LNG

Saipem, the Italian energy and LNG engineering company specialising in subsea and oil and gas development projects and pipelines, posted soaring third-quarter revenues of more than €3 billion ($3.2Bln) as global demand surged.

Saipem said revenues to the end of September 2023 amounted to €3.02Bln compared with €2.85Bln in the same three months of 2022.

Quarterly gross earnings increased to €230 million versus €168M in the prior-year quarter. Net profits in the quarter came in at €39M versus a loss of €8M in the same quarter last year.

The Milan-based company said new contracts added to the backlog in the first nine months of 2023 amounted to €11.92Bln, an increase from the €6.92Bln in the corresponding period of 2022.

The backlog as of September 30, 2023 amounted to a total of €27.57Bln. These contracts comprised €15.08Bln in asset-based services, €10.33Bln in Energy Carriers and €2.15Bln in Offshore Drilling of which €2.69Bln was being completed in 2023.

LNG awards

Saipem won contracts earlier in 2023 with three linked to increased LNG production in Angola, Trinidad and Papua New Guinea.

“Group performance further improved with another quarter of growth in terms of revenues, margins, net result and cash generation, confirming the trend already recorded in the first six months of the year,” said Saipem.

“The improvement is recorded in the Offshore, Engineering and Construction and Drilling divisions,” Saipem added.

Saipem is also showing continued traction in the Middle East. After the close of the quarter, on October 5, Saipem, in consortium with National Petroleum Construction Company (NPCC), signed on behalf of Abu Dhabi National Oil Company a contract related to the Hail and Ghasha development project-package one in the United Arab Emirates.

Saipem said its share of the contract amounted to around $4.1Bln. The project is aimed at developing the resources of the Hail and Ghasha natural gas fields located offshore Abu Dhabi.

The project scope of work encompasses the engineering, procurement and construction (EPC) of four drilling centres and one processing plant to be built on artificial islands, as well as various offshore structures and more than 300 kilometres of subsea pipelines.

Adriatic FSRU

As part of the domestic Italian LNG build-out Saipem was awarded a contract by Italian gas system operator SNAM for the construction of the associated facilities for the new Floating Storage and Regasification Unit (FSRU) to be located in the Adriatic Sea offshore Ravenna as Italy’s fifth import terminal.

The contract, awarded jointly via a temporary venture with two other Italian companies Rosetti Marino and Micoperi, comprises the EPC and installation of a new offshore facility and for the docking and mooring of the FSRU.

The latest Italian floating terminal will be connected to shore via a 26-inch offshore pipeline of 8.5km length, plus a 2.6 km onshore pipeline and a parallel fibre optic cable.

McDermott International, the US energy and liquefied natural gas project engineering company, has reached support agreements with more than 75 percent of secured letter of credit facility providers, funded debt creditors and equity holders stemming from its several years of debt woes.

German natural gas supplier Verbundnetz Gas AG (VNG), based in the eastern city of Leipzig, has become the second large Russian gas buyer to be approved for a Berlin Government bail-out to stay afloat after LNG buyer Uniper received government funds in return for a stake.

The 50th anniversary Gastech Exhibition and Conference on LNG, pipeline natural and emerging energies is beginning on September 5 in the Italian city of Milan with global energy leaders and executives set to discuss the growing global gas crisis.

The US Supreme Court ruling just before the July 4 holiday weekend to limit the regulatory powers of the Environmental Protection Agency (EPA) over emissions from power plants is seen reducing legal challenges on the US hydrocarbon industry, including against LNG export developments and natural gas pipeline infrastructure.

In a 6-3 opinion the Supreme Court in Washington DC ruled in the case of West Virginia versus the EPA that the federal agency did not have the authority to regulate industry greenhouse-gas emissions that would affect individual power plants.

The case stems from former President Barrack Obama's Clean Power Plan (CPP), which would have enforced mandates for how much GHG emissions from power plants were allowed.

The policy was never officially implemented as it faced legal challenges and was side-lined under the Administration of President Donald Trump.

