LNG

Japanese trading house Mitsui and Company Ltd, has purchased more shale-gas assets in Texas and plans to bring them to full-scale development and production as possible feed-gas supplies for LNG output.

UK major Shell has confirmed a deal as expected to acquire the liquefied natural gas assets of Pavilion Energy, the natural gas company set up by Singapore’s wealth fund Temasek to give the Asian island state energy security.

Gaztransport and Technigaz (GTT), the French LNG storage technology company, has received design approval from two European classification societies for the latest containment system.

The Royal Navy warship “HMS Duncan” has deployed from Portsmouth to the Red Sea as part of the mission to keep open international shipping routes amid renewed attacks on vessels by the Iranian-backed Houthi rebels of Yemen, ending hopes that shipping in the region could possibily return to near normal by the end of 2024.

The attacks have forced LNG carriers, oil tankers, containerships and other vessels to continue to be re-routed to longer and more expensive journeys around southern Africa amid renewed concerns that the Israel-Hamas war would further destabilise the Middle East now that Iran’s proxy, the Houthis, are back in action.

Shipping data shows that there has almost been a complete halt on LNG carriers entering the Red Sea area during the first five months of 2024.

In April 2024 a total of just 159 ships of all types used the Suez Canal, marking a sharp decline of 85 percent in the traffic from more normal times.

Re-routed

A total of 2,922 vessels used the Cape of Good Hope route in March, and the number was little changed in April at 2,873.

Maritime traffic at the Cape of Good Hope increased by 125 percent in the last six months, reflecting the diversions from both the Suez Canal and Bab-el-Mandeb Strait off Yemen.

The number of containerships and LNG carriers using the Cape was up by 260 percent and 180 percent respectively in April, according to shipping data.

All countries in the Eastern Mediterranean, including Turkey, have found themselves at the end of a dead-end for all trade from Asia, as ships no longer reach them through the Suez Canal and instead have to go round South Africa and enter the Med by the Strait of Gibraltar, adding to costs.

Meanwhile, the United States Navy and the Royal Navy have led the most strikes against Houthi targets in retaliation for their attacks on vessels.

The Houthis have launched repeated drone and missile strikes in the Red Sea region since November 2023, later expanding their attacks to the Indian Ocean.

The group has said it will attack any ships sailing towards Israeli ports, even in the Mediterranean Sea, though there have as yet been no attacks on vessels in the East Med area.

Shipping protection

The UK government said that the Type 45 destroyer just deployed will relieve its sister ship “HMS Diamond”, which has been protecting shipping lanes in the Red Sea from Houthi attacks since before Christmas.

The Royal Navy said that “HMS Duncan” was a like-for-like replacement as it is armed with the same Sea Viper missile system and equipped with the same radar systems, which are able to accurately detect faraway threats.

During her deployment, “HMS Diamond” has shot down nine drones and one missile, launched by Houthis from the coast of Yemen at cargo ships.

“The 200 men and women of ‘HMS Duncan’ have worked to ensure that their ship is ready to deploy, successfully completing trials and training last week in preparation for the deployment,” said a Ministry of Defence statement.

“This will see the ship work to ensure freedom of navigation and make international waters safer and more secure for merchant vessels,” the statement added.

“HMS Duncan” spent five months leading NATO’s premier task group in the Mediterranean Sea last year, until handing over flagship duties to the Italian Navy in December.

The ship is now ready for more operations, with over 60 new members joining the ship’s company. 

European liquefied natural gas and wholesale pipeline gas prices soared by over 16 percent on the week while stronger Asian spot cargo values and higher global gas futures prices signalled a return of volatility to a market harbouring doubts about the stability of supplies.

Seatrium of Singapore, a leading global company in repairing, upgrading or refitting LNG carriers, has signed a favoured customer contract with a South Korean shipping company.

A wholly owned subsidiary of US energy engineers McDermott has been awarded a significant contract by the Marsa liquefied natural gas project in the Sultanate of Oman on the Arabian Peninsula for storage and associated piping.

McDermott, based in Houston, Texas, has confirmed that its subsidiary CB&I will build a full containment concrete LNG storage tank at the Marsa project site at Oman's Port of Sohar.

