LNG

March 13 (LNGJ) - Abu Dhabi National Oil Company of the United Arab Emirates has issued a limited notice to proceed for early engineering, procurement and construction activities to a joint venture comprising Technip Energies, Japan’s JGC Corp. and UAE-based National Petroleum Construction Co. for the Al-Ruwais LNG export project. The final investment decision for the liquefaction plant is expected later in 2024.

   “The project is set to significantly contribute to the Al Dhafra region’s economy by attracting further investments and creating a vital energy trade gateway in Al-Ruwais Industrial City,” said ADNOC. The liquefaction and export plant will have two liquefaction Trains each with 4.8 million tonnes per annum of output for a total of 9.6 MTPA. Abu Dhabi already operates the Das Island plant with around 6 MTPA of output.

The Gas Exporting Countries Forum (GECF), known as the OPEC of LNG and pipeline gas, is preparing for its 7th Summit meeting with members scheduled to start arriving at the end of February in the Algerian capital of Algiers.

The GECF, whose secretariat is based in Doha in Qatar, will attempt to put some context into the geopolitical and economic challenges facing LNG and pipeline natural gas producers.

Although the GECF counts Qatar among its members the other main LNG producers, Australia and the US, have never been members nor will they be sending observers.

The GECF meeting will have 19 countries in attendance who together represent over 70 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.

Algeria, which is a key supplier of LNG to Europe from its Skikda and Arzew liquefaction plants and with gas pipelines connected to Italy and Spain, said it would use the occasion to “build a consensus” between the producing states to preserve the interests of gas exporters.

Algiers Declaration

Meetings will start on February 29 and the actual summit will take place on March 2, after which the LNG nations will issue what will be known as the “Algiers Declaration”.

The meeting is expected to support emerging African LNG nations and existing producers in their fight to alleviate energy poverty, in particular through better access to financial resources for gas development as well as improved energy security.

GECF Secretary General, Mohamed Hamel, who is himself an Algerian outlined what is on the agenda for the 12 nations who are members and the other seven countries who will attend as observers.

“This summit presents an opportunity for leaders to engage in comprehensive discussions encompassing geopolitical, economic and policy developments, providing an avenue to delve into both the immediate and long-term prospects and challenges in the natural gas sector,” explained Secretary General Hamel.

“Moreover, the summit will reiterate the important role of our Forum in strengthening cooperation among member countries, advocating for natural gas as a pivotal element in achieving the UN’s sustainable development goals, ensuring stability in natural gas markets and addressing energy security, affordability, and sustainability,” he added.

Prior to the March 2 summit, a high-level working group will meet and an Extraordinary Ministerial Meeting will be held to “prepare essential documents” for the summit, including the Declaration.

The summit will be complemented by a series of side events such as the inauguration of the Headquarters in Algiers of the newly established GECF Gas Research Institute.

Global Gas Outlook

Additionally, the delegates will approve and issue the latest edition of the “Global Gas Outlook”, one of the GECF's flagship publications.

Finally, there will be a signing ceremony for Memoranda of Understanding with the African Energy Commission (AFREC) and the Economic Research Institute for ASEAN and East Asia (ERIA).

Preparations for the summit have been undertaken by the Algerian National Committee in collaboration with the GECF Secretariat and “all of the necessary resources have been mobilised to ensure ideal conditions for a successful and productive” summit.

“I am confident that this summit will go beyond discussions and collaborations, providing delegates the opportunity to immerse themselves in Algeria's distinctive culture and warm hospitality,” Hamel stated.

The 12 GECF members are Algeria, Bolivia, Equatorial Guinea, Egypt, Iran, Libya, Nigeria, Qatar, Russia, Trinidad and Tobago, United Arab Emirates and Venezuela.

There are also seven observer members: Angola, Azerbaijan, Iraq, Malaysia, Mauritania, Mozambique and Peru.

Adnoc Gas, the natural gas and LNG producer in Abu Dhabi in the United Arab Emirates, has signed a 10-year supply agreement with GAIL India, the Indian pipeline gas and city-gas player whose facilities include the Dabhol LNG import terminal south of Mumbai.

Under terms of the deal, Adnoc Gas said it would supply GAIL with 500,000 tonnes per annum of LNG.

