LNG

The North Sea Transition Authority (NSTA) is awarding 27 new oil and gas licences aimed at strengthening domestic energy security as a necessary back-up for renewables and to help reduce the mounting import bill for pipeline natural gas, LNG and oil.

A total of 27 licences have been offered in quicker-to-production areas with more to follow subject to additional environmental checks.

According to Offshore Energy UK (OEUK), the trade body for the sector, around 220,000 jobs are supported by the current offshore industry fields.

UK energy data

OEUK has also provided valuable data on the state of the North Sea oil and gas industry and to fill the gap in educated-understanding among sections of the public about the necessity of hydrocarbon energy and its benefits.

Licensing is the first step taken by energy production companies with the regulator to find and produce domestic supplies.

However, each licence does not represent a new oil field. It’s simply that energy companies require licences for a range of activity in so-called “blocks” which are carefully mapped sections of the seabed in UK waters.

These start from seismic and initial exploratory work through to production, either near existing infrastructure in previously known fields or in new fields.

“Licencing is a normal part of most energy production regimes and is used in the UK to manage the development of oil and gas, wind and most recently, carbon capture projects,” said OEUK.

“It is part of a bigger process which companies must undertake to explore, analyse, produce and then eventually decommission energy production,” the group added.

Around 75 percent of the UK’s current energy needs are provided by oil and gas.

The UK is a net importer of oil and natural gas, meaning it consumes more than it produces domestically.

Field numbers

“There are currently 284 active oil and gas fields in the North Sea and by 2030 around 180 of those will have ceased production due to natural decline,” OEUK explained.

The industry, thus, needs the churn of new licences to ensure no cliff-edge is reached in domestic production.

“We all recognise that our energy system must change and our industry includes companies that are expanding into renewables while using their expertise to pioneer ever cleaner energy production,” said OEUK Chief Executive David Whitehouse.

“The reality of the energy transition is that we need both oil and gas and renewables in an integrated system to protect the UK’s energy needs over the coming years,” Whitehouse added.

“Last year filling the fuel import gap cost the UK £117 billion ($142Bln). That’s a lot of money spent supporting the economic growth of other producing countries. With careful management and collaboration, the UK can become the gold standard of energy transitions. We can drive economic growth, reach our climate goals and avoid a future where we increasingly import our energy and export our jobs,” he explained.

Nordic natural gas company Gasum of Finland, the region’s biggest distributor of LNG, aims to change its strategy in the next five years to concentrate operations on biogas made from waste and the electricity business.

Gas Authority of India, the grid and natural gas pipelines operator and the second-largest importer of LNG after Petronet, has just brought in a new Managing Director and Chairman at a time when Indian energy strategies are expected to be revised with a more urgent focus on natural gas.

Engie, the France-based European utility company, reported an annual profit of €3.7 billion ($4.2Bln) compared with a loss of €1.5Bln in 2020 as the natural gas and power network businesses improved and nuclear turned a profit while renewables were disappointing given the amount of investment and promotion.

Höegh LNG Partners, the owner and operator of five floating storage and regasification units, has completed the refinancing of two FSRUs contracted as floating import terminals in Indonesia and Turkey.

The France-based International Group of Liquefied Natural Gas Importers (GIIGNL) has issued its annual report with key export and import statistics showing surges in spot LNG deals and in deliveries on short-term contracts.

The France-based International Group of Liquefied Natural Gas Importers (GIIGNL) has issued its annual report with landmark statistics, including more than 10,000 cargoes delivered without incident and the global LNG carrier fleet passing the 600-vessel mark.

“LNG flows experienced a shift in patterns,” said GIIGNL President Jean-Marie Dauger in his executive overview of the 2020 publication.

“Northeast Asian demand growth moderated due to economic slowdown, milder weather and competition from nuclear and coal-fired power generation, while most of additional LNG volumes were absorbed into Europe which played a balancing role thanks to its abundant infrastructure and well-connected gas market,” he explained.

The GIIGLN constitutes a forum for exchange of information and experience among its 88 members with the aim of enhancing the safety, reliability, efficiency and sustainability of LNG import activities and in particular the operation of regasification terminals.

The GIIGNL said that while no new country joined the ranks of importers in 2019, several countries made sound progress on infrastructure development and are set to begin importing in the coming year or two.

“At the start of 2020 eight new floating terminals and 18 new onshore terminals were reported to be under development,” said the GIIGNL President.

“Total regasification capacity under construction at year-end reached 131 million tonnes per annum,” added Dauger.

“About 63 percent of the capacity under construction was located in Asia, of which nearly half was in China and India,” he said.

Global regasification capacity stood at 920 MTPA at the start of 2020 and there were 42 importing countries.

Seven new terminals were commissioned, adding a combined 13 MTPA of new regasification capacity.

Two terminals are based on a floating solution and four are small-scale facilities with a regasification capacity of less than 1 MTPA.

“Three expansion programs were completed in India, Taiwan and Thailand, adding 5 MTPA of LNG regasification capacity,” said Dauger in his overview.

In Asia, demand was characterized by two diverging trends: on the one hand, it continued to be boosted by China despite the US-China trade frictions and the slowdown of the coal-to-gas switch in the industrial sector.

On the other hand LNG demand declined in Japan and South Korea, where increasing levels of nuclear power generation and the pace of renewables deployment influenced the role of LNG in the power mix.

“In Europe, the absorption of surplus volumes was enabled by a combination of lower pipeline imports, declining domestic production, increased storage use and additional gas-fired power generation,” he explained.

“Imports dwindled in the Middle East as Egypt increased its exports. The same dynamic occurred in South America as Argentina started LNG production and exports,” added Dauger.

The GIIGNL report also noted that for LNG sellers and buyers, business models and contractual arrangements are becoming increasingly diversified.

“Traders continue to take advantage of seasonal and local supply tensions and integrated portfolio players are displaying impressive growth, aiming to bridge the disconnect between LNG seller and buyer interests,” it said.

“We see competing interests, a world in which sellers require long-term commitments to support their investments, whereas buyers need shorter contract durations, diversified pricing structures, increased destination flexibility and greater volume flexibility in order to manage demand uncertainty,” added the report.

LNG commercial operations over the previous near enabled the delivery of 100,000 cargoes without major incident, showing a remarkable track-record of safety.

“As we enter a new decade and as GIIGNL is approaching its 50th anniversary, our association remains committed to promoting cooperation between LNG players and to supporting the development of safe, efficient and sustainable LNG imports for a responsible energy transition,” stated President Dauger.

Gaztransport and Technigaz (GTT), the French technology firm for designs of systems for the maritime transportation and storage of liquefied natural gas, with Excelerate Energy of the US, a leading floating LNG terminal project company.

Toyo Engineering Corp. of Japan has been awarded two engineering and construction contracts in Thailand and Russia as it redirects its core business to petrochemicals after being involved in the global build-out of LNG liquefaction plants and import terminals, including the Sakhalin export facility in the Russian Far East and the largest Indian import terminal at Dahej near Mumbai.