LNG

TechnipFMC, the US oil and gas services company, reported increased profit and revenues as well as a rising backlog of contracts covering areas such as South America, the Gulf of Mexico and Europe.

European natural gas prices and Asian spot LNG cargo values moved higher on April 15 in early market activity after the weekend drone and ballistic missile attacks on Israel by Iran further unsettled energy markets.

Murban crude oil in Abu Dhabi that usually trades at around $3 a barrel below dated Brent crude was trading at $90 a barrel on April 14 after Iran launched its first ever direct state-on-state attack on Israel using drones and cruise missiles, indicating that oil and gas prices in Europe will rise on Monday April 15, though the increase in Brent price could be limited to under $95 a barrel because of previous factoring in of the ongoing crisis.

UK major BP posted solid results in the third quarter that saw the Chief Executive resign while in company activities a very strong oil trading result along with higher oil and natural gas production were partly offset by weaker natural gas marketing and trading results.

Equinor, the Norwegian oil and gas major and main pipeline natural gas supplier to Europe amid diminishing Russian deliveries from Gazprom, will be an LNG trader with additional volumes supplied by the largest US LNG exporter Cheniere Energy.

Under a planned 15-year agreement Equinor will purchase around 1.75 million tonnes of LNG per annum from Houston-based Cheniere from 2026.

“This new Sales and Purchase Agreement (SPA) will add new volumes to Equinor’s already significant gas portfolio of pipeline gas and LNG,” stated Equinor.

The Norwegian company also disclosed that the expansion at Corpus Christi to add 10 MTPA to the current nameplate capacity of 13.5 MTPA will likely be followed by another boost in output.

“With global energy demand growing and increased focus on energy security, the LNG market is expected to grow significantly. US LNG can supply the European markets as well as cover demand in other markets,” explained Equinor.

The Stavanger, Norway-based oil and gas major has recently shipped the first cargo from the repaired Hammerfest in Northern Norway to re-established seaborne LNG supply link Europe.

New US volumes

It was the first cargo to leave the Hammerfest liquefaction and export plant since the September 2020 fire.

Once the Hammerfest is ramped up to full production of 4.8 MTPA, a ship will leave the facility on Melkøya island every five or six days and over the year will deliver 5 percent of Norway’s natural gas exports while the other 95 percent is delivered by pipelines.

Norway’s role as a key supplier to Europe has taken on more importance because of the Russian invasion of Ukraine and Western sanctions against Russian oil and gas.

The Hammerfest project gave Europe its first large-scale LNG supply when it came on stream in 2007, though the facility was originally planned and built to supply the US before the shale-gas boom.

“I am very pleased that we have entered into a long-term agreement with Cheniere, the largest US producer of LNG,” said Helge Haugane, Equinor’s senior vice president Gas & Power.

“Based on our production in Norway, Equinor is the second-largest supplier of pipeline gas to Europe. The new LNG agreement is a major building block in Equinor’s ambition to further strengthen our global gas position by adding more LNG to the portfolio,” Haugane explained.

Crucial role

“LNG will play a crucial role in providing energy security. By increasing our position in this segment, we will be even better positioned as a long-term reliable supplier of energy’ he stated.

Under the SPA, Equinor has agreed to purchase the volumes from Cheniere Marketing on a free-on-board basis whereby the Norwegians send their own ships.

Equinor said the deliveries under the SPA would start in the second half of 2026 and reach the full 1.75 MTPA in the second half of 2027.

“Half of the volume, or about 900,000 tonnes, is subject to Cheniere making a positive final investment decision to construct additional liquefaction capacity at the Corpus Christi LNG Terminal beyond the seven-Train Corpus Christi Stage III Project,” stated Equinor.

This suggests that the Cheniere, which operates the Sabine Pass plant in Louisiana with 27 MTPA of production, is planning yet another expansion at the Texas facility.

Saipem, the Italian energy and LNG engineering company and an offshore specialist, has been awarded a contract by Aker BP for a drilling campaign offshore Norway as upstream activities are set to increase.

TotalEnergies, the French energy major, said that Europe did not have enough liquefied natural gas import infrastructure for the number of cargoes required to make up for the Russian volumes cut by Western sanctions over the Ukraine invasion.

