coloured gradual logo with name

LNG SHIPPING CONSULTANCY

shipping@lngclub.com

+44 1784 439 636

phone-icon
Mail black small

Opinion

By CS LNG, Apr 11 2019 08:44AM

1. FOURTH TRAIN FOR YAMAL LNG

The actual capacity of the three trains of Yamal LNG liquefaction plant is 17.5mtpa, told Novatek Chairman Leonid Mikhelson the audience of the Arctic Forum in St. Petersburg. “This is 6-7% above the projected capacity. By the end of the year we plan to launch the fourth production train with a capacity of 1mtpa”, he added. This will bring the Yamal LNG total capacity up to 18.5mtpa. Initially, only three trains with a total capacity of 16.5mtpa were planned.

[Source: Sea News 10/04/2019]


CS LNG comment: Something unusual here if the train 4 is only 1 mill tonnes!

---



2. AUSTRALIA CANNOT TAKE CHINA'S LNG DEMAND FOR GRANTED

It is not surprising executives from Australia's biggest liquefied natural gas exporters were rubbing shoulders with China's top energy companies in Shanghai this week. Australia has a lot riding on China's transition from a coal-powered economy to a greater reliance on gas. China's current restrictions on Australian coal exports are a reminder that Canberra cannot take demand for that commodity and iron ore for granted. The focus is increasingly on Australia's huge LNG market as Woodside, Santos and Oil Search and their partners prepare to invest $US27 billion ($49.6 billion) into new projects in Western Australia. China, which currently powers just a fraction of its huge economy with gas, will play an important role in future demand. But the message from the world's biggest LNG players at a major industry conference in Shanghai last week was one of caution. They recognise there are challenges to the huge increase being forecast for China's LNG needs. Woodside chief executive Peter Coleman, a regular visitor to China, has been warning for some time that Australia risks being over-reliant on the world's second-largest economy. "Forecasts can change as attitudes change," he says. This is something the coal sector can relate to as it comes under pressure from the environmental lobby and investors. Coleman also says his industry is “at risk of losing relevance” unless it can demonstrate why a low-carbon world needs LNG. “In Australia, we have learnt from a decade of climate policy paralysis, where society will not support policies if they are perceived to threaten living standards. Our industry needs to show it is committed to effective action on climate change," he warns. China became the world's second-biggest LNG importer after Japan last year after imports almost doubled from the previous year. Demand for natural gas from China is expected to pass 400 billion cubic metres by 2022. This demand is largely being driven by Chinese President Xi Jinping's "blue sky" campaign designed to clean up the pollution choking China's cities. But this cannot happen overnight. Li Hui, vice-president of China National Offshore Oil Corp, China's biggest LNG buyer, told the conference there were huge challenges facing the country during the transition. China's pipelines, storage and other infrastructure is underdeveloped. big LNG buyers in China lack overall planning, and procurements are sporadic because of seasonal demand that creates big swings in global prices. China plans to quadruple import capacity from its 21 terminals within the next 20 years, according to state media.

[Source: Australia Financial Review 07/04/2019]


CS LNG comment: Well they will have to revise their policy as China has been Oz focus for the past 20 years ever since the Asian financial collapse in 1997. Where else can Australia expect to sell LNG in vast quantities and expect to get paid AND have a reasonable trading relationship?

---



3. LNG 'COCAINE' TANKER LEAVES T&T

The Hispania Spirit, the LNG tanker on which $120 million in cocaine was found at a port at Atlantic in Point Fortin last week, has left Trinidad. On the marine tracking website marinetraffic.com stated that the vessel left Trinidad at 7.26 p.m. Sunday and it was expected that its next port of call would be at its home port on April 16 in Santa Cruz de Tenerife, in Spain. The ship’s captain and crew of 28 were on board the vessel when it left for its voyage. They were interviewed by officers of the Organised Crime and Intelligence Unit and Customs and Excise Division about the cocaine that was discovered in the vessel’s rudder last Wednesday morning. The vessel had been docked at Jetty #1 since Tuesday, and 200 kilogrammes of cocaine wrapped were discovered when the captain was checking the vessel. Point Fortin police were contacted by security personnel at Atlantic and told of the illegal cargo. Officers of the OCIU, Customs and Excise, Coast Guard and ASP Ramphal, Sgt Jones, Ag Cpl Carter, Cpls Bajan and Bates and PC David. The captain told police that he made interval checks throughout their duration in Trinidad. It was during one of those checks around 8 a.m. on Wednesday that that seven black bales of cocaine covered with nylon mesh were found. The narcotics were seized by Coast Guard officers and handed over to the Customs and Excise Division.

