In this issue

 

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.

Tuesday, 01 December 2015

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.

Tuesday, 01 December 2015

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.

Though Shell's acquisition of BG is creating the world's largest LNG seller, Wood Mackenzie believes that regardless of the Tepco/Chubu merger, the buy-side is getting more fragmented.

ConocoPhillips, operator of the small-scale Kenai LNG export plant in Alaska, has filed an application with the US Department of Energy for authority to export cargoes to Free Trade Agreement Nations and Non-FTA countries. The permit would extend the current export license that expires in March 2016.

Despite the fall in global oil and gas prices, growth of LNG use in Asia's power sector is limited by coal. "Only very competitively priced LNG has a chance to beat coal in Asia," the International Energy Agency's (IEA) executive director Dr Fatih Birol told the Singapore Energy Week today.

News Nudges

Commissioning cargo departs from Corpus Christi Train-1

The first commissioning cargo has loaded and departed from Train-1 at Cheniere Energy’s Corpus Christi LNG export terminal in Texas. The LNG was loaded onto the 174,000 cubic metres capacity carrier “Maria Energy”, charted by Houston, Cheniere’s marketing unit. Start-up of Train-1 marks the first export of LNG from the state and from a greenfield liquefaction facility in the lower 48 states. All three Corpus Christi trains combined will produce up to 13.5 mtpa. The first two Trains are fully contracted and Train 3 is mostly contracted. Any excess capacity will be available for Cheniere Marketing to sell. Corpus Christi is being constructed at a cost of $15 billion.