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.

Japanese insurance companies will raise premiums for liquefied natural gas carriers operating in Russian territorial waters by about 80 percent starting on January 25 after previously threatening to withdraw the cover from shipping lines.

TotalEnergies, the French major with global LNG stakes, booked an impairment of over $4 billion in its earnings because of the negative impacts of involvement in Russian LNG and particularly the Arctic LNG II project on the Gydan Peninsula.

The Arctic LNG II project being developed on the Gydan Peninsula in northern Siberia has amended a project financing agreement signed earlier in 2021 with several Russian banks to increase the maximum allowed under the facility

Novatek, the Russian natural gas developer of the Arctic LNG II project, has concluded two important agreements on offtake from the facility coming on stream in 2023 while selling a stake to French major Total in its cargo trans-shipment subsidiary.

Novatek, the Russian natural gas producer and LNG project operator and developer, reported first-quarter 2021 preliminary operating results showing that hydrocarbon production totalled 158.1 million barrels of oil equivalent.

Zvezda Shipbuilding in the Russian Far East has held a steel-cutting ceremony for the first in a series of 15 ice-breaking LNG carriers ordered by the nation’s Sovcomflot shipping line to serve the Arctic LNG II export project being developed by natural gas company Novatek.

The Zvezda complex is located at Bolshoi Kamen on the coast of the Sea of Japan and about 12 miles northeast of the city of Vladivostok.

The shipbuilder is owned by a consortium of Russian energy companies, including Rosneftegaz, Rosneft and the financial affiliate of Gazprom, Gazprombank.

Shipbuilding, financing, lease, and time-charter contracts were signed last year by the four companies involved in ordering the 15 vessels, the first of which is scheduled for delivery in the first quarter of 2023.

Participants in the ceremony on November 20 included Yury Borisov, Deputy Prime Minister of the Russian Federation, Leonid Mikhelson, Chairman of Novatek, Igor Tonkovidov, President and Chief Executive of Sovcomflot and Sergey Tseluyko, Managing Director of Zvezda Shipbuilding and Daniil Algulyan, Deputy Chairman of VEB.RF, the Russian bank providing the financing.

“The steel-cutting for the lead vessel heralds the building of a new generation of ice-breaking LNG carriers,” said Sovcomflot (SCF).

“The design of these new vessels incorporates the many years of experience Sovcomflot has acquired in operating large vessels within challenging ice conditions,” it added.

“The engineering solutions selected for this class of vessel will enable increased speed and manoeuvrability when sailing in ice conditions, compared with ice-breaking LNG carriers of the previous generation,” explained the shipping line.

“This will, for the first time, allow year-round navigation in the eastern sector of the Russian Arctic, thereby expediting the implementation of national plans to boost cargo traffic along the Northern Sea Route,” it added.

All the vessels in the series will be assigned an Arc7 ice class.

The first LNG carrier of the series was ordered directly by SCF, while the other 14 vessels were ordered by Smart LNG, a joint venture of Sovcomflot and Novatek.

The shipbuilding process is being supervised by the Russian Maritime Register of Shipping.

During the ceremony, Deputy Federation Minister Borisov said that the start of work was preceded by a “tremendous effort” both in terms of organisation and production preparations.

“These vessels will significantly contribute to the development of cargo traffic along the Northern Sea Route, which is strategically important for Russia,” explained Borisov.

Each vessel will have capacity of more than 172,000 cubic metres and be 300 metres long and over 48 metres wide. Their power capacity is 45 megawatts, with each vessel equipped with three unique azimuth propulsion units.

“The start of construction of the first in this new generation of LNG carriers by Zevzda is a significant milestone for the Russian shipbuilding industry, which has never before constructed vessels with this level of engineering complexity,” said SCF CEO Tonkovidov.

“We are looking forward to continuing our close collaboration with our partners and are ready to further support the Russian civilian shipbuilding industry as part of the implementation of major energy projects,” stated the CEO.

All the 15 new LNG carriers will be registered under the Russian flag and will be operated by Russian crews.

The Arctic LNG II project is being developed with three gravity-based platforms and the estimated capital expenditure for the joint venture is now put at the equivalent of US$21.3 billion.

Arctic LNG will produce almost 20 million tonnes per annum of LNG as well as gas concentrate from the principal feed-gas resources, the Utrenneye gas field.

Novatek holds 60 percent of the Arctic LNG project and four other 10 percent stakes are shared between various shareholders.

The 10 percent holdings belong to French major Total, which is also a shareholder in the Novatek company, China National Petroleum Corp., China National Offshore Corp. and a Japanese investor group comprising Mitsui & Co. and the government institution, the Japan Oil, Gas and Metals National Corporation (Jogmec).

Mitsui OSK Lines, the Japanese shipping company, said it signed charter agreements for three ice-breaking liquefied natural gas carrier for the Arctic II LNG project in the Gydan Peninsula of northern Siberia being developed by Russian natural gas company Novatek.

