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Opinion

CS LNG News Update: 18th April 2019

By CS LNG, Apr 23 2019 07:59AM

1. MOZAMBIQUE EXPECTED TO BECOME A TOP 10 GLOBAL LNG SUPPLIER

According to GlobalData, Mozambique is expected to become one of the world’s top 10 largest LNG producers by the mid-2020s, when over 30mtpa of LNG comes on stream, on a par with capacity in African leaders Nigeria and Algeria. The feed gas for new LNG projects will come from the ultra-deepwater Rovuma Basin, where over 125 trillion ft3 of recoverable natural gas resources have been discovered to date. This consists of 75 trillion ft3 in block Area 1 and 50 trillion ft3 in block Area 4. Participants in Area 1 and 4 are now progressing towards final investment decisions (FID) for the onshore LNG terminals. Cao Chai, Oil and Gas Analyst at GlobalData, says: “The development break-even gas price of around US$4-5 per thousand ft3 for the onshore LNG projects in Mozambique is competitive compared to current Japan spot LNG prices of US$9.24 per thousand ft3. This is due to the relatively low expected CAPEX per million tpy in comparison to other integrated LNG projects around the world, and the low upstream cost compared to non-integrated LNG projects in the Americas.” Both external and internal Mozambique-specific challenges have slowed progression of LNG developments in the country. However, positive signs such as securing additional gas sales and purchase agreements have formed the majority of the activity from Mozambique and Rovuma LNG participants so far in 2019. These contracts are a key part of the projects progression towards the construction phase, as they provide some certainty about future revenues to underpin the massive capex of nearly US$40 billion required to bring these facilities online. Chai concludes: “The advancement of LNG business in Mozambique will transform the country to a major global LNG supplier. It will also bring direct revenue to Mozambique government and promote the growth of local industries through a domestic gas component of the initial project and follow-on expansions. Furthermore, construction on the LNG megaprojects is expected to last for over a decade providing significant employment and training opportunities for Mozambicans.”

[Source: Energy Global 17/04/2019]


CS LNG comment: Good luck to this wonderful little country but they will need help from the World Bank and IFC by adopting a sensible approach to finance and credit risk.

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2. FINAL COMMISSIONING UNDER WAY AT CAMERON LNG

The final commissioning step is under way for Train 1 at Sempra Energy’s Cameron LNG facility in Louisiana, Kallanish Energy reports. The company Monday announced it has begun pipeline feed gas flow to the first liquefaction train of the $10 billion liquefaction/export project, located at Hackberry, Louisiana. "The entire Cameron LNG team has worked safely and diligently to reach this milestone and we expect to start producing LNG this quarter," said Lisa Glatch, chief operating officer of Sempra LNG and board chair for Cameron LNG, in a statement. "Sempra Energy is now one step closer to reaching our goal of building up to 45mtpa of LNG export capacity to serve global markets,” she added. Cameron LNG will begin ramping up the feed gas deliveries to the facility as it completes the commissioning process, the company said. The company has said it expects to begin production in the second quarter of 2019, with the first exports to follow shortly. All three trains are expected to be in production in 2019. Commissioning began last November. The initial three trains or units are capable of producing 12mtpa, or 1.7 billