LNG

Malaysian state energy company Petronas and Japan’s leading LNG importer and power producer JERA have signed a memorandum of understanding (MoU) to provide “reliable LNG supply for Japan.” The accord was signed during the Energy Asia 2025 conference.

French energy major TotalEnergies has acquired stakes in multiple blocks offshore Malaysia and Indonesia from Petronas, targeting oil prospects with a view to export LNG from Malaysia from 2030.

China’s COSCO Shipping (Qidong) Offshore and the COSCO shipyard (Nantong) have received approval in principle (AiP) from the Norwegian classification society DNV, along with a main scantling approval for their new concept for a floating liquefaction and storage unit. The innovative new FLNG concept reflects the industry’s drive for flexible, lower-carbon energy solutions, commented DNV’s regional manager for greater China, Norbert Kray.

Australian engineering firm Worley has published an update on its reimbursable EPC contract, worth $9 billion, with Venture Global for phase 1 of the CP2 LNG project in Cameron Parish, Louisiana. First LNG is targeted in Q3-2027.

Global energy investment will reach a record $3.3 trillion this year – despite escalating geopolitical tensions and related economic uncertainty, the International Energy Agency (IEA) finds. China cements its position as the world’s single largest investor in energy.

Burning LNG to balance renewable energy is ‘key’ to exit coal-fired power generation in Asia, a new study by S&P Global Commodity Insights finds. The average lifecycle carbon intensity for LNG sourced from Australia, the US and Qatar and used for electricity production in the study countries was 47% lower than for coal.

Escalating tensions between Israel and Iran have pushed up crude oil prices to nearly $75 per barrel. The geopolitical risk premium has soared to around $8 per barrel, impacting oil-indexed natural gas contracts as well as term LNG deliveries.

The outlook hinges on Iran’s response. If the regime in Teheran keeps airstrikes focussed on Israeli military sites, as seen in past episodes, price increases may remain contained and temporary, Rystad analysts reckon. But if Iran escalates by disrupting crude oil and LNG shipments through the Strait of Hormuz, or attacks regional energy infrastructure, prices could go through the roof.

In an undisguised threat, US President Donald Trump warned the Iranian regime to stay clear on attacking American military bases in the Middle East, or face dire consequences. 

Nautical chokepoint

The Strait of Hormuz – a key nautical route between the Mediterranean and the Red Sea – is the chokepoint in this scenario. Around 12 million barrels per day of crude oil pass through the strait, over 80% of it bound for Asia. Additionally, over 3.5 billion cubic feet (bfc) of natural gas, or 18% of world shipments, travel through the strait onboard of LNG tankers.

Though there is a pipeline to bypass the Strait of Hormuz, the capacity of that pipeline is limited. Saudi Arabia’s East-West oil pipeline and the UAE’s Habshan-Fujairah oil pipeline together can handle around half of the flow. As for natural gas, the Abqaiq-Yanbu pipeline runs parallel to the East-West Petroline in Saudi Arabia, bypassing the Strait of Hormuz. Its capacity is 290,000 barrels per day, carrying primarily gas liquids.

To date, Iran never succeeded in blocking the Strait of Hormuz which is jointly controlled with Oman. Past tactics included seizing or harassing tankers by jamming their GPS signals to draw them into Iranian waters.

“If Iran were to attempt a full-scale blockade of the Strait, it would likely face strong international pushback,” Rystad head of geopolitical analysis Jorge León warns. Retaliatory actions are to be expected particularly from countries of the Gulf Cooperation Counci, comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.

Even Iran’s key ally, China, would be hit hard by higher oil and LNG prices, he underlined, stressing such a move would isolate Iran politically and economically.

Beware shipping rates

Peter Sand, Xeneta chief analyst takes a similar view: “Any closure of the Strait of Hormuz would see services re-routed, with increased reliance on India West Coast ports for connecting the Far East to Indian sub-continent,” he noted. The inevitable disruption and port congestion, as well as the potential for higher oil prices, would cause a spike in ocean freight container and LNG shipping rates.

Average spot rates from Far East to North Europe are up 62% since early December 2023, just before escalation in the Red Sea, while average spot rates to US East Coast – another trade that would ordinarily transit the Suez Canal – are up a staggering 165%, analysts pointed out.

KARMOL, a joint venture between Karpowership and Japan’s MOL, has named its latest Floating Storage and Regasification Unit (FSRU) at Seatrium’s yard in Singapore. The four conversions include Karmol LNGT Powership Africa, Karmol LNGT Powership Asia and Karmol LNGT Powership Europe.

