LNG

Texas LNG, the liquefied natural gas export plant to be constructed by New York-based Glenfarne Group in the Port of Brownsville, has been issued with two additional mitigation measures by regulators and said it was still on track to make a final investment decision in 2023.

Technip Energies, the leading LNG and energy project company, said a consortium which it heads has been awarded a pre-construction services agreement (PCSA) related to the onshore facilities for the Hail and Ghasha Gas Development Project in Abu Dhabi in the United Arab Emirates.

Technip’s partners in the contract are South Korea’s Samsung Engineering and Italian firm Tecnimont SpA.

Hail & Ghasha is a conventional gas development located in shallow water in the emirate of Abu Dhabi and is operated by Abu Dhabi National Oil Company (ADNOC).

The fields lie in the Ghasha Concession block in water depth of around 328 feet and are expected to start commercial production in 2025.

“The PCSA phase follows the successful completion of an updated front-end engineering and design (FEED) for the entire development, executed by Technip Energies,” said  Technip.

Next phase

“This next phase covers early project activities for onshore facilities, such as initial detailed engineering and procurement services of critical long lead items,” explained Technip.

The PCSA scope of work also includes the preparation of “an open book cost estimate” for the project delivery of the onshore scope, which will be considered as part of the final investment decision-making process.

“We are honoured to be trusted by ADNOC to continue from the successful FEED execution to the initial activities for the onshore facilities for this important gas growth project and to prepare an open-book cost estimate for project delivery,” said Arnaud Pieton, Chief Executive of Technip Energies.

“This reinforces Technip Energies' long-standing relationship and trust developed over the last four decades with ADNOC, supported by our long-term presence in Abu Dhabi,” added Pieton.

“Together with our joint venture partners, Samsung Engineering and Tecnimont, we will utilize our global experience on mega project execution and open book estimate conversions to transparently and diligently work with ADNOC and their international concession partners to continually optimize the project and successfully meet their requirements,” declared the CEO.

The multi-billion-dollar Hail and Ghasha project is also seen as playing a vital role in meeting the UAE’s gas self-sufficiency objectives.

ADNOC’s partners in the project with a concession term of 40 years include Italy’s Eni, Germany’s Wintershall Dea and Austria’s OMV

Technip Energies, a leading European-based liquefied natural gas engineering company, reported increased first-half net profits and revenues even as it made “an ongoing orderly exit” from the Arctic LNG II project in Russia.

A heavy-lifting, transportation and installation contract has been awarded to privately held Dutch company Mammoet for Saudi Aramco’s natural gas storage and gas resources management project, the Aramco Hawiyah Unayzah Gas Reservoir Storage venture, located 260 kilometres (160 miles) east of Saudi Arabia's capital Riyadh.

Petroleos Mexicanos (Pemex), the Mexican oil and gas producer, appears to have nothing left in its locker to cope with the current global crisis and may have to call on US credit lines for its pipeline natural gas and LNG imports after its corporate and state ratings were reduced.

The socialist government of President Andrés Manuel López Obrador, which had made boosting Pemex’s declining output one of its core objectives, is now being squeezed on the financial front after reversing previous administration’s policies and keeping private companies out of the energy business.

Before then crude price slump and coronavirus impacts Pemex had produced 1.7 million barrels a day of crude on average in January 2020, below government forecasts and just half of peak production of 3.4M barrels in 2004. 

Analysts said that with oil prices where they are, 75 percent of Pemex’s oil and gas fields will only generate losses if output is not cut.

They added that the risks goes well beyond Pemex as the Mexican government relies on the energy company to fund 18 percent of the national budget with its oil sales.

US company S&P Global Ratings has now downgraded Pemex and its subsidiaries PMI Trading Ltd., PMI Norteamerica SA and MEX Gas Supply and conducted similar action on the sovereign credit rating.

“Recurring government aid to Pemex over the last 12 months reinforces our assessment of an almost certain likelihood of extraordinary government support if the company were to run into financial difficulties,” explained S&P Global.

“Therefore, the ratings on Pemex continue to mirror those on the sovereign debt,” it added.

López Obrador was aiming to build a large new oil refinery in an $8 billion project with which he hoped to divert Mexican oil exports to domestic use and cut dependence on US fuel imports.

The Mexican President had reversed the policies of the previous administration that had decided to gradually cut Pemex loose from state funding for its monopoly business.

Some of the refinery contracts were awarded in July 2019 for the project in the southern port of Dos Bocas to companies including US LNG and energy engineers KBR Inc., Fluor Corp. as well as Samsung Engineering of South Korea and several Mexican companies.

The refinery in the President’s home state of Tabasco was scheduled to process 340,000 barrels per day of Mexico’s benchmark grade, Maya heavy crude, and to be completed by 2022. 

S&P Global downgraded its foreign currency and local currency ratings on Pemex to “'BBB” and “BBB-plus” from “BBB-plus” “A-minus”  respectively, and maintained a negative global scale ratings outlook after similar action on Mexican government debt.

“Lower oil and natural gas prices anticipated over the next two years will jeopardize the execution of Pemex’s business plan, because weaker cash flow will limit the ability to fully fund its multi-annual capital investment needs,” explained the S&P report.

“In this context, we see limited room for Pemex to improve its very weak credit metrics any time soon,” stated the US firm.

“In addition, low cash flow generation prospects and an extended period of adverse financing conditions could gradually tighten the company's liquidity,” it added.

“Therefore, we have revised downwards our stand-alone credit profile (SACP) on Pemex to “CCC-plus” from “B-minus,” said the report.

“The negative outlook on Pemex mirrors that on the sovereign and reflects our view that the close relationship between the company and the sovereign will remain unchanged in the next couple of years,” S&P explained.

“Our assessment also captures the integral link between Pemex and the government, given its full ownership of the company and the high government involvement in all strategic decisions,” it added.

“We consider that our assessment has been reinforced over the last 15 months through recurring government aid to Pemex in the form of capital contributions, legal amendments to alleviate the company's tax burden, the monetization of certain assets, and close collaboration to deter fuel theft,” said the credit report.

“Another factor captured in our assessment is the reversal in Mexico's energy policy under the current administration, which repositions Pemex at center stage and curbs the participation of private players in the domestic energy sector,” added S&P.

The US ratings firm said it expect a “pronounced hit” to the Mexican economy with the combined shocks of the coronavirus in Mexico itself and in the US, its main trading partner, and lower oil prices.

“These shocks, while temporary, will worsen already weak gross domestic product (GDP) growth dynamics for 2020-2023 that reflect, in part, low private-sector confidence and poor investment dynamics,” it said. 

The Texas LNG export project proposed for Cameron County in the port of Brownsville made more progress as the Federal Energy Regulatory Commission delivered a final environmental impact statement.

The Texas LNG Brownsville, a liquefaction and export venture on the Gulf of Mexico in South Texas, is making progress in its permitting process to produce an initial 4 million tonnes per annum.

TechnipFMC, one of the leading global energy and LNG project engineering companies, said it was taking a stake in UK company Magma Global Ltd to help further develop a new generation of hybrid flexible pipe for use in offshore contracts.

Texas LNG Brownsville, the liquefaction and export plant proposed for the Gulf Coast, said the US Coast Guard issued a recommendation to the US Federal Energy Regulatory Commission confirming the suitability of the Brownsville Ship Channel for the facility's marine traffic in terms of safety and security.