[Source: The Trinidad Express 09/04/2019]


CS LNG comment: It looks like TK are paying their Captains too high a salary or not employing smart captains who can’t recognise a windfall! Seriously well done to the Master for avoiding what could have been a very embarrassing and costly exercise, and to TK for having the right procedures in place. But it does put the focus on Point Fortin for their ISPS procedures and securities around the plant.

---

By CS LNG, Apr 11 2019 08:33AM

1. QP ANNOUNCES MAJOR CONTRACTS FOR QATAR’S LNG EXPANSION PROJECT

Qatar Petroleum announced that it has awarded a number of contracts related to Qatar’s LNG expansion project designed to enhance its capabilities by increasing LNG production capacity from 77 to 110mtpa by 2024. The contracts were announced by H E Saad bin Sherida Al Kaabi, the Minister of State for Energy Affairs and President & CEO of Qatar Petroleum, in a speech at the 19th International Conference & Exhibition on Liquefied Natural Gas in Shanghai (LNG2019). The Minister announced awarding the fabrication and installation of the offshore jackets to McDermott; and the contract for early site works required to prepare the site of the four new 8 mtpa LNG mega-trains in Ras Laffan Industrial City to a joint venture between Consolidated Contractors Company and Teyseer Trading and Contracting Company. H E the Minister also said: “We are in the tendering phase for 8 rigs for the development drilling. The Front End Engineering and Design of the Onshore Facilities with Chiyoda will be completed in the next few days. The main Invitations to tenders for the Engineering, Procurement and Construction of the Onshore Facilities will be issued before the end of this month. In a few weeks, qualified ship yards will be invited to participate in a tender for the provision of LNG ship construction slots for the LNG shipping fleet required for the LNG expansion project.” Minister Al Kaabi said: “The State of Qatar is partnering with many countries around the world to ensure the security of their energy supplies and the sustainability of their economic growth. As the largest LNG producer we are also expanding our capacity in many parts of the world. This includes adding 16 MTA from our Golden Pass LNG export project in the United States with our long-term strategic partner ExxonMobil. This project is under construction and should be in operation by 2024. It is worth noting that Qatar Petroleum and ExxonMobil have established Ocean LNG, which is an international joint venture marketing company that will be responsible for marketing all Golden pass LNG production.”

[Source: The Peninsula 03/04/2019]


CS LNG comment: And so the rush begins to dump another 50million tons of LNG into the market.

---



2. TOTAL INVESTS MORE IN TELLURIAN, DRIFTWOOD LNG

French energy major Total said it will invest more than $700 million in Houston-based Tellurian and its Driftwood liquefied natural gas export project in Louisiana. The deal, which includes the additional purchase of more LNG by Total, increases Total's already sizable interest in Tellurian and the roughly $30 billion LNG export and gas pipelines project. Total, which also is a major investor in the Cameron LNG project in Louisiana, is the world's second-largest LNG player after Royal Dutch Shell. Tellurian is focused on an integrated gas project, which includes piping gas all the way from West Texas' booming Permian Basin, processing the gas in Louisiana and exporting the LNG worldwide, especially to growing Asian markets. "The cost to produce natural gas in the U.S. continues to fall, as the engine of American innovation finds more efficient ways to apply technology to producing its vast energy resources," said Patrick Pouyanné, Total's Chairman and CEO said. "The Tellurian team has an established track record of developing and constructing energy infrastructure on time and at the lowest cost." Tellurian was co-founded by its chairman, Charif Souki, who founded and led Houston-based Cheniere Energy until his ouster. Cheniere is the nation's modern LNG export pioneer. As part of the deal, Total is making a $500 million equity investment in the Driftwood LNG project near Lake Charles, La. Total also will purchase about 20 million additional shares in Tellurian stock for $200 million, further upping Total's existing ownership stake. Total also agreed to buy 2.5 million metric tons of additional LNG from Tellurian per year for 15 years, based on the Japan-Korean LNG price marker. Tellurian expects to make a final investment decision and start construction on Driftwood LNG later this year. The goal is to start selling LNG in 2023 and to fully complete the project by 2026.

