LNG

Glenfarne Group has signed a preliminary 30-year gas supply pact with ConocoPhillips, securing sufficient volumes for Phase 1 financial close on the Alaska LNG project.

Japanese trading company Mitsui & Co is in advanced negotiations to buy a minority stake in Qatar’s North Field South LNG expansion, a 16 mtpa liquefaction project being developed at an estimated cost of $17.5 billion. The deal would give Mitsui access to one of the world’s lowest-cost LNG developments.

US major ConocoPhillips has agreed to acquire Marathon Oil Corp., the US company and main shareholder in Equatorial Guinea LNG in West Africa as well as a key operator in the major US shale basins.

Sempra Infrastructure, the subsidiary of California-based utility and energy company Sempra and with stakes in LNG plants and projects in the US and Mexico, has completed the sale of a stake in the Port Arthur LNG project in Texas to US asset management firm Kohlberg Karvis Roberts (KKR), which is already a stakeholder in Sempra Infrastructure.

Sempra said the sale was complete to KKR on a 42 percent indirect, non-controlling interest basis in the Port Arthur LNG Phase 1 project .

The transaction results in Sempra Infrastructure retaining a controlling 28 percent indirect interest in Phase 1 at the project level, and ConocoPhillips owning the remaining 30 percent interest.

“The closing of this transaction continues the positive momentum of our world-class Port Arthur LNG facility and highlights Sempra Infrastructure's ability to access capital to support the growth of its infrastructure business,” said Justin Bird, Chief Executive of Sempra Infrastructure.

“We remain committed to developing energy infrastructure projects with strong partners to continue growing our portfolio while advancing global decarbonization and energy security,” Bird added.

James Cunningham, a Partner at KKR, said the firm was pleased to proceed with the investment.

“Port Arthur LNG Phase 1 has continued its strong momentum and is on track to meet its objectives of helping to deliver energy security, economic growth and a near-term supply of reliable and cleaner energy,” added Cunningham.

Texas FID

Sempra Infrastructure reached a positive final investment decision for Port Arthur LNG Phase 1 in March 2023 and contracted US engineering firm Bechtel Energy to build the facility.

The company has additionally placed major long-lead time orders with equipment and technology companies Air Products and Baker Hughes.

The $13 billion total estimated capital expenditures for the Port Arthur project are being financed with $6.8Bln of non-recourse project-level debt and $6.2Bln of project-level equity.

The company noted that 100 percent of current contractable capacity for Port Arthur Phase 1 had been secured with long-duration contracts and high-quality counterparties.

“The expected commercial operation dates for Train 1 and Train 2 are 2027 and 2028 respectively,” Sempra said.

Progress also continues at Energía Costa Azul LNG Phase 1 on the Pacific Coast of Mexico where construction at the Mexican export project remains on track to reach commercial operations by the summer of 2025.

The San Diego, California-based company is also pursuing a Phase 2 development project at the Cameron LNG export plant in Louisiana. 

BW Offshore, the global operator of floating production, storage and offloading (FPSO) units, said the Barossa natural gas project for the Timor Sea was progressing as part of plans to prolong the lifespan of the Australian Darwin LNG export plant.

BW Offshore, which has main offices in Oslo and Singapore, said it continued to execute the Barossa FPSO project with overall completion on schedule at 67 percent at the end of April 2023.

“Hull blocks have been assembled in the floating dock and preparations for float out are progressing, with major equipment arriving at the topside construction yard,” explained BW Offshore in its first-quarter earnings report.

The company said that it also progressed its strategy of capturing value from non-core assets with the sale of “BW Opportunity” in the first quarter and the subsequent divestment of “BW Athena” in April.

Operator

The Darwin plant in the Northern Territory is operated by Adelaide-based Santos with capacity to produce around 3.7 million tonnes of LNG per annum, mainly for Japanese buyers, including JERA Co. Inc, the Asian nation’s largest LNG importer and power group.

The Japanese have participated in the Darwin LNG project since 2003 through the power companies that formed JERA and when the Australian plant was first operated by ConocoPhillips before the US major sold its stake to Santos.

Darwin LNG was constructed to receive feed gas from the Bayu-Undan gas field, located in the Timor Sea, and had contributed to the stable supply of LNG for almost 17 years before becoming depleted.

BW Offshore reported net profit for first quarter of $17.8 million, down from $41.3M in the previous quarter and $46.3M in the first three months of 2022.

“We deliver on our plan to generate value from our asset base through divestments and are discussing potential redeployment-related work for ‘BW Opportunity’ with its new owner,” said Marco Beenen, Chief Executive of BW Offshore.

