LNG

Santos Ltd, the Australian operator of two liquefied natural gas export plants and a main shareholder in Papua New Guinea LNG assets, has signed a long-term supply deal with Hokkaido Gas Co., the Japanese utility.

Woodside Energy, the operator of the Northwest Shelf LNG project and Pluto LNG in Western Australia, has completed the sale of a 10 percent non-operating participating interest in the Scarborough Gas joint venture for US$910 million to the LNG Japan group.

The completion follows Woodside’s announcement in August 2023 that it had established a strategic relationship with LNG Japan that involved equity in the Scarborough project, potential LNG offtake and collaboration on opportunities in new energy.

“The sale proceeds received by Woodside of US$910M for equity in the Scarborough Joint Venture comprise the purchase price, reimbursed expenditure and escalation,” said Woodside in a statement.

Trading houses

Woodside’s sale and purchase agreement is with a jointly owned subsidiary of LNG Japan, which is a 50-50 joint venture between two Japanese trading houses, Sumitomo Corp. and Sojitz Corp., and a Japanese state-owned agency called the Japan Organization for Metals and Energy Security (Jogmec).

The Scarborough gas field project comprises the Pluto Train 2 joint venture and modifications to Pluto Train 1 to process Scarborough gas.

The venture includes the Scarborough field itself and associated offshore and subsea infrastructure.

The Scarborough field is located 375 kilometres (233 miles) off the coast of Western Australia and the reservoir contains less than 0.1 percent carbon dioxide.

Scarborough gas will be processed at the Pluto LNG facility, where Woodside is currently constructing a second liquefaction Train .

In addition to the sale of a 10 percent non-operating participating interest to Japan LNG, Woodside additionally stated in February 2024 that it had entered into an SPA with the largest Japanese LNG importer and power company, JERA Co. Inc. for a 15.1 percent non-operating participating interest in Scarborough.

Commitment

“LNG Japan’s commitment to the Scarborough Joint Venture is a demonstration of the value our customers place on gas as a long-term source of energy as they navigate the energy transition,” said Woodside Chief Executive Meg O’Neill.

“Completion of the sale to LNG Japan is a significant milestone as we progress toward first LNG cargo from Scarborough targeted in 2026,” O’Neill stated.

“We are also pleased to welcome Japan Organization for Metals and Energy Security’s equity investment,” the CEO added.

“Jogmec’s support reflects the contribution Scarborough gas will make to Japan’s energy security,” she added.

Woodside still holds a 90 percent interest in the Scarborough venture and will remain as operator.

Following completion of the transaction with JERA Woodside’s interest will be 74.9 percent in the Scarborough venture.

After completion of the JERA deal, Woodside estimated that as of 26 March 2024, the Perth-based company’s Scarborough field proved (1P) undeveloped reserves are reduced by 128.7 million barrels of oil equivalent to 1,158.3 million barrels of oil equivalent.

Western Australian LNG operator Woodside reported a plunge in annual earnings of 74 percent as it focused on its next phase of growth in the Scarborough Gas project, Sangomar oil offshore Senegal and on the Trion venture in the Gulf of Mexico.

Australia’s largest liquefied natural gas companies Woodside Energy and Santos have ended their merger discussions after failing to agree terms for creating a A$88 billion (US$58Bln) LNG mega-company in the Southern Hemisphere.

Australian energy company Santos reported solid annual and quarterly earnings with steady cargo flows from Gladstone LNG in Queensland and from Papua New Guinea while legal hold-ups were removed to push forward with bringing new feed-gas to Darwin LNG from where only one cargo was shipped in the fourth-quarter.

Dec 27 (LNGJ) - JERA Co. Inc, the largest Japanese LNG importer and power supplier, has concluded an agreement to support the expansion of LNG and gas-fired power in the Philippines through system designs and tight regulatory oversight. The agreement was concluded following JERA’s selection as the contracted party for the oversight project. “The Republic of the Philippines is expected to expand its adoption of gas-fired thermal power generation due to the increased demand for electricity accompanying the country’s robust economic growth,” said JERA

   The Tokyo-based company said its role would include developing national systems including regulatory frameworks to “support the full-scale adoption of LNG in the Philippines and support for developing regulations for facilities” related to the construction, operation and maintenance of LNG storage and regasification terminals, gas transportation and distribution systems as well as third-party access.

