LNG

QatarEnergy, the leading global LNG produce, has signed a farm-in agreement with ExxonMobil Corp. to acquire a 40 percent participating interest in two exploration blocks offshore Egypt.

Under the terms of the agreement, which is subject to customary approvals by the government of Egypt, QatarEnergy will acquire a 40 percent working interest in each of the “Cairo” and “Masry” Offshore Concession Agreements, while operator ExxonMobil will retain the remaining 60 percent working interest.

“I am pleased with our entry into the Cairo and Masry offshore exploration blocks as they expand QatarEnergy’s presence in the Arab Republic of Egypt and extend our ambitious exploration program in-country,” said Saad Sherida Al-Kaabi, the President and Chief Executive QatarEnergy.

Partners

“We look forward to working with our valued long-term strategic partner ExxonMobil, as well as with the Egyptian Natural Gas Holding Company (EGAS) and the Egyptian Ministry of Petroleum and Mineral Resources, in this promising and prospective region,” explained Al-Kaabi.

“I would like to take this opportunity to thank the Egyptian authorities and our partners for their valuable support and cooperation,” he added.

Financial details of the latest QatarEnergy-ExxonMobil transaction were not disclosed.

The Cairo and Masry offshore exploration blocks were awarded to ExxonMobil in January 2023 and cover an area of around 11,400 square kilometres in water depths of 2,000 to 3,000 metres.

The QatarEnergy deal in Egypt was signed amid some concern about one of the main overseas LNG ventures involving QatarEnergy, the US Golden Pass export project and also involving ExxonMobil.

The Golden Pass LNG project has acknowledged ongoing discussions regarding the future role of the US Zachry group in the engineering, procurement and construction joint venture also including McDermott of the US and Chiyoda Corp, of Japan.

Golden Pass talks

“Golden Pass LNG acknowledges ongoing discussions regarding the role of Zachry within the venture,” said a statement.

“Work continues to diligently complete the project, but these discussions may impact site activity in the near term,” the statement added.

The Golden Pass liquefaction facilities are being constructed at the existing import terminal located on the Sabine-Neches Waterway in Texas.

The three liquefaction Trains will have a nameplate capacity of around 16 million tonnes per annum of LNG and ExxonMobil and QatarEnergy are marketing their own volumes.

The Train 1 mechanical completion is still on track for completion at the end of 2024 with first LNG in the first half of 2025.

McDermott International, the US LNG and energy engineering company, is set to emerge from Chapter 11 bankruptcy protection after the US Bankruptcy Court for the Southern District of Texas approved the sale of its Lummus Technology business to New York equity funds.

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. 

McDermott International, the energy and LNG engineering company, reported progress on three US LNG export projects and with other orders pending as it also registered third-quarter losses of $1.9 billion in the midst of a corporate overhaul and asset sales.

McDermott International Inc., one of the main firms involved in the US Gulf Coast build-out of liquefaction and export plants, was the subject of speculation at the Gastech 2019 conference in Houston after its shares plunged more than 60 percent and trading was suspended.

Freeport LNG in Texas is shipping its first cargo to the Middle East in a move underscoring the benefits of the US shale boom that has boosted the nation's resources since the facility on Quintana Island was first conceived as an import terminal in 2004.