LNG

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.

Novatek, the Russian developer of the Arctic LNG II project on the Gydan Peninsula, has declared “force majeure” to some of the buyers of cargoes based in China because of delays in the start-up of the facility.

Dec 7 (LNGJ) - Chiyoda Corp., the Japanese LNG and energy engineering company, said it was awarded a feasibility study contract for a carbon-dioxide liquefaction plant by Japan’s Electric Power Development Co. (J-Power). Chiyoda’s contract scope includes the design of a CO2-capture plant, a liquefaction plant and utility facility.

   J-Power is participating in the public call for commissioned research for a CCS project selected by the Japan Organisation for Metals and Energy Security (JOGMEC), along with Eneos Corp. and JX Nippon Oil & Gas Exploration. “Chiyoda will collaborate with J-Power by applying its CCS project experience to support their plans,” said Chiyoda.

The Japan Organization for Metals and Energy Security (Jogmec), a Japanese government agency, has released the results of two annual surveys on the volumes of LNG handled by Japanese companies and the current status of the destination restrictions in LNG sales and purchase agreements.

French energy major TotalEnergies said it was assessing the possible impact of US sanctions on the Arctic LNG II project on the Gydan Peninsula of northern Russia in which it has a direct 10 percent stake and a total interest of 21.5 percent via its shareholding in Russian natural gas company and LNG developer Novatek.

TotalEnergies was a leading player in two Arctic LNG joint ventures and a shareholder in the Novatek company itself as well in the existing Novatek-operated Yamal LNG plant, though announced last year it was looking for ways to pull out after Russia invaded Ukraine in February 2022.

In contrast with other global energy majors like Shell and ExxonMobil Corp. that have cut ties with Russia after its invasion of Ukraine, the French company has held on to several investments, including minority stakes in Yamal LNG and Arctic LNG II.

Before the latest sanctions imposed on November 2 by the US on Russia over the Ukraine invasion, TotalEnergies had said it would honour its gas contracts in Russia as long as there were no sanctions involved.

Consequences

“The consequences of the designation of Arctic LNG 2 as a SDN (special designated nationals) entity by the US authorities on TotalEnergies' contractual commitments to Arctic LNG II are currently being assessed,” said TotalEnergies

The company had previously said in March 2022 it had decided to no longer book proved gas reserves for the Arctic LNG II project nor contribute any more investment capital to the project, which is scheduled to come onstream in the first quarter of 2024.

TotalEnergies booked an impairment of $4.1 billion in its first-quarter earnings of 2022 for Arctic LNG II out of a total of $14.8Bln in Russia-related asset write-downs for all of 2022.

Novatek Chairman Leonid Mikhelson has pledged to bring the Gydan Peninsula liquefaction and export plant on stream in early 2024.

Two liquefaction Trains have already been installed on gravity-based platforms at an LNG assembly yard in the town of Belokamenka in the Murmansk region and have been towed to the site.

Each liquefaction Train installed on the platforms will have production capacity of 6.6 million tonnes per annum to total almost 20 MTPA in nameplate capacity.

During the first half of 2023 a total of over 80 gas wells were completed at the Utrenneye gas field to provide feed gas for Arctic LNG II.

All three liquefaction Trains at the Arctic LNG II plant were originally scheduled to come on stream in a two-year time span from 2023, though issues with the supply of technology have delayed the start-up.

Basic LNG modules were constructed in China for the liquefaction Trains and the first was delivered back in September 2021 to the Murmansk assembly site.

China modules

The modules were built at the Wison shipyard at Zhoushan in the eastern Chinese province of Zhejiang.

The first Chinese module was delivered to the Murmansk yard in September 2021, five months before the Ukraine invasion.

Novatek controls 60 percent of the Arctic LNG II project and its other remaining active partners out with TotalEnergies are from China and Japan.

They are China National Petroleum Corp., China National Offshore Oil Corp. and a consortium comprising Japanese companies, including Japan's Mitsui & Co. and the Japan Organization for Metals and Energy Security, previously known as JOGMEC.

All the shareholders in the project will have offtake. The biggest shareholder Novatek signed sales and purchase agreements in 2022 with two Chinese energy companies, ENN Group and Zhejiang Energy Gas Group.

The Russian company's subsidiary, Novatek Gas and Power Asia, signed a deal with ENN’s trading firm ENN LNG (Singapore) Ltd.

LNG deliveries to ENN will be on a delivered ex-ship (DES) basis whereby Novatek supplies the shipping to ENN’s Zhoushan LNG receiving terminal in eastern China.

Chiyoda Corp., the leading Japanese liquefied natural gas and energy engineering company, has been awarded a contract by Japan’s Mitsubishi Corp. to study the establishment of carbon-capture and storage (CCS) value chains in Japan and elsewhere using its expertise in LNG liquefaction.

Russian natural gas company Novatek has held a ceremony with the Russia’s government to mark the launch of the first modular liquefaction Train onboard a gravity-based structure at an assembly yard in the Murmansk region and set to be towed to the Gydan Peninsula project site on the Gulf of Ob in Western Siberia.

Novatek, the Russian natural gas company and operator of the Yamal LNG export plant and developer of Arctic LNG II set to start up by early 2024, has reported positive operating data for the second quarter of 2023 as it continued to supply cargoes to the European Union.

Novatek, the Russian natural gas company and operator of the Yamal LNG export plant and developer of Arctic LNG II currently still under threat from Western sanctions imposed because of the Ukraine invasion, has reported operating data for the first quarter of 2023 as it continued to supply cargoes to the European Union.

A US company backed by Japanese utility and LNG importer Tokyo Gas is in talks with US natural gas producer Rockcliff Energy as a possible buyer of the company from private equity firm Quantum Energy Partners for around $4.5 billion.

The transaction, which is being talked about by US investment bankers, would be another move by a Japanese company to secure natural gas assets.

This follows renewed concerns in Japan about its future energy resources since the Russian invasion of Ukraine and has led Japan’s state banking and energy agencies to support new moves by companies to expand the nation’s foreign resources base.

Tokyo Gas Natural Resources, based in Houston, Texas, is 70 percent owned by Tokyo Gas and with the balance held by Castleton Commodities International (CCI).

Tokyo Gas started acquiring its stake in CCI in May 2017 because of its natural gas assets in Louisiana and Texas, including the Haynesville shale play.

The Haynesville shale lies under parts of three southern states, including East Texas, northwest Louisiana and southwest Arkansas.

Previous deals

CCI had also previously purchased the Carthage upstream and midstream assets in East Texas from subsidiaries of the former Anadarko Petroleum Corp. for over $1 billion.

CCI subsequently combined the acquired assets with the company's existing East Texas upstream assets.

Tokyo Gas currently has volume and tolling agreements with the Cameron LNG plant in Louisiana and the Cove Point project in Maryland and is said to be considering other deals with US export projects under development in Texas and Louisiana.

Japan's Economy, Trade and Industry Minister (METI) recently oversaw deals by Japanese companies, including JERA Co Inc., the largest LNG importer, to secure future LNG supplies from Oman.

Japan had been so keen to secure enough LNG supplies during the Northern Hemisphere winter season that it asked state-run banking agencies to financially back utilities and trading companies to buy spot cargoes even at elevated prices.

The Japan Bank for International Cooperation and another state body, JOGMEC, which recently changed its name to the Japan Organization for Metals and Energy Security, have also increased their backing for energy asset transactions and are encouraging Japan's banking sector to do the same..