Analysts said the Court ruling leaves the Administration of President Joe Biden dependent on passing legislation if it wants to introduce regulations to reduce GHG emissions at plants and facilities.

“A decision of such magnitude and consequence rests with Congress itself,” the Court ruled,

The justices stated that they doubted Congress intended to delegate the question of “how much coal-based generation there should be to any administrative agency” of the federal government.

Biden setback

Analysts added that the Court ruling marked a setback for Biden, who was elected President on an anti-hydrocarbon platform and several of his first moves included blocking oil and gas projects.

The most high-profile Biden cancellation was of the Keystone XL pipeline extension to deliver more cheap Canadian oil for refining in the US into petroleum products such as gasoline.

Biden and his Democratic Party also opposed LNG, a policy they have now rowed back on, and blocked the Jordon Cove LNG export project proposed for the northwest state of Oregon as an outlet to Asia for abundant US natural gas.

Biden has also pledged to remove carbon from the US power grid by the middle of the next decade, setting the country on a path to net-zero emissions.

However, his efforts to implement more extreme climate-mitigation legislation in Congress have stalled and could disappear after the mid-term elections in November 2022.

US lawyers were quick to comment and asserted that the Supreme Court ruling in the case for West Virginia, the US coal state, should be interpreted as a warning to federal agencies not to overstep their explicit statutory authority in crafting new regulations.

Though the Obama CPP never took effect, its opponents were concerned that a similar policy against coal, oil and gas could be enacted unless the courts intervened and this led to the West Virginia case.

The petitioners in the case were West Virginia, supported by the state of North Dakota, along with two coal companies and they asked the Court to decide whether the EPA had blanket authority to force changes in the power generation mix in the name of GHG reductions and the answer was no.

The France-based International Group of Liquefied Natural Gas Importers (GIIGNL) has issued its annual report with key export and import statistics and noted that 2022 would see a ‘‘paradigm shift” in the market with government and institutions getting involved after the Russian invasion of Ukraine.

“Price volatility was exacerbated in February 2022 by the Russia-Ukraine conflict, and the current European energy crisis proves to be a stark reminder of LNG’s vital role in ensuring energy security and economic stability,” said Jean Abiteboul, GIIGNL President in his introduction to the report.

“Governments and public institutions are becoming increasingly involved in the LNG business, and we will monitor the consequences of this paradigm shift over the course of the coming year,” he added.

Global regasification capacity rose last year by 46 million tonnes per annum to reach 993 MTPA as four new large-scale terminals were brought in operation in Brazil, Croatia, Indonesia and Kuwait and five expansion programmes were completed, four of which are in China and one in Japan.

“At least six new markets have started or are scheduled to join the sector as importers in 2022, including Ghana, Hong Kong, El Salvador, the Philippines, Senegal and Vietnam,” said the report.

“In the meantime, LNG production has been struggling to keep pace with demand, which sent spot LNG prices upwards,” it added.

The GIIGLN constitutes a forum for exchange of information and experience among its 90 members and they handle more than 90 percent of LNG imports worldwide.

The membership the GIIGLN comes from 27 countries and the body also aims to share experiences to enhance safety, reliability, efficiency and sustainability of LNG import activities and in particular the operation of regasification terminals.

Keeping pace

“During 2021, LNG imports returned to robust growth, reaching 372.3 million tonnes, a 4.5 percent increase over 2020. Asia remained the main demand center for LNG, growing by 7.1 percent,” it said.

The report added that LNG production has been struggling to keep pace with demand, which sent spot LNG prices upwards.

“While 7.4 MTPA of new capacity came onstream, 5 MTPA of which in the United States, global LNG exports were affected by unscheduled maintenance and shortfalls in feed gas,” the report added.

“Increased output from the US, Egypt, Malaysia and Russia was partly offset by lower exports from Angola, Indonesia, Nigeria, Norway, Peru and Trinidad,” said the GIIGNL.

