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Opinion

CS LNG News Update: 14th March 2019

By CS LNG, Mar 18 2019 10:54AM

1. TRADE WAR CUTS U.S. LNG EXPORTS TO CHINA

Only one LNG vessel that left the United States in 2019 went to China, Reuters shipping data show, as the eight-month trade war between the two nations starts to cool. The governments of the world’s two largest economies have been locked in a tariff battle as Washington presses Beijing to address longstanding concerns over Chinese practices around technology transfers, market access and intellectual property rights. The countries are working to achieve a trade deal that matches their interests, including eliminating tit-for-tat tariffs. The only vessel to head to China from the United States this year was the Adam LNG, which left Cheniere Energy Inc’s Sabine Pass export terminal in Louisiana on Jan. 30, according to the shipping data. The data shows a handful of LNG vessels from the United States in the Pacific Ocean, some of which could end up in China. In 2018, 27 LNG vessels went from the United States to China, down from 30 in 2017. Most of those, however, left U.S. ports before the trade war started in mid-2018, with 18 tankers going to China in the first half of the year and just nine during the second half. The United States and China started imposing tariffs on each other’s goods in July. As the dispute heated up, China added LNG to its list of proposed tariffs in August and imposed a 10-percent tariff on LNG in September. The United States is the world’s fastest-growing exporter of LNG, while China is the fastest-growing importer of the fuel as the government weans the country off coal to reduce pollution. In 2017, China imported about $447 million, or about 15 percent, of the LNG shipped from the United States, making it the third biggest buyer of the U.S. fuel. Prior to the slowdown, China was on track to import 141.6 billion cubic feet (bcf) of U.S. LNG in 2018, up from 103.4 bcf in 2017 and 17.2 bcf in 2016. It imported no U.S. LNG in 2015.

[Source: Reuters 13/03/2019]


CS LNG comment: As a fact fewer US cargoes have gone to China but could pricing have something to do with it? And perhaps the SE Asia and ME producers can land the LNG more competitively?

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2. QATAR PETROLEUM BUYS STAKE IN MOZAMBIQUE EXPLORATION BLOCK FROM OPERATOR ENI OF ITALY

Italian Energy company Eni has sold a stake to Qatar Petroleum in an exploratory block offshore Mozambique, where several LNG projects are being developed from other blocks in the Rovuma Basin. Qatar Petroleum has acquired a 25.5 percent participating interest in Block A5-A located in the deep waters of the Northern Zambezi Basin, about 1,500 kilometres northeast of the capital Maputo. Eni was awarded the block in the fifth competitive Licensing Round launched by the government of Mozambique and an exploration and production concession contract was signed in October 2018. It extends over an area of 5,133 square kilometres in a water depth between 300 metres and 1,800 metres, in a completely unexplored zone in front of the town of Angoche. Eni is the operator of the Block A5-A consortium with a 59.5 shareholding, which would be reduced to 34 percent after the farm out is approved. Other partners are South Africa’s Sasol with 25.5 percent and the state energy company of Mozambique ENH with 15 percent. “The transaction represents another milestone in the strategic path that Eni and QP undertook to further strengthen their partnership worldwide,” said Eni Chief Executive Claudio Descalzi. Eni has been present in Mozambique since 2006 when it acquired the Area 4 licence in the offshore Rovuma basin where total gas in place is estimated to be more than 85 trillion cubic feet after discoveries in the Coral, Mamba and Agulha fields. The Coral field is subject to a floating LNG development with production capacity of 3.4mtpa. Construction of the Coral FLNG joint venture began in June 2017 the start-up is scheduled for 2022. The development programme also includes the construction of an onshore plant composed by two liquefaction Trains for gas treatment and liquefaction capacity of 15.2mtpa in the first phase of the Rovuma LNG project. The onshore joint venture is expected to be sanctioned in 2019 and production is being targeted for 2024. Eni and Qatar Petroleum are already partners in upstream developments in Oman and Mexico.

[Source: LNG Journal 12/03/2019]


CS LNG comment: So, just how cosy is Eni getting to Qatar? Maybe we will see them feature in the new Qatari expansion (at the expense of Exxon?)!

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3. COSCO DALIAN SHIPYARD TERMINATES DALIAN INTEH LNG CARRIER

Cosco Shipping Heavy Industry’s Dalian shipyard has terminated a newbuilding contract with Dalian Inteh Group for a 28,000 cu m LNG carrier due to payment delays. Dalian Inteh Group, a chemical logistics company, signed a RMB560m ($83.4m) EPC contract with Shanghai Bestway Marine & Energy Technology in 2013 for the design and construction of the vessel, and Shanghai Bestway awarded the construction contract to Cosco Dalian. The contract was the first and only LNG carrier order secured by Cosco Dalian. According to Shanghai Bestway, the owner failed to make further payments following an initial payment of 10% of the EPC contract, while Shanghai Bestway has already paid 40% of the construction contract to Cosco Dalian. Last year, Shanghai Bestway reported the risk of not being unable to receive payment from Dalian Inteh due to the owner’s financial issues. Shanghai Bestway said the company will do its best to coordinate with Dalian Inteh and Cosco Dalian to continue the project, however, it will also reserve the right to take legal actions against Dalian Inteh. The construction of the LNG carrier is near completion and the ship will be ready for delivery soon. Shanghai Bestway is now in deep financial trouble with lawsuits against the company stacking up. The company’s controlling shareholder Liu Nan failed in three separate deals to dispose of his shares in the company.

[Source: Splash 24/7 12/03/2019]


CS LNG comment: Clearly someone had bigger ambitions than a wallet!

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