LNG

ADNOC Gas, the stand-alone spin-off from Abu Dhabi National Oil Company in the United Arab Emirates, has signed a natural gas supply agreement with Chinese major PetroChina International.

JERA Co. Inc., the largest Japanese liquefied natural gas buyer, and Korea Gas Corp. (Kogas), its counterpart in South Korea, have signed an accord to cooperate in the LNG business.

South Korea said the nation’s oldest coal-powered electricity generating plant would be shut down for good on December 31 in line with the government's plan to shift towards cleaner energy.

The Korean Ministry of Trade, Industry and Energy confirmed that the Honam Coal Power Plant located in Yeosu in South Jeolla province, 450 kilometres south of the capital Seoul, was scheduled to stop operations at the end of December.

“The plant has been in operation as a power producer since 1973,” added the Ministry.

The nation's nine other coal-based plants have all been retired since 2017 as their operational life cycles have expired.

“A new gas-fired generating facility using regasified LNG will be built at the Yeosu site,” said the Ministry.

The Hanyang Corporation has been grated permits to convert the city of Yeosu into a hub for LNG.

The approved project will include construction of LNG storage tanks, a jetty and other regasification infrastructure as well as truck-loading bays by 2024.

South Korea is the world’s third-largest LNG importer with access to global supplies.

The country's annual demand for LNG is expected to reach about 48 million tonnes in 2034 compared with 41.7MT estimated for 2021.

South Korea's imports of LNG in 2020 amounted to 40.81MT versus fourth-placed India’s 26.62MT.

The nation’s six large operational import terminals are at Boryyeong, Incheon, Kwangyang, Pyeong-Taek, Samcheok and Tong-Yeong.

The biggest supplier to South Korea is Qatar with just short of 10MT of cargoes and followed by Australia with 8.10MT.

Sovcomflot, the Russian shipping line with 31 gas carriers in operation or on order and an overall fleet of 145 vessels, is now listed on the Moscow stock exchange and more than doubled nine-month net profits as it looked ahead to future long-term Arctic LNG charter earnings.

JERA Co Inc., the largest Japanese LNG buyer, said it signed an accord with ExxonMobil and the city government of the Vietnamese port of Haiphong to work together on a potential integrated LNG-to-Power project for the Port.

One of the main sessions of the Gastech Virtual Summit as it wound down after five days was a discussion of Asian LNG demand where Japan will develop new small-scale facilities, China is on a steady upward path for cargo imports and Singapore is determined to lead the field in LNG bunkering.

A Russian joint venture involving fleet owner Sovcomflot and natural gas company and LNG developer Novatek has signed contracts with a Russian bank and Zvezda Shipbuilding in the Far East to construct and lease 10 ice-breaking Arc-7 class LNG carriers.

The venture called Smart LNG has simultaneously signed long-term time-charter agreements for these 10 vessels with the Novatek-led Arctic LNG II project.

In total, contracts for 15 such vessels have now been signed, including shipbuilding, financing with Russian bank Veb.Rf Group, leases and time-charter contracts.

The Arctic LNG II project being developed with three gravity-based platforms and the estimated capital expenditure for the joint venture is now put at the equivalent of US$21.3 billion.

Arctic LNG will produce 19.8 MTPA of LNG as well as gas concentrate from the principal feed-gas resources, the Utrenneye gas field.

Novatek holds 60 percent of the Arctic LNG project and four other 10 percent stakes are shared between various shareholders.

The 10 percent holdings belong to French major Total, which is also a shareholder in the Novatek company, China National Petroleum Corp., China National Offshore Corp. and a Japanese investor group comprising Mitsui & Co. and the government institution, the Japan Oil, Gas and Metals National Corporation (Jogmec).

The contracts for the lead ship in the series were signed by Socomflot in October 2019 and the contracts for another four sister ships were signed by Smart LNG in January 2020.

Sovcomflot, also known as SCF, continues to implement its strategy, with the goal of steadily growing the company’s value through expanding its portfolio of long-term industrial shipping contracts.

“The company point as a special focus on operations in challenging climatic and ice conditions,” said Sovcomflot.

“With 10 long-term time charters added to this portfolio, SCF $20 billion in contracted future earning and receivables,” stated the Russian shipping line.

The vessels will be operated under the Russian Federation flag and the Russian Maritime Register of Shipping (RS) will provide supervision during the construction of the vessel series.

The Zvezda complex is located at Bolshoi Kamen on the coast of the Sea of Japan and about 12 miles northeast of the city of Vladivostok.

The shipbuilder is owned by a consortium of Russian energy companies, including Rosneftegaz, Rosneft and the financial affiliate of Gazprom, Gazprombank.

