LNG

April 18 (LNGJ) - Chinese LNG imports totalled 19.78 million tonnes in the first three months of 2024, up 20.8 percent from the same three months of 2023, according to data from the Chinese General Administration of Customs. China imported 6.65MT of LNG in March alone, up 25.1 percent from March 2023. China’s main LNG suppliers to its network of 25 import terminals are Australia, Qatar, Malaysia, Indonesia and the Yamal plant in Arctic Russia.

   China’s oil and gas companies also increased production by 2.3 percent and 5.2 percent from January to March to 53.48MT and 63.2 billion cubic metres respectively. China’s daily average of oil and gas production in March reached 593,000 tonnes and 700 million cubic metres. Russia is the leading energy exporter to China, which purchased 107MT of oil from the Russians last year, up 24 percent, and 8MT of LNG. Gas supplies to China via the “Power of Siberia” pipeline have increased to a record 22.7 Bcm.

The United States said it exported more liquefied natural gas than any other country in the first half of 2023 with shipments averaging 11.6 billion cubic feet per day during the period, which was 4 percent more than in the same six months of the previous year.

South Korea, the third-largest Asian liquefied natural gas importer, may be seeking more short-term cargoes after temporarily suspending one of its nuclear reactors on April 9 for safety reasons.

A statement from Korea Hydro & Nuclear Power Co. (KHNP) said that the No. 2 reactor at the Kori Nuclear Power Plant, located at the port of Busan, about 325 kilometres (202 miles) southeast of the capital Seoul, was halted on April 8 upon the expiry of its 40-year permission to operate.

The Kori-2 unit began commercial operations in April 1983 as the country's third nuclear reactor.

Currently, South Korea operates 18 out of its 25 nuclear reactors and this closure takes it down to 17.

The shutdown comes at a time when the Korean Ministry of Trade, Industry and Energy has plans to also cut coal-fired power generation by around half (from 42 percent to 22 percent) through 2030.

Phase-out policy

The new Government of Yoon Suk Yeol had reversed the previous government’s nuclear phase-out policy and has been working to expand nuclear power generation to 30 percent of the country's total by 2030, with the figure for 2021 coming to 27.4 percent.

South Korea’s LNG imports had risen to an annual 47 million tonnes and plans to have more nuclear power to replace higher-priced LNG have now been affected by the Kori-2 plant closure.

The largest LNG suppliers to South Korea are Qatar and Australia with around 11 MTPA of cargoes each followed by the US and Oman.

South Korea sources all of its gas from LNG imports more about 55 percent is used to generate electricity with 16 percent used as chemical feedstock or a source of heat and 26 percent allocated to the commercial and residential gas sectors.

The company responsible for the Kori-2 nuclear reactor is Korea Hydro & Nuclear Power Co. (KHNP).

Huge losses

KHNP is itself a unit of Korea Electric Power Co. (KEPCO), a company 51 percent owned by the government and which is in the middle of a financial crisis after reporting huge losses in 2022.

The utility’s losses reach 30 trillion Korean won ($23 billion) in 2022, though has been kept viable by the Government allowing an increase in its debt ceiling and for giving permission to raise power prices.

As regards the Kori-2 nuclear reactor, the Government explained that the suspension was “inevitable” as the process to extend its lifespan has been delayed due to the previous government's policy to phase out nuclear power.

The new plans involves keeping the Kori-2 plant open until June 2025.

However, even if the government’ re-opening procedures are speeded up the closure is expected to last for two years.

China Petroleum and Chemical Corp. (Sinopec), one of the world’s top 10 oil and gas companies and a significant liquefied natural gas importer to back up its refining and petrochemical activities, reported a 21 percent increase in annual revenues but net profits dropped by almost the same amount on weak domestic demand.

Exxon Mobil Corp., the leading global oil and gas company and LNG market operator, posted a record $56 billion net profit for 2022 and fourth-quarter earnings of $12.8Bln amid Russian expropriations while it is also being forced to sue the European Union over  $1.3Bln of “unfavorable items” associated with additional taxes on the US shareholder-owned company.

Abu Dhabi National Oil Company (Adnoc) has invited investment banks to pitch for roles in the initial public offering (IPO) of its natural gas business during the first half of 2023.

Several investment banks have been asked for proposals to act as joint global coordinators and bookrunners in the IPO to join New York-based Goldman Sachs as part of a planned banking syndicate, according to bankers familiar with the plans.

Adnoc is combining its gas-processing subsidiary with its main gas export unit, Adnoc LNG, into a single listed entity and has engaged Goldman Sachs as the principal bank to oversee the various transactions.

Adnoc plans to offer investors a minority stake in the new company through an IPO on the Abu Dhabi Securities Exchange in 2023.

Adnoc LNG was the first production company in the Arabian Gulf and processes feed gas at Das Island, located 160 kilometres (100 miles) off the coast of Abu Dhabi.