[Source: Houston Chronicle 03/04/2019]


CS LNG comment: Total clearly has faith in this project and definitely does not want to let Shell have all its own way in the US Gulf.

---



3. WOODSIDE, CHEVRON TO EXPAND CANADA’S KITIMAT LNG JV

Woodside Energy and Chevron Canada have applied for a new licence for their Kitimat LNG plant in northern British Columbia that could see it nearly double in size to produce 18mtpa, Chevron says. The companies submitted the application to Canada’s National Energy Board on Monday, with a revised plant design that may include up to three LNG trains, instead of two. “Chevron and Woodside have re-evaluated the originally proposed 2-train, 10mtpa LNG plant development concept, with a focus on improving Kitimat LNG cost of supply competitiveness relative to other global LNG projects,” Chevron said in a statement on Wednesday. The Kitimat LNG application follows the approval last October of the massive LNG Canada project, also located in Kitimat. That project is led by Royal Dutch Shell and will initially produce 14mtpa, with the option to increase to 28mtpa. A growing LNG industry in northern British Columbia would be a boon for western Canadian natural gas producers that would supply the projects, analysts said. “While very early days, the new LNG export licence application by Chevron Canada for its Kitimat LNG project could represent a nice source of long-term demand for domestic gas in Western Canada,” BMO Capital Market analyst wrote in a research note. Chevron and Woodside, which have a 50:50 joint venture in the project, have not yet set a date for a final investment decision for Kitimat LNG or disclosed cost estimates.

[Source: The West Australian 04/04/2019]


CS LNG comment: And just where is all of the new LNG actually going to go?

---

By CS LNG, Apr 2 2019 09:32AM

1. VITOL'S HEAD OF LNG EXPECTS SUPPLY SHUTDOWNS DUE TO MARKET GLUT

Vitol Group’s head of liquefied natural gas trading said on Wednesday that the outlook was bleak for LNG in the short term due to an “incredibly” oversupplied market, which would lead to some output shutdowns. “We had record imports of LNG into Europe. Three years ago we saw 63 cargoes in one month, in March we see 125 cargoes, April and May we expect 150 and 170 cargoes... This is really unprecedented,” Pablo Galante Escobar, Vitol’s head of LNG, told the FT Commodities Global Summit in Switzerland. “We said before that we expect a battle between the U.S. LNG and Russian pipelines. We believe that is happening now but it is being joined by LNG from the Middle East, Africa that is not finding the homes in Pakistan, Bangladesh or China, where the winter was mild but there are other factors, such as excess production.” This week, spot prices for LNG cargoes to be delivered into northeast Asia in May fell to a nearly three-year low of $4.30/mmBtu as buyers are shunning cargoes and re-directing them to Europe, trade sources said. In Europe, the Dutch front-month gas price is trading at around $4.90/mmBtu on Wednesday, with prices holding a premium over Asia since last week. Lower-than-expected LNG demand and a drop in prices in Asia have made Europe a top destination for LNG produced in the Atlantic basin since October, a drastic change from previous years. A number of Asian companies, including South Korea’s KOGAS and China’s PetroChina having been selling cargoes from their U.S. and Russian offtake, respectively, to Europe in the past several months. Several trade sources said that prices would need to go down by around $1.00/mmBtu to cause shutdowns, but admitted that the costs for delivery from the United States to Europe look “not very healthy.” U.S. producer Cheniere told Reuters earlier this year, however, that its customers have the contractual right to turn down volumes and pay a fixed fee for processing.

[Source: Reuters 27/03/2019]


CS LNG comment: There may be a glut, but it is not so easy for many producers to shut in. Certainly, the shipowners won’t like this news!