The latest Adnoc Gas agreement for LNG volumes follows similar deals signed with Japan Petroleum Exploration, France’s TotalEnergies, Indian Oil Corp. and PetroChina International.

Adnoc Gas, which was spun-off in March 2023 from Abu Dhabi National Oil Co. (ADNOC) to become a separate company, is estimated to have the seventh-largest gas reserves globally.

Step forward

“This long-term LNG supply agreement with GAIL India marks a significant step forward in our commitment to continue providing reliable and sustainable energy solutions to our partners and customers around the world,” said Ahmed Mohamed Alebri, Chief Executive of Adnoc Gas.

“India continues to be a key market for Adnoc Gas and this latest supply agreement underscores our ongoing dedication to fostering long-term partnerships,” added Alebri.

The main Adnoc Gas LNG operation is the the Das Island plant in Abu Dhabi with three liquefaction Trains and 6 MTPA of output.

The Das Island facility has operated since 1977 and was the first export plant established in the Arabian Gulf.

“Adnoc Gas continues to leverage opportunities arising from ADNOC’s integrated gas masterplan, which links every part of the gas value chain in the UAE,” said the company.

The ADNOC Group is leading the developments for the UAE that includes the new low-carbon Ruwais LNG export project currently under development in Al Ruwais Industrial City in Abu Dhabi.

Al Ruwais project

When completed, Al Ruwais will have two liquefaction Trains each with capacity of 4.8 MTPA for a total of 9.6 MTPA.

GAIL is a leading natural gas company in West Asia with a presence in India’s gas trading, transmission, city-gas and other sectors including petrochemicals.

The New Delhi-based company currently has a 75 percent share of the gas transmission network.

Its pipeline assets are 14,490 kilometres (9,000 miles) in length and GAIL makes about 50 percent of the country’s domestic natural gas sales.

GAIL has six subsidiaries including GAIL Global USA Inc., which looks after its Cove Point LNG interests in the state of Maryland.

The company also runs an LNG trading business based in Singapore.

Other assets include a majority stake in Konkan LNG, the ownership company of India's Dabhol LNG import terminal, located in the West Coast Indian state of Maharashtra, south of Mumbai, and with 5 MTPA of capacity.

The London-based Joint War Committee, which advises Lloyd’s marine insurance underwriters on risk, has expanded the portion of the Red Sea that is considered to be part of the riskiest waters for insurance purposes following continued attacks by Iran-backed forces on global shipping traversing the Suez Canal after passing Yemen.

Shipping analysts said that the cost of insurance cover has surged almost 10-fold since the missile attacks from Iran-supported Houthti rebels in Yemen first began as a show of support for the Hamas terror group by Iran using its proxies in Yemen.

The latest liquefied natural gas prices are largely unaffected by a market currently experiencing a supply glut because of mild weather in Europe and ample storage levels and global supplies.

The Dutch Title Transfer Facility price was quoted at around $11.185 per million British thermal units on December 19, its lowest level since 2021 and with the UK National Balancing Point price at $11.240 per MMBtu.

The Japan Korea-Marker price for spot cargoes sold to North Asia was at an unchanged level of $15.197 per MMBtu, a bit less than last week. The JKM was also moving to the February front-month with new lower values of $12.372 per MMBtu.

Analysts said that with Iran leading Yemen’s Houthi rebels in their missile attacks on shipping, the greatest price risk for LNG, oil and other fuels is an attack by Iran on shipping in the Arabian Gulf that could lead to the Shaat-al-Arab waterway route in and out of the Gulf being closed.

This would lead to the cut off of about one-fifth of global LNG supplies that is currently supplied by Qatar and the United Arab Emirates.

Possible outcomes

The analysts added that a Gulf shipping shutdown could happen if Iran sucker-punches an innocent vessel in the Gulf or Iran is itself is sucker-punched by Israel.

Iran is also heading for severe sanctions for its proxy war on global shipping that is proceeding because part of the Iranian armed forces in the Revolutionary Guard has apparently gone rogue. Analysts stated that the overthrow of the Tehran regime and the freeing of the long-suffering Iranian people may be nearer that most people currently could imagine.

A missile fired by the Iran-backed Yemeni Houthi rebels has just hit another cargo ship in the Red Sea near the strategic Bab el-Mandeb Strait leading to and from the Suez Canal, following other attacks in previous days against various vessels and where Iranian ships posing as legitimate cargo vessels were confirmed as acting as command ships for the attacks.

