LNG

U.S pipeline operator William has commissioned two Transco projects – the Southeast Energy Connector in Alabama and the Texas to Louisiana Energy Pathway along the Gulf Coast. The fully contracted expansions help deliver additional volumes to LNG exports facilities along the Gulf Coast.

Production in the Permian Shale, one of the largest U.S. unconventional oil and gas plays, is set to rise as the Matterhorn Express Pipeline ramps up facilitating greater gas flows to liquefaction facilities along the Gulf Coast.

Chevron has sold a 70% stake in its East Texas gas assets to an affiliate of TG Natural Resources (TGNR), owned by Tokyo Gas and Castellon Commodities International for $525 million, with $75 million paid in cash and $450 million as capital carry to fund Chevron’s Haynesville development.

The transaction is anticipated to generate over $1.2 billion in value to Chevron at current Henry Hub prices, to US oil major said in a statement.

“This transaction supports Chevron’s previously announced plans to divest $10-15 billion of assets by 2028 in order to optimize its global energy portfolio,” the US oil major said in a statement.

Upon closure of the deal, Chevron will retain a 30% non-operated working interest in a joint venture with TGNR and an overriding royalty interest in the assets.

South Korean utility SK GA Ulsan has started operations of a 1.2 GW combined-cycle power station that can run on LNG and liquefied petroleum gas (LPG). Dual-fuel capability allows the plant operator to optimise fuel costs while guaranteeing stable electricity supply for 2.8 million households in the Korean port city.

Taiwan's state-owned energy company CPC Corp is considering investing into the Alaska LNG export project, having signed an initial offtake agreement with AGDC to buy LNG from the venture. The deal was signed on a tour of Alaska’s Governor Mike Dunleavy across Asia, seeking additional investors for the $44 billion Alaska LNG project.

Cost overruns and limited firm offtake had for long delayed the Alaska LNG venture – but now the project became a priority of the US Trump administration. Gov. Dunleavy and senior officials from Alaska Gasline Development Corporation (AGDC), a state entity developing the liquefaction project, are currently touring Asia with the aim of securing firm offtake agreements and private investment.

Apart from Taiwan, utility buyers in Japan and South Korea have also been approached to step up their LNG imports as the United States seeks to balance its trade deficit with these countries.

The letter of intent (LoI), signed by CPC Corp, is not binding but could sway further Asian LNG buyers to sign on for firm offtake of Alaska LNG. As part of the LoI deal, CPC wants to invest in the export project though the exact amount is still subject to discussions.

Firm offtake its vital for project developers to reach financial close on the $44 billion Alaska LNG project, one of the most expensive liquefaction projects in the world. The venture has been government funded after ExxonMobil, ConocoPhillips, and BP backed out in 2016 citing cost concerns and headwinds from environmentalists.

Phase 1 of Alaska LNG focuses on construction of the pipeline to deliver North Slope gas to interior and southcentral Alaska and resolve energy shortages on Cook Inlet. Infrastructure to liquefy the gas and export it will be developed in Alaska LNG Phase 2.

Feedgas for Alaska LNG is meant to be sourced from Prudhoe Bay and Point Thomson fields. These fields will produce some 3.5 billion cubic feet of gas per day. The proposed liquefaction terminal in Nikiski, southwest of Anchorage is designed to process, store and transport up to 20 million tons per year (mtpa) of LNG.

Realisation of the gas pipeline, for starters, has gained traction after Glenfarne in January teamed up with AGDC agreeing to jointly Alaska Export Facility, Pipeline, and a Carbon Capture facility. Moreover, Glenfarne and ENSTAR Natural Gas Company also have agreed to advance an LNG import project utilizing the Alaska LNG export site.

Should the massive Alaska LNG venture go ahead, it would be Taiwan’s geographically closest source of US LNG given that cargoes from Alaska do not need to transit the Panama Canal to reach Asia.

Egyptian Natural Gas Holding Company (EGAS) is understood to have set a $14/MMBtu cap on spot LNG purchases this summer in response to rising prices in the Atlantic Basin. An additional $2/MMBtu premium is being offered if vendors agree to get payment deferred by one year.

China has suspended LNG imports from the United States for 40 days in a tit-for-tat trade war, forcing traders to reroute shipments. No US LNG cargo is currently on route to China, Kpler data shows, and China Resources Gas International’s just secured alternative supply from Australia through a deal with Woodside.

Venture Global is headed towards taking a final investment decision (FID) for its Calcasieu Pass 2 project after receving a critical export authorization. The terminal’s initial phase has firm offtake agreements with ExxonMobil, Chevron, New Fortress Energy, JERA, China Gas, Inpex, SEFE and EnBW.

Financial markets do not trust the Kremlin’s agreement to a limited ceasefire in the war in Ukraine: Prices for oil, natural gas and gold prices increased on the news, even though the ceasefire is meant to put an end to attacks on energy and infrastructure for 30 days.

The agreement, brokered by the U.S. President Donald Trump initiated negotiations with his counterpart Vladimir Putin during a nearly two-hour phone call clearly disappointed energy traders: Many had expected Trump to find a “quick resolution” of the war as the precondition of an eventual restart of Russian gas transits through Ukraine prior to this winter.

Market’s immediate reaction was disappointment, and prices mirrored that: After falling during the day, yesterday oil prices increased by more than $0.5 per barrel on the news. 

Similarly, gold prices increased by $3 per ounce, while TTF front-month prices also went up from €43.50 to €43.64 per megawatt-hour (MWh).

“The likelihood of an imminent increase in Russian oil and gas supplies in the market has decreased,” commented Rystad’s head of geopolitical analysis, Jorge León. Instead, he a permanent peace agreement will now have to be set out “through small steps over a longer period.”

Russian gas exports to Europe ‘unlikely to return’

Analysts agree that Russian gas exports to Europe are “unlikely to return,” and some hedge funds have cut positions at the Dutch TTF after amplifying price swings increased their value at risk (VaR). Technical buying will restart, Energy Aspects reckons, once prices TTF front-month fall to the low €40s per MWh.

Expiry on a gas transit contract between Russia’s Gazprom and Naftogaz Ukrainy has left Europe short of 15.4 bcm per year of Russian pipeline gas. A painful shortfall, yet a far cry from the 174 billion cubic metres per year (bcm/y) that Gazprom had exported to Europe exported five years ago.

Efforts of the European Commission to bridge the gap have diverted away from Russia and focus on the Caspian region instead. Azerbaijan’s President Ilham Aliyev promised last autumn the country will raise natural gas exports to the European Union this year to 13 bcm and 20 bcm/y potentially by 2027, though analysts caution bottlenecks on pipeline transit capacity could lead to a lengthy ramp up.

Turkey’s TSO Botas and Bulgartansgas also increased capacity at the Strandzha 1 entry point, allowing for larger flows from the Caspian Sea region. Botas’ role in facilitating Europe’s energy security is gaining ground: If Azeri or Turkmen gas supplies were absent, the EU could fall short of nearly 7.2 Bcm of gas per year and would need resort to importing LNG at a higher price to avert supply risks.

Australian oil and gas major Woodside has signed its first standalone, term LNG deal with China Resources which agreed to offtake 0.6 mtpa on a delivered basis starting from 2027.