“Shipbuilding and time charter contracts for 15 Arc7 LNG carriers, signed between 2019-2020, enable the Russian shipping community to play a role in transporting cargoes of strategic importance for the Russian economy, which are generated by large-scale energy projects in the Russian Arctic,” said Igor Tonkovidov, President and Chief Executive of Sovcomflot.

“These contracts will also help to further develop our national expertise in ice navigation and create over 850 new jobs for Russian seafarers, as all the 15 vessels will have Russian crews,” explained Tonkovidov.

“We are pleased to see that this new generation of Arctic LNG carriers, which will contribute significantly to growing the cargo traffic along the Northern Sea Route, was designed based on SCF’s long-standing experience of safely operating vessels in ice conditions,” stated the Sovcomflot CEO.

Sovcomflot bases its success in developing long-term partnerships with key customers, including Gazprom, Novatek, Lukoil, Royal Dutch Shell, French major Total, Exxon Neftegaz and Sakhalin Energy.

The Russian line’s fleet comprises 146 vessels with a total deadweight of 12.6 million tonnes, including ships owned through joint ventures. More than 80 vessels have an Ice classification.

Tellurian Inc., the developer of the proposed Driftwood LNG export plant in Louisiana, is making new pitches to investors and buyers as it pointed to a likely surge in demand in China and India as well as nations in Southeast Asia as it pledged to have feed-gas at a price lower than the Henry Hub.

In its latest report filed with the US Securities Exchange Commission, Tellurian forecasts that 100 million tonnes per annum of additional construction is needed because of LNG capacity constraints by 2021 as demand increases.

Analysts said the company may be keen to still bring India’s Petronet LNG on board or other potential investor-buyers from Asia or elsewhere.

“Haynesville shale gas production of 46 million cubic feet per day from current assets of 1.2 trillion cubic feet will enable Driftwood to supply LNG at a free-on-board (FOB) price of $3.50 million tonnes per annum,” said Tellurian in its presentation

“Haynesville gas can be supplied at a lower cost than Henry Hub at $2.00 per MMBtu and delivered to the plant regardless of Henry Hub market index prices,” said Tellurian.

“The company’s model for investors ensures interest alignment for joint venture partners who own their share of the LNG at a cost of $3.50 per MMBtu, comprising $2.00 per MMBtu for gas delivery, $0.75 of operating expenses and $0.75 for debt service,” explained the Houston-based company listed on the Nasdaq global exchange.

Tellurian stated that its integrated model would help avoid the effects of price volatility.

“Driftwood LNG will come at a lower cost and will have less price volatility than other LNG price indexes,” the company noted.

Tellurian’s Driftwood facility would provide more than 27 MTPA of supply to meet new demand, particularly in China and India.

“China and India LNG demand is resilient and imports were up 8 percent and 21 percent respectively through July 2020 on a year-on-year basis,” said Tellurian.

The company stated that new Asian markets will also see demand growth of around 41 MTPA by 2025 and these emerging markets could add the equivalent of another South Korean market in the next four years.

Bangladesh, Malaysia, Pakistan and Thailand are facing domestic gas demand increases because of the need for power amid declining indigenous gas production and strong economic growth prospects.

The Philippines, Taiwan, Vietnam and Indonesia so far have only 17 percent gas market penetration and with growing gas demand for power, especially as coal and nuclear options fall out of favour.

Tellurian additionally expressed its confidence in engineering, procurement and construction contractor Bechtel Inc. of the US, which had also invested $50M in the project.

The company said its fully-wrapped EPC contract had already seen 30 percent of engineering completed and the project was shovel-ready.

The presentation stated that the Driftwood project would be brought to fruition by an experienced team, several of whom helped develop Cheniere Energy’s Sabine Pass LNG export plant, the largest in the US.

The executives listed are Executive Chairman and co-founder of Tellurian Charif Souki, who launched Cheniere in 1996 and Meg Gentle, the current President and Chief Executive of Tellurian.

They will be aided by former UK BG Group head of LNG, Martin Houston, who is also a co-founder and Vice Chairman of Tellurian.

Another key member of the management team is named as Keith Teague, Chief Operating Office and another recruit from Cheniere.

Sept 2 (LNGJ) - Tokyo Gas, the utility and LNG importer, has formally launched TG Global Trading to lead the further development of the group’s liquefied natural gas trade activities.

   “TGT regards the global LNG demand growth centred in Asia and increased liquidity of the market as an opportunity to expand LNG trading by maximizing and optimizing assets such as storage tanks, LNG vessels and sales and purchase agreements,” said the company. Tokyo Gas has set the goal of expanding its LNG transaction volumes to 20 million tonnes and its traded volumes by 5 million tonnes per annum by 2030.

UK and Continental European natural gas prices and US Gulf Coast LNG futures have jumped to summer season highs, while US domestic natural gas prices have been boosted by a forecast July heatwave to boost cooling demand.