LNG

Equinor, the Norwegian major and the UK’s Centrica, owner of the British Gas utility, have signed a deal for the delivery of more Norwegian pipeline natural gas over the next three winters and the accord will slightly lessen the need for more LNG deliveries to UK terminals.

European and Asian LNG prices increased again and with the Europe-Asia differential widening to $8.65 per million British thermal units, while crude oil also surged on the week on concerns about the impact on global energy supplies of the Ukraine war and much reduced Russian oil and gas volumes for Western markets.

Intercontinental Exchange, the leading global provider of trading platforms and clearing, is pushing ahead with development of derivatives and products to allow the hedging of risk in the natural gas, LNG and oil complexes with the latest being a successful Permian Basin product launch.

The company said that its ICE Midland WTI American Gulf Coast futures went to its first expiry on February 23, with 1,395 contracts going to expiry, equivalent to 1.4 million barrels, for delivery in March.

The initial success of ICE’s WTI American Gulf Coast oil product came after record activity during 2021 in two key LNG trading derivatives, the European benchmark Dutch Title Transfer Facility (TTF) and the Japan-Korea Marker for North Asian spot cargoes.

Since the Midland WTI contract began trading on January 24, over 12,000 ICE Midland WTI AGC futures have traded, equivalent to 12 million barrels of Permian Basin-originated WTI crude oil.

Open interest is 3,576 contracts and goes out to January 2023.

Analysts note that contract is named after the Texas city of Midland which sits on the Permian Basin, a centre of oil drilling and future abundant supplies of associated natural gas for the expanding LNG sector on the Gulf Coast of Texas and Louisiana.

However, the contract code itself carries the initials (HOU) of the other Texan energy city, Houston.

Cargoes offered

“It’s early days still but HOU is off to a great start,” said Jeff Barbuto, Global Head of Oil Markets at ICE.

“We’ve seen some encouraging developments in the physical space, with cargoes being offered based on HOU pricing, EFPs taking Midland WTI to the water, and general market engagement in exploring different ways to use HOU for pricing exposure, exporting, and managing risk around Midland WTI,” explained Barbuto.

The Exchange for Physical (EFP) mechanism allows participants to exchange a HOU futures position for the equivalent number of underlying physical Midland WTI barrels.

The contract is deliverable at both Magellan Midstream Partners’ Magellan East Houston (MEH) terminal and Enterprise Products Partners L.P.’s Enterprise Crude Houston (ECHO) terminal.

ICE explained that to further facilitate trading between the MEH and ECHO terminals to create one large liquidity pool, Magellan and Enterprise will transfer Midland WTI barrels between the terminals for no charge during the first year if the barrels are not delivered to the buyer’s preferred terminal, and at 10 cents per barrel for all other WTI transfers meeting HOU quality specifications.

In addition to North Sea Brent crude and WTI Oil, ICE has also pioneered the Murban oil grade trading in the United Arab Emirates,

The ICE Futures Abu Dhabi (IFAD) exchange is underpinned by the Murban oil market since it was launched at the end of March 2021.

Some long-term LNG supply contracts for nations like Japan are also linked to the oil price.

TTF and JKM futures and options form part of ICE’s global natural gas complex alongside the UK National Balancing Point, Henry Hub, the West India Marker (WIM) LNG (Platts) and the Spark LNG Freight Futures contracts. 

Liquefied natural gas cargo liftings dropped and February LNG spot prices for delivery to the North Asian nations China, Japan and South Korea went through the roof, accompanied by record European wholesale natural gas futures prices for January soaring over 40 percent in a week.

Oct 27 (LNGJ) - The 261,900 cubic metres capacity Q-Max LNG carrier “Mozah” is scheduled to deliver the UK’s first November shipment. The cargo is set to arrive on November 3 at the UK South Hook import terminal at Milford Haven in Wales from the Ras Laffan plant in Qatar. The shipment was heading for UK shores as the nation’s National Balancing Point (NBP) benchmark natural gas price was last at around $30.50 per million British thermal units.

April 28 (LNGJ) - Qatar is delivering the first two LNG cargoes to the UK in May. The 261,700 cubic metres capacity carrier “Lijmiliya” is scheduled to arrive in the UK from Ras Laffan on May 1 with a shipment for the South Hook facility in the Welsh port of Milford Haven, according to the port authorities. Another Qatari carrier, the 266,000 cubic metres capacity vessel, the “Al Dafna”, is due to berth at South Hook on May 5.

   The latest shipments are scheduled as the UK National Balancing Point natural gas benchmark price and the main Continental European price, the Dutch Title Transfer Facility (TTF), are both at seasonal highs. Both prices were quoted at the equivalent of $7.60 per million British thermal units.

April 26 (LNGJ) - The 171,866 cubic metres capacity carrier “Ougarta” is scheduled to deliver an Algerian cargo on April 27 to the Isle of Grain LNG import terminal, operated by National Grid Plc on the estuary 45 miles southeast of London. The shipment, lifted on April 22 from the Arzew plant on the Mediterranean coast of Algeria, is arriving in the UK as the National Balancing Point (NBP) gas price fell to the equivalent of $7.05 per million British thermal units.

Demand for liquefied natural gas cargoes continued at a high seasonal level as liftings increase this week along with prices at all points, including North Asia spot volumes, Indian delivered cargoes, US Gulf Coast futures and Dutch and UK European gas values.

Feb 22 (LNGJ) - The UK is receiving three LNG cargoes this week at the Port of Milford Haven in Wales, two from the US and one from Qatar. The 165,000 cubic metres capacity carrier “Marib Spirit” will discharge its cargo on February 23 at the South Hook terminal from Cheniere Energy’s Sabine Pass plant in Louisiana, according to the port authorities.

   Another shipment from Sabine Pass is scheduled to be unloaded on February 25 at the Dragon regasification terminal at the Welsh port from the “Stena Clear Sky” carrier with 171,800 cubic metres capacity. The third shipment will arrive on February 27 at the South Hook terminal from Qatar onboard the largest carrier, the 266,000 cubic metres capacity Q-Max vessel “Mozah”. The UK deliveries are being received at lower seasonal prices as the UK National Balancing Point has declined in the last week to the equivalent of $5.90 per million British thermal units.

Feb 9 (LNGJ) - The 170,050 cubic metres capacity carrier “Hoegh Gannet” was scheduled to deliver a cargo on February 16 to the UK South Hook terminal in Milford Haven from the Sabine Pass plant in Louisiana, according to port authorities. The vessel was heading across the Atlantic as the UK National Balancing Point price recovered from an earlier fall and was last quoted at the equivalent of $7.15 per million British thermal units.