LNG

European natural gas prices and US Gulf Coast last day futures for free-on-board cargoes from Louisiana and Texas increased for a second day after the Iranian drone and missile attacks on Israel brought more uncertainty and volatility into oil and gas markets.

European natural gas and LNG prices skyrocketed by 47 percent on the week to their highest level since mid-February as geopolitical and energy security tensions gripped the Atlantic Basin and Mediterranean markets while North Asian spot cargo prices rose by just over 5 percent.

Europe’s natural gas and LNG markets suffered another price fall on the week of 5.8 percent amid mild winter weather as the Japan-Korea Marker price for spot cargoes extended its front-month premium to $5.65 per MMBtu over European Union values.

Kansei Electric Power (Kepco), a leading Japanese LNG importer, has won a court victory to keep open a nuclear plant that some local residents wanted to shut down because of its age in a ruling that may impact future LNG demand in Japan.

The United States Government forecasts that liquefied natural gas exports would hit an all-time high through the normally quieter Northern Hemisphere summer from May to August and even amid higher benchmark Henry Hub prices.

Delfin LNG, the US floating liquefaction and export project proposed for offshore Louisiana, has filed with the Federal Energy Regulatory Commission for a third extension of permits to complete the venture.

BW Group said a $128.3 million financial package has been arranged with IDB Invest, the private arm of the Inter-American Development Bank, to help fund a converted floating storage and regasification unit (FSRU) as part of a gas-for-power project in the Latin American nation of El Salvador.

The financial package has a 15-year contractual term. The funds provide resources for the purchase and conversion of the “BW Tatiana” LNG carrier to an FSRU.

This is the region's first FSRU, which will be permanently moored at the Port of Acajutla in El Salvador.

A BW Group subsidiary, BW LNG, is developing the project with Invenergy, a multinational power generation and operations company.

“The power project’s use of natural gas will reduce the country's reliance on imported diesel and heavy fuel oil-fired generation, resulting in significant environmental benefits,” said the developers.

Invenergy and BW LNG will jointly commission, operate and maintain the FSRU.

“BW is grateful for the opportunity to bring clean, affordable energy to the region, with the support of Invenergy and IDB Invest,” said Jessica Cheung, Vice President for Treasury and Corporate Finance at BW Group, the Singapore-based shipping and oil and gas projects company with a fleet of around 420 tankers and ships, including 190 LNG and liquefied petroleum gas (LPG) vessels.

“Besides enhancing this project's competitiveness, we hope this financing encourages the development of many more LNG-to-power projects in the region,” added Cheung.

BW LNG said a key part of the El Salvador project was the FSRU, which will have regasification capacity of 280 million standard cubic feet a day and storage capacity of 137,000 cubic metres.

Regasified LNG will be transported via a subsea pipeline to the onshore 378-megawatts natural gas-fired power plant.

The El Salvador project is scheduled to be completed in 2022 and is expected to meet about 30 percent of El Salvador's energy demand.

“The close of financing for the FSRU represents a significant step forward in the completion of the transformational project, the foundation for El Salvador's clean energy future,” said Meghan Schultz, Senior Vice President, Finance and Capital Markets at Invenergy.

“This multi-component project is only made possible through the collaboration and support of our incredible partners, BW LNG and IDB Invest,” added Schultz.

Venture Global, the US LNG project developer with two export plants proposed for Louisiana, has filed with regulators to permit its construction of a third plant in the Gulf Coast state.

The Arlington, Virginia-based company filed with the Federal Energy Regulatory Commission for a venture called Delta LNG and its associated Delta Express pipeline.

The company’s first and most advanced plant is at Calcasieu Pass in Louisiana with current nameplate export volumes of 12 million tonnes per annum and is expected to come on stream in 2022, along with associated facilities, including the TransCameron Pipeline.

Venture Global, owned by former investment banker Michael Sabel and lawyer Robert Pender who act as joint chief executives, is also constructing a second plant at Plaquemines near river mile-marker 55 on the west side of the Mississippi River, 30 miles south of New Orleans.

The Mississippi River project has current output targets of 20 MTPA of LNG and was set to include small-scale liquefaction Trains, four LNG storage tanks and three marine loading berths.

The Delta LNG plant is also proposed for Plaquemines Parish and would have peak capacity to process 24 MTPA.

The filing made on April 17 also requested the start of a permit process for a 287-mile pipeline called Delta Express between Perryville in Louisiana, crossing into the neighbouring state of Mississippi, and then back into Louisiana to connect to the LNG plant.

According to a preliminary schedule the third Venture Global project could see construction start in late 2021 and the plant shipping its first cargo by November 2024.

Venture Global had in March 2019 that it planned to expand the scope of its LNG development business on the US Gulf Coast to 60 MTPA of production based on customer demand, almost doubling current plans for 32 MTPA of output.

Co-CEOs Pender and Sabel said that having fully contracted Calcasieu Pass and anticipating completion of Plaquemines LNG an expansion was being studied to meet additional customer demand.

“We believe our model of mid-scale modular liquefaction is the future of low-cost LNG production,” they said.

Venture Global noted that the Calcasieu Pass project with its planned 10 MTPA of output had received all federal authorizations.

The project’s engineering contractor, Kiewit Energy of Omaha, Nebraska, is now carrying out site preparation in advance of construction.

The Calcasieu Pass plant has signed binding 20-year sale and purchase agreements with companies such as Royal Dutch Shell, BP of the UK, Italian utility Edison, Portugal’s Galp Energia, Repsol of Spain and Poland’s national oil and gas company.

The Plaquemines project is expected to receive its final regulatory authorization in August and commence construction later in 2019.