LNG

Moon Hussain of Brunei LNG analyses future liquefaction and trade developments in his country and in Asia in general as competition rises

Brunei LNG, the oldest LNG exporter to Asia, plans for the future 35 years after the first of its more than 5,000 delivered cargoes left for Japan.

The company is in the midst of an asset rejuvenation programme, which will extend the longevity of a facility that sent its first cargo to Senboku in Japan in December 1972 and has also been a regular supplier to South Korea.

Fereidun Fesharaki, Chief Executive Officer, FACTS Global Energy, Hawaii

Any regasification project looking for LNG deliveries in 2007-2012 will find there is very little volume left since the majority of liquefaction ventures have sold their planned output.

The next LNG supply push will come in 2012-2015, with possibly supply from Iran and expansions of projects such as Tangguh in Indonesia, Sakhalin in Russia and Gorgon and the Browse Basin in Australia.

John McKay

The creation of an LNG financial derivative and a liquid market for trading a cargo-based contract is a challenge facing an industry which up to now has traded its commodity based solely on the value of pipeline natural gas or crude oil.

International Mercantile Exchange Holdings (IMEX), the developers of an energy bourse in Qatar, is considering creating a derivative to service the spot LNG cargo market and has hired Steve McMillan, former European head of global inter-dealer brokerage GFI, as its Chief Executive.

Karim Nassif, London, and Terry A Pratt, New York

The first public rating by US credit agency Standard & Poor’s of a liquefied natural gas shipping entity was recently accorded to Qatar-based Nakilat Inc.

The rating on Nakilat, a wholly owned subsidiary of Qatar Gas Transport Co. Ltd., was raised following the upgrade of the State of Qatar. Nakilat was rated “A+'”with a stable outlook.

Heinz Kotzot, Charles Durr, David Coyle and Chris Caswell of KBR, Houston, Texas, USA.

As the LNG industry has matured, there is often an inclination to compare the successes and challenges among projects over time. Many publications have fallen into the habit of using a specific cost term of “dollars (USD) per ton of annual LNG production” as an indicator for comparing the engineering and execution skills of owners, licensors and contractors.

This dollar per annual ton benchmark, commonly abbreviated as “dollars per ton” is highly dependent on site specific factors. These factors include the remote nature of the site, local content requirements, design criteria, marine conditions, design practices, and scope differences.

Round up of latest company news

Morten Frisch, Senior Partner, Morten Frisch Consulting, and Carlos Lapuerta, Managing Director, The Brattle Group Ltd.

The winter of 2005/06 was very different in the United States and Europe. The US had some price spikes, but an overall mild winter led to an easing of prices, below levels that had been predicted the previous year.

The most recent forecasts from the US confirm our concerns expressed in earlier work concerning the future market for LNG imports.

Didier Holleaux, Vice President LNG, Gaz de France, Paris, in the first of a three-part series analyses a trading realm weighed down by technical and contractual issues

LNG Transatlantic Arbitrage, the diversion of LNG cargoes from Europe to the US - or the other way round – for a certain higher profit margin makes up only around 25 percent of spot trading and the relative scarcity of such deals is mainly due to technical and contractual issues.

But even when these difficulties are overcome, the significant fixed costs involved, the high volatility of the arbitrage, and its sensitivity to market conditions, means it is a business for the players who have a well-sized and diversified portfolio of LNG supplies.

John McKay

The UK is set to overtake France in LNG regasification capacity before the end of the year as two new import terminals open on schedule, while a new French terminal project has been beset by hold-ups that have led to its inauguration being delayed by eight months.

Europe’s three newest terminals will boost regasification capacity by almost 19 million tonnes per annum and increase Atlantic Basin competition for cargo diversions between France and the UK on the one hand, and Europe and the US on the other.

The Fos Cavaou terminal, being developed by Gaz de France and French energy major Total, is located at Fas Cavaou in the Autonomous Port of Marseilles, and was originally scheduled to be in commercial operation by just after mid-2007.

A round-up of latest events, company and industry news