LNG

Australian coal-seam gas explorer Elixir Energy has issued a quarterly activities report outlining progress on CSG projects in Queensland and Mongolia.

Origin Energy, the Australian upstream supplier to the Australia-Pacific LNG export plant in Queensland facing a A$18.4 billion (US$12.3 billion) buyout offer from a two-firm consortium led by Canada's Brookfield Asset Management, said the due diligence on the deal was largely completed.

Origin said in a statement to the Australian Securities Exchange that it was continuing its “active engagement” with Brookfield and consortium partner MidOcean Energy, an LNG company formed and managed by US-based energy investor EIG.

“Origin advises that the Consortium has substantially completed due diligence and active engagement continues on a non-exclusive basis in relation to the submission of a binding proposal,” said Origin.

The Sydney-based company noted that any binding proposal would be subject to a number of conditions, including approval by Australian regulators.

“At this stage, shareholders do not need to take any action and Origin will continue to keep shareholders updated in accordance with its continuous disclosure obligations,” said the company.

Origin’s business comprises Integrated Gas with its feed-gas sales to Australia-Pacific LNG and a utilities and domestic power markets unit, the Energy Markets division.

This is made up of retail and wholesale electricity sales and natural gas supplies to the states of Queensland, New South Wales, Victoria and South Australia.

Targeted

The bid for Origin from Brookfield comes after its offer in 2022 to buy Australia's leading utility, AGL Energy, was rejected.

The Origin buy-out proposal was made through the Brookfield Global Transition Fund, which is co-run by Mark Carney, the former Governor of the Bank of England.

Under the proposal to acquire Origin, Brookfield would take over the company’s Energy Markets business, while MidOcean Energy, in the form of EIG, would take control of Origin's Integrated Gas business, including its 27.5 percent stake in APLNG.

The APLNG plant stake that would go to EIG’s MidOcean under the Origin buy-out is a supplier to China and one of its shareholders is China Petroleum & Chemical Corp, known as Sinopec.

Origin is the main upstream operator for coal-seam gas supply to the facility while US major ConocoPhillips is the plant operator.

APLNG came on stream in 2016 and has two liquefaction Trains with total nameplate capacity of around 9 million tonnes per annum with about 7 MTPA going to China.

The plant sits alongside two other CSG-to-LNG facilities on Curtis Island, the Shell-run Queensland Curtis LNG plant and the Gladstone plant, operated by Santos.

Sembcorp Marine of Singapore said it signed a contract with US engineering company Bechtel for module assembly of the second liquefaction Train proposed for Woodside’s Pluto LNG export project in Western Australia.

Australian wholesale natural gas prices more than doubled year-on-year and the three LNG plants in the state of Queensland shipped record volumes in the July-to-September period because of higher spot LNG prices and firm demand ahead of the North Asia winter.

The Australian Energy Market Operator (AEMO) said that total East Coast Australia gas demand increased by 5 percent in the third quarter compared with the same period of 2020.

In its third-quarter “Quarterly Energy Dynamics” report, AEMO gave an overview of prices and said that year-to-date demand for LNG from the three state of Queensland export plants, which have a combined nameplate capacity of 25.3 million tonnes per annum, came to over 20.5MT of LNG during the first nine months of 2021.

AEMO noted that the quarterly average prices were at record levels across all East Coast gas markets, averaging $10.74 per gigajoule (GJ) compared with $4.47 per GJ in the third quarter of 2020.

“It is the first time every market has averaged over $10 per GJ,” said the report.

The various Australian wholesale natural gas markets saw prices rising in Adelaide by 113 percent, Brisbane by 155 percent and Sydney logging an increase of 156 percent.

“Queensland LNG exports continue to be influenced by strong Asian LNG demand and record high international gas prices,” said the AEMO report.

“Demand for Queensland LNG is usually lower in the Northern Hemisphere summer but Q3 2021 demand was the highest Q3 on record, and the fourth highest quarter on record,” it added.

“Year-to-date demand has totalled 1,038 PJ, the first time demand has exceeded 1,000 PJ in the first three quarters of the calendar year and is tracking 62 PJ higher than the previous record in 2019,” stated AEMO.

By participant, the Santos-operated Gladstone Liquified Natural Gas (GLNG) recorded the largest increase of 27.7 PJ, while Shell’s Queensland Curtis LNG (QCLNG) increased by 2.4 PJ, and Australia-Pacific LNG (APLNG), operated by ConocoPhillips, increased by 2.1 PJ.

The report added that there were 87 LNG cargoes exported from Queensland  in the July-September quarter, up from 78 in the same period in 2020.

The number of GLNG cargoes exported increased from 21 to 29 over the same period, QCLNG cargoes numbers rose from 28 to 29, while APLNG cargoes numbers were unchanged at 29.

TotalEnergies has completed a transaction in Australia with the US equity fund Global Infrastructure Partners in relation to the downstream facilities of the Gladstone LNG project in Queensland for a sum of more than US$750 million.

The downstream assets are owned by TotalEnergies subsidiary Total GLNG Australia (TGA).

“As part of this transaction, GIP will receive a throughput-based tolling fee calculated on TGA’s share of gas processed through the downstream facilities over a period of 15 years,” explained TotalEnergies.

TGA retains full control and ownership of its 27.5 percent interest in the Gladstone LNG downstream joint venture.

“We have worked closely with GIP to achieve this infrastructure transaction and are happy of this first collaboration with such an experienced infrastructure partner,” said Jean-Pierre Sbraire, Chief Financial Officer at TotalEnergies.

Monetization

“This monetization of infrastructure assets contributes to focusing further TotalEnergies’ capital on core producing assets,” he added.

The Gladstone LNG plant, operated by Adelaide-based Santos, is one of three coal-seam-gas to-LNG ventures on Curtis Island near the port of Gladstone.

The other GLNG project partners are Malaysian oil and gas company Petronas and Korea Gas Corp

The integrated LNG project consists of CSG gas wells producing feed gas from the Fairview, Arcadia, Roma and Scotia fields, located in the onshore Bowen-Surat Basin in Queensland.

The GLNG plant and the neighbouring Shell-operated Queensland Curtis facility and the ConocoPhillips-run Australia-Pacific plant ship cargoes to Asia, mainly China, South Korea and Japan.

The GLNG project includes pipeline transportation of the CSG over a distance of around 400 kilometres to the liquefaction plant.

The plant, which has been on stream since 2015, consists of two Trains with a total nameplate capacity in excess of 7.8 million tonnes per annum. 

Elixir Energy, the Australian exploration and production company with plans for a small-scale liquefaction plant using coal-seam gas to provide clean fuel for trucks in Mongolia, is making progress in assessing resources in the South Gobi desert region.

Origin Energy, the Australian utility and upstream supplier for the Australia-Pacific LNG export plant in Queensland, whose other shareholders are ConocoPhillips and Chinese major Sinopec, said the plant logged record production.

The Gladstone liquefied natural gas joint venture involving Santos of Australia, Petronas of Malaysia, Korea Gas Corp, and French major Total, plans to open up more Queensland coal-seam gas supplies to boost the long-term viability of the plant on Curtis Island.

Origin Energy, a shareholder in the Australia Pacific LNG plant in Queensland with Sinopec of China and ConocoPhillips, reported record revenue from its share of 33 cargoes shipped in the first quarter at an average price of US$10.84 per million British thermal units.

Origin said the selling price for first-quarter cargoes was 2 percent higher than the US$10.59 per MMBtu price in the fourth quarter of 2018 and 34 percent up on the average price of US$8.10 per MMBtu fetched in the first three months of 2018.

“JCC (long-term contract) prices softened in the early part of the quarter, as economic growth concerns and US sanction waivers for Iran helped ease oil market tightness. Prices have since recovered, driven by OPEC output cuts and further supply outages in Venezuela,” explained Origin in its quarterly activities report.

The APLNG cargoes shipped in the first quarter were only three more than the 30 that departed in the same three months of 2018.

The plant produces almost 9 million tonnes per annum from two Trains and 7.6MTPA is contracted to Sinopec, whose formal name is China Petroleum & Chemical Corporation.

Sydney-based Origin said its share of production from the APLNG plant at Curtis Island was 834,100 tonnes in the first quarter, a 3 percent rise on the 772,800 tonnes taken in the year-ago quarter.

Origin said its more than one-third share of APLNG sales brought in record revenue of A$763.9 million (US$540), a 53 percent increase compared with the A$499.9M earned in the same quarter of 2018.

Origin runs two divisions, Integrated Gas, including upstream coal-seam gas for LNG, and Energy Markets, its gas and electricity retail and wholesale business.

Domestic natural gas sales brought in A$75M in the quarter, down 17 percent from the previous quarter’s A$90M, though also lower than the year-ago period’s A$82.7M.

“Natural gas sales decreased 10 percent on the prior quarter, reflecting seasonal demand and the ending of short-term wholesale contracts in Queensland. This decline in sales was partly offset by more gas utilised in generation,” said Origin.

Origin Chief Executive Frank Calabria said the APLNG plant continued to deliver strong earnings.

“This result was driven by continued reliable operational performance and higher realised commodity prices,” explained Calabria.

“In the Energy Markets business, our power stations performed solidly over the summer and were ready and available during heatwave conditions which occurred across much of the country in January and again in March,” he added.

“While gas sales to wholesale customers declined in the quarter, we directed additional gas to generation where it helped to meet peak summer demand in the electricity market,” stated the CEO.