“This reflects a strong FPSO market with oil and gas companies seeking efficient solutions for safe, secure and reliable production,” added Beenen.

Gross operating income for the three months came to $79.0M, down from $84.4M in the prior-year quarter and $104.9M in the previous quarter.

Outlook

“The reduction is largely due to a non-recurring reimbursement recorded in fourth quarter 2022 for expenses incurred under the limited notice to proceed (LNTP) contract with Shell for the Gato do Mato (Brazil) project,” said BW Offshore.

In its Outlook, BW Offshore said it expected that the core units in the existing fleet would continue to “generate significant cash flow” in the time ahead supported by the $5.8Bln of firm contract backlog at end of March 2023, including the Barossa contract.

“The company is experiencing continued strong interest for infrastructure-type lease and operate FPSO projects, combined with continued access to equity and debt financing for field development initiatives with long-term production, low break-even costs and low carbon emissions,” it stated.

“Discussions are ongoing with the buyer of ‘BW Opportunity’ for EPCC work and an operations and maintenance contract related to a redeployment of the FPSO which can drive growth in the FPSO segment,” added BW Offshore.

Equinor, the European LNG producer from the Hammerfest plant in northern Norway and a leading pipeline gas supplier to the European Union and the UK, said it was postponing indefinitely a large offshore wind project called Trollvind citing issues such as rising costs and technology availability.

Revenues from the Australia-Pacific LNG (APLNG) plant in Queensland for the quarter to the end of March declined amid the implementation of the sale of Australia's Origin Energy to Canadian and US funds, Brookfield Asset Management and Washington DC-based EIG.

The US Department of Energy has given final approval after permit processes lasting more than a decade of the Alaska Gasline Development Corp. LNG export project to supply Asian nations with the state’s abundant North Slope gas.

Baker Hughes, the US liquefied natural gas equipment-maker and energy services company, has been awarded an order by Bechtel Energy to supply two main refrigerant compressors for the Port Arthur LNG export project in Texas.

The Port Arthur venture is being developed in the first phase by the Sempra Infrastructure unit of California-based Sempra in Jefferson County, Texas, after a positive final investment decision made on March 20.

Baker Hughes said it would supply four Frame 7 turbines paired with eight centrifugal compressors across two LNG Trains under the deal with engineering, procurement and construction contract-holder Bechtel.

The two large-capacity Trains at the Texas project will each produce over 6 million tonnes per annum for a nameplate capacity of around 13 MTPA in the first phase.

Baker Hughes added that it would also supply two electric motor-driven compressors for the plant’s boosting services.

Critical equipment

“We are delighted to be working with Bechtel and Sempra Infrastructure to supply critical equipment for this innovative LNG project,” said Baker Hughes Chairman and Chief Executive Lorenzo Simonelli.

“Baker Hughes has been committed to LNG for over 30 years, and the announcement builds on our track record of delivering high-availability and reliable LNG technology, with low total cost of operations, further enabling increased exports of LNG from the US Gulf Coast to meet global energy needs,” Simonelli added.

Baker Hughes noted that the Frame 7 turbine was well-proven for its energy efficiency, availability, reliability and maintainability.

“Packaging of the turbine-compressor Train, a unique Baker Hughes offering, as well as manufacturing of the compressors and testing of the Trains, will take place at Baker Hughes’ facilities in Italy,” explained the company.

Commercial start

“The expected commercial operation dates for Port Arthur LNG Phase 1 Train 1 and Train 2 are 2027 and 2028 respectively,” added Baker Hughes.

Total capital expenditure for the Port Arthur Phase 1 project is estimated at $13 billion.

Sempra explained that it had secured a joint venture with ConocoPhillips whereby an affiliate of the US major has acquired a 30 percent non-controlling interest in the project and is purchasing 5 MTPA of LNG offtake under a 20-year sale and purchase agreement.

Additionally, ConocoPhillips will be managing the Port Arthur project's overall natural gas supply requirements.

ConocoPhillips will also have certain rights to participate in future expansion projects in both equity and offtake.

Sempra has also reserved an indirect stake in Port Arthur LNG for US asset management firm Kohlberg Kravis Roberts , which is already a stakeholder in Sempra Infrastructure.

Sempra, the US utility whose LNG unit Sempra Infrastructure owns Cameron LNG in Louisiana and other projects in Mexico, has taken a positive final investment decision to build the Port Arthur liquefaction and export plant in Texas.