LNG

Slovakia, the land-locked European Union member most dependent on Russian natural gas, has signed a liquefied natural gas supply deal with US major ExxonMobil Corp, and will receive the volumes via import facilities in Italy and Croatia.

The LNG supply agreement has been signed with the main Slovakian energy company, Slovenský Plynárenský Priemysel (SPP).

“A contract with a strategic partner like ExxonMobil opens new opportunities in access to natural gas and LNG,” said SPP in a statement without mentioning volumes nor prices

SPP also explained that gas transportation arrangements to the land-locked central European country had been secured from LNG terminals in Italy and Croatia.

Slovakia uses around 5 billion cubic metres of natural gas per annum and has mostly received Russian pipeline supplies from Gazprom that had to transit through Ukraine.

The EU nation is one of the countries most affected among the 27-member EU bloc as it had also previously relied on Russia for more than 85 percent of its gas.

Analysts noted that two-thirds of Slovakia’s oil has also come from Russia and meant the Slovakians had been opposed to more packages of sanctions cutting Russian supplies.

Polish pipeline

Earlier in September Slovakia was also able to have a guarantee of pipeline natural gas via Poland.

LNG importer Poland inaugurated a new natural gas pipeline interconnector between Poland and Slovakia as part of EU funding to help create a Polish gas hub supplying central and northeast EU countries.

The latest pipeline connects the gas networks of the two countries and will ensure supply delivery to comply with the EU strategy of diversifying routes.

The completion of the pipeline is a small part of an EU plan to create a North-South gas infrastructure corridor between the Baltic Sea, the Adriatic and Aegean Seas, the eastern Mediterranean Sea and the Black Sea.

The Poland-Slovakia pipeline with a total length of 165 kilometres (103 miles) was an EU Project of Common and received more than €100 million ($99.6M) of EU funding through the Connecting Europe Facility and which represented around 40 percent of the project’s costs.

The EU gas network had previously supported flows between the Russian Federation and Western Europe before the Ukraine invasion in mid-February 2022. 

Dominion Energy’s $9.7 billion deal to sell its gas transmission and gas storage assets to Berkshire Hathaway Energy is a triumph for America’s most celebrated investor Warren Buffett, also known as the Oracle of Omaha, his birthplace in the state of Nebraska.

Freeport LNG Chief Executive Michael Smith said he was hopeful of signing sufficient deals with buyers as the Quintana Island facility in Texas slowly expands, though suggested the second wave of plants may face difficulties 

However, Smith stated in an interview with pricing agency S&P Global Platts that the market had completely changed in 2019.

The Freeport project comprises four Train in all and the plant shipped its first cargo from the second liquefaction Train in mid-December 2019.

The cited a list of challenges, including record low prices and weaker than expected demand in Asia, oversupply concerns and the recent coronavirus outbreak in China.

He said this had created a perfect storm of headwinds for producers looking to construct new liquefaction plants or additional processing Trains.

“I don't think there's going to be a lot,” Smith said of additional sanctioned US capacity. 

“The margins for everyone have come down,” he stated.

More than a dozen US developers are pursuing projects for new plants or additional production capacity and have yet to announce positive final investment decisions.

The first phase construction at Freeport will see the building of one more Train, bringing to total to three and 15 million tonnes per annum of output.

The original Freeport terminal was completed in 2008 as an import facility with one berth and two storage tanks, each of 160,000 cubic metres capacity.

A second loading berth and a 165,000 cubic metres capacity full containment LNG storage tank have been added. The Train 4 project will be the second phase of construction.

“We don't have anything signed up. Until we do have something signed, no one is going to hear from us,” said Smith about the Train 4 project at his Texas plant.

Freeport's current target is for a final investment decision on Train 4 by mid-2020 and a start-up scheduled for 2024.

“We believe once we have the requisite capacity sold to reach our financing hurdles, we can close a transaction within a six-week time period, eight on the outside,” explained the CEO.

Smith declined in the interview with S&P Global to specify what range of prices Freeport was discussing with prospective buyers, though he said it was similar to the deals announced by other developers.

“We don't believe we are wasting our time,” said Smith. However, he stated that circumstances had changed since the first wave buildout of the six US plants currently operating.