LNG

Equinor, the Norwegian oil and gas major and main pipeline natural gas supplier to Europe amid diminishing Russian deliveries from Gazprom, will be an LNG trader with additional volumes supplied by the largest US LNG exporter Cheniere Energy.

Under a planned 15-year agreement Equinor will purchase around 1.75 million tonnes of LNG per annum from Houston-based Cheniere from 2026.

“This new Sales and Purchase Agreement (SPA) will add new volumes to Equinor’s already significant gas portfolio of pipeline gas and LNG,” stated Equinor.

The Norwegian company also disclosed that the expansion at Corpus Christi to add 10 MTPA to the current nameplate capacity of 13.5 MTPA will likely be followed by another boost in output.

“With global energy demand growing and increased focus on energy security, the LNG market is expected to grow significantly. US LNG can supply the European markets as well as cover demand in other markets,” explained Equinor.

The Stavanger, Norway-based oil and gas major has recently shipped the first cargo from the repaired Hammerfest in Northern Norway to re-established seaborne LNG supply link Europe.

New US volumes

It was the first cargo to leave the Hammerfest liquefaction and export plant since the September 2020 fire.

Once the Hammerfest is ramped up to full production of 4.8 MTPA, a ship will leave the facility on Melkøya island every five or six days and over the year will deliver 5 percent of Norway’s natural gas exports while the other 95 percent is delivered by pipelines.

Norway’s role as a key supplier to Europe has taken on more importance because of the Russian invasion of Ukraine and Western sanctions against Russian oil and gas.

The Hammerfest project gave Europe its first large-scale LNG supply when it came on stream in 2007, though the facility was originally planned and built to supply the US before the shale-gas boom.

“I am very pleased that we have entered into a long-term agreement with Cheniere, the largest US producer of LNG,” said Helge Haugane, Equinor’s senior vice president Gas & Power.

“Based on our production in Norway, Equinor is the second-largest supplier of pipeline gas to Europe. The new LNG agreement is a major building block in Equinor’s ambition to further strengthen our global gas position by adding more LNG to the portfolio,” Haugane explained.

Crucial role

“LNG will play a crucial role in providing energy security. By increasing our position in this segment, we will be even better positioned as a long-term reliable supplier of energy’ he stated.

Under the SPA, Equinor has agreed to purchase the volumes from Cheniere Marketing on a free-on-board basis whereby the Norwegians send their own ships.

Equinor said the deliveries under the SPA would start in the second half of 2026 and reach the full 1.75 MTPA in the second half of 2027.

“Half of the volume, or about 900,000 tonnes, is subject to Cheniere making a positive final investment decision to construct additional liquefaction capacity at the Corpus Christi LNG Terminal beyond the seven-Train Corpus Christi Stage III Project,” stated Equinor.

This suggests that the Cheniere, which operates the Sabine Pass plant in Louisiana with 27 MTPA of production, is planning yet another expansion at the Texas facility.

The US Potential Gas Committee (PGC), a body made up of more than 800 experienced volunteer geoscientists and engineers and the American Gas Association (AGA), have announced that the nation has a 3,374 trillion cubic feet (Tcf) natural gas resource base, boosted by expanding shale-gas reserves in key basins.

US pipeline company Kinder Morgan and its equity fund partners have received a permit from the US Department of Energy to export domestic natural gas from the Gulf LNG export project proposed at the site of an existing import terminal near Pascagoula in Mississippi.

“This announcement advances the Trump administration’s commitment to energy security here at home and for our friends abroad,” said US Energy Secretary Rick Perry.

“Increased amounts of US LNG on the world market benefit the American economy, American workers and consumers and help make the air cleaner around the globe,” added Perry.

The DoE permit gives the Gulf project the authority to export up to 1.53 billion cubic feet per day of natural gas from the liquefaction plant being built near Pascagoula.

Gulf LNG is “authorized to export this LNG by vessel to any country with which the US does not have a free trade agreement (FTA) requiring national treatment for trade in natural gas, and with which trade is not prohibited” by US law or policy.

The Gulf terminal is to be transformed into a liquefaction plant to produce an initial 11.5 million tonnes per annum of LNG for export.

The facility is located next to the Bayou Casotte Navigation Channel and already includes a five-mile send-out pipeline and two LNG storage tanks, each with a capacity of 160,000 cubic metres.

The Gulf project was the fifth US liquefaction and export venture approved by the Federal Energy Regulatory Commission in 2019 when it issued construction permits on July 16.

“The US is in another year of record-setting natural gas production,” said Steven Winberg, Assistant Secretary for Fossil Energy at the DoE.

“I am pleased that the Department of Energy is doing its part to bring about an efficient regulatory system that allows for additional US energy to find its way into the global market,” added Winberg.

Including the Gulf LNG permit, the DoE said it had approved 34.52 Bcf per day of exports to non-free trade agreement countries.

Of this approved amount, around 14 Bcf per day is in various stages of operation and construction, with four LNG export projects currently operating and two more expected to come on stream soon.

The Pascagoula facility had originally been constructed to import LNG cargoes from Angola in southwest Africa before the US shale-gas boom from a production plant developed by international oil companies, including Chevron Corp.

It was originally owned by US pipeline company El Paso and later acquired by Kinder, which has sold 50 percent of the project to US equity funds.

These include 30 percent held by Thunderbird LNG, a unit of the Blackstone Group of fund managers.

The remaining 20 percent is held by Gulf LNG Holdings, comprising Arc Logistics Partners and Lightfoot Capital Partners equity funds.

It is interconnected to several downstream pipelines, including Transco, Florida Gas Transmission, the Destin Pipeline and the Gulfstream Natural Gas Pipeline from where feed-gas can be transported for processing and export from Pascagoula.

Kinder is currently in the process of completing a second LNG export project it is developing, the Elba Island facility near Savannah in the state of Georgia.

US pipeline company Kinder Morgan and two equity funds are making progress on receiving permits to transform the existing Gulf LNG import terminal in Pascagoula in Mississippi into an export plant.

The US is likely to become a larger supplier of liquefied natural gas to China once the build-out of the next wave of liquefaction and export capacity on the US Gulf Coast is completed because of continued domestic challenges in the Chinese energy and shale-gas sectors.