The containerships and tankers owner Maersk, the world’s biggest shipping company, and Germany’s Hapag-Lloyd as well as BP Shipping of the UK and many other companies, have stopped their fleets from taking the Bab el-Mandeb Strait past Yemen to or from the Suez Canal.

The BP LNG and tanker fleet would be particularly vulnerable as they mostly have the word “British” in their names which would be seen to attract terrorism unless there was a Royal Navy vessel nearby.

Among the BP LNG fleet, the “British Listener” was lifting a cargo from the Mozambique FLNG hull “Coral Sul” offshore the southeast African nation so is well placed to deliver into Asia far from the Red Sea and would be likely heading for South Korea.

Other basins

The BP LNG vessels are mostly doing shuttle deliveries from Mozambique to Asia as BP has purchased all of the offtake from very first but not the last Mozambique project. Some of BP's LNG carriers are operating in the Asia-Pacific market.

The “British Contributor”, for example, is scheduled to discharge a cargo on December 25 at the Sendai import terminal in Japan after lifting it from the Northwest Shelf plant in Western Australia.

One of the few LNG carriers in the East Mediterranean on December 19 was the “BW Tulip” that had just delivered a shipment to the Marmara Ereglisi import terminal in Turkey and was heading through the West Mediterranean into the Atlantic and with the destination given as the Freeport plant in Texas, according to shipping data.

Another LNG carrier in the West Med off Gibraltar was the “Diamond Gas Metropolis”, with 174,000 cubic metres capacity. This ship was now heading for the UK Isle of Grain LNG import terminal near London with a cargo lifted from the Cameron plant in Louisiana on December 8.

Most carriers using the Suez Canal would come from Qatar on the East-to-West route for Europe while those going West to East would be rarer and carrying cargoes stored off a port like Gibraltar and delivered to Italy, Spain or Turkey and very unusually now India via the Suez Canal or further afield via Suez.

That’s as the norms of LNG carrier and other energy and container shipping navigation have been upended by a year of chaos and sky-high tariffs at the Panama Canal caused by the drought in the region and low water levels in the Gatun Lake that is part of the Canal water system.

European and Asian liquefied natural gas prices fell over the past week with the Dutch Title Transfer Facility benchmark declining by over 7 percent as European Union storage levels hit 100 percent and energy security concerns waned with cargo deliveries gathering pace and seasonal temperatures prevailed.

China National Offshore Oil Corp. and French energy and utility company Engie have completed a yuan-settled liquefied natural gas trade through the Shanghai Petroleum and Natural Gas Exchange, the third such LNG trade achieved by the Chinese.

The yuan transaction was completed on the Shanghai Petroleum and Natural Gas Exchange (SHPGX), according to a statement from the trading platform.

The statement added that under the yuan-denominated agreement an LNG cargo of about 65,000 tonnes would be delivered in November.

China has recently emphasized its need where possible to settle oil and gas trades in yuan in an attempt to establish its currency internationally and to weaken the dollar's dominance in energy trading.

CNOOC had previously conducted China's first yuan-settled trade with French major TotalEnergies in March 2023 and Singapore's Pavilion Energy also settled such a deal in August.

Das Island cargo

The first 2023 yuan-settled LNG trade involved TotalEnergies and Abu Dhabi National Oil Company’s trading unit as well as CNOOC.

The cargo from that transaction arrived in May 2023 and was unloaded at the main terminal in southern Guangdong province.

The shipment from Das Island in Abu Dhabi in the United Arab Emirates was delivered by the “Mraweh” LNG carrier, a mid-sized vessel with 135,000 cubic metres of capacity.

CNOOC said at the time that the cargo delivery to the Dapeng terminal marked progress by China towards more yuan settlement of cross-border energy trade

CNOOC had purchased the Das Island cargo from TotalEnergies at the Shanghai Exchange.

China has raised the issue over the past several years of seeking more use of the Chinese currency with nations like Saudi Arabia and other energy exporters.

Analysts note that the Chinese economy would benefit hugely even if China only partly paid for its oil and gas in yuan.

China imported more than 500 million tonnes of crude oil last year and more than 100 million tonnes of natural gas by pipeline and as LNG and with the LNG portion amounting to 63.44 million tonnes.