The contract strengthens Seatrium’s position as a leader in the highly specialised FSRU conversion market. Works entail the instalment of a regasification skid and supporting systems such as cargo, utility, spread-mooring, offloading, electrical and automation.

KARMOL LNGT Powership Africa (ex-Dwiputra, built 1994) arrived off Dakar, Senegal, in June 2021. The vessel has a storage capacity of 125,000 cubic meters and a scalable regas capacity of 15 to 300 million standard cubic feet per day (mmscfd), adding to the Turkish company’s global fleet of LNG-to-power solutions.

Karpowership, part of Istanbul-based Karadeniz Holding, has the world’s largest fleet of Powerships with 40 ships and a combined capacity of over 7,500 MW. Earlier this year, the Turkish company contracted MAN Energy Solutions to supply and install 48 dual-fuel engines.

Singapore is at the heart of an evolving regional power grid which is poised to lower the share of LNG-fuelled power generation. If all proposed interconnections get built, they could unlock up to 25 GW of renewable and energy storage capacity worth over $40 billion, Rystad Energy reckons.

Today, over 96% of Singapore’s electricity is generated by burning natural gas which needs to be imported as LNG. Yet, Rystad analysis finds that importing electricity through the regional grid is cost-effective for the city state and could help reduce CO2 emissions by 13 million tons per year.

Higher load factor helps reduce electricity cost

Though CCGT are flexible and reliable in terms of operation, comparing the levelized cost of electricity (LCOE) reveals that electricity imports via ASEAN interconnectors may offer a more cost-effective alternative to building new domestic CCGT capacity. Singapore’s Electricity Market Authority (EMA) current regulatory framework require projects to reach an annual load factor of at least 60% within five years of commercial operation. For project developers there is a strong economic incentive to exceed this target.

Raising the load factor target from 60% to 100% could lower the overall LCOE, as this helps spread transmission costs more equally. This impact is particularly significant in countries such as Malaysia (Sarawak), Cambodia and Vietnam, where long transmission distances amplify cost optimization benefits particularly for hydropower projects

Solar-plus-storage hybrid systems, with optimized direct current/alternating current (DC/AC) configurations and appropriately sized battery energy storage systems (BESS), can already achieve load factors above 90%. By integrating solar and BESS technologies with the necessary backups, these systems can reach the level of reliability required by Singapore’s EMA and could be comparable to other dispatchable energy sources.

“Hybrid systems could deliver lower LCOEs than many in the industry currently anticipate. Singapore, strategically positioned at the heart of this evolving energy system, stands to gain significantly,” said Rystad’s renewables analysts Nevi Cahya Winofa.

First Gen is divesting 60 percent of its Philippine gas business to Prime Infra in a deal worth 500 billion Pesos (US$890m), covering controlling interests in BW Batangas FSRU, the proposed 1.2 GW Santa Maria power plant as well as the Santa Rita, San Sorenzo and Avion power plants (1,597 MW combined).

Santa Maria, a 1,200 MW combined-cycle power plant, will be fuelled via an interim offshore LNG terminal which is also part of the divested assets. Tokyo Gas had been contracted to supply an LNG cargo to First Gen in July 2024 which had been unloaded at the BW Batangas floating storage and regas unit (FSRU).

First Gen confirmed at the time it closed a tender for a cargo by awarding a contract to Tokyo Gas. Similar contracts were signed earlier with Shell Eastern LNG, Trafigura, TotalEnergies Gas and Power Asia and CNOOC Gas and Power Trading. The regasified LNG is designated for the First Gen Clean Energy Complex, comprising the Santa Rita, Avion and San Gabriel power plants.

The 1 GW Santa Maria CCGT used to supply baseload and mid-merit power to the Luzon grid. The Sta. Maria CCGT was initially meant to enter operations by the end of this year or early 2025, but the timeline slipped and First Gen now decided to divest its gas power assets altogether.

Following the sale, Prime Infra will hold the lion’s share of 60% in the Batangas-based gas power plants, with First Gen retaining the remaining 40%. The same equity split will apply to the LNG terminal, while Tokyo Gas of Japan will continue to hold a 20% stake.

Prime Infra already owns Prime Energy, the operator of the vast but depleting Malampaya gas field, which used to be a critical source of fuel for Luzon’s power generation.

First Gen Chairman and CEO Federico Lopez haled the deal as a “major step in our mission to forge collaborative pathways toward a decarbonized and regenerative future.” The partnership is meant to provide First Gen with more financial leeway to pursue its renewable energy projects.

As the largest renewable energy producer of the Philippines, First Gen covers about 18% pf the country’s electricity supply. Both First Gen and the media company ABS-CBN belong to the Lopez group of companies.