LNG

Woodside Petroleum Chief Executive Peter Coleman told the LNG2019 conference in Shanghai that international energy majors needed to do more to demonstrate as China has already done that a lower-carbon world needs LNG.

Hudong-Zhonghua Shipbuilding, the owner of the largest Chinese shipyards, said it was planning to construct the world’s largest liquefied natural gas carrier with a capacity of 270,000 cubic metres.

French energy major Total said at the LNG2019 conference in Shanghai that it had signed a series of agreements to strengthen its foothold on the US Gulf Coast with equity stakes and additional volumes.

Total said it signed its deals with Tellurian Inc., a company in which it already has shares and the developer of the Driftwood LNG project in Louisiana.

The accords signed were a Heads of Agreement committing Total to invest in the development company Driftwood Holdings and another to take its supply from the venture to 2.5 million tonnes per annum of LNG.

Total said it would make an additional equity investment in the Driftwood LNG joint venture and purchase more offtake.

The final environmental impact statement was issued by the US Federal Energy Regulatory Commission in January 2019 to develop the liquefaction plant to produce around 27.6 million tonnes per annum of LNG.

Tellurian and Total said they planned a sales and purchase agreement (SPA) for a further 1.5 MTPA of LNG from Tellurian Marketing’s offtake volumes from the Driftwood venture.

The sales agreement will be for the purchase of free-on-board (FOB) whereby Total supplies the shipping for a minimum term of 15 years and at a price based on the Platts Japan Korea Marker (JKM).

Total’s equity agreement gives the French company an additional 20 million shares of Tellurian common stock for an amount of $200 million, adding its previous investment.

The agreements are subject to the relevant regulatory approvals and to the final investment decision of the Driftwood project.

“These agreements increase our commitment to Driftwood LNG, a highly cost-competitive project that benefits from the low gas production costs and prices in the US,” said Patrick Pouyanne Chairman and Chief Executive of Total.

“In line with our strategy to become a major LNG portfolio player, this transaction will add 2.5 MTPA of competitive US LNG to Total’s portfolio and strengthen our positions in the US,” added Pouyanne.

Total has been a shareholder in Nasdaq-listed Tellurian since 2017, after the Group acquired 46 million shares for an amount of $207M.

Tellurian said it was expecting to have about six partners-customers when it takes its final investment decision for the first phase of the joint venture near Lake Charles that will cost a total of $30 billion.

The company is expected to take its final investment decision by mid-2019 and would progress to producing the first LNG in 2023 and complete the project in 2026.

NextDecade Corp., the developer of the Rio Grande LNG export project at the port of Brownsville in Texas, announced at the LNG2019 conference in Shanghai that it had signed a 20-year sale and purchase agreement with Royal Dutch Shell.

Shell will purchase LNG on a free-on-board basis whereby it provides its own shipping starting from the commercial operation date of Rio Grande LNG, currently expected in 2023.

The US company announced the key event at its exhibition stand at the LNG19 conference in the Chinese city backed by the International Gas Union (IGU) and Gas Technology Institute.

NextDecade said that around three-quarters of the purchased LNG volumes will be indexed to the North Sea Brent crude price and the remaining volumes indexed to US natural gas prices, including the benchmark Henry Hub.

“The SPA is the first-ever long-term contract with LNG produced out of the United States to be indexed to Brent and comes with full destination flexibility,” stated NextDecade.

“We are thrilled that we continue to achieve our milestones, as promised, and look forward to finalizing additional commercial agreements and to proceeding with the development of our Rio Grande LNG project,” added the company.

Matt Schatzman, NextDecade’s President and Chief Executive and a former executive with BG Group of the UK, said he was honoured to have Shell as the first foundation customer.

“Shell is not only the largest portfolio LNG company in the world, Shell is also a recognized pioneer in the global LNG business,” explained Schatzman.

“Shell was the first to sign a long-term SPA from the United States indexed to Henry Hub in 2011, and so it is fitting they are the first to sign a long-term SPA from a US LNG project indexed to Brent,” added Matt Schatzman.

Shell also welcomes the deal with Slavko Preocanin, Vice President of Shell LNG Marketing & Trading saying the deal secured more volumes for the Anglo-Dutch company for the 2020s.

“It ensures we can meet the growing demand for secure, flexible and cleaner energy from our global customers,” added Preocanin.

“We look forward to working with NextDecade in the years to come,” he added.

NextDecade said it anticipated making a positive final investment decision by the third quarter of 2019 on up to three LNG Trains in its first phase of development.

The Brownsville plant will produce around 27 MTPA of LNG and the company’s affiliated Rio Bravo Pipeline in South Texas is also being approved.

NextDecade has a second Texan export venture called Galveston Bay LNG.

Galveston Bay LNG will include a 97-mile affiliated pipeline to move 3 billion cubic feet of natural gas per day from the Katy Hub in Waller County, while the liquefaction plant is proposed for a 550-acre site along the Texas City Ship Channel.

Qatar Petroleum and ExxonMobil said their joint marketing company Ocean LNG, created in 2016, would be responsible for placing all of the offtake from the Golden Pass liquefaction and export plant being developed on the Gulf Coast of Texas.

Ocean LNG is an international joint venture marketing company started in October 2016 in which Qatar Petroleum owns 70 percent and ExxonMobil holds 30 percent.

“Ocean LNG will be prominently featured for the first time as part of the Qatar Petroleum pavilion at the global industry event, LNG 19, being held in Shanghai,” said Qatar Petroleum.

“Since its establishment, Ocean LNG has been active mainly in South America and Europe,” noted Qatar Petroleum.

“Following a successful Final Investment Decision of Golden Pass LNG on 5 February 2019, Ocean LNG will now focus its efforts on marketing its US LNG volumes in the Asia Pacific region through further extensive engagements,” explained the company.

The marketing unit would seek to expand its relations and networks with both established customers as well as emerging and prospective LNG buyers.

“The FID of Golden Pass LNG earlier this year underpins Ocean LNG's marketing efforts to deliver US LNG to customers across the globe,” said Saad Sherida Al-Kaabi, Qatar’s Minister of State for Energy Affairs, and President and Chief Executive of Qatar Petroleum.

“This is a further testament of Qatar Petroleum's position as a global LNG leader with a large portfolio capable of offering tailored LNG supply structures and commercial terms in an evolving global LNG environment,” stated Al-Kaabi.

The existing Golden Pass facility, located on the Sabine-Neches Waterway in Texas, is majority owned by Qatar and with ExxonMobil holding 30 percent of the venture.

Originally designed as an import facility before the shale-gas revolution, Golden Pass will be reconfigured at a cost of more than $10 billion to export up to 15.6 million tonnes per annum of LNG.

Golden Pass has already received all necessary regulatory approvals from both the US Federal Energy Regulatory Commission and the Department of Energy.

An engineering consortium comprising McDermott and Zachry Group of the US and Japan’s Chiyoda Corp. have been awarded the contract to build the plant.