LNG

Chevron Corp., the US major oil and gas company with LNG operations in Australia and Africa, has received a vote of confidence from US investor Warren Buffett whose Berkshire Hathaway has taken its stake to almost 7 percent.

Buffett’s Berkshire Hathaway has increased its stake in San Ramon, California-based Chevron by over 15.84 million shares.

This transaction has brought Berkshire Hathaway's total share count in Chevron to 126.09M shares, representing about 5.96 percent of Buffett’s investment portfolio and 6.81 percent of Chevron's outstanding shares.

Lower price

According to Berkshire Hathaway data, the Chevron shares were acquired at an average price of $149.16 each and were valued at $18.80 billion.

Buffett is a celebrity figure among America’s small retail investors and is known to his fans as “The Oracle of Omaha”.

Buffett’s other main energy investment is in Houston, Texas-based Occidental Petroleum which forms 4.19 percent of the Berkshire Hathaway portfolio. The Buffett firm also has a huge 50 percent represented by shares in Apple Inc.

Chevron’s shares have recently risen to $154.63 per share, backed by positive earnings and the company’s acquisition agreement signed in October 2023 with US oil and gas company Hess Corp.

The value of the Buffett stake has already risen and at current prices on February 19, 2024, is now worth just short of $20Bln at $19.49Bln.

Chevron recently reported annual net profits of $21.41Bln, down from $35.60Bln in the previous year, though apart from 2022 the Chevron performance was the strongest since 2013.

LNG projects advance

Chevron listed among its highlights as achieving first natural gas production from the Gorgon Stage 2 development in Western Australia where its operates both the Gorgon LNG and Wheatstone LNG export plants.

Chevron also reached a final investment decision with partners to construct a third gathering pipeline that is expected to increase natural gas production capacity at the Leviathan gas field and a future LNG hub in the East Mediterranean offshore Israel.

The company additionally expanded the Bayou Bend carbon-capture and sequestration project on the US Gulf Coast through an acquisition of nearly 100,000 acres.

However, Chevron assets in the Permian Basin in Texas and New Mexico also helped to underpin the earnings.

Chevron posted an increase in its Permian production by 10 percent in 2023 with US quarterly output coming to 1.16 million barrels per day compared with 895,000 barrels per day, helped by the 2023 acquisition of US independent oil and gas company PDC Energy.

Chevron is also paying $53Bln for New York-based Hess, giving it access to major oil discoveries in the South American nation of Guyana as well as more US shale assets in the Bakken Shale Basin of North Dakota.

Golar LNG Ltd, the shipping company now specialising in a small but growing fleet of floating liquefied natural gas production and import project vessels, said the “Hilli Episeyo” had seen its 100th cargo lifted from offshore Cameroon in West Africa.

The Hong Kong floating LNG import terminal, the “Bauhinia Spirit” FSRU deployed to the east of the Soko Islands, is operating well after entering service in July 2023 and has been receiving diverse cargoes.

CLP Power Hong Kong and The Hongkong Electric Company are the charter owners of the facility and they have recently updated investors on the benefits of LNG imports for the former British colony handed back to China in 1997.

“The operation of the terminal has enhanced Hong Kong’s fuel supply stability by the addition of a new supply source for natural gas, facilitating the city’s energy transition,” they said.

The “Bauhinia Spirit” is the world’s largest FSRU and has an LNG storage capacity of 263,000 cubic metres. 

It is moored at the jetty of the terminal to receive, store and regasify LNG before the natural gas is sent by two separate subsea pipelines to CLP Power’s Black Point Power Station and HK Electric’s Lamma Power Station.

“The terminal gives the power companies direct access to international LNG markets and provides a long-term alternative fuel source to meet Hong Kong’s generation needs,” they added.

Reliability

“It also strengthens the companies’ supply reliability, and ability to source competitively-priced gas for the benefit of customers and Hong Kong as a whole,” the statement explained.

The CLP Holdings Chairman, Sir Michael Kadoorie, said that the construction of the offshore LNG terminal took place in the midst of the pandemic, exemplifying Hong Kong’s engineering prowess and the city’s can-do spirit. 

“Being the first of its kind in Hong Kong, the offshore LNG terminal bears great significance in supporting the city’s energy transition,” Kadoorie added.

“CLP Power and HK Electric have been serving Hong Kong for over a century. This new terminal signifies a proud collaboration between us to support Hong Kong’s energy development,” he explained.