The LNG company also supplies one billion standard cubic feet of gas per day to the United Arab Emirates national grid, contributing to Adnoc’s commitment towards gas self-sufficiency in the UAE.

Current stakes

Adnoc LNG is majority owned by the Abu Dhabi-based firm with a 70 percent share of the company. The other shareholders are Japan’s Mitsui & Co with 15 percent, UK major BP with 10 percent and TotalEnergies with 5 percent.

Adnoc said late last month that the consolidation of the two entities would create one of the world’s largest gas-processing companies with a processing capacity of around 10 billion standard cubic feet per day.

Analysts note that Adnoc in the UAE and other nations in the region such as Qatar are overhauling their corporate capabilities to replace all Russian energy imports as early as mid-2024 as Western sanctions were imposed over the Russia's invasion of Ukraine.

The UAE is comprised of seven emirates and the leading energy emirate is Abu Dhabi, which also has the Ghasha mega-project, the world’s largest offshore sour-gas development. 

The emirates, outside of Abu Dhabi, have varying degrees of more limited energy resources in Dubai, Sharjah, Ajman, Umm Al-Quwain, Fujairah and Ras Al Khaimah,

The multi-billion-dollar Ghasha project will play a vital role in meeting the UAE’s gas self-sufficiency objectives.

Adnoc says that the Ghasha mega-project draws on its long-standing sour-gas expertise, including its Shah onshore ultra-sour gas field project, its pioneering work in the creation of artificial islands and the wide and deep sour-gas capabilities of its concession partners.

Adnoc is also currently unlocking potential unconventional gas resources as part of its integrated gas strategy and since late 2019 it has announced the discovery of 160 trillion standard cubic feet of recoverable unconventional gas.

The Japan Bank for International Cooperation, the leading state-owned financial institution, has signed an additional loan deal amounting to 100 billion yen ($675 million) for JERA Co Inc., Japan's biggest LNG buyer and power generation company.

Japanese liquefied natural gas imports increased for a third successive month in June as they edged higher by 1.7 percent and year-on-year costs doubled while volumes increased from Asia, Australia and particularly Russia.

South Korean authorities said fire-fighters were still tackling a huge forest fire that at one time had threatened the Samcheok liquefied natural gas import terminal and the Hanul Nuclear Power Plant in Uljin as it began to spread to the south.

The Gas Exporting Countries Forum (GECF), the OPEC of natural gas and LNG based in Qatar, has published its Annual Outlook outlining supply and demand forecasts and expects total upstream and midstream investments to reach $8.7 trillion by 2050.

In its sixth edition, the Outlook finds that natural gas can become the fuel of choice in satisfying the growing world energy needs, addressing climate change and improving air quality.

“The GECF Global Gas Outlook 2050 underscores that investment in natural gas is critical for the stability of global energy systems,” declared Mohamed Hamel, Secretary General of the GECF.

“Environmental policies are a key driver of the projections contained in the Outlook. In this context, whilst upholding that natural gas is the cleanest of hydrocarbon fuels, the Outlook explores the state of technologies that will make it even cleaner,” added Hamel.

The GECF comprises 19 countries who together represent 71 percent of the world’s proven gas reserves, 43 percent of its marketed production, 52 percent of pipeline gas and 58 percent of LNG exports.

Asia-Pacific demand

“Global energy demand will rise by 29 percent over the next three decades, with the majority of that increase emanating from growing economies in Asia Pacific and Africa,” said the report.

“Natural gas demand will rise by 46 percent from 3,840 billion cubic metres in 2020 to 5,625 Bcm in 2050. The Asia-Pacific region will represent the largest growth share,” it added.

“The power generation sector will take a frontline place, accounting for 42 percent of the total increase in gas demand. The transport sector and blue hydrogen generation will emerge as significant new areas of gas demand expansion,” stated the GECF.

The Middle East, principally Qatar, will deliver 32 percent of the global gas supply increase and there will be a growing role for deepwater and unconventional natural gas resource developments to meet demand.

The global gas trade is forecast to increase by 45 percent by 2050 and become more integrated and interrelated through LNG expansion.

Trade in natural gas is seen expanding by 1.5 percent per annum between 2020 and 2050 to reach 1,815 Bcm and account for a third of global gas demand.

The report forecasts that LNG will overtake pipeline trade around 2030 to reach 845 million tonnes (1,150 Bcm).

The GECF has 11 full members, including seven LNG producers: Algeria, Egypt, Equatorial Guinea, Nigeria, Qatar, Russia, Trinidad and Tobago, along with pipeline producers Bolivia, Iran, Libya and Venezuela.

It also has eight observer-status member countries. They include five LNG nations: Angola, Malaysia, Norway, Peru and the United Arab Emirates, along with Azerbaijan, Iraq, and Kazakhstan.