The report said that in 2021, two important final investment decisions were taken for the North Field East expansion project in Qatar, which will add 33 MTPA of liquefaction capacity from 2025, and Pluto LNG Train 2 in Australia for 5 MTPA.

“By 2025, more than 120 MTPA of new liquefaction capacity will progressively come online, which should partly relieve tensions in the LNG market,” stated the report.

With 68 new vessels delivered during 2021, the report confirmed that the LNG fleet reached 700 vessels, including 48 floating storage and regasification units (FSRUs) and 31 LNG bunkering vessels, representing a 9 percent increase in cargo capacity.

“Freight rates remained very strong throughout the year and the order book at year-end was remarkably high, with 196 units to be delivered by 2025,” said the report.

Police in the Canadian province of British Columbia said environmental extremists have carried out a violent attack on a project site of the Coastal GasLink LNG feed-gas pipeline for LNG Canada.

TotalEnergies of France said it benefited from a leading position in liquefied natural gas to generate $4.8 billion in adjusted third-quarter net income versus $848 million in the 2020 quarter while cash flow amounted to $8.4Bln.

Oct 15 (LNGJ) - KBR said a liquefied natural gas engineering joint venture in which the Houston-based firm had a 30 percent ownership interest, JKC Australia LNG, had signed a binding settlement agreement resolving outstanding disputes over the Ichthys LNG project near Darwin. KBR’s partners were Japan’s JGC Corp and Chiyoda Corp.

   “We are pleased to announce the resolution of disputes between JKC and its client,” said Stuart Bradie, KBR President and Chief Executive of the Ichthys LNG plant of Inpex Corp. of Japan and France’s TotalEnergies. However, KBR noted that this deal did not affect the continuing pursuit of JKC's claim against its sub-contractor associated with a combined cycle power plant project.

Sound Energy, the UK company with natural gas assets in Morocco and an LNG production proposal, has reported progress on several fronts, including sales, finance and engineering.

The company is planning to develop a micro-LNG plant for the Tendrara 5-Horst gas well in its Tendrara production concession in eastern Morocco, near the Algerian border.

The micro-LNG plant is part of a full field development plan centred around the construction of a 120-kilometre pipeline going north to link with the Maghreb-Europe pipeline.

Graham Lyon, Executive Chairman, said that there had been positive developments for the Tendrara concession, including on a commercial gas sales contracts and Phase 1 engineering of the micro-LNG plant.

A company called Afriquia Gaz SA has signed a conditional LNG sales agreement.

Afriquia Gaz  is Morocco-based and is currently engaged in the refining and marketing of liquefied petroleum gas (LPG).

“The agreement covers a 10-year, take-or-pay LNG sale and purchase at Tendrara,” said Lyon.

Sound Energy is also negotiating an $18 million loan from Afriquia Gaz.

The company added that there has also been activity covering the pipeline development discussions.

“A huge amount of work has been completed so far this year and much remains to be concluded during the remainder of 2021,” said Chairman Lyon.

“Having secured a long-term LNG sales agreement with Afriquia Gaz, we have established a route to market for our gas and following completion of the proposed $18M loan from Afriquia Gaz, the company will have financing for the Sound Energy share of the Phase 1 development,” he explained.

Afriquia Gaz has received £2.0 million ($2.8M) of share equity at 1.25 UK pence per share in connection with the LNG sales agreement, thus providing Sound Energy with more liquidity.

The LNG sales agreement with Afriquia Gaz commits the buyer to purchase not less than 100,000 cubic metres per annum produced and liquified from the Phase 1 development concession joint venture.

“With important catalysts to come in the near term, I look forward to updating shareholders further as we progress towards the development phase of the project and to becoming a revenue generating business,” he stated.

The company said the Tendrara Horst field would help provide domestic LNG to industrial users in Morocco, displacing presently imported fuels with a deeper carbon footprint.

Sound Energy was also able to successfully restructure its Luxembourg-listed €28.8M, 5-percent senior secured notes by engaging proactively with noteholders to agree a suitable restructuring without substantial equity dilution.