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Opinion

By CS LNG, Dec 10 2018 09:15AM

1. THE WORLD CROWNED NEW LNG EXPORT AND IMPORT CHAMPS IN NOVEMBER

The reigns of Qatar as the world’s biggest seller of liquefied natural gas and Japan as the biggest buyer have come to an end. Well, for one month at least. In November, Australia was the biggest exporter and China the biggest importer, according to Kpler, an energy research firm that focuses on ship-tracking data. Australia shipped out 6.55 million tons during the month, compared to 6.27 million for Qatar. The start-up of new Australian projects like Inpex Corp.’s Ichthys LNG have boosted the country’s production capacity this year as it nears the end of a $200 billion construction boom. China took in 6.56 million tons in November, a 43 percent jump from October, while Japan imported 6.39 million tons, Kpler said in an emailed report. China’s LNG imports have surged in the past two years amid government efforts to clear urban smog by replacing coal boilers with natural gas burners. Chinese buyers also wanted to build up stockpiles of the fuel ahead of winter heating season to avoid a repeat of last year’s gas shortages. The changes underscore the shifting dynamics in the LNG industry. Among producers, Qatar is undertaking a major expansion project as it competes with growing output from Australia, North America and Russia. Global import growth is expected to be dominated by China and new, smaller markets such as Pakistan and Thailand as traditional buyers like Japan see their needs plateau. [Source: Bloomberg 06/12/2018]


CS LNG comment: Bloomberg has to be American as only Americans can relate to the “world” as US centric! Just look at the baseball World Series where only US teams compete! LNG has finally gone global, but does it really matter who is the biggest LNG producer? The article should be focused on who is the cheapest producer.

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2. KAWASAKI TARGETS ASIA WITH FLOATING POWER PLANTS USING LNG AS FUEL AND COSTING $175M Kawasaki Heavy Industries of Japan has completed the development of a floating, gas-fired power plant to operate with LNG deliveries and aimed at Southeast Asia with its many islands and isolated communities unable to receive pipeline gas supplies. Kawasaki is aiming to sell the ships to customers such as power companies in the fast-growing Asia economies where infrastructure remains underdeveloped and at a time when LNG supplies are plentiful in the region. “The vessel is the first of its kind able to generate 100,000 kilowatts of electricity,” stated Kawasaki. The power plant is designed to accept LNG supplies and is on a barge measuring about 100 metres in length. “The barge is equipped with generators, fuel tanks to store the liquefied natural gas that fires them, and power distribution equipment,” said Kawasaki. The vessel will be assembled at a shipyard, towed to where it is needed and anchored to the sea floor. “By putting the ship near where consumers are, power transmission distances can be shortened,” the company pointed out. Equipped with a high-efficiency gas turbine, the ship can generate between 30,000 kW and 160,000 kW of electricity, enough to supply power to between 100,000 and 160,000 homes. “It will sell for around 20 billion yen ($175 million). Kawasaki Heavy's system will include a small fueling vessel, taking advantage of the company's skills in building LNG tankers,” said Kawasaki. “The gas-fired, floating power plant is 10 percent more efficient than a comparably sized coal-powered or oil-fired plant,” it added. Kawasaki said the plants required about four years each to build, though they can go online more quickly than land-based facilities because it requires almost no civil engineering. “This will allow utilities to recoup their costs more quickly,” the company added. [Source: LNG Journal 06/12/2018]


CS LNG comment: The future of LNG? For sure: we have gone from discharging liquid from conventional ships to discharging gas from FSRU so why not electricity to markets that only want power not gas.