“We would like to take this opportunity to express our greatest gratitude to the many parties who helped make this engineering wonder possible - our business partners, marine experts, engineers, technicians, construction workers and HK Electric and CLP Power colleagues,” Kadoorie stated.

John Lee, Chief Executive of the Hong Kong Special Administrative Region (HKSAR), said that the offshore LNG terminal was a great benefit to the people of Hong Kong.

“The terminal not only ensures a more reliable and diversified energy supply for Hong Kong, but also helps to promote more stable electricity prices,” Lee concluded.

Subsea 7 SA, the Oslo-listed oil and gas field services company, was awarded a large contract by Azule Energy in the framework of the Agogo Integrated West Hub Development Project offshore Angola in southwest Africa.

The contract scope includes the transport and installation of around 98 kilometres of flexible pipes, 30km of umbilicals and associated subsea structures in water depths of around 1,700 metres.

UK major BP and Italian energy company Eni agreed to form the 50-50 joint venture company Azule Energy a year ago in early March 2022 in the LNG-producing African state.

Azule Energy was set up as the new holding entity for the Angolan assets of both BP and Eni.

“Project management and engineering have commenced and will be managed from Subsea 7's offices in Angola, France, UK and Portugal,” said Subsea 7.

Fabrication will take place at the Sonamet yard in Lobito, Angola, and offshore operations are planned between the fourth quarter 2024 and the fourth quarter of 2025.

“We are pleased to have our first contract with Azule Energy and to continue supporting the development of the Angolan offshore energy industry,” said Franck Louvety, Subsea 7 Vice President for Africa, the Middle East and Caspian regions.

Record

Subsea7 noted that it had been working for over 40 years in Angola and has an important track record in-country.

The company also said it defined a “large contract” as being between $300 million and U$500M.

Since its formation Azule has become Angola’s largest producer, holding stakes in 16 licences, as well as participating in the Angola LNG joint venture.

The European energy companies have embarked on giving Azule a strong pipeline of new projects starting up over the next few years, including the new Agogo project awarded to Subsea 7.

Azule is also leading the development of the New Gas Consortium (NGC), the first non-associated gas project in the country, which will support the energy needs of Angola’s growing economy, its decabonization path and strengthen its role as a global LNG player.

Angola is already the second-largest oil producer in Sub-Saharan Africa and uses associated gas to produce LNG sourced at its liquefaction plant, operated by the main shareholder, the US major Chevron Corp.

Eni and BP are also shareholders in Angola LNG along with France’s TotalEnergies and the Angolan state energy company Sonangol.

The Angola LNG plant is located 350 kilometres north of the capital Luanda in Soyo, at the mouth of the Congo River, and is one of the world’s most modern LNG processing facilities.

A pipeline network of over 500 kilometres delivers gas from offshore oil fields to the Soyo plant designed to process 1.1 billion cubic feet of natural gas per day and produce 5.2 million tonnes per annum of LNG.

Despite holding almost 9 percent of the world’s proven reserves of natural gas, Africa remains the most energy-poor continent while industries rely on expensive, inefficient and polluting sources of energy leaving hundreds of millions of households lacking modern energy access, according to a new International Gas Union report.

JGC Holdings Corp., the Japanese energy engineering company with current major liquefied natural gas project work in progress, reported a 30 percent jump in nine-month sales as the Yokohama-based company maintained a healthly backlog of contracts.

JGC said nine-month sales came to 416.6 billion yen ($3.17 billion) compared with 319.4Bln ($2.43Bln) in the period to the end of December 2021.

Among the contracts won by JGC was as head of a consortium with South Korea’s Samsung Heavy Industries for the construction of a nearshore floating LNG project in Malaysia planned by national oil and gas company Petronas.

This facility will be the third floating LNG plant to be constructed for an offshore gas fields in Malaysia. It will have minimum production capacity of 2 million tonnes per annum of LNG and was scheduled for completion in 2027.

JGC’s main responsibilities will cover the engineering, procurement and commissioning work for the FLNG topside, the associated onshore facilities as well as the management of the overall project.

JGC’s consortium partner SHI would be responsible for the FLNG hull EPC work and the modular fabrication of the topside.

The company’s earnings statement showed operating profits rose to 25.3Bln ($185 million) versus 15.3Bln yen ($116M) in the period.

