LNG

Shell Plc has confirmed its shareholding with four other partners in the new LNG export plant being developed in the United Arab Emirates by Abu Dhabi National Oil Company’s (ADNOC) at Al Ruwais.

The Nigeria LNG plant at Bonny Island in the Niger Delta is set for more feed gas from development of the onshore Ubeta gas field first discovered 60 years ago in the West African nation with world-class oil and gas untapped reserves.

Nigerian National Petroleum Corp., the state energy company, and French major TotalEnergies said they had agreed to develop the field at an initial cost of $550 million.

TotalEnergies is the operator of the onshore licence for the Nigerian Ubeta's gas field with a 40 percent while NNPC will own 60 percent.

The field is located about 80 kilometres northwest of Port Harcourt in Rivers state, and the current licence covers two fields currently in production, the Obagi oil field and the Ibewa gas and condensate field.

The Ubeta gas volumes will be processed at the nearby Obite gas treatment centre and supplied to both the Nigerian domestic gas market and to the Nigeria LNG plant.

Schedule

The production start-up is expected in 2027, with a plateau of 300 million cubic feet per day, or about 70,000 barrels of oil equivalent per day including condensates.

TotalEnergies, which has a 15 percent stake in the Bonny Island liquefaction and export project, said the Ubeta field would be part of and expansion of LNG output from 22 million tonnes per annum to 30 MTPA.

NNPC Chief Executive Mallam Mele Kyari said he appreciated the support from stakeholders as well as from the administration of Nigerian President Bola Tinubu.

“We appreciate presidential support for the fiscal terms of the agreement,” Kyari added.

The TotalEnergies Senior Vice President African Exploration and Production, Mike Sangster, said the Ubeta project is the latest in a series to tap associated gas from oil production.

“Ubeta fits perfectly with our strategy of developing low-cost and low emission projects, and will contribute to the Nigerian economy through higher LNG exports,’ Sangster added.

Train Seven

The Nigerian LNG plant has been in production since 1999 and the shareholders in addition to TotalEnergies are held by NNPC with 49 percent, Shell with 25.6 percent and Italy’s Eni with 10.4 percent.

The facility has capacity to producer 26 MTPA of LNG from six liquefaction Trains, though the development of a seventh LNG Train has suffered from delays.

The Royal Navy warship “HMS Duncan” has deployed from Portsmouth to the Red Sea as part of the mission to keep open international shipping routes amid renewed attacks on vessels by the Iranian-backed Houthi rebels of Yemen, ending hopes that shipping in the region could possibily return to near normal by the end of 2024.

The attacks have forced LNG carriers, oil tankers, containerships and other vessels to continue to be re-routed to longer and more expensive journeys around southern Africa amid renewed concerns that the Israel-Hamas war would further destabilise the Middle East now that Iran’s proxy, the Houthis, are back in action.

Shipping data shows that there has almost been a complete halt on LNG carriers entering the Red Sea area during the first five months of 2024.

In April 2024 a total of just 159 ships of all types used the Suez Canal, marking a sharp decline of 85 percent in the traffic from more normal times.

Re-routed

A total of 2,922 vessels used the Cape of Good Hope route in March, and the number was little changed in April at 2,873.

Maritime traffic at the Cape of Good Hope increased by 125 percent in the last six months, reflecting the diversions from both the Suez Canal and Bab-el-Mandeb Strait off Yemen.

The number of containerships and LNG carriers using the Cape was up by 260 percent and 180 percent respectively in April, according to shipping data.

All countries in the Eastern Mediterranean, including Turkey, have found themselves at the end of a dead-end for all trade from Asia, as ships no longer reach them through the Suez Canal and instead have to go round South Africa and enter the Med by the Strait of Gibraltar, adding to costs.

Meanwhile, the United States Navy and the Royal Navy have led the most strikes against Houthi targets in retaliation for their attacks on vessels.

The Houthis have launched repeated drone and missile strikes in the Red Sea region since November 2023, later expanding their attacks to the Indian Ocean.

The group has said it will attack any ships sailing towards Israeli ports, even in the Mediterranean Sea, though there have as yet been no attacks on vessels in the East Med area.

Shipping protection

The UK government said that the Type 45 destroyer just deployed will relieve its sister ship “HMS Diamond”, which has been protecting shipping lanes in the Red Sea from Houthi attacks since before Christmas.

The Royal Navy said that “HMS Duncan” was a like-for-like replacement as it is armed with the same Sea Viper missile system and equipped with the same radar systems, which are able to accurately detect faraway threats.

During her deployment, “HMS Diamond” has shot down nine drones and one missile, launched by Houthis from the coast of Yemen at cargo ships.

“The 200 men and women of ‘HMS Duncan’ have worked to ensure that their ship is ready to deploy, successfully completing trials and training last week in preparation for the deployment,” said a Ministry of Defence statement.

“This will see the ship work to ensure freedom of navigation and make international waters safer and more secure for merchant vessels,” the statement added.

“HMS Duncan” spent five months leading NATO’s premier task group in the Mediterranean Sea last year, until handing over flagship duties to the Italian Navy in December.

The ship is now ready for more operations, with over 60 new members joining the ship’s company. 

The Panama Canal Authority said it was trying to increase US liquefied natural gas transits and had invited energy company executives to Panama for discussions as water levels recovered on the Canal after a prolonged drought blamed on the “El Niño” weather effects.

The ACP, as it is known from its Spanish name Autoridad del Canal de Panamá, said traffic was recovering from a low point at the start of 2024 when booking slots for vessels were cut to 22 ships from all sectors.

During the Atlantic Basin-Pacific Basin transits the ships are lifted from sea level in locks up to the Panama Canal’s Gatun Lake where the water levels had dropped substantially and the levels have risen again.