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3. NEWBUILDS DRIVE DOWN SPOT RATES FOR LNG CARRIERS

Charter rates for LNG tankers are beginning to fall from 2018 highs that reached as much as US$195,000 a day, as more vessels come down the slipway and expand the global fleet. In a sharp drop, rates had declined at the end of November to around US$160,000 a day, according to Reuters. One shipbroker said the spot rate in early December for a newbuild vessel was as low as US$140,000 a day because more vessels were becoming available on the charter market. And it’s possible the rate could fall further, industry sources said, with up to 10 LNG carriers coming on the spot charter market during December as floating cargoes are unloaded. Rates are also volatile, with big troughs between the highs and lows. In June, for example, they ran at around US$90,000 a day in the Atlantic basin and at US$70,000 a day in the Pacific, according to energy consultant Wood Mackenzie. LNG charter rates closely reflect the spot LNG trade, usually following the price of the super-cooled gas. As Reuters explained, “[the price] has fallen since September due to sluggish demand from Asian buyers.” There is also a close relationship between charter rates and tanker movements. Reuters added “Due to inflated shipping rates, not many spot Atlantic cargoes travelled east in recent months. Some companies had to arrange cargo swaps in order to reduce costs.” And explaining the fewer movements lately between the Atlantic and the Pacific basin, one LNG trader told Reuters “Shipping rates are very high [so] there is not much room for work at the moment.” However, it is expected that most of the demand for LNG shipments in early 2019 will come out of Asia Pacific where ExxonMobil, BHP and Australia Pacific LNG will be chartering vessels to load up from Australia-based plants and sail for gas-hungry Asian markets, in particular China which has become the world’s biggest buyer of LNG. Although charter rates have been falling, they are still well above those applying in 2017. In Q1 2017 they averaged below US$100,000 a day. Meantime the global fleet of LNG carriers will continue to grow. At last count, in mid-September, no less than 33 new vessels had been ordered in 2018 so far, according to Wood Mackenzie’s principal analyst for LNG shipping and trade, Andrew Buckland. That compares with 19 in 2017 and just six in 2016. New vessels are hitting the water faster than ever before. At the end of Q3 2018, 36 tankers had been added to the global fleet of LNG carriers, with three being scrapped. Another 22 are due for delivery before the end of 2018. Sounding a cautionary note, Mr Buckland said “Owners need to be careful they don’t over-order. There is still a huge number of ships ordered in the 2011-2014 LNG newbuilding boom to be delivered to the fleet. And there is a long history of new ships arriving before new supply.” On the bright side, he added that there is a new wave of LNG supply projects coming on stream between now and 2020, most of which will require the gas to be shipped. Also, terminals are opening at a rapid rate, for instance in China, which will facilitate deliveries. The steady stream of orders for new LNG carriers is largely attributable to falling construction prices. “In real terms newbuilding prices have never been lower [and they] look even more attractive when you consider how much more you get for your money with the latest ship designs,” Mr Buckland pointed out. “The temptation for owners is to order sooner rather than later while the newbuilding price remains low.” The newbuilds are so much more advanced in terms of design and technology that they are making ships ordered even three or four years ago outdated, Mr Buckland explained. That is especially true of propulsion. The new generation of gas-injection, slow-speed engines now offers fuel savings of over 20 tonnes a day compared with even the latest dual-fuel diesel and tri-fuel diesel-electric engines. The savings over the older steam-powered ships are even bigger – up to 75 tonnes a day. [Source: LNG World Shipping 06/12/2018]


CS LNG comment: What goes up has to come down and that has always been the case for shipping rates. And do we need inane comments from WoodMac that the stellar rates have fallen. Those rates were unsustainable and anyone with any LNG experience knew that. A more sensible comment from WoodMac should have been that new builds drive down values of older tonnage.

By CS LNG, Nov 29 2018 01:26PM

1. TANKERS GOING NOWHERE INDICATE LNG MARKET BECOMING MORE LIKE OIL

Some liquefied natural gas sellers aren’t in a rush to deliver their multimillion-dollar cargoes. With uncertain demand and no signs yet of bitter cold, some traders are preferring to keep their fuel inside vessels in the hope prices will rise. While the sight of stationary cargoes might not be unusual in the more-established oil market, technology has only recently made it feasible to keep LNG at minus 162 degrees Celsius for longer periods. “There are cargoes parked close to Singapore, apparently waiting for the right market conditions to be delivered,” said Dumitru Dediu, an associate partner at McKinsey Energy Insights, which monitors LNG flows. “Some of the players are speculating.” There are about 30 vessels currently flagged as floating storage globally, two-thirds of which are in Asia, the biggest LNG consuming region, according to cargo-tracking company Kpler SAS. That’s still a fraction of a global fleet of more than 500 vessels. The practice of using tankers as floating storage is common in the more developed oil market. It happens during periods of contango -- when storage on land is used up, immediate demand is weak and the cost for later delivery is high enough to cover the expense of storing crude on a tanker. Trading houses and oil majors from Vitol Group and Glencore Plc to BP Plc and Royal Dutch Shell Plc collectively made billions of dollars from 2008 to 2009 stockpiling crude at sea. At the peak of the floating storage spree, sheltered anchorages in the North Sea, the Persian Gulf, the Singapore Strait and off South Africa each hosted dozens of supertankers. LNG, the fastest-growing fossil fuel, is starting to resemble the oil market in that sense. Holding it back is that some LNG is lost to keep it cool during its journey, known as boil off, and that most sales are through traditional long-term contracts without destination flexibility. But that’s rapidly changing. Modern tankers are capable of serving as floating storage, especially for markets such as China that lack that capacity. They have lower boil-off rates, bigger capacity and re-liquefaction units on board to keep the cargoes cool. If a cold snap suddenly comes and the spot price rises, a well-diversified player storing fuel may boost earnings by $2 million to $5 million, despite current high shipping rates and boil off, Dediu said. “Playing contango on LNG has not been traditionally popular, but given the price volatility for gas we do see a lot more players doing this,” he said. “With higher volatility and given the unpredictable winter weather patterns, from one week to another, it might be a real option for some of the players.”

