LNG

A study involving UK maritime classification society Lloyd’s Register, Shell International Trading and Shipping Co. and French liquefied natural gas storage technology company GGT Group has concluded that inspection intervals for LNG carrier membrane tanks could be safely extended due to monitoring technology and predictive maintenance.

Gaztransport and Technigaz (GTT), the French maritime LNG storage technology company, has confirmed an order from China for the storage tank designs for eight very large liquefied natural gas carriers, which will be part of QatarEnergy’s “Hundred Ships Programme” to handle the deliveries from the North Field production expansion in the Arabian Gulf.

Liquefied natural gas has been crucial in navigating through the gas market crisis, playing a key role in offsetting the shortages in Europe, with global LNG exports showing a first-half 2023 year-over-year increase of more than 4 percent despite volatilities due to facility maintenance and outages in the Northern Hemisphere summer months.

The market report and outlook comes from the 90-page Global Gas Report 2023 just issued by the International Gas Union, the global voice of the gas industry with more than 150 corporate members in over 80 countries, representing 90 percent of the global gas market and whose President is Li Yalan of China.

“In the context of the globally tight LNG supply, while it was instrumental in keeping the lights on in Europe, the unaffordable prices left some countries in Asia in the dark,” the IGU stated.

“Europe’s natural gas imports shifted from Russian pipelines towards LNG leading to a 69 percent increase in its LNG imports, reaching 124 million tonnes (169 billion cubic metres) and making Europe the biggest importing market, absorbing a significant share of the global LNG volume by outbidding other customers,” the IGU added.

The IGU noted that roughly two thirds of the additional volumes, or 30MT of LNG,came from the United States and in Asia, China reduced LNG imports from Australia and the US by a total of 21MT, while it increased imports from Qatar by around 7.4MT.

Supply shortage

The IGU also stated natural gas prices had cooled in 2023, largely due to demand-side adjustments in Europe and Asia, yet they remain above pre-Covid and pre-energy crisis levels. 

“The shortage of global supply, which was the key reason behind last year’s shocks, is still there: the market is in a state of a fragile and unstable equilibrium,” the IGU explained, citing marginal supply growth and the need for more infrastructure de-bottlenecking.

The report added that Europe's growing dependence on LNG has rendered global gas prices increasingly vulnerable to liquefaction and shipping supply risks.

Global natural gas production in 2022 stayed flat in comparison with the previous year with a marginal 8.3 Bcm uptick, which was less than a 0.5 percent increase year-on-year.

However, the IGU said that first half of 2023 saw a mild revival in global gas supply, yet the final annual result remains uncertain. 

“Looking back, the curtailment of Gazprom’s output in Russia was offset by supply growth in North America, which grew from 1,160 Bcm to 1,213 Bcm, and in the Middle East, which grew from 670 Bcm in 2021 to 687 Bcm in 2022,” the IGU said.

“In Europe, incremental production in 2022 largely came from Norway, which has been maximising output (7 percent growth year-on-year) to increase exports to the rest of the continent,” the report added.

“In Asia, gas production rose modestly from 696 Bcm in 2021 to 712 Bcm in 2022, driven mainly by higher production in China and Central Asia,” said the report.

“By contrast, Africa experienced falling gas production of 1 percent (2.9 Bcm) between 2021 and 2022,” the report stated.

The US Government expects the benchmark Henry Hub natural gas price to increase along with gas-fired power demand and rising feed-gas supplies for liquefied natural gas exports as dry gas production stalls.

US natural gas storage design capacity was down in 2021, primarily driven by reductions in the Pacific region of almost 12 percent as energy market changes including LNG exports signalled a greater need for capacity, especially flexible, high-deliverability storage.

Aug 31 (LNGJ) - The 173,400 cubic metres laden LNG carrier “Barcelona Knutsen” is scheduled to arrive on September 11 at the UK LNG port of Milford Haven from Spain. In other activity, shipping data showed the 142,890 cubic metres capacity carrier “Maran Gas Coronis” in the English Channel on August 31 awaiting orders and with a cargo onboard from the Algerian LNG plant at Arzew.

