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By CS LNG, Apr 27 2020 06:31PM

UNCERTAINTY OVER PAPUA LNG TO GO-AHEAD

In its external market conditions assessment, Kina Securities Limited (KSL) reports an air of uncertainty regarding the proceeding of Papua LNG project citing P’Nyang’s no deal outcome a key to the sentiment. This was in its 2019 Annual report released last week Friday on the PNG National Stock Exchange. This is an important reason for our economic view of the immediate future. This large scale LNG project would have seen multi USD billion investments into PNG over a number of years and was a key driver of confidence – which has fallen since the negotiations, concluded unsuccessfully. There is an element of uncertainty as to whether the Papua LNG project (which is the second leg of the overall LNG project) will now go ahead. It added the best case alternative would be a redesign of what were to be shared facilities to support P’Nyang and Papua LNG, to allow only the Papua LNG project to proceed. This will delay the development of Papua LNG, however the parties are reengaging to see if an acceptable solution can be found. The assessment, however, stated a reassuring fact is that in the 2020 National Budget, the government had not allowed for revenues from these gas projects in its revenue track so there will not be additional fiscal downside from the project not proceeding. Notwithstanding this, the difficulties experienced by the economy and business in general will not be helped by this development. We expect that the short to medium term outlook will be a period of ongoing reform and adjustment as the government puts in place initiatives to reduce the fiscal deficit over time, while simultaneously building on foundational work in areas such as infrastructure spending and value added processing to build the manufacturing base of the country. Priority outcomes for government spending in 2020 include rightsizing the public service and laying the groundwork for future infrastructure investments in economic corridors, it added.

Source: Post Courier 20/04/2020


CS LNG comment: Of course, there is uncertainty given the current price collapse and no demand not to mention no buyer willing to commit to a 20-year SPA.


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CHINA RECEIVES FIRST US LNG SHIPMENT SINCE MARCH 2019

A BP-chartered tanker delivered the first US LNG cargo to China in 13 months on Monday, after tariff exemptions that followed an initial trade agreement between the two countries made the shipment more economical. The resumption of US deliveries to China -- the last one was in March 2019 -- could provide more optionality for the market heading into summer, especially as European storage fills up. How much volume China can absorb is uncertain, as Northeast Asian spot LNG prices remain low and the potential for a second wave of the virus in the region looms. Reports of more cargo cancellations and deferments and an extension of the lockdown in India due to the virus have further dampened sentiment. In the near-term, at least, the Maran Gas Vergina's arrival is positive for US exporters, which have been eager to serve the world's second-largest LNG importer behind Japan. The Greek-owned tanker, which loaded at Freeport LNG in Texas last month, pulled alongside the pier for the port city of Tianjin, on China's northern coast, around 0130 GMT on Monday. The top LNG receiving port in China is home to regasification facilities operated by China National Offshore Oil Corp. and Sinopec. Earlier this year, state-owned distributor Beijing Gas won government approval to build a 5mtpa LNG receiving terminal in Tianjin. At least five other tankers that loaded on the US Gulf Coast are headed to China as of Sunday, Platts cFlow showed. Three of them showed Tianjin as their captain's destination -- the Palu LNG, SK Resolute and Hoegh Giant. The captain's destination for the Cool Explorer and Arwa Sprit doesn't currently specify a port in China. The RWE-chartered Palu LNG, which loaded at Cheniere Energy's Corpus Christi Liquefaction in Texas, is expected to arrive April 22, followed on April 24 by the Cool Explorer, which is under charter to Cheniere and loaded at the exporter's Sabine Pass terminal in Louisiana. The Total-chartered SK Resolute, which loaded at Sempra Energy's Cameron LNG in Louisiana, is scheduled to arrive in China on April 29, while the Naturgy-chartered Hoegh Giant, which loaded at Sabine Pass, is set to arrive on May 5. The Cheniere-chartered Arwa Spirit, which loaded at Corpus Christi Liquefaction, showed a scheduled arrival in China on May 8, according to Platts cFlow. US LNG exporters are preparing to release their financial results for the January-March quarter and their outlooks for the rest of the year. The reports will give the market a clearer idea of the challenges they may face in placing cargoes in the months ahead. In the fall of 2018, China imposed tariffs of 10% on imports of US LNG in retaliation for duties the US placed on imports of Chinese goods. The tit-for-tat tariffs were raised to 25% by Beijing in June 2019. Then in January, China promised to increase its energy purchases from the US by $52.4 billion over the next two years, as part of the initial trade agreement that Beijing and Washington signed. The purchases are to include LNG. The following month, China said it would begin offering a limited number of tariff exemptions on certain commodities, including LNG, based on volume and market demand.