TotalEnergies posted annual net income of $16.03 billion versus losses of $7.42Bln the previous year and the earnings included a 10 percent increase in LNG sales totalling 42 million tonnes in 2021.

The company’s LNG sales for the fourth quarter jumped 16 percent to 11.2MT and the average LNG selling price was $13.12 per million British thermal units in the final three months of 2021, an increase of 44 percent compared with the third quarter.

Fourth-quarter net income came to $5.83Bln versus $847 million in the same three months of 2020.

Hydrocarbon production for LNG increased 6 percent year-on-year in the fourth quarter.

“LNG sales increased sharply on higher production from Cameron LNG in Louisiana and Freeport LNG in Texas, up 16 percent in the fourth quarter compared to a year ago and up 10 percent for full-year 2021 versus 2020,” stated the Paris-based company.

TotalEnergies also announces its decision not to sanction and to withdraw from the North Platte deepwater project in the US Gulf of Mexico.

“The decision not to continue with the project was taken as the company has better opportunities of allocation of its capital within its global portfolio,” said TotalEnergies.

TotalEnergies held a 60 percent operated interest in North Platte, alongside its joint-interest owner Equinor of Norway, which held 40 percent. .

“We have duly notified our partner and the relevant authorities of the immediate withdrawal from the project, and of its resignation as operator which will be effective following a short transition period to ensure an orderly hand-over of operatorship,” stated the company.

Brazil and Africa

TotalEnergies at the same time is increasing its presence in Brazil and Africa by entering the Brazilian Atapu and Sépia giant fields and launching the Lake Albert Resource Development Project for Uganda and Tanzania.

The French major’s annual results showed generated cash flow of $30.7Bln, which was $13Bln more than in 2020, and adjusted annual gross earnings came to $42.3bln.

“The integrated Gas, Renewables and Power segment reported adjusted net operating income of $2.8Bln and cash flow of $2.4Bln in the fourth quarter, bringing full-year results and cash flow to $6.2Bln and $6.1Bln, respectively,” said Chairman and Chief Executive Patrick Pouyanné.

“These historic results build on the globally integrated LNG portfolio, leveraging rising oil and gas prices and outperformance in the gas and LNG trading business,” he added.

“The profitable growth strategy in Renewables & Electricity continues with more than 10 gigawatts of installed gross capacity and more than 6 million electricity customers at year-end 2021,” stated the CEO.

TotalEnergies said it its 2022 outlook that it expected to continue the momentum that has been underway for several years.

“TotalEnergies is implementing its strategy of integrated growth in LNG, which will generate structural cash flow growth of $1Bln in 2022,” stated the company

“In addition, given the evolution of oil and gas prices in recent months and the lag effect on price formulas, TotalEnergies anticipates that its average LNG selling price should remain at a high level of at least $12 per MMBtu in the first half of 2022,” it added.

Norway, the LNG producer whose export plant at Hammerfest is still offline after last year’s fire, has offered four production licences in the Government’s 25th licensing round split between seven energy companies and with one block located in the Norwegian Sea and three in the Barents Sea.

The 25th licensing round is facilitating exploration and production activity on the Norwegian Continental Shelf.

“This is important for employment and value creation in the Norwegian oil and gas industry,” said Minister of Petroleum and Energy Tina Bru.

“The (licence) allocations are in line with the goals we presented in the White Paper Energy for Work. They are also an important part of the framework conditions for the companies on the NCS,” added Minister Bru.

The 25th licensing round had been announced on November 19, 2020 and the application deadline was February 23, 2021.

Companies could apply for licences in nine different areas, eight in the Barents Sea and one in the Norwegian Sea.

The successful companies have committed to acquiring 3D seismic surveys and to initiate some wildcat drilling.

Two licences were awarded to Norwegian state-backed company Equinor, operator of Hammerfest LNG, now shut until March 2022 after the fire on September 28 in 2020.

The first Equinor licence (50 percent stake and operator) is in partnership with state company Petoro AS (20 percent), Sweden-based company Lundin Energy (20 percent) and Idemitsu Petroleum, part of the Idemitsu Group of Japan (10 percent).

The sole Norwegian Sea licence went to the UK’s Ineos (60 percent) and in partnership with Royal Dutch Shell.