[Source: Bloomberg 27/11/2018]

CS LNG comment: The problem with floating storage on LNG ships especially the older ones, is that the cargo is boiling off so every 10 days you are losing about 1%. The question is though was this a planned move by the traders or a reaction to the lack of market demand in the Asian area?

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2. AFRICA LNG SET TO SURGE AS FLOATING PROJECTS CUT TIME TO MARKET

Africa is on the cusp of a liquefied natural gas boom. That’s in part due to accelerating global demand. It’s also down to a fast-track method of getting the fuel to market. Kosmos Energy Ltd.’s project in Mauritania and Senegal, set to get the go-ahead next month, will use a floating vessel to convert gas from the offshore Tortue field into LNG. Such units, which can be built out of existing tankers, reduce the time from exploration to export, helping to lure investment and boost enthusiasm for gas development in a region traditionally focused on oil. “Africa is the hot spot for floating LNG,’’ said Lucas Schmitt, a senior gas analyst at consultants Wood Mackenzie Ltd. “Confidence in floating facilities is firming up.’’ Kosmos and partner BP Plc are targeting first gas from Tortue by 2022, bringing it online four years after Africa’s first floating LNG facility -- a Cameroonian project that started output earlier this year. The last bureaucratic steps are on track and a final investment decision is just “weeks away,” Kosmos spokesman Thomas Golembeski said last Wednesday. Rising gas consumption in Asia is driving growth in global demand. That’s prompted a change in attitudes to African gas finds since the Tortue field was discovered in 2015, with developers now keen to tap the fuel rather than sidestepping discoveries in favor of oil. The Tortue discovery “was not met with jubilant praise,” said Tracey Henderson, senior vice president of exploration at Dallas-based Kosmos. “You went from ‘gas is valueless,’ to everyone trying to figure out how to monetize it.” The project is just one of a slew of African LNG ventures expected to spur gas production on the continent. The expansion could see Africa’s total LNG output capacity almost double by 2030, according to consultants Rystad Energy SA.

]Source: Bloomberg 27/11/2018]

CS LNG comment: Dream on! And floating does not cut time to market: just ask Shell about Prelude!

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3. BULGARIA TO TAKE STAKE IN PROPOSED ALEXANDROUPOLIS LNG TERMINAL

Bulgaria's efforts to diversify its sources of natural gas deliveries includes plans to take a minority stake in the proposed LNG terminal near Alexandroupolis, in northern Greece, Bulgarian Energy Minister Temenouzhka Petkova said on November 26. Speaking at a round-table discussion on gas market integration and Bulgaria's priorities for improving energy security in the region, Petkova said that LNG offered the opportunity of further diversification of sources, on top of the one billion cubic metres of gas from Azerbaijan, for which Bulgaria already signed a contract several years ago. "When we talk about the Greece-Bulgaria [gas] inter-connector, we must note the importance of another opportunity for diversification of gas deliveries and that is our participation in the Alexandroupolis terminal," Petkova said. "It is a project of extreme importance to the entire region. It is in full synergy with the Greece-Bulgaria inter-connector and that is why the Bulgarian Government discussed the prospect and took the decision to participate in this project as a shareholder, so that we have the opportunity for gas deliveries from various LNG sources, including the US, Qatar and Algeria," she said. The current plans envision Bulgaria's state-owned gas grid operator becoming a minority shareholder in the Alexandroupolis terminal, although Petkova did not mention how large a stake it might take. Bulgarian Parliament energy committee chairperson Delyan Dobrev told the same round-table that a motion to approve Bulgartransgaz's participation as a shareholder in the terminal would be put on the National Assembly's agenda later this week. Greek ambassador to Bulgaria Grigorios Vassiloconstandakis told the round-table that securing diversified energy sources for the entire region was one of Greece's main priorities, with the vertical gas corridor, of which the Greece-Bulgaria inter-connector was part, set to deliver gas to Bulgaria, Romania, Serbia, Hungary and other Central European countries. US ambassador in Sofia Eric Rubin also emphasised the importance of diversified energy sources, re-iterating his country's support for Bulgaria's efforts in that sense. The LNG floating terminal off the Greek coast near Alexandroupolis, developed by gas company Gastrade, is currently undergoing the market test process. Gastrade envisions construction on the 5.5 billion cubic metres a year terminal starting in the second quarter of 2019 and commercial operations launching before the end of 2020.