---



2. NAKILAT EXPANDS FLEET WITH FOUR ADDITIONAL LNG CARRIERS

Nakilat has established a new joint venture (JV), ‘Global Shipping Co. Ltd.’, with shipping company Maran Ventures Inc. (Maran Ventures). Under the agreement, Nakilat will have a 60 percent stake in the JV while Maran Ventures will hold the remaining 40 percent. With 4 LNG vessels under the new JV, the number of Nakilat vessels will effectively increase to 74, which is approximately 11.5 percent of the global LNG fleet in carrying capacity. Nakilat’s Chief Executive Officer Abdullah Al Sulaiti said, “This agreement is a step forward for the company as we expand our fleet with additional capacity to meet the growing international demand for clean energy. This has subsequently led to a significant increase in demand for LNG shipping, which we hope will have a positive effect on charter rates. With the 4 new vessels being managed and marketed by Nakilat, this not only affirms our global leadership in energy transportation but also bears testament to our vessel management and marketing capabilities with the world’s largest LNG fleet. Nakilat’s steady growth highlights our robust financial performance and strategic planning, which comes as part of our efforts to maximize returns for our shareholders and support Qatar’s industry leading position as the world’s top LNG exporter. Al Sulaiti added, “We have seen a shift in terms of management and vessel technology in the industry, which we have taken into consideration. Currently under construction in South Korea, the four modern vessels each have a cargo carrying capacity of 173,400cu m. They are equipped with some of the most advanced technology in the market today, with two of them being equipped with ME-GI while the other two with X-DF technology.” Chairman of Maran Ventures, John Angelicoussis said, “Nakilat has been one of our strategic partners for many years and we are pleased to be strengthening our relationship with them. Through this new venture, I am confident that we will continue to provide first-class services together for all our LNG customers around the world and look forward to further collaborations in the future.”

[Source: The Peninsula 28/03/2019]


CS LNG comment: From a being a late entrant to the LNG ‘game’ Maran has certainly understood the rules and how to win within them. Interestingly they have chosen to remain a private shipping company to achieve this success.

---



3. ASIAN PRICES FALL BELOW DUTCH BENCHMARK, DRIVING CARGOES WEST

Asian spot prices for LNG this week fell to their lowest in nearly three years driven by excess supply and lack of buying interest in the region. Spot prices for May delivery to Northeast Asia LNG-AS dropped to $4.40/mmBtu this week, down 25 cents from the previous week and the lowest since April 22, 2016, Refinitiv data showed. Offers were plenty with Russia’s Sakhalin 2 and Angola LNG plants offering cargoes for April to May, traders said. Australia’s new Ichthys project sold at least one cargo for April while Indonesia’s Pertamina offered a spot cargo for May and 11 cargoes for May to December, they added. Shell’s Prelude floating LNG platform that recently shipped out its first condensate cargo is also expected to ship out LNG soon, though the specific timeline was not clear, traders said. Buying interest from North Asia was scarce except for one recent purchase from South Korea’s POSCO for a May cargo at about $4.40/mmBtu, two trade sources said. Gas inventories in Asia are high and buyers are shunning cargoes and re-directing them to Europe, sources said earlier this week. Several Chinese companies were reselling cargoes they did not need due to high inventory, two traders said. The Japan Korea Marker, the benchmark for Asian spot LNG cargoes, has fallen below the Title Transfer Facility (TTF) price in the Netherlands, a European benchmark, in an unusual move that is driving cargoes west, traders said. Gail India sold a U.S. cargo bound for Asia to northwest Europe, as part of optimisation and to take advantage of the price spread, sources said. However, the low prices are attracting interest from buyers in India, trade sources said. India’s Reliance and Gail (India) were both seeking cargoes for May while Indian Oil Corp and Petronet were also seeking cargoes, they added. Still, limited import capacity in the country could curb their purchase volumes, a trader familiar with the market said. In Western Australia, Dampier and Ashburton ports have re-opened and LNG operations are slowly being ramped up at Woodside Petroleum’s Pluto and North West Shelf LNG plants, industry sources said. The company said earlier this week it had evacuated all personnel from offshore production platforms off Western Australia ahead of Cyclone Veronica, and was operating the North West Shelf LNG and Pluto LNG plants on skeleton staff. Once the plants are back fully online, supply could further dampen prices, the sources said.

[Source: Reuters 29/03/2019]


CS LNG comment: Let battle commence! How long will it last though!