   The 170,200 cubic metres capacity Liberian-flagged LNG vessel “Velikiy Novgorod” was also in the English Channel awaiting orders.

Equinor posted a multiple increase in net profits and revenues as it stepped up to boost European energy security with more pipeline gas, a re-started LNG plant and 18 percent higher gas output from the Norwegian Continental Shelf.

European Union natural gas benchmarks and North Asia spot liquefied natural gas cargo prices advanced because of concerns that Russia could cut off the main pipeline link to Germany and cause a global LNG supply crisis at a time when US and Australian shipments were down because of outages.

The Norwegian Ministry of Petroleum and Energy has updated its estimate of projected European natural gas sales in 2022 to about 8 percent higher than last year and set to be bolstered by the restarting Hammerfest LNG export plant in Northern Norway and with the volumes helping to offset declining Russian gas sales.

The France-based International Group of Liquefied Natural Gas Importers (GIIGNL) has issued its annual report with key export and import statistics and noted that 2022 would see a ‘‘paradigm shift” in the market with government and institutions getting involved after the Russian invasion of Ukraine.

“Price volatility was exacerbated in February 2022 by the Russia-Ukraine conflict, and the current European energy crisis proves to be a stark reminder of LNG’s vital role in ensuring energy security and economic stability,” said Jean Abiteboul, GIIGNL President in his introduction to the report.

“Governments and public institutions are becoming increasingly involved in the LNG business, and we will monitor the consequences of this paradigm shift over the course of the coming year,” he added.

Global regasification capacity rose last year by 46 million tonnes per annum to reach 993 MTPA as four new large-scale terminals were brought in operation in Brazil, Croatia, Indonesia and Kuwait and five expansion programmes were completed, four of which are in China and one in Japan.

“At least six new markets have started or are scheduled to join the sector as importers in 2022, including Ghana, Hong Kong, El Salvador, the Philippines, Senegal and Vietnam,” said the report.

“In the meantime, LNG production has been struggling to keep pace with demand, which sent spot LNG prices upwards,” it added.

The GIIGLN constitutes a forum for exchange of information and experience among its 90 members and they handle more than 90 percent of LNG imports worldwide.

The membership the GIIGLN comes from 27 countries and the body also aims to share experiences to enhance safety, reliability, efficiency and sustainability of LNG import activities and in particular the operation of regasification terminals.

Keeping pace

“During 2021, LNG imports returned to robust growth, reaching 372.3 million tonnes, a 4.5 percent increase over 2020. Asia remained the main demand center for LNG, growing by 7.1 percent,” it said.

The report added that LNG production has been struggling to keep pace with demand, which sent spot LNG prices upwards.

“While 7.4 MTPA of new capacity came onstream, 5 MTPA of which in the United States, global LNG exports were affected by unscheduled maintenance and shortfalls in feed gas,” the report added.

“Increased output from the US, Egypt, Malaysia and Russia was partly offset by lower exports from Angola, Indonesia, Nigeria, Norway, Peru and Trinidad,” said the GIIGNL.

The report said that in 2021, two important final investment decisions were taken for the North Field East expansion project in Qatar, which will add 33 MTPA of liquefaction capacity from 2025, and Pluto LNG Train 2 in Australia for 5 MTPA.

“By 2025, more than 120 MTPA of new liquefaction capacity will progressively come online, which should partly relieve tensions in the LNG market,” stated the report.

With 68 new vessels delivered during 2021, the report confirmed that the LNG fleet reached 700 vessels, including 48 floating storage and regasification units (FSRUs) and 31 LNG bunkering vessels, representing a 9 percent increase in cargo capacity.

“Freight rates remained very strong throughout the year and the order book at year-end was remarkably high, with 196 units to be delivered by 2025,” said the report.