Bottlenecks

However, during the first quarter most US LNG carriers looking to reach Asia were continuing to choose the longer trans-Atlantic route around South Africa to avoid shipping bottlenecks impacting transits via the Panama Canal, and as security concerns also increased in the Red Sea area to take the Suez Canal out of play.

During March and April up to 30 LNG carriers per month left US LNG plants with Asian cargoes and headed for the longer route to Asia rather than use the Panama Canal.

The latest ACP data showed that only 14 US LNG carriers reached the Asian market via the Panama Canal during the first quarter of 2024 compared with 40 LNG vessels during the same period of 2023.

LNG carrier transits through the Panama Canal's Neopanamax locks had amounted to under 5 percent of the total in the past two months compared with more than 60 percent by other large vessels like containerships.

The ACP said it was now working to modify transit slot allocations and has sent out a survey to all Canal users, including LNG customers, to identify their needs.

Panama invitation

Now that transits have returned to near normal the ACP said it was looking for ways to guarantee crossings for LNG carriers from the US Gulf Coast and other areas and said it had invited LNG companies to come to Panama later in May for talks.

“We will talk and define parameters and will listen to the very big aspirations of the companies,” a statement said.

The ACP has proposed building water reservoirs as medium-term to long-term solution to try and mitigate the drought and low-water conditions being repeated on a regular basis in the Canal system.

The project to widen the Canal at a cost of $5.5 billion was inaugurated eight years ago in June 2016 enabling the largest LNG carrier and containerships to transit the waterway.

While LNG from the US Gulf Coast has mostly pointed at an Atlantic crossing to Europe over the past year, Asia is still a key market for US LNG through the Canal.

Recovery plan

The Canal expansion work included two new lock complexes with a total of 16 gates, eight on the Pacific side and eight on the Atlantic side.

The primary action plan of the ACP is to tap additional rivers to join the Chagres River, the largest river in the Panama Canal's watershed.

The original Canal builders had dammed the Chagres River in two places to create Gatun Lake and the water used for the locks.

The ACP is now seeking to accelerate its plan to divert four additional rivers into the watershed by 2030.

April 9 (LNG) - The UK is scheduled to receive a cargo this week from Qatar as LNG prices remain firm in the Atlantic Basin. The UK wholesale natural gas price on the National Balancing Point market was last at the equivalent of $8.735 per million British thermal units.

   The “Tangguh Palung” with 154,800 cubic metres capacity is scheduled to discharge a cargo on April 13 at the UK South Hook import terminal at the Port of Milford Haven, according to shipping data. The shipment was lifted on March 15 from QatarEnergy’s Ras Laffan export plant in the Arabian Gulf.

Sonatrach, the Algerian state energy company and LNG producer, has signed an accord with French major TotalEnergies to expand cooperation in the exploration and production of natural gas and in the LNG business.

The Sonatrach-TotalEnergies memorandum of understanding outlines the realisation of a work programme for the appraisal and development of natural gas resources in the Northeast Timimoun region.

The accord includes synergies with existing processing facilities for production from the Timimoun field to reduce costs and emissions.

Sonatrach and TotalEnergies plan to “consolidate their partnership and expand their cooperation” in their gas resources and LNG business.

Sonatrach added that the accord “defines the framework of cooperation between the parties” with the objective of concluding a hydrocarbon contract in the identified area of ​​interest.

Interests

TotalEnergies is active in oil and gas exploration and production through its interests in the Tin Fouyé Tabankort (TFT) and Timimoun gas fields, the Berkine Basin oil fields (Blocks 404a and 208) and via LNG supply contracts with Sonatrach.

“Sonatrach and TotalEnergies operate, within the framework of association contracts, the contractual areas of TFT II, ​​TFT Sud, Timimoun and Berkine,” the statement noted.

These are among the largest gas fields Algeria and located in the prolific Illizi-Ghadames Basin.

Total and Sonatrach are also advancing with their petrochemical project development for Western Algeria.

“This memorandum of understanding reflects our shared willingness to expand our strategic partnership with Sonatrach,” explained Julien Pouget, Senior Vice President Middle East and North Africa, Exploration and Production at TotalEnergies.

Sonatrach and TotalEnergies earlier in 2023 extended their cooperation in the LNG sector with a new contract.

In 2025, Sonatrach will thus be delivering 2 million tonnes per annum of LNG to TotalEnergies at the LNG importer terminal at Fos-Cavaou, west of Marseille.

Energy security

“This will contribute directly to the security of energy supply in France and Europe,” the statement added.

Algerian LNG exports have been recovering from a low ebb and increased by almost 9 percent to 13.45 million tonnes in 2023 from 12.40MT in the previous year from the Arzew and Skikda liquefaction plants on the Mediterranean Coast.

Algeria is also a main pipeline natural gas supplier to Europe via Trans-Mediterranean pipelines supplying Italy as well as Spain and Portugal.

Moody’s Investors Service, the US ratings agency, said in a report into liquefied natural gas that Chinese demand in 2024 will be similar to last year and while European gas markets remained resilient the region’s reliance on LNG could increase price volatility.

Angola, a liquefied natural gas exporter in the Atlantic Basin for more than 10 years, said it was leaving the Organization of Petroleum Exporting Countries because membership of the crude oil cartel was not serving its interests.

The Panama Canal Authority has further reduced ship transits because of drought blamed on the “El Niño” weather effects to 24 vessels in November and booking slots will be cut to 22 ships in December, hitting LNG, oil and containership traffic on the Atlantic-Pacific Basin crossings and sending bidding for slots up to $2 million or more as waiting times grow to more than a week.

Asian spot liquefied natural gas prices fell and European wholesale values declined by a bigger margin as the early European Union gas storage build continued at a steady pace, while German import volumes dropped off and China’s deliveries increased.