LNG

An agreement to firm up the establishment of a gas hub in the Eastern Mediterranean was signed in Cairo earlier this week.

This will capitalise on Egypt’s existing hydrocarbon infrastructure and position Cyprus as a gas producer and exporter, the signatories said.

It outlined a comprehensive framework to enable the rapid development of the Cronos gas discovery offshore Cyprus and in particular the Block 6 resources.

Once produced, the gas will be transported to and processed at Egypt’s Zohr facilities before being liquefied at the Damietta LNG plant for export to European markets.

The agreement was signed by Egypt’s Minister of Petroleum and Mineral Resources, Karim Badawi, Cyprus Minister of Energy, Commerce and Industry, George Papanastasiou, developers’ Eni’s CEO, Claudio Descalzi, and a TotalEnergies’ representative.

The signing ceremony took place during the opening ceremony of EGYPES, Egypt’s premier energy event.

This agreement was described as a concrete milestone to establish a gas hub in the Eastern Mediterranean capitalising on Egypt’s existing hydrocarbon infrastructure and positioning Cyprus as a gas producer and exporter.

Eni‘s Descalzi, commented: “This agreement paves the way to bring Cyprus' gas to the market in a timely fashion, contributing to energy security and competitiveness of energy supply.

“This project leverages Egypt’s existing infrastructure, including export facilities, which are a key enabler for developments in the region.

“Egypt and Cyprus reaffirm their roles in the emerging energy hub of the Eastern Mediterranean, which is set to play an increasing role in the global gas supply in the near future,” he said.

Discovered in 2022 and subsequently appraised last year, Cronos is estimated at more than 3 trill cu ft of untapped gas.

In addition, Block 6 encompasses further potential resources currently under exploration and appraisal, including the Zeus discovery made in 2022.

Eni said that it had been present in Cyprus since 2013 and operates Block 6 by holding a 50% interest. The Italian energy giant also operates Block 8 and has participating interests in Blocks 7 and 11.

The company operates in Egypt through a wholly owned subsidiary, IEOC and also has a 50% share in the Damietta LNG plant.

It was thought that the FSRU ‘Prometheus’ would be utilised at Damietta to produce LNG from Cronos.

She was originally converted for a Cypriot LNG import project, which became mired in legal battles. 

European LNG prices, which are currently trading at a premium to Asia, are reaching levels that will start hurting demand, the CEO of energy and commodities trading firm Vitol has warned.

India's gas market is at an inflection point, as infrastructure expansion and policy support drive unprecedented growth in consumption, according to an International Energy Agency (IEA) report, unveiled at last week’s India’s Energy Week (IEW).

TotalEnergies’ delayed Mozambique LNG project outlook is increasingly uncertain.

In 2024, the Polish energy company, ORLEN Group delivered nearly 244,000 tonnes of LNG to customers last year, an almost 30% increase year-on-year.

The LNG was mainly sourced from the Świnoujście import terminal, plus from the transhipment terminal in Klaipėda, and the company’s own production facilities.

Świnoujście had more than 11,000 tanker trucks leaving from its loading bays last year to deliver 197,000 tonnes of gas.

“The steady growth of the ORLEN Group’s small-scale LNG sales in Poland demonstrates the appeal of LNG as fuel and underscores the competitiveness of our commercial offering.

“LNG transported in tanker trucks provides access to low-carbon fuel in regions beyond the reach of the national gas network. Moreover, the expansion of the small-scale LNG market supports the transition of Poland’s economy, where natural gas plays a vital role in meeting the energy needs,” said Grzegorz Bujnowski, ORLEN’s Executive Director for Gas Trading.

While most of the imported volumes at Świnoujście are regasified and injected into the transmission pipeline network, some remained in its liquefied state, enabling it to be delivered to customers via specialist cryogenic road tanker trucks and containers.

In addition to the sales operations conducted at the Świnoujście plant, ORLEN produces LNG at its facilities in Odolanów and Grodzisk Wielkopolski. It has also been selling LNG from the Klaipėda transhipment terminal since 2020.

In total, the Group marketed nearly 244,000 tonnes of LNG last year: 197,000 tonnes from Świnoujście, over 22,000 tonnes from Odolanów and Grodzisk Wielkopolski, and 25,000 tonnes from Klaipėda.

Key LNG recipients included industrial customers across various sectors, as well as private consumers connected to off-grid gas systems, which rely on LNG deliveries that are subsequently regasified at local stations.

LNG is also used in regions having access to the Polish national distribution network where demand for gas exceeds the capacity of existing pipelines.

In these cases, LNG regasification stations help bridge the gap in gas supply, ensuring that customer needs are fully met, ORLEN said. 

The Netherland’s Gate Terminal fourth new storage tank will be fitted with Svanehøj’s gauging system.

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The LNG shipping sector has entered 2025 under pressure, amid challenging market fundamentals and significant geopolitical developments.

Most industry market players have agreed that the current rock bottom freight rates will probably last all year and possibly into 2026.

LNG freight rate plummeted to $1,500 per day in the Atlantic Basin on 6th February, a 65% drop on the previous week when rates were assessed at $4,000 per day, according to S&P Global Commodity Insights.

As a result, charterers said that the tri-fuel diesel electric (TFDE) type LNGCs had no advantage over their 2-stroke counterparts.

As has been well documented, the surge in newbuildings has led to an LNGC oversupply situation, which has helped to drive rates down.

If a TFDE vessel is accepted for a charter, the owner will incur a loss, as the vessel’s daily opex will exceed the rate agreed.

It was thought that the TFDE rates would not reach zero, as owners wouldn’t charter the vessels out and take a significant hit, as they would be keen to cover their opex.

“I guess they will be negative if 2-strokes are $5,000 per day,” a charterer said talking with Platts, adding….”they have more boil-off, no reliquefaction and gas it not cheap. There is no advantage of TFDEs over 2-strokes.”

Last year, the average Atlantic day rate was $40,689, falling to $15,000 on 31st December, the last day of 2024, assessed by Platts.

Decline continues

Rates have continued to decline since the start of this year, as on 17th January, they were assessed at $15,000 per day, falling by $9,000 per day to $6,000 on the 24th of the month.

Charters have intensified, due to the limited availability of cargoes, particularly i n the East with the result that many charters were unfulfilled.

In addition, fuel and vessel delivery costs are high, so would be buyers should expect a higher price to account for factors, such as reliquefaction.

One shipbroker said: “If you don’t believe that you will secure employment for the vessel, it becomes expensive to fuel the ship.

“There are usually environmental issues and costs associated with burning fuel to keep the ship cool. Overall, you should expect a higher price to maintain the ship’s temperature, manage reliquefaction and address boil-off, “ he said.

The Pacific Basin has also witnessed a significant downturn since the beginning of this year. Platts assessed LNGC rates at $6,000 per day on 6th February of those operating in the Asia/Pacific region.

As for 2-stroke LNGCs, rates were assessed at $4,500 per day, a $3,000 drop on the previous week, while vessels operating in the Pacific, rates were assessed at $11,000 per day, a drop of $2,000 on the week.

Last year, 2-strokes operating in the Atlantic averaged $53,979 per day, falling to $23,000 by the end of the year.