Australia’s largest liquefied natural gas companies Woodside Energy and Santos said they were in discussions that could lead to a merger of the two companies valued at a combined A$88 billion (US$58Bln) and which would create a dominant LNG force in the Asia-Pacific region.

JERA Co. Inc, Japan’s biggest liquefied natural gas importer and utility company, said it expected the LNG demand-supply imbalance to be less serious this winter season than last because the forecast milder weather, the high storage held in Europe and the delayed resurgence of the economy in China.

JERA, which buys around 35 million tonnes per annum of LNG and is Japan’s biggest fossil-fuel electricity generator being owned jointly by Tokyo Electric Power and Chubu Electric, the two largest power companies, gave the LNG market forecast in a company earnings presentation

The presentation in Tokyo was led by JERA President and Chief Executive Hisahide Okuda.

JERA, which currently oversees the operations and provides fuel for a total of 26 power plants in Japan and imports LNG into 11 of Japan’s network of 37 terminals, said the only issue to be concerned with was that of the unexpected.

Potential issues

“Since overall global supply has not grown, there is the potential for LNG production issues on the supply side - a problem at any LNG plant could cause prices to jump. We believe, therefore, that the environment for LNG procurement remains unpredictable,” Okuda explained.

“Turning to LNG fundamentals, although demand for LNG is growing, particularly in Europe, LNG supply is not expected to catch up to that demand until around 2025, leading to a tight supply-and-demand situation,” the CEO said.

“However, at JERA, in addition to building an LNG portfolio that combines long-term, short-term, and spot contracts, we also secure a stable fuel supply by flexibly optimizing procurement and resale through JERA Global Markets,” Okuda added.

He noted that the company was also following the “Strategic Buffer LNG (SBL)” plan proposed by the Ministry of Economy, Trade, and Industry (METI) whereby at least one LNG carrier-load of surplus LNG per month between December and February can be supplied to any domestic operators as determined by METI.

According to METI and its Policy Subcommittee on Electricity and Gas, Japan will have a winter’s reserve margin exceeding the 3 percent minimum necessary to ensure stable supply.

“JERA, however, is taking nothing for granted. We will be doing our utmost to secure both kilowatts and kilowatt hours in order to ensure stable power supply,” CEO Okuda stated.

Older plants

“JERA is moving steadily forward in replacing older thermal power plants with state-of-the-art facilities. Six units, totaling 4.32 million kilowatts, whose replacement has already been completed, have begun commercial operation,” he added.

The CEO declared that looking to 2024, JERA would continue moving forward with an additional 2.99 million kilowatts in power plant replacement.

“We believe that moving decisively in this way to upgrade power sources is an important part of ensuring safety,” Okuda said.

In addition, given the smooth progress of trial operations at Yokosuka Thermal Power coal-fired power plant’s Unit 2, we will be moving its start of commercial operation forward from February 2024 to December 2023, which will also contribute to this winter’s supply capacity,” the CEO said.

The Yokosuka coal-fired plant is described by JERA as a “high-efficiency coal-fired power station that uses an ultra-supercritical (USC) power generation” system.

“Its generating capacity of 650 megawatts will contribute to a stable electricity supply,” Okuda added.

The JERA CEO said that the company was also moving forward with carbon-capture and storage projects in Asia.

JERA is carrying out joint research with Japanese LNG and energy engineers JGC Holdings Corp. and the Indonesian state electricity company Perusahaan Listrik Negara (PLN) on a project to introduce and commercialise CCS for thermal power.

“With these projects and others, we are collaborating on decarbonisation with a growing number of Asian countries including Bangladesh, Thailand, Malaysia, the Philippines, Vietnam, Indonesia and Singapore,” Okuda said.

JERA Co. Inc., Japan’s biggest liquefied natural gas importer and utility company, reported an almost 8 percent increase in quarterly revenues and a swing to profit compared with a loss in the same three months of last year.

Nippon Yusen Kabushiki Kaisha, the Japanese shipping company known has NYK Line, is continuing to expand its liquefied natural gas-powered fleet of vessels now numbering over 800 owned and operated ships, including 86 LNG carriers.