Net profits amounted to 22.5Bln yen ($171 million), down from 44.3Bln yen $337M) in the prior year nine-month period.

JGC’s contracts backlog was 1.58 trillion yen ($12.5 billion) at the end of December 2022.

LNG Canada

The company was also still working towards completion of the LNG Canada project at Kitimat in British Columbia being constructed by Shell and partners. JG's partner on the venture is Fluor Corp. of the US.

JGC was additionally involved in the successful completion of the Coral South floating LNG venture offshore Mozambique for Italian energy company Eni and partners.

FLNG is one of JGC’s speciality spheres and it has been retained along with Europe's Technip Energies for the front-end engineering and design for a similar project offshore Nigeria.

Other JGC outstanding energy industry contracts include the Basra Oil Refinery modernization, the construction of an oil-gas separation unit in Saudi Arabia as well as LNG import terminal work in Taiwan.

Italian government ministers have signed an accord with the Republic of Congo in West Africa to increase natural gas production and exports under a plan also involving future LNG shipments.

Italian Minister of Foreign Affairs, Luigi di Maio, and the European Union member’s Minister for Ecological Transition, Roberto Cingolani, signed the letter of intent with Congolese counterparts, including Congo's Minister of Hydrocarbons Bruno Jean Richard Itoua.

Also present was the Chief Executive of Italian energy company Eni, Claudio Descalzi, and after the signing the parties met in the capital Brazzaville with the President of the Republic of Congo Denis Sassou Nguesso.

“The agreement provides for the acceleration and increase of gas production in Congo, primarily through the development of an LNG project with start-up expected in 2023,” said a statement.

The floating LNG joint venture would have capacity of more than 3 million tonnes per annum of LNG once fully operational.

“LNG exports will allow the valorization of the production of natural gas that exceeds Congo’s internal market needs,” explained the statement.

The Republic of Congo and Eni have also agreed to define initiatives to promote decarbonisation, renewable energy and the development of an agricultural supply chain to produce feedstock for bio-refining without competing with the food chain.

“Currently Eni is the only company committed to developing the huge gas resources of the Republic of Congo,” said the Milan-based oil and gas company.

It currently supplies natural to the Congo Power Plant (CEC), which guarantees 70 percent of the country's electricity generation and Eni has been present in Congo for over 50 years.

At the start of March 2022, New Fortress Energy Inc., the New York-based supplier of LNG for power, signed an accord with a Eni’s Congo subsidiary for the deployment of LNG production equipment off the coast of the African nation for a period of 20 years.

NFE said it would set up its “Fast LNG” facility to produce LNG from the associated gas fields off the Congo.

The deal in the form of a preliminary Heads of Agreement provides a framework for negotiating a long-term tolling agreement between NFE and Eni.

NFE said that this would be for the full capacity of the facility and for the purchase by NFE of around 1.2 million gallons of LNG per day pursuant to a 20-year free-on-board (FOB) sales and purchase agreement.

The Republic of Congo’s associated gas comes from its oil production.

Wes Edens, Chairman and CEO of NFE, described the NFE-Eni deal at the time as a “landmark partnership” with the Italian company seen by Edens as the “perfect partner” for the “Fast LNG” unit

The NFE “Fast LNG” design pairs modular, midsize liquefaction technology with jack-up rigs or similar floating infrastructure to enable a much lower cost and faster deployment schedule than floating liquefaction vessels.

Under the NFE plan, a permanently moored floating storage unit (FSU) would serve as an LNG storage facility alongside the floating liquefaction infrastructure, which can be deployed anywhere where there is abundant and stranded natural gas.

French major TotalEnergies has pledged to restart the Mozambique LNG project construction in 2022 as it also expanded its Mozambican operations by completing the acquisition of BP’s retail fuel network, wholesale business and fuel import terminals at three of the southeast African nation's ports. 

Indian state company Oil and Natural Gas Corp. (ONGC), whose overseas arm holds a stake in the TotalEnergies-led Mozambique LNG export project, plans to raise by four-fold its domestic exploration and production acreage to find more natural gas and oil in India and cut the bill for imports.

Chevron Shipping Company, which has a fleet of more than 30 tankers including 10 LNG carriers as the transportation arm of Chevron Corp., said it had joined the Sea Cargo Charter, a benchmark initiative for responsible shipping activities and transparent reporting as part of the International Maritime Organization’s efforts to reduce emissions, especially in ports.