Source: S&P Global Platts 20/04/2020


CS LNG comment: It would be interesting to see the real US$ loss figure for these cargoes!


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TOTAL SHUTS DOWN MOZAMBIQUE LNG ON OUTBREAK

Total has shutdown work at Mozambique LNG in order to manage an outbreak of coronavirus at the site in Cabo Delgado. A first case was detected on April 1, Total said. Since then a large number of workers have been tested for the virus and a “small proportion” have tested positive. In order to reduce the risk of further transmission, Total and its contractors have “progressively moved to temporarily reduce the number of personnel at the project site in collaboration with the Ministry of Health”. For now, the focus of those remaining at the Afungi site will be on security, logistics and the provision of essential services to maintain the camp. Total said it, and its partners, were working to upgrade local medical facilities in the province, with PPE, ventilators and test kits. According to the Mozambique authorities, there are 39 reported cases in the country, as of April 19. In the previous 24 hours, 85 tests were carried out in the last 24 hours, of which four were positive. All four were found in Cabo Delgado, where the ministry is working on an investigation. One case was reported in Afungi and three in the city of Pemba. Mozambique’s cases appear concentrated in the northern province and Maputo, the capital city.

Source: Energy Voice 20/04/2020


CS LNG comment: So, did the ISIS just mingle whilst infected rather than trying to kill people outright?



By CS LNG, Apr 27 2020 06:17PM

AUSTRALIA'S BOOMING LNG INDUSTRY STALLS AFTER FALL IN OIL PRICES AMID CORONAVIRUS

The extraordinary growth in Australia’s liquefied natural gas (LNG) industry, the main cause of recent rises in national greenhouse gas emissions, has stalled indefinitely, with decisions on more than $80bn of investments delayed due to a collapsed oil price sunk by coronavirus and a geopolitical price war. The price of Brent crude oil is less than half what it was in early January, having fallen again on Friday despite the OPEC oil cartel and its allies reaching a supply deal to stop Saudi Arabia and Russia flooding the world with more oil than it can use. The Asian spot price for LNG, which is linked to the oil benchmark, is down about two-thirds in six months. The unprecedented crash had already prompted oil and gas giants to defer investment decisions on projects including Woodside’s massive Burrup Hub expansion off the Western Australian coast and Santos’ $7bn Barossa project 300km north of Darwin. A decision on the first parts of the Burrup Hub expansion, including a $17bn development of the Scarborough gas field, has been pushed to 2021. Calls on Barossa and the largest section of the proposed Burrup Hub, a $30bn development of the untapped Browse gas field involving Woodside, Shell and BP, have been deferred to an unnamed date. In inland gas exploration, Origin Energy has paused exploration drilling for its unconventional gas project in Northern Territory’s Beetaloo Basin. Analysts said while prices were expected to rebound, the pace and scale of recovery were near impossible to forecast and may not reach the level required to justify new LNG investments for years, if at all. Climate activists said an extended delay was likely to make major new investments harder to justify as markets increasingly valued clean energy over fossil fuels. Peter Coleman, Woodside’s chief executive, told The Weekend Australian the industry was facing the worse situation he had seen and indicated the company’s projects were not guaranteed to go ahead. “I would suggest if we’re still sitting here in 12 months in the oil and gas industry in this difficult pricing situation then we’re going to have a fundamentally different industry and a fundamentally different view of how to create value,” he said. David Low, a senior analyst with consultants Wood Mackenzie, said its assessment remained that Scarborough and Barossa projects would be sanctioned next year, but both projects still had challenges to overcome related to ownership structure, and could have their timelines pushed out. “If oil prices are slow to recover, operators could opt to further delay discretionary spend and remain focused on strengthening their balance sheets. This will likely mean further delays for the Australian projects,” Low told The Guardian.

Source: The Guardian 13/04/2020


CS LNG comment: Well, we would award our medal to the Guardian this week (ie if we actually had one!) for what we consider to be actual sensible reporting! DT (aka POTUS, or KOTUS!) might even comment that it was good!



