LNG

Baker Hughes, the US liquefied natural gas equipment-maker and energy services and technology company, was awarded a contract from Algerian state-owned oil and gas company Sonatrach for a gas-boosting project to supply Italy and the European Union.

The project is in the Hassi R’Mel gas field in Laghouat province of central Algeria, which produces and supplies over half of the North African nation’s natural gas.

The giant Hassi R’Mel field had been in long-term decline but this new venture is aimed at increasing gas volumes.

The project will also increase and stabilize feed-gas supplies to the Mediterranean Coast from the Hassi R'Mel hub to the port of Arzew where one of the nation’s two LNG exports plants is located. in Algeria.

System support

Baker Hughes is part of a consortium with Italian engineering company Maire Tecnimont that will supply Sonatrach with 20 compression trains to enhance the resilience of Algeria’s energy system.

“The agreement strengthens Italy-Algeria bilateral relations as Baker Hughes and Tecnimont will leverage their Italian industrial expertise to deliver on the project,” said a statement.

The contract is part of a broader order awarded to the consortium.

The signing ceremony for the contract took place in Algiers in the presence of the three company Chief Executives Rachid Hachichi of Sonatrach, Lorenzo Simonelli of Baker Hughes and Alessandro Bernini of the Maire Tecnimont group as well as Mohamed Arkab, Algeria’s Minister of Energy and Mines.

The part of Baker Hughes award comprises the supply of the 20 compression trains based on the US company’s Frame 5 gas turbine and BCL compressor technology, which will be installed across three gas boosting stations within the Hassi R’ Mel gas field.

The field is located 550 kilometres south of Algiers and is the largest gas field in Algeria and will a key source of energy supply for Algeria and the EU.

Key project

Baker Hughes CEO Simonelli said the agreement is part of an historic collaboration with Sonatrach for key energy projects.

“We have long believed that it is critical to increase gas within the overall global energy mix,” added Simonelli.

“This project helps to solve for energy producers the multi-faceted challenge of driving sustainable energy development as energy demand increases,” the CEO explained.

“ We are proud to support such a critical energy project in partnership with Tecnimont,” Simonelli stated.

Algeria became the second-largest gas supplier to Europe in 2023, further strengthening the country’s role in enhancing the energy security of the continent, particularly in Italy where Algeria represents the biggest single source of import.

The Hassi R’ Mel project is part of a broader strategic collaboration between Algeria and Italy, which includes recently signed agreements to foster bilateral cooperation and for Italy to provide financial support for Algeria’s gas production.

Dutch utility Gasunie, whose network and assets include over 17,000 kilometres of pipelines in the Netherlands and northern Germany as well as stakes in Dutch and German LNG import facilities, has explained its energy security plan now that the Groningen gas field in the Netherlands is no longer active and imports of Russian gas have almost ceased.

Gasunie noted that global demand for LNG also currently exceeds supply, which means security of supply is no longer a given.

The utility said that Gasunie Transport Services (GTS) was being assigned the statutory duty to give annual advice on the security of natural gas supply and has drawn up a plan that was being presented to the Dutch Ministry of Economic Affairs and Climate Policy.

“The GTS vision emphasises the importance of proactive measures to guarantee the security of natural gas supply in the short and long term, while factoring in the challenges presented by the current market and changing climatic conditions,” Gasunie explained.

“The vision still features an important role and responsibility for market parties, but does propose several extra market rules allowing for intervention if deemed necessary to guarantee security of supply,” the report added.

Gasunie has LNG import facility stakes in the Dutch Gate terminal in Rotterdam and the Eemshaven import hub in Groningen,

The utility is additionally involved in the German natural gas market and in developing the onshore LNG terminal in Brunsbüttel on the Elbe.

Guarantees

“A continuous sufficient gas supply and well-filled gas storage facilities for the winter periods are needed to guarantee security of supply,” said the report.

“The Netherlands currently depends on imports for 75 percent of its gas consumption,” it noted.

“Given the closure of the Groningen field and declining domestic production, this dependence will become even greater,” Gasunie stated.

“The Netherlands would therefore benefit from a well-functioning European internal gas market as would other EU member states,” the utility added.

There are also now likely to be additional statutory measures in the 27-nation EU to fill gas storage facilities.

As of mid-2022, supply from Russia to northwest Europe ceased almost entirely.

This is being compensated for by maximum pipeline gas imports from Norway and maximum LNG supply through the Gate terminal and the EemsEnergy Terminal throughout the year.

“This supply covers basic demand, but can barely make an additional contribution in winter,” said Gasunie.

“Since LNG supply is stable over the course of the year, it is not sufficient to allow for seasonal flexibility. All in all, this means that seasonal storage facilities will be the primary source of seasonal flexibility in the years to come, even more so than in previous years,” Gasunie declared.

Gasunie explained that although market parties determined the flows of gas flows, commercial motives were sometimes at odds with guaranteeing security of supply.

Statutory measures

Several additional statutory measures are, therefore, proposed such as establishing a statutory standard filling level for seasonal storage facilities that market parties need to adhere to.

This could also see the government designate a party to act as back up in the event that the market parties do not meet their obligations on time.

“To create sufficient supply for the long term, expanding LNG import capacity, as is currently happening at Gate and the German terminals, remains crucial for security of supply. Existing LNG plants will also need to remain available,” said Gasunie.