The three vessels are being built by the South Korean shipbuilders, Daewoo Shipbuilding and Marine Engineering, and are scheduled for delivery in 2023.

“The vessels will mainly transport LNG from a loading terminal on the Gydan Peninsula in the Russian Arctic to the floating LNG storage units (FSU) to be installed at the trans-shipment terminal in Kamchatka (eastbound) and Murmansk (westbound) via the Northern Sea route,” explained MOL.

The Arctic LNG II project being developed by Novatek with three gravity-based platforms and the estimated capital expenditure for the joint venture is now put at the equivalent of US$21.3 billion.

Arctic LNG will produce 19.8 MTPA of LNG as well as gas concentrate from the principal feed-gas resources, the Utrenneye gas field.

Novatek holds 60 percent of the Arctic LNG project and four other 10 percent stakes are shared between various shareholders.

The 10 percent holdings belong to French major Total, which is also a shareholder in the Novatek company, China National Petroleum Corp., China National Offshore Corp. and a Japanese investor group comprising Mitsui & Co. and the government institution, the Japan Oil, Gas and Metals National Corp. (Jogmec).

“Compared with MOL's previous icebreaking LNG carriers, which can only sail eastbound in the Northern Sea Route during mostly summer and autumn period of time when the ice is thin, the new vessels will have a narrower width, hull form optimized for ice breaking, and an increased propulsion engine output which will enable the vessels to sail east via the Northern Sea Route all year round,” stated MOL.

MOL added that combination of these three ice-breaking LNG vessels, which can transport LNG to the FSUs in the east and west throughout the year, and conventional LNG carriers that will transport LNG from the FSUs to their final destinations, will enable efficient year-round transportation.

“The eastbound transportation route will reduce the distance of the voyage by approximately 65 percent compared to the westbound route via the Suez Canal for Asian destinations, thereby making a significant contribution to a reduction of greenhouse-gas emissions by vessels,” said the Japanese company.

MOL noted that it had already been engaged in transporting LNG using three icebreaking LNG carriers on the Northern Sea Route since March 2018 for the Yamal LNG Project in Russia.

“These new contracts were concluded in recognition of MOL's proven track record and technical expertise in the Northern trade, and the experience and resources which the company has built over many years of LNG transportation,” said the company.

Gaztransport and Technigaz, the French designer of liquefied natural gas maritime and onshore storage systems, has received a second order from the Zvezda Shipyard in the Russian Far East for the tank designs of 10 ARC7 ice-breaking LNG carriers.

GTT said each vessel would offer a capacity of 172,600 cubic metres capacity and be fitted with the Mark III membrane containment system.

GTT technologies have been adapted for heavy environmental conditions, allowing LNC carriers to operate and navigate safely in ice-covered waters.

“These ARC7 vessels will contribute to the projects of the Russian LNG producer Novatek,” said GTT.

The 10 carriers are scheduled to be delivered between the second half of 2024 and the end of 2025.

“We are very pleased to work with Zvezda and look forward to continuing this partnership through this second order for 10 ARC7 ice-breaking LNG carriers,” said Philippe Berterottière, Chairman and Chief Executive of GTT.

The Zvezda complex is located at Bolshoi Kamen on the coast of the Sea of Japan and about 12 miles northeast of the city of Vladivostok.

Zvezda signed a technical assistance and license agreement with GTT in June 2020.

The new generation of carriers built by Zvezda will serve the new plant of Russian natural gas company Novatek and partners from France, China and Japan.

GTT said these unique LNG carriers are intended to transport cargoes from the project being developed on the Gydan Peninsula in northern Siberia.

Zvezda is owned by a consortium of Russian energy companies, including Rosneftegaz, Rosneft and the financial affiliate of Gazprom, Gazprombank.

The Russian shipbuilder obtained its GTT licence after a qualification process that began in September 2017, including the construction of a Mark III technology mock-up.

The shipyard plans to specialise in the construction of large-capacity vessels, ice-class ships, special vessels and marine equipment or offshore platforms.

Construction of LNG carriers is one of the priority directions of the production programme at the shipyard.

The first vessel for Arctic LNG II will be constructed at the Zvezda shipyard for Russian shipping line Sovcomflot and be financed by the Russian VEB Group, a development bank.
The first carrier and its sister ships will be capable of traversing the Northern Sea Route.

The newbuilds will be designed for year-round operations in the ice conditions of the Kara Sea and the Gulf of Ob and will be able to sail independently through ice over two metres thick.

Sovcomflot LNG carriers currently deliver cargoes for Yamal plant of Russian natural gas company Novatek and for Gazprom’s Sakhalin plant in the Russian Far East.

Russia is proceeding with the world’s largest LNG trans-shipment facilities at the ports of Murmansk and Kamchatka and has signed contracts with a South Korean shipyard to build two floating storage barges as part of the project.