By CS LNG, Oct 1 2018 07:40AM
1. SHELL’S $31 BILLION LNG CANADA PROJECT MOVES AHEAD WITH CHINA APPROVAL
Royal Dutch Shell Plc’s Chinese partner in a liquefied natural gas venture in western Canada approved its share of the investment, pushing the C$40 billion ($31 billion) development one step closer to a final approval. The board of PetroChina Co., the nation’s largest oil and gas company, approved its $3.46 billion share of the LNG Canada project, the company said in a filing to the Hong Kong stock exchange Friday. The Beijing-based company holds 15 percent of the development. All the partners, including Malaysia’s Petroliam Nasional Bhd, Japan’s Mitsubishi Corp. and Korea Gas Corp., need to make similar moves for the venture to approve a final investment decision. Shell didn’t immediately respond to requests for comment. "PetroChina’s board approving their portion of funding for the project is a clear sign that the project is sprinting toward FID now," Bloomberg NEF analyst Fauziah Marzuki said by email. LNG Canada would be Canada’s largest-ever infrastructure project. With the capacity to eventually export as much as 26mtpa, primarily to Asia, it would also be the biggest new LNG terminal to be sanctioned in years. The decision may be the start of a wave of investments for major gas export projects after a supply glut and a price collapse forced the three-year hiatus. Booming demand growth means that 11 projects, including LNG Canada, are likely to receive final investment decisions by the end of 2019, according to BNEF. Shell and its partners are set to announce an FID on the project as soon as next week, Bloomberg News reported Wednesday. Preparations for an October 5 announcement followed by an LNG Canada event at a local golf club the next day are underway in Kitimat, British Columbia, the site of the proposed project, said people with direct knowledge of the activities, who asked not to be identified. [Source: Bloomberg 28/09/2018]
CS LNG comment: If this FID goes ahead it will be THE killer blow to US Gulf ambitions of capturing Asian market. If we look at the shareholders we can see where the market is and how the discount works: equity always wins!
2. ARGENTINA AIMS TO START CONSTRUCTION OF FIRST LNG EXPORT TERMINAL IN 2019
Argentina's government wants construction of the country's first LNG liquefaction terminal to start in the second half of 2019, making it possible to export an increasing surplus of production from the giant Vaca Muerta shale play, an official said Thursday. "We are confident that the decision to push the button on this project will come after the next presidential election in October 2019," Daniel Dreizzen, the country's secretary of energy planning, said at a Moody's finance seminar in Buenos Aires. He said companies have brought forward proposals for building the terminal, which will be evaluated. Earlier this month, the country's biggest gas transporter, Transportadora de Gas del Sur (TGS), and Texas-based Excelerate Energy, which operates two floating LNG import terminals in Argentina, agreed to study the possibility of a liquefaction project in Buenos Aires province. They said they would present the proposal to the government by the end of this year for evaluation. But if no company is ready to advance by next year, Dreizzen said the government will hold an auction to find a builder and operator of the project. The terminal will have six trains for exporting supplies and should start operations by 2023, with the capacity to ship an initial 40 million cu m/d from Vaca Muerta, Dreizzen told S&P Global Platts on the sidelines of the event. The likely spot for the terminal will be in Bahia Blanca, a deep-water port in southern Buenos Aires province, where it will be fed with gas from Vaca Muerta in the southwestern Neuquen Basin, he added. The gas for export will be delivered over a dedicated pipeline under a contract that guarantees it can't be redirected to meet domestic demand, providing more confidence about the supply stability for the project's investors, Dreizzen said. [Source: Platts 28/09/2018]
CS LNG comment: Has this guy spent too much time in Columbia with over exposure to local ‘talcum powder’? They can’t even pay for the import cargoes on time let alone afford to invest in liquefaction: or is he thinking if they produce LNG they won’t have to import the product!
3. QATAR'S LNG PLANS GET EVEN BIGGER AS U.S. TRADE WAR OPENS NEW OPPORTUNITY
Qatar Petroleum is primed to boost its natural gas output by adding a fourth liquefied natural gas (LNG) production line to raise capacity from the North Field, as it aims to steal another march on its competitors, particularly emerging U.S. exporters. U.S. LNG is one of Qatar’s major competitors for new supply development. But U.S. President Donald Trump is engaged in a tariff war with China, the world’s largest growth market for LNG. “Qatar could see this as an opportunity. It has recently signed a contract doubling the volumes that it will sell to PetroChina and is likely to be looking at further opportunities to supply the Chinese market,” said Giles Farrer, an expert in global gas and LNG supply at consultancy Wood Mackenzie. The world’s top supplier of the super-cooled gas said on 26 September that output from the field, which is shared with Iran, will rise from 77 million to 110 million tonnes of LNG per year. Qatar is well-placed to compete with any other LNG supplier because it has very low LNG production costs due to the co-production of valuable natural gas liquids from the North Field. “Based on the good results obtained through recent additional appraisal and testing, we have decided to add a fourth LNG mega train,” said Qatar Petroleum’s chief executive, Saad Sherida al-Kaabi, in a statement. Last year, Qatar announced it was planning to develop additional gas from the North Field and build three new LNG mega-trains. Qatar could probably add an additional train without significant additions to capital investment, said Farrer. Wood Mackenzie estimates capital expenditure for the three mega-trains previously announced was around $24 billion, covering both the upstream and liquefaction parts of the project. With worldwide activity in the oil and gas industry still low, now is a good time in the cost cycle to invest in a new project, added Farrer. “There are likely to be economies of scale from developing a bigger project, particularly in light of the promising appraisal results at the North Field…these economies of scale will make what is already the most competitive new LNG project worldwide even cheaper.” “Since Qatar announced its initial plan, the market environment has improved. Forecasts of future oil prices are higher, and forecasts of future LNG demand have grown stronger, particularly in Europe and China. Having already taken the decision to compete for LNG market share, Qatar is doubling down, making sure that it will be fully able to benefit from LNG market upside,” he added.
[Source: Forbes 26/09/2018]
CS LNG comment: Now this is a real story and one that supports our belief that US Gulf exports are not economically viable for Asian trade. Qatar will use US exports to hit Europe leaving Qatar exports to reach Asia.