By CS LNG, May 29 2019 08:21AM
1. ASIA LNG SPOT PRICE DROPS BELOW $5/MMBTU AS SUPPLY FLOODS MARKET
The Asian spot price for liquefied natural gas (LNG) has dropped to below $5 per million British thermal units (mmBtu) this week as sellers flooded the market with spot cargoes, trade sources said. The price is at its lowest level since the beginning of April. Oil majors Shell and BP each offered a July loading cargo at $4.60-$4.65/mmBtu on Wednesday in Platts market on close (MOC) window, at a price well below the $5.35/mmBtu levels seen last Friday, they added. A large tender by Egypt to sell up to 13 cargoes, as well as several sell tenders by Indonesia's Pertamina, Angola and Australia are also weighing on the market, sources said.
[Source: Energy World / Reuters 23/05/2019]
CS LNG comment: Well, it is still only May so they winter rush has not started yet, but it is looking ominous for pricing especially with more LNG supply coming on stream from US this summer. And just what impact will this have on charter rates? Let us wait and see!
2. SAUDI ARAMCO INKS 20-YEAR DEAL WITH SEMPRA FOR LNG SUPPLY
Saudi Aramco signed a 20-year agreement to buy LNG from a forthcoming export terminal in Texas that U.S.-based Sempra Energy is developing, the two companies said on Wednesday. The Saudi state oil giant plans to become a major global gas player, and this deal will provide it with access to some of the world’s cheapest and most abundant natural gas via the U.S. shale boom. Aramco has been developing its own gas resources and eyeing gas assets in the United States, Russia, Australia and Africa. Demand for supercooled LNG hit a record in 2018 at 42.1 billion cubic feet per day (bcfd), according to the International Gas Union, and growth is expected to keep rising as countries wean themselves off dirtier coal. One billion cubic feet of gas is enough to supply about 5 million U.S. homes for a day. The sale-and-purchase agreement is for 5mtpa of LNG, equivalent to about 0.7 bcfd of natural gas. This is Saudi Arabia’s first known nonbinding agreement to buy LNG, and the largest such LNG deal since 2013, according to energy consultancy Wood Mackenzie. Aramco will also buy a 25% equity stake in the first phase of the multibillion-dollar project, to be constructed in Port Arthur, Texas, about 90 miles (145 km) from Houston, the companies said. “Port Arthur LNG could be one of the largest LNG export projects in North America, with potential expansion capabilities of up to eight liquefaction trains or approximately 45mtpa of capacity,” the companies said. Global LNG demand is expected to grow by about 5 percent a year through the mid-2020s, according to U.S. Energy Information Administration (EIA) projections. Since February 2016, when the United States started exporting the fuel from the Lower 48 states, it has become the world’s fourth biggest LNG exporter.
[Source: Reuters 22/05/2019]
CS LNG comment: Does this mean that the new LNG team at Sempra (now that Octavio and Co. have left) really knows what they are doing and what may have been missing for the past 10 years? Certainly, a deal of this magnitude with that off-taker is a real coup. DES or FOB?
3. NOVATEK ANNOUNCES 3RD LNG PROJECT IN ARCTIC
As if in a great rush to develop its Arctic resources, Russian natural gas company Novatek this week made clear that it is starting the development of a third LNG project in the Yamal region. The Ob LNG will be based on the resources of the Verkhnetiuteyskoye and Zapadno-Seyakhinskoye fields, two structures located in the central part of the Yamal Peninsula. The fields hold a total of 157 billion cubic meters of natural gas and the projected new plant will produce up to 4,8 million tons of LNG per year. The plant and adjacent infrastructure will cost $5 billion and is to come in operation in year 2023, newspaper Kommersant reports with reference to a high-ranking representative of Novatek. The development of the Ob LNG will run parallel to the Arctic LNG 2, the company’s far bigger project currently under development on the nearby Gydan Peninsula. The Arctic LNG 2 will produce up to 19,8 million tons, and the first of the projected three trains is to be ready by year 2023. The announcement of the Ob LNG comes a the same time as Novatek signs a major contract with UK-based TechnipFMC on engineering and construction of the Arctic LNG 2. Novatek’s first Arctic project, the Yamal LNG, is already operating at full speed, which means an annual production of up to 16,5 million tons.
[Source: The Barents Observer 23/05/2019]
CS LNG comment: A step too far too quick? Does Novatek and its partners have the resources to manage two simultaneous projects?