DOE) – not quite enough to cover costs. As South America loses some attractiveness for US LNG, delivery of a fist cargo to China has just opened up a potentially vast export market.
Assertive buyers ask for reworked terms of long-term LNG imports, making use of their rising bargaining power increases as a wave of new supply from the US and Australia enters a subdued global gas market. ‘Homeless LNG’, estimated to amount to up to 50 mtpa by 2020, is prompting Indian and Japanese buyers to ask for changing terms of trade of LTCs to better match spot rates. Resale of excess cargoes through swaps is yet another trend to reign in the LNG glut.
Despite challenging market conditions, global capital expenditure on floating import units is anticipated to surge, with more than 14 countries are expected to commission their first FRSU during 2016-2022.
Det Norske Veritas and Germanischer Lloyd (DNV GL), an international classification society, have given IHI the approval in principle for its design of a Floating LNG Power Station (FLPS). The concept is a combination of a FSRU and a power plant.
Plans for several LNG-fuelled power plants in Chile have been shelved after none of the projects won contracts at the country’s latest electricity tender. A series of wind and solar power projects secured more than half of the contracts at auction.
Ivory Coast, Ghana and South Africa are tipped to become front-runners in setting up integrated LNG-to-power projects. Developers can arrange attractive import terms as a glut of new gas supply from Australia and the United States is entering global markets while demand from key Asian buyers remains subdued.
Cleaning up China’s power mix is becoming an increasingly tedious process as domestic shale gas production slows. Faced with a challenging geology and spiralling costs, the government cut 2020 targets by a third to around 30 Bcm, simultaneously to slashing subsidies – but analysts call even these reduced goals ‘unrealistic’.
With exports of pipeline gas to Mexico on the rise, and LNG exports from Louisiana ramping up, the United States is forecast to become a net exporter of natural gas by the second half of next year. “For the first time since 1957, the United States is on track to export more natural gas than it imports,” commented said EIA Administrator Adam Sieminski. Yet, the spread widens between Marcellus spot and Henry Hub gas prices.
The US Federal Energy Regulatory Commission (FERC) has prepared a final environmental impact statement (EIS) for the Golden Pass LNG Export Project proposed by Golden Pass Products, LLC and Golden Pass Pipeline, LLC.
Northwest Europe is evolving beyond being ‘a market of last resort’ for US LNG, as rising gas prices on the forward curve are propping up the economics and profit margins for shipping cargoes across the Atlantic. Just short of 70 mtpa nameplate capacity will be commissioned by 2019 from five US liquefaction projects. Over in France, the Dunkirk regas terminal awaits its commissioning cargo by July 8.
Over $5.3 billion have been spent to widen the Panama Canal – a strategic shortcut for sea voyages between the Atlantic and Pacific oceans. Exporters of US shale gas now aspire to send up to 550 LNG tankers by 2021 through that vital sea-link from the US Gulf Coast to Asia.
A 3-month clock has started ticking for Canada’s prime minster Justin Trudeau to make a decision on the Petronas-led Pacific NorthWest LNG project on Lelu Island, BC. The count-down started after the project’s final filing was posted on the website of the Canadian Environmental Assessment Agency on June 27. [ http://www.ceaa-acee.gc.ca/050/document-eng.cfm?document=114745 ]
Eying to export LNG from the US Gulf Coast, Houston-headquartered Eos Investment Group has started the permitting process in Chile for a Floating Storage and Regasification Unit (FSRU) to be deployed as an import terminal. Meant to become Chile’s fourth such facility, the GNL Talcahuano FSRU will be located at a port in the Biobio region.
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.”