LNG

Chinese liquefied natural gas imports in March 2023 rose by almost 16 percent as demand showed its most significant monthly increase in 14 months.

Chinese liquefied natural gas imports in July 2022 to its network of 22 regasification terminals declined significantly on a year-on-year basis amid an economic slowdown while shipments from Russia have edged higher since the Ukraine invasion.

Energy Transfer LP, the owner of assets in the Permian Basin and Haynesville Shale as well as the Cushing crude oil delivery system, has signed two LNG sale and purchase agreements with ENN Group for its almost forgotten Lake Charles LNG export project in Louisiana.

Under the two SPAs, Energy Transfer is expected to supply 1.8 million tonnes of LNG to ENN's natural gas subsidiary and 900,000 tonnes of LNG to the ENN Energy unit per annum on a free-on-board (FOB) basis.

Energy Transfer said the purchase price was indexed to the Henry Hub benchmark plus a fixed liquefaction charge.

Both SPAs are for a term of 20 years and first deliveries are expected to commence as early as 2026.

China’s ENN has an annual LNG distribution capacity of over 10 billion cubic metres of natural gas and runs the first large-scale private LNG terminal in China, the Zhoushan LNG facility in eastern Zheijang province south of Shanghai.

The SPAs will become fully effective upon the satisfaction of the conditions precedent by Energy Transfer’s plan and final investment decision to transform the existing Lake Charles LNG import terminal into an export plant.

Almost forgotten

The Lake Charles LNG import terminal once had BG Group of the UK as a main customer. Shell then become a terminal partner before later withdrawing from the export plant joint venture.

The Federal Energy Regulatory Commission has issued permits for the Lake Charles transformation and to produce 16.5 million tonnes per annum of LNG.

Energy Transfer had acquired the Lake Charles terminal in mid-2011 with the takeover of Southern Union Co. for $7.9 billion.

“The signing of these long-term SPAs will further enrich ENN’s LNG resources, expand resource supply channels, and improve ENN’s natural gas supply capacity to meet the rapidly growing natural gas demand in the domestic market,” said Zheng Hongtao, President of ENN’s natural gas unit and Vice Chairman of the Board.

Tom Mason, President of Energy Transfer LNG, said the Dallas, Texas-based company was pleased to have ENN Energy onboard.

“The execution of these two SPAs represents a significant event in moving the Lake Charles LNG project towards FID,” he explained.

“We are experiencing strong demand for long-term offtake contracts for Lake Charles LNG and we are optimistic that we will be in a position to take a positive FID by year-end,” stated Mason.

“The Lake Charles LNG project is expected to be financed primarily through infrastructure funds and strategic partners, with Lake Charles LNG retaining an equity stake and operatorship of the liquefaction facility,” he added.

Lake Charles LNG will be constructed with the existing brownfield site of regasification facility and will capitalize on four existing LNG storage tanks, two deep water berths and other LNG infrastructure.

“Lake Charles LNG will also benefit from its direct connection to Energy Transfer’s existing Trunkline pipeline system that in turn provides connections to multiple intrastate and interstate pipelines,” said Energy Transfer.

“These pipelines allow access to multiple natural gas producing basins, including the Haynesville, the Permian and the Marcellus Shale,” the company declared.

Chinese liquefied natural gas imports rose year-on-year by 4.2 percent last month and over 18 percent in the year-to-date period, keeping the nation on track to be the world’s No. 1 LNG importer for 2021.

PetroChina posted a wider first-half overall net losses and falling revenues, including on imports of LNG and pipeline gas, but said it was optimistic for rest of 2020 on Chinese domestic demand.

The state-controlled Chinese major said in a Web-based earnings presentation that first-half net losses came to 29.98 billion Chinese yuan ($4.39Bln), of which the loss in the second quarter narrowed compared with the first quarter, “indicating a steady improvement in business” trends.

PetroChina is the Hong Kong-listed affiliate of China National Petroleum Corp. (CNPC) and has LNG project stakes in Mozambique and Canada.

The company said first-half revenues dropped to 929.04Bln yuan ($136.06Bln), representing a year-on-year decrease of 22.3 percent.

However, the Exploration and Production segment, one of the company’s four divisions, achieved an operating profit of 10.35Bln yuan ($1.51Bln).

The three other operating segments of the Group consist of Refining and Chemicals, Marketing and Natural Gas and Pipeline.

International operations do not constitute a separate operating segment of the Group.

The Marketing division recorded an operating loss of 12.89Bln yuan ($1.88Bln), while the Natural Gas and Pipeline segment achieved an operating profit of 14.37Bln yuan ($2.10Bln).

This was 21.5 percent lower that the 18.30Bln yuan ($2.68Bln) operating posted in the first six months of 2019.

PetroChina said sales volumes of imported natural gas and LNG recorded a net loss of 11.83Bln yuan ($1.73Bln), representing an increase in losses from last year of RMB631M yuan ($92.4M) in the six months..

“Under the influence of Covid-19 and the macroeconomic downturn, global natural gas market demand declined, while the international natural gas prices dropped across the world and LNG spot prices in Europe, America and Northeast Asia hit record lows,” said PetroChina.

PetroChina operates three important Chinese LNG import terminals at Dalian and Tangshan in the northeast of the country and at Rudong in the central Jiangsu province in the coastal area near Shanghai.

PetroChina additionally receives natural gas pipeline supplies from the Central Asian states of Turkmenistan, Kazakhstan, Uzbekistan as well Russia through CNPC.

“The growth of demand for domestic natural gas slowed down and output of natural gas continued to increase relatively rapidly, while the growth of imports of natural gas declined substantially,” it added.

PetroChina said that in the first half, the overall domestic consumption of natural gas amounted to 155.6 billion cubic metres, representing an increase of 4.2 percent compared with the same period of last year.

Domestic natural gas output amounted to 95.0 Bcm, an increase of 9.9 percent versus the same period last year.

It noted that first-half Chinese imports of natural gas, both pipeline and LNG, amounted to 66.7 Bcm, representing a rise of 3.3 percent compared with the first half of 2019.

PetroChina’s managing company CNPC now imports pipeline natural gas from Gazprom Power of Siberia project as well as LNG from projects such as the Yamal plant in Arctic Russia and from PetroChina LNG agreements.

The Chinese major is part of Royal Dutch Shell’s LNG Canada project under its own name PetroChina and has a stake in the Area 4 reserves in the Rovuma Basin offshore Mozambique with Italian company Eni and ExxonMobil.

China National Offshore Oil Corp., the state-backed oil and gas producer and the nation’s largest LNG import terminal owner, said annual net profits rose almost 16 percent as it achieved record production in 2019.