Gasunie warned that if the coming winters were colder than average, seasonal storage facilities would be empty quicker and that would mean that there would be “a realistic chance” of insufficient supply capacity volumes to fill seasonal storage facilities back up to the standard filling level.

“In close collaboration with the Ministry of Economic Affairs and Climate Policy and other relevant stakeholders, GTS is making every effort to create a sustainable and reliable gas supply for the Netherlands,” Gasunie concluded.

With five liquefied natural gas import terminals in operation, France has now assumed the role of a leading regasified LNG supplier to the European Union, especially Germany and other neighbours, as gas from Russia’s Gazprom has been easily replaced with increasing gas flows from West to East in the EU.

A cooperation agreement has been signed between key natural gas infrastructure owners from Greece, the Balkans and Central Europe including Gastrade, developer of the Alexandroupolis floating LNG import terminal for Greece and the Balkans.

Enagás, the Spanish gas grid and LNG terminals operator, has held an event for marketers and the regulatory authorities at its headquarters in Madrid where it revealed plans to launch an open season on March 6 for logistics services at the re-activated El Musel import terminal in Northwest Spain on the Bay of Biscay.

Norwegian energy major Equinor, the main supplier of pipeline natural gas to Europe and an LNG producer and exporter, reported soaring profits and record cash flow from becoming the primary gas supplier to its European neighbours after the cutting of Russian gas pipelines.

The Baltic state of Lithuania has allocated the long-term capacity on a regional basis for the floating liquefied natural gas import facility at the port of Klaipėda.

LNG importer Croatia is receiving European Commission aid to help the Balkan state that was formerly part of the former Yugoslavia to provide transmission system operators (TSOs) with balancing services.

The Commission approved, under EU State aid rules, a €19.8 million ($19.9M) Croatian aid measure in favour of energy storage operator IE-Energy, headquartered in Rijeka, Croatia.

The measure is aimed at helping IE-Energy to partially finance the procurement and the installation of grid-scale batteries to provide transmission system operators (TSOs) with balancing services.

“Furthermore, the measure contributes to the modernisation of Croatia's energy network, as well as to increasing the country's and the EU's energy security of supply,” added the Brussels-based European Union’s executive body.

LNG expansion

The grant comes as the Croatian Government is planning to invest €180M in a new gas pipeline section that would help double capacity at its LNG floating storage and regasification unit located off the Adriatic Sea island of Krk.

Croatia, which became a member of the EU in 2013, received its first LNG cargo in January 2021 at the FSRU, the “LNG Croatia”.

Under government plans, a €155M gas pipeline extension will connect Zlobin and Bosiljevo in northwest Croatia in about three years’ time when the FSRU’s capacity will be boosted to 6.1 billion cubic metres per annum of regasified LNG from the current 2.6 Bcm.

The Commission said its TSO grant for balancing would further contribute to the modernisation of Croatia's energy network, as well as to increasing the country's and the EU's energy security of supply.

“The aid was also is proportionate as it is limited to the minimum necessary, and that it will not have undue negative effects on competition and trade between member states,” it added.

Cheniere Energy, the largest US LNG exporter from its Sabine Pass plant in Louisiana and the Corpus Christi facility in Texas, has agreed to extend an LNG sales accord  with the French utility Engie.

Cheniere said it has agreed with Engie, based in Paris, to amend the LNG sale and purchase agreement (SPA) the parties previously entered into in June 2021.

The Houston, Texas-based company said that under the revised SPA, Engie had agreed to purchase approximately 900,000 tonnes per annum of LNG from Corpus Christi on a free-on-board basis for 20 years and whereby the French provide their own ships.

The FOB contract began in September 2021. Cheniere said the purchase price for LNG under the SPA is indexed to the Henry Hub price, plus a fixed liquefaction fee.

Engie had previously agreed in June 2021 to purchase between 400,000 tonnes per annum and 1.1 million tonnes per annum of LNG for 11 years.

“We are pleased to build upon the long-term agreement we signed in 2021 with Engie, one of Europe’s energy leaders in low-carbon solutions, to increase the volume and extend the term beyond 2040,” said Jack Fusco, Cheniere’s President and Chief Executive .

“This SPA reflects the importance of a diverse and reliable long-term supply of natural gas for Europe and reinforces the value the LNG market places in Cheniere’s commitment to climate and sustainability initiatives,” added Fusco.

Flexible

“We look forward to continuing to supply Engie with flexible, cleaner burning LNG as part of our shared vision of a lower carbon future,” stated the CEO.

Cheniere is now moving forward with the lump sum, turnkey, engineering, procurement and construction contract with US LNG and energy engineering firm Bechtel Inc. for the Corpus Christi LNG plant expansion.

Cheniere has asked Bechtel to commence early engineering, procurement and other site work for the Corpus Christi expansion, known by Cheniere as the Stage III Project.

Corpus Christi Stage III is a fully permitted project consisting of up to seven mid-scale Trains, each with an expected liquefaction capacity of about 1.49 MTPA with a total production capacity of more than 10 MTPA.

Cheniere said that it was pleased to once again partner with Bechtel following the engineering firm’s “unmatched track record for execution excellence” while successfully building Cheniere’s LNG platform.

Cheniere in February 2022 announced the completion of Train 6 at Sabine Pass plant Cameron Parish in Louisiana, formally taking nameplate capacity to 27 MTPA. 

While imports of liquefied natural gas to the European Union and the UK are increasing in January, none of the natural gas is ending up in Germany because there is no LNG infrastructure even amid various plans spanning almost 10 years.