LNG

Russian natural gas giant Gazprom, seeking an outlet for supplies previously delivered to Europe before the Ukraine invasion, has signed an accord with Iran to supply the  Gulf nation with pipeline gas from Russia.

Serbia, the Balkan state that was part of the former Yugoslavia and has been a candidate nation for 10 years to be a member of the European Union, has completed an interconnector pipeline to Bulgaria giving the Serbs supply options of regasified LNG from Greece or pipeline gas from Azerbaijan to replace Russian supplies.

Contrary to what is suggested in the political discussions, it is hardly the price of gas that increases the price of electricity, themain driver now in the European Union and particularly in Germany is the carbon-dioxide (CO2) price that gas-fired and coal-fired power plants have to pay for their emissions. 

Sept 15 (LNGJ) - Turkey said it would construct a physical hub in the country’s western region of Thrace to connect all existing gas pipelines. “Turkey can also receive LNG from different countries like the US, Algeria and Qatar,” said Energy and Natural Resources Minister Alparslan Bayraktar in describing the plan

   “We also take pipeline gas from Iran, Azerbaijan and Russia,” said the minister. “What we are trying to do in Thrace is build a physical hub that will connect to all respective pipelines and to our underground gas storage at Silivri as well as to LNG import terminals,” Bayraktar added.

Novatek, the Russian operator of the Yamal LNG export plant in Northern Siberia and the developer of the Arctic LNG II venture scheduled to start up in late 2023, is continuing to function despite sanctions over Ukraine and has just accepted a Russian patent for LNG processing in Arctic plants.

Russian natural gas company Gazprom said it had halted supplies to China through the “Power of Siberia” pipeline running from Russia’s Far East into China’s northeast Heilongjiang province.

Russia expects to supply more LNG and pipeline natural gas to China in 2023 after energy shipments to the Chinese increased after the February 2022 invasion of Ukraine, including deliveries of Russian crude oil.

Mitsubishi Corp., the Japanese trading house with widespread LNG assets from Canada, to the US Gulf Coast to the Asia-Pacific and Russia, said it was retaining its stake for now in the Sakhalin LNG export project in the Russian Far East.

This Mitsubishi Natural Gas division’s assets and volumes are concentrated in the Asia-Pacific region, Russia, the US, Canada and Oman.

“We are working on initiatives to strengthen our existing business platform and develop new projects in traditional LNG-producing countries such as Brunei, Malaysia, Indonesia, Australia and Oman,” said the company.

Mitsubishi’s project stakes in addition to Sakhalin LNG in Russia include Sempra’s Cameron LNG in Louisiana, Shell’s LNG Canada project, Brunei LNG, Malaysia LNG, Oman LNG, Tangguh LNG in Indonesia and the Donggi Senora LNG plant, also in Indonesia.

It also has volumes from the Chevron-operated Wheatstone LNG project in Western Australia and the North West Shelf plant operated by Woodside Energy.

“Earnings were increased in the LNG-related business, despite trading losses in the LNG sales business,” said Mitsubishi in its fiscal first-half earnings statement.

Price benefits

Like global energy companies, Japanese trading houses have benefited from skyrocketing oil, gas and coal prices in 2022.

For the April-September first half, Mitsubishi’s net profit nearly doubled to a record 720 billion yen ($4.90Bln), a rise of 97 percent from the 360.56Bln yen ($2.45Bln) logged in the fiscal first half of 2021.

Revenues for the six months came to 10.72 trillion yen ($73.05Bln) compared with 7.72 trillion yen ($57.63Bln) in the first half of 2021.

“This was mainly due to increased market prices and transaction volumes,” said Mitsubishi.

“In addition to Natural Gas and Mineral Resources, which were bolstered by market factors, Automotive & Mobility, Power Solution, Industrial Materials and other segments are forecast to see greater earnings than originally forecast,” said the company.

Mitsubishi is an investor and trader in LNG along with the other Japanese trading houses such as Mitsui & Co, Marubeni Corp and Sumitomo Corp.

Sakhalin situation

On Russia, Mitsubishi said the company’s main business in Russia consists of a financial service business in the Automotive and Mobility segment and investment in the LNG-related business as part of its Natural Gas division.

“As of September 30, 2022, the carrying amount of total assets related to the company’s business in Russia was 209.91Bln yen ($1.43Bln),” said Mitsubishi.

“The company holds a 10 percent ownership interest in Sakhalin Energy Investment Company (SEIC), which has been engaged in LNG-related business in Russia, and accounts for this investment as a financial asset,” explained Mitsubishi.

It said that based on the Russian Federation presidential decree issued on June 30, 2022 and a further resolution, a new company, Sakhalin Energy LLC (SELLC), was established to take over the operation of this LNG business, and the rights and obligations of SEIC were transferred to SELLC.

“Mitsubishi submitted its notice to continue ownership in the LNG-related business to the Russian government and received approval on August 31, 2022. As a result, the company continues to hold a 10 percent ownership interest in the LNG-related business,” it added.

“However, the details related to the operation of SELLC, including the terms of the LLC members agreement, will need to be discussed once the LLC members composition of SELLC will be determined,” said Mitsubishi.

“As such, there remains uncertainty surrounding this investment,” it declared.

Höegh LNG Holdings, the owner of 10 floating storage and regasification units (FSRUs) and two conventional carriers, has agreed to grant a purchase option to Lithuania to buy the FSRU “Independence”.

The FSRU has been in operation at the port of Klaipeda since October 2014.

It was expected to be purchased by the Lithuanians from Höegh LNG and has been chartered since being deployed for around $68 million per annum.

The shipping company said that the charterer of the “Independence”, the Lithuanian, energy storage company Klaipėdos Nafta, had notified Höegh that it would like to exercise and option to acquire the FSRU.

“The transfer of ownership is expected to occur in December 2024,” said Höegh.

“Until then, the existing FSRU contract between a subsidiary of Höegh LNG and Klaipėdos Nafta continues unchanged,” it added.

The Klaipėda LNG terminal is still the main source of gas supply to Lithuania which is building up its already well developed gas transmission infrastructure.

Latvia storage

Klaipėda Nafta is expanding its gas supplies and has gas transmission projects with European Union neighbours, helping Latvia to boost its gas storage volumes.

Höegh LNG Holdings in September 2022 finalised the acquisition Höegh LNG Partners, the affiliate company with five ships and listed on the New York Stock Exchange.

The company's two conventional carriers, each with 147,200 cubic metres of capacity, are the “Arctic Lady” chartered to TotalEnergies and the “Arctic Princess”, chartered to Norway’s Equinor.

Both vessels are mostly on shuttle duty delivering cargoes from the Equinor-operated Hammerfest LNG export plant.

Höegh LNG Holdings revealed the initial merger plan in December 2021 and went on to acquire all outstanding common units not already owned by Höegh LNG Holdings in exchange for $9.25 in cash per common unit.

German natural gas supplier Verbundnetz Gas AG (VNG), based in the eastern city of Leipzig, has become the second large Russian gas buyer to be approved for a Berlin Government bail-out to stay afloat after LNG buyer Uniper received government funds in return for a stake.