[Source: The Sofia Globe 20/11/2018]

CS LNG comment: Blind leading the blind? No doubt Brussels will throw more money at this unnecessary project.

By CS LNG, Nov 29 2018 09:15AM

1. FLORIDA LNG PROJECT ADVANCES WITH PLANS TO SUPPLY CARIBBEAN POWER AND MARITIME MARKETS

The Federal Energy Regulatory Commission has prepared a draft environmental impact statement for the mid-scale Jacksonville project in Florida proposed by Eagle LNG Partners to supply regional power and fuel markets. Eagle LNG is planning its facility for the north bank of the St. Johns River in Jacksonville and would comprise about 1mtpa of LNG output from three small liquefaction Trains, each was capacity of around 330,000 tonnes. One LNG storage tank is also proposed with a net capacity of 45,000cu m. The marine facilities would have a loading platform and two liquid loading arms capable of docking and mooring a range of LNG vessels with cargo capacity of up to 45,000cu m. LNG truck-loading facilities would have a dual bay capable of handling between 260 and 520 trucks per year. Eagle has said that the facility would serve both domestic and international markets. The company will load the fuel onto ocean-going vessels for export to countries in the Caribbean where heavy fuel oil or diesel is currently in use for power generation. It will also supply the domestic marine fuel market. Feed-gas would be delivered to the Jacksonville plant via a 120-foot-long non-jurisdictional pipeline that would be constructed, owned and operated by Peoples Gas, a subsidiary of Teco Energy. “We determined that construction and operation of the project would result in some limited adverse environmental impacts, but impacts would not be significant with the implementation of Eagle LNG’s proposed and our recommended mitigation measures,” said a FERC statement. The regulator added that its decision was based on a review of the information provided by Eagle and further developed from data requests, field investigations, scoping and contacts with federal, state and local agencies. “Although many factors were considered in this determination, the principal reasons are: the LNG terminal site would be in an area currently zoned for industrial use and is along an existing, maintained ship channel in the St. Johns River,” the FERC stated. The draft EIS comment period closes on January 7, 2019. “The Commissioners will take into consideration the FERC environmental staff’s recommendations when they make a decision on the project,” the agency added.

[Source: LNG Journal 19/11/2018]

CS LNG comment: Why would FERC encourage an LNG project in the “sunshine state” when there are enough projects in the “industrial redneck states” in the Gulf?

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2. SAGA LNG ORDERING UP TO FOUR LNG CARRIERS AT CMHI Saga LNG Shipping, the LNG shipping unit controlled by Landmark Capital, is going to order up to four 80,000cu m LNG carriers at China Merchants Heavy Industry (CMHI). The contract will include a firm order for two vessels, with options for another two. An official at Saga LNG confirmed to Splash that the company has signed an MOU with CMHI for the shipbuilding contract. Currently the final design and contract work are under way and an official order will be placed in the first quarter of 2019. Saga LNG is expected to take delivery its first ever ship, a 27,000cu m LNG carrier from, CMHI’s Jiangsu yard early next year.

[Source: Splash 24/7 16/11/2018]

CS LNG comment: In the UK Saga is a holiday firm for over 60’s so having an image of zimmer framed LNG carriers is hard to shake! But it is just an MOU.

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3. TWO THIRDS OF LNG ORDERS PLACED THIS YEAR ARE SPECULATIVE

Two thirds of the LNG orders placed this year have been speculative, according to Norwegian owner Awilco LNG, in a sign of the changing scene in this historically conservative sector. A total of 42 newbuilding orders have been placed year to date of which about 27 are assumed speculative, Awilco LNG stated in its latest quarterly report. Historically the LNG sector had a very small spot market, with the hugely expensive newbuilds tending to be ordered with long term contracts already secured. However, with the entrance of many new players in recent years the ratio of long term versus spot has changed considerably in the LNG trades. The current orderbook for LNG vessels above 100,000 cu m – excluding FSRUs and FLNGs – is 93 vessels, of which 37 are potentially available for contract, Awilco LNG stated. “Although the orderbook represents almost 20% of the fleet, market analysts expect the 91mtpa of new LNG production scheduled to start up from 2018 to 2021 to require more vessels than the current available tonnage and orderbook during periods of high ton-mile demand,” the Norwegian owner stated yesterday.

[Source: Splash 24/7 16/11/2018]

CS LNG comment: And that is why rates will not stay in 6 figures!