LNG

Woodside Energy, the leading supplier of Australian LNG cargoes to North Asia, has signed a sale and purchase agreement with the South Korean state-owned utility Korea Gas Corp. as more Asian nations seek to secure long-term supplies for energy security.

The SPA provides for the supply of around 500,000 tonnes per annum of LNG for a period of 10.5 years on a delivered basis whereby Woodside supplies the shipping.

The supply deals with the Koreans begin in 2026 and will come from Woodside’s portfolio.

“LNG delivered to Kogas under the SPA will be sourced from uncommitted volumes across Woodside’s global portfolio, including the Scarborough Energy Project which is targeting first LNG cargo in 2026,” explained Woodside.

Kogas already receives Australian LNG cargoes from other regional projects such as Gladstone LNG in Queensland.

Queensland LNG

The GLNG plant is operated by Adelaide-based Santos and Kogas is a shareholder along with French major TotalEnergies and Malaysia’s Petronas.

The state-owned Korean utility has been a long-term regional importer from nations like Indonesia and Malaysia as well as Qatar and Oman in the Middle East.

Woodside Chief Executive Meg O’Neill said that the SPA was significant as Woodside’s first long-term supply agreement into Korea, the world’s third-largest LNG market.

She said the agreement reinforced the ongoing contribution of Woodside’s LNG towards the energy security needs of major customers in the region.

“Woodside is pleased to be a long-term supplier of LNG to Kogas, a leading global energy company and one of the world’s largest LNG importers,” said O’Neill.

“This agreement is further demonstration of ongoing robust demand for Woodside’s products from major energy customers in our region,” O’Neill stated.

LNG for power

Kogas President and CEO Choi Yeon-Hye said she was pleased to conclude the SPA with Woodside.

“This SPA has enabled Kogas to enlarge the customer base in the domestic power market, reinforcing our role as a leading natural gas supplier in Korea,” she stated.

“By leveraging this SPA, we look forward to further expanding our business opportunities with Woodside in the LNG industry,” added Choi.

Kogas controls or jointly controls five out of South Korea’s seven import terminals at Incheon, Pyeongtaek, Samcheok, Tong-Yeong and Jeju.

The other two terminals are at Gwangyang and Boryeong and are used respectively by steelmaker POSCO and other utilities.

European liquefied natural gas prices dropped as supplies were ample for the remainder of the winter season while Asian spot cargo prices edged higher even as LNG deliveries to China hit seasonal lows ahead of the Chinese New Year holiday shutdown.

Intercontinental Exchange Inc., the leading global provider of energy trading platforms for futures and options, said its global futures and options markets reached record open interest on one day in December of 86 million contracts.

European spot natural gas prices followed futures prices lower to marks last seen in June 2021 just before energy security concerns entered the market and at least seven liquefied natural gas cargoes were heading for the UK even as the differentials widened in favour of Asian spot cargo values.

The Australian regulatory and competition watchdog has waved through the A$18.7 billion (US$11.9Bln) buyout of Origin Energy by a North American consortium and with a resultant side-deal also giving Saudi Aramco access for the first time to the liquefied natural gas sector.

European natural gas market prices and Asian spot LNG cargo values slipped to near last year’s levels as hotter weather temporarily dispelled gas supply concerns and available shipping remained short for the Northern Hemisphere winter to come.

South Korean steelmaker and LNG importer POSCO has been engaged in damage restoration work after a typhoon and was planning to re-start the Pohang steel complex as the gas-fired power plant using regasified LNG is returned to normal capacity.

China National Offshore Oil Corp, the Chinese major and largest LNG importer, has started production at the first deepwater natural gas field fully operated by a Chinese company.

CNOOC said the Lingshui 17-2 field started production in the South China Sea.

The field is expected to reach peak production of 328 million cubic feet of natural gas and 6,751 barrels of condensate per day by 2022.

CNOOC said the Lingshui 17-2 field would have 11 production wells when fully completed.

The new field would bring CNOOC's total gas production capacity in the South China to more than 13 billion cubic metres per annum, the equivalent of around 9.6 million tonnes per annum of LNG.

CNOOC said in its statement that Lingshui 17-2 was part of the company’s plan to significantly increase its gas output to cut carbon emissions over time.

In its LNG activities CNOOC has recently expanded the planned storage capacity from six tanks to 10 tanks for the Yancheng-Binhai Port import terminal now under construction in the eastern province of Jiangsu.

Phase one will have an annual receiving capacity of 3 MTPA and will be completed by 2022, including the first four 220,000 cubic metres full containment LNG tanks.

The company added that the Binhai LNG terminal project would also be an important asset in the industrial upgrade of the Yangtze River Economic Zone.

CNOOC has the largest regasification capacity of the Chinese majors with a presence in eight of the existing 22 import terminals, even after state-backed PipeChina bought and opened up several CNOOC-owned terminals to third-party access.

CNOOC also reportedly purchased almost a dozen additional LNG cargoes for delivery between July 2021 and March 2022 as demand in southern China is expected to remain strong as well as in the north and eastern industrial belts.