Their 1055-B block is located between two previous large natural gas finds.

The two other Barents Sea licences were awarded to Equinor with Lundin Energy and Petero, and one went to Austria’s OMV (30 percent) with Vår Energi (70 percent and operator), a joint venture between Italy’s Eni and the private equity investor HitecVision.

The Norwegian Ministry of Petroleum and Energy has awarded 61 upstream licences in pre-defined areas of the Norwegian Continental Shelf to 30 licensees, including prominent LNG players such as BP, Shell, Total and Eni of Italy, as well as ConocoPhillips, the only bidder among US majors.

“I am pleased to offer 61 new production licenses in this year's round to a diverse range of companies,” said Tina Bru, Norway’s Minister of Petroleum and Energy.

“These companies have shown great interest in gaining access to new exploration acreage, illustrating the industry's confidence in continued profitability from exploration, which is good news for the Norwegian state as the resource owner,” added Bru.

Of the 61 production licences taken up, 34 are in the North Sea, 24 in the Norwegian Sea and there are three in the Barents Sea.

A total of 18 companies have been offered one or more operatorships.

The licences were awarded with work-programme commitments or as additional areas of activity.

“Exploration to provide additional discoveries is vital in order to maintain a high level of activity, employment and revenue over time for Norway's largest industry,” explained the Minister.

“I now eagerly await the commencement of activity and the resulting discoveries,” stated Bru.

The first licensing round on the NCS took place in 1965. The activity started in the North Sea, and exploration in the Norwegian Sea and the Barents Sea started around 15 years later.

Norway is the main pipeline natural gas supplier to Europe, along with Russia’s Gazprom, in competition to LNG deliveries from nations such as Qatar, the US, Nigeria, Algeria and Trinidad and Tobago, as well as Russia.

The Minister noted that since the first oil and gas discoveries, the NCS has contributed more than 15.70 trillion Norwegian crowns ($1.85 trillion) in value creation.

It has also given the Norwegian state a net cash-flow of over 6.70 trillion crowns ($785Bln) since the year 2000.

Norway’s net cash flow from the petroleum sector in 2021 is forecast as amounting to around 99Bln crowns ($11.60Bln), which equates to an income of 75,000 crowns ($8,800) for each Norwegian family of four.

“An active exploration policy, including regular licensing rounds on the NCS will facilitate new discoveries,” said the Ministry.

“This in turn will contribute towards securing state revenue, value creation and employment, all of which is important in order to maintain Norway's welfare over time,” it stated.

The Ministry noted that petroleum activity on the NCS is conducted with great emphasis on health, safety and the environmental standards.

“Exploration, development and production takes place with low emissions to air. The greenhouse gas-emissions are also part of the European Union Emissions Trading System (ETS),” it added.

The Ministry said that the probability of an oil-well blow-out is extremely low, and there are strict requirements in place for emergency preparedness to reduce the consequences in the event of an accidental oil spill.

“During 50 years of petroleum activities, no accidental oil spills have reached Norwegian shores, and no damage to the marine environment has been proven,” it said.

The big winners in the licensing round include German oil and gas company Wintershall Dea, which was awarded interests in 16 Norwegian blocks, including four as operator.

Italy’s Eni said the jointly-owned venture company Var Energi, in which the Milan-based company has a 70 percent stake and the balance is held by European energy investment firm HitecVision, was awarded 10 exploration licences.

Licence stakes awarded/and with operatorships: Aker BP (10/8); AS Norske Shell (1/1); Chrysaor (6/3); Concedo (1/0); ConocoPhillips (4/3); DNO (10/4); Edison (2/0); Equinor (17/10); INEOS (4/1); Inpex (2/1); Kufpec (1/0); Lime (4/0); Lotos (3/0); Lundin (19/7); MOL (1/1); M Vest (2/0); Neptune (6/3); OKEA (6/4).

OMV (3/3), One Dyas (6/0), Pandion (5/0); Petrolia NOCO (3/1); PGNiG (4/0); Source (4/0); Spirit (3/0); Sval (5/1); Total (3/0); Var Energi – Eni (10/5); Wellesley (2/1) and Wintershall DEA (16/4).