French major TotalEnergies is going ahead with a large investment in the Marsa LNG project to serve as the first LNG bunkering hub in the Middle East.

The joint venture between TotalEnergies and Oman National Oil Company will build a liquefaction plant with 1 million tonnes per annum of output.

Feed-gas will come from Oman’s Mabrouk North-East field in the onshore Block 10 area.

Contractors

The main engineering, procurement and construction contracts have been awarded to France’s Technip Energies for the LNG plant and to CB&I for the 165,000 cubic metres capacity LNG storage tank.

The LNG is primarily intended to serve the marine fuel market in the Arabian Gulf region while LNG quantities not sold as bunker fuel will be off-taken by TotalEnergies and the Omani partner.

In addition to the storage tanks contract, CB&I will provide turnkey EPC services for the tank and associated piping.

Project delivery will be executed in Oman, where CB&I has been continually present since 1968, with support from CB&I's Dubai office.

“Through this project, CB&I will contribute to the construction of one of the lowest GHG emissions intensity LNG plants ever built,” said Cesar Canals, President and Chief Executive of CB&I.

“It supports our ambition to build storage for projects that will help provide reliable energy to markets,” Canals explained.

“It will also pave the way for similar storage opportunities in the future and continues our long history of execution excellence in the Middle East, specifically Oman,” he added.

Work is expected to commence with construction activities in the fourth quarter of 2024.

The overall Marsa bunkering fuel projects is targeted for completion in 2028.

Japanese shipping company Mitsui OSK Lines (MOL), whose energy fleet includes over 150 tankers for oil and other products and around 90 LNG carriers, reported stable LNG profits while the containership business was badly hit by a “tidal wave” of new vessels in the sector.

The European Union said the emissions trading system (ETS) followed by power utilities, oil and gas companies, industry and aviation has helped reduce carbon-dioxide pollution by a record 15.5 percent in 2023 compared with the previous year.

QatarEnergy, the leading global LNG producer and with three growth projects being developed has signed time-charter party (TCP) agreements with Qatar Gas Transport Co. (Nakilat) for the operation of 25 conventional-size LNG vessels as part of the second shipowner tender under Qatar’s LNG fleet expansion programme.

The agreements were signed in Doha by Saad Sherida Al-Kaabi, the Minister of State for Energy Affairs and President and Chief Executive of QatarEnergy and Abdullah Al-Sulaiti, the CEO of Nakilat.

A statement said that 17 of the 25 LNG vessels are being constructed at the Hyundai Heavy Industries (HHI) shipyard in South Korea, while the remaining eight are being constructed at Hanwha Ocean, formerly Daewoo Shipbuilding and Marine Engineering, also in South Korea.

“These agreements firm up last month’s selection of Nakilat as the owner and operator of up to 25 conventional-size LNG carriers, underscoring our continued confidence in Qatar’s flagship LNG shipping and maritime company,” said Al-Kaabi.

“This is a testament to Nakilat’s world-class capabilities as well as to the significant contributions of Qatari listed companies to our country’s national economy,” he explained.

“The agreements we signed today play an important role in implementing QatarEnergy’s historic LNG shipping programme, which will cater for our future requirements, as we move forward with the expansion of our LNG production capacity to 142 million tonnes per annum by 2030,” Al-Kaabi stated.

Each of the 25 vessels will have a capacity of 174,000 cubic metres and will be chartered out by Nakilat to affiliates of QatarEnergy pursuant to the 15-year TCP agreements.

Liquefaction surge

Qatar announced at the end of February 2024 that it was going ahead with a third huge expansion called the North Field West (NFW) project to take overall output to 142 MTPA by the end of the decade.

The NFW joint venture will add to production expansions already under way with the North Field East (NFE) and North Field South (NFS) LNG projects.

The current NFE ramp-up of QatarEnergy’s liquefaction capacity will take production from 77 MTPA to 110 MTPA by 2027.

The second phase, called the NFS venture, will further increase the LNG output capacity from 110 MTPA to 126 MTPA.

The new NFW project will be developed to take production to 142 MTPA.

Overall the three expansions will put into production a total of eight LNG mega-Trains, each with nameplate capacity of around 8 MTPA and total additional nameplate capacity of just over 64 MTPA.