NextDecade Corp., the developer of the Rio Grande LNG export project in Texas, has formally taken a final investment decision to build the first three liquefaction Trains and export facilities with anticipated full capacity of around 27 million tonnes per annum with funding from the US, the Middle East and Asia.

UK major Shell plc reported an increase in net profits for the first three months of the year as liquefied natural gas sales volumes rose by 6 percent on the previous quarter, though were slightly less than the same quarter of 2022.

Mitsui & Co. of Japan, a leading liquefied natural gas market participant and trader, confirmed the acquisition of shale-gas assets in South Texas with access to LNG export plants on the US Gulf Coast.

Mitsui said it purchased a 92 percent working interest in the Eagle Ford basin assets from a subsidiary of Silver Hill Energy Partners, a private company based in Dallas, Texas.

The assets comprise 8,500 net acres known as the Hawkville field and with easy reach of the region’s LNG export cluster.

The confirmation statement from Mitsui on the acquistion did not include a value for the transaction.

“Additional gas production is expected from this asset with further development,” said the company.

The Eagle Ford acreage will be managed by a company subsidiary, Mitsui E&P USA.

“The subsidiary will develop and operate the asset, aiming for stable gas production of over 200 million cubic feet per day from the field,” Mitsui explained.

Mitsui stated that it was also promoting liquefaction and export of US natural gas to global markets and has methanol production businesses using natural gas as feedstock.

Cameron stake

It has also increased its offtake from the Cameron LNG plant in Louisiana, operated by Sempra Infrastructure, and where the Japanese company has a 16.5 percent shareholding.

However, Mitsui’s LNG assets are global with holdings in the Middle East at liquefaction plants in Qatar, Oman and the United Arab Emirates.

In Asia, Mitsui has an LNG stake in the Tangguh export project in Indonesia and is still a shareholder in the Sakhalin LNG plant in the Russian Far East.

It additionally has a stake in the oldest Australian liquefaction plant, the Woodside-operated Northwest Shelf (NWS) plant, and has an impending tolling deal at NWS using feed gas from the onshore Perth Basin in Western Australia.

“In addition to proactively pursuing upstream development projects, we will strengthen the natural gas value chain, including adjacent businesses,” Mitsui stated.

Mitsui said it believed that natural gas and LNG would play an important role as a “pragmatic solution” for the energy transition and it would continue to contribute to the stable supply of energy.

US company Perma-Pipe International Holdings has opened its largest production facility outside North America in Abu Dhabi in the United Arab Emirates to tap into the increasing Middle East production expansion in the LNG, oil and pipeline natural gas sectors.

Perma-Pipe, based in Spring, Texas, said the official opening of the facility was attended by President and Chief Executive David Mansfield and Chairman Jerry Walker as well as dignitaries from the UAE, Saudi Arabia and Qatar.

While Qatar is embarking on a major natural gas and LNG expansion, the UAE and Saudi Arabia are also expanding their natural gas sectors with plans for increased production and subsequent equipment needs.

The US company, which is listed on the Nasdaq global exchange, said the Abu Dhabi factory is on a six hectare site and is fully equipped with technologies to provide the latest environmentally-friendly products for pipelines, gas-gathering and pipe insulation .

“We have every reason to believe that the demand for clean energy, such as LNG and hydrogen, will continue to grow in the years to come,” said CEO Mansfield.

“This new development is not specific to the UAE only. It is an export hub to serve projects all over the world. We now have a factory that is unique with its wide product offerings and with the capacity to respond to the growing demand,” added Mansfield.

Pre-insulated pipes

Perma-Pipe is leader in pre-insulated piping and leak detection systems for oil and gas gathering, district heating and cooling and other applications.

The new facility will offer fabrication and fusion bonded epoxy coating capabilities, and the XTRU-THERM® and PolyTherm® brands of insulation systems and other jacketed and reinforced products.

In total, Perma-Pipe has operations at 14 locations in six countries.

“This new production site opens up many perspectives for Perma-Pipe, the world leader in pre-engineered pre-insulated piping systems,” said Saleh Sagr, Senior Vice President for Perma-Pipe’s Middle East and North Africa region.

“We aim to meet the growing regional demand and also have a logistical position to better serve the oil and gas industry in the UAE with its large capacity and product quality,” Sagr added.