By CS LNG, Apr 10 2020 06:44PM


LONG ROUTE TO ASIA MAY BE THE BEST BET FOR US LNG EXPORTERS IN WEAK MARKET

The most curious aspect of two tankers' current voyage from US Gulf Coast LNG terminals may not be whether their cargoes land in China or somewhere in between -- but, rather, the route they are taking to get there. Heading East toward the Cape of Good Hope, the Total-chartered SK Resolute and Naturgy-chartered Hoegh Giant have avoided the much shorter but pricey passage through the Panama Canal and the currently discounted passage through the Suez Canal. If they eventually unload in East Asia, they will have taken more than a month to get there. Ultra-low international spot prices are forcing offtakers from the US to scrape the barrel for premiums, and that means staying on the water longer in hopes of getting a higher netback in the future. Voyage length for tankers from the US Gulf Coast to East Asia is averaging three more days than during the same period a year ago, S&P Global Platts Analytics data showed. "It essentially becomes floating storage," said Michael Webber, managing partner of investment research firm Webber Research & Advisory. "If the spot pricing is weak and there is contango in the curve, depending on how the pricing is structured, maybe you want to take the time getting there." Taking the eastbound route rather than westbound route to Asia should take nine to 13 days longer, depending on whether the tankers go around Africa or through the Middle East. Tanker day rates have dropped by half from the beginning of the year to $48,000 as of this week, and charters can often lock in better rates. If booked a month ago -- the lengthiest voyage would have cost an extra 22 cents/MMBtu, Platts Analytics data showed. Weak LNG prices due to lower than expected demand, exacerbated by the coronavirus pandemic, means offtakers from the US are willing to absorb the extra cost and the boil-off from the longer voyage. Since January, the voyage length from the Gulf Coast to Asia has been getting consistently longer -- growing 11.4% year over year, or over three days, Platts Analytics data showed. The canal operators are taking notice. The Suez Canal Authority is temporarily offering LNG tankers that load on the US Gulf Coast and deliver to East Asia a rebate of 75% of normal Suez tolls if they pass through the canal, according to a circular on the agency's website. Deliveries through the canal to ports in the Arabian Gulf and in India will get rebates of 35%-55%, the circular said. The offering took effect April 1 and runs through June 30. Gross fees of the Suez and Panama canals are comparable, but with the current rebate for US Gulf Coast cargoes, Egyptian transits offer a major advantage. However, this rebate does not make up for the additional 10-day voyage at an incremental cost of 2.4 cents/day, Platts Analytics data showed. The latest Panama Canal toll structure was approved in September 2019 and is still rolling out, with the last modification to be implemented on May 1. A spokeswoman for the Panama Canal Authority, Jessica De Jesus, wouldn't say specifically whether the operator plans to match the Suez toll rebates. But she did say the canal was expecting to see fewer transits in the coming weeks. "At this time, we're operating in a very fluid environment," De Jesus said. "We anticipate further insight in the days to come."

Source: S&P Global Platts 07/04/2020


CS LNG comment: Of course the long route makes sense when the ships have to pass just about every market en route to China that could offer a better price if a sudden requirement pops up.

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SHELL'S PRELUDE LNG TO KEEP FLARING GAS DURING SHUTDOWN

The Prelude floating LNG facility will continue to burn, or flare, unwanted gas during an extended shutdown of many months adding to its incredibly high initial carbon footprint. Production from Shell's 488m-long showpiece off the Kimberley coast shut down in February and is not expected to recommence until the third quarter of 2020. Boiling Cold understands that Shell has shut-in most of the subsea wells to reduce gas flow, but the Prelude is still receiving more gas than it can consume. The Prelude emitted 2.32 million tonnes of greenhouse gases in the 12 months to June 2019 for just one shipment of LNG. The Prelude first received gas from its subsea wells in December 2019 but has been powered by gas from as early as June 2018 when it received a load of LNG. Boiling Cold asked Shell why the Prelude could not be powered by diesel during the shutdown, as it was before June 2018, to stop flaring. A response was not received. LNG plants are expected to flare more gas than average in the early stages of operation. Still, new facilities generally do not operate for as long as Prelude while producing so little. The excess gas is burnt safely from a flare tower. The carbon dioxide released has a much lower greenhouse gas effect than unburnt methane but reducing flaring as much as possible is regarded as oil and gas industry best practice. The LNG industry's case that its product is a net benefit to climate change rests the emissions saved by consumers burning gas instead of the dirtier fossil fuel coal exceeding the significant carbon emissions from LNG production. A Shell spokesperson said the amount of gas flared each month was now 60% less than when the Prelude commenced operations. "We are committed to further improving performance over time," the spokesperson said. "Shell's policies aim to minimise all types of flaring, managed through annually updated greenhouse gas and energy management plans."

Source: Boiling Cold 05/04/2020


CS LNG comment: This “white elephant” continues to attract attention for the wrong reasons. Maybe a Shell executive could come clean and admit to shareholders that this experiment at FLNG has been the ultimate failure for Shell and that everyone involved has been reprimanded with disciplinary notes on their personnel records!

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BP ISSUES FORCE MAJEURE NOTICE TO GOLAR LNG UNIT ON FLOATING FACILITY

Golar LNG Ltd said on Tuesday that it received a force majeure notice from a BP Plc unit seeking to delay taking delivery of a floating liquefied natural gas facility by a year. The notice is the latest force majeure claim issued in the LNG sector that is struggling with a seasonal plunge in demand as well as the spread of the coronavirus outbreak, which has further hammered the consumption of the super-chilled fuel globally. BP is expecting a one-year delay due to the pandemic and currently sees no possibility in reducing the duration of the new timing, according to a statement from Golar’s unit Gimi MS Corp. The oil major was expected to take delivery of the facility in 2022 and charter it for 20 years to liquefy gas from its Greater Tortue Ahmeyim project on the maritime border between Mauritania and Senegal. Golar said it was in talks with BP to establish the duration of the delay and the extent to which this has been caused by the coronavirus outbreak. The plant is designed to produce an average of about 2.5 million tonnes of LNG per annum. The construction of the floating facility was expected to cost about $1.3 billion, excluding financing costs. Golar also said it was talking to its main building contractor, Keppel Shipyard Ltd, to re-schedule activities to reduce its capital spending commitments for 2020 and 2021. Companies invoke force majeure when they cannot meet their contractual obligations because of circumstances beyond their control.

Source: Reuters 07/04/2020


CS LNG comment: Well, do BP now have Chinese executives with their attitude of FM in the light of no economic reason to proceed with the contract? This was a nonsense from the start and should never have been signed off: maybe the shareholders should be asking more questions of management: just like every company should face post Covid-19!

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INDIA LOCKDOWN: LNG VESSELS BUILD UP OUTSIDE PORTS DUE TO FORCE MAJEURE REJECTIONS, TANK-TOP CONCERNS

Suppliers rejecting force majeure notices from Indian buyers and tank-top concerns in the Dahej and Hazira terminals have caused LNG vessels to build up along the west coast of India. The discharge rate at Indian terminals has been lower since a 21-day lockdown was imposed in the country on March 24 to contain the spread of the coronavirus. For the two weeks during the lockdown India has discharged 12 LNG cargoes, compared with 16 clips for the two weeks prior, S&P Global Platts trade flow software cFlow showed. "Suppliers are not ready to accept FM and we cannot take cargoes due to lower demand and the tank-top situation so there is no other alternative but for vessels to line up outside the ports," an Indian LNG importer said. However, another Indian LNG importer added that they had mutually agreed with their suppliers to defer most of the cargoes which were expected to arrive into India over end-March and April. Three LNG vessels -- LNG Abuja 2, Mubaraz and Malanje -- were identified as idling along the western coast of India, according to cFlow. Malanje sailed from Angola's Soyo LNG terminal on March 13 and has been off the western coast of India since March 29. Mubaraz sailed from Das Island, UAE, on March 26 and has been idling off the Gujarat coast since March 30. LNG Abuja 2 left Nigeria's Bonny LNG terminal on March 15 and has been anchored off the Indian west coast since April 5, cFlow data showed. Another vessel, Rioja Knutsen, has been slow steaming and heading to the Dahej LNG terminal. The vessel sailed from the US' Sabine Pass LNG terminal on March 2 and is expected to enter Dahej April 8, cFlow showed. The voyage is expected to take 37 days rather than around 25 days as usual. Indian LNG and domestic gas demand is expected to fall due to the lockdown, with only essential industries like refineries, power and fertilizers expected to be operational. "Since the lockdown demand has collapsed for us to about 40%, with reduced demand from CNG, power and industrial sectors," another Indian LNG importer said. After the emergence of force majeure declarations by Indian buyers such as GSPC, GAIL and Petronet LNG due to the lockdown, the DES West India assessment dropped by 35% to all-time low of $2.00/MMBtu by April 1, S&P Global Platts data showed. With spot LNG prices in India languishing at record lows, Reliance issued a tender Monday to procure a cargo for June 10-15 delivery to either Dahej or Mundra LNG terminal. The tender closed Tuesday. Due to the ongoing lockdown and operational constraints at Indian ports, some traders said there could be an additional risk premium associated with cargoes discharging in India due to potential operational delays. Delaying term cargoes, which are generally linked to Brent prices for three months preceding the delivery month, would also be beneficial for buyers since oil prices dropped significantly in March.

Source: S&P Global Platts 07/04/2020


CS LNG comment: What part of Force Majeure do the Indians not understand! They have yet to learn the LNG business! Just because current spot LNG prices are low, and they have seized to buy them but hope to turn away their long-term volumes with their associated higher prices. There is no such thing as being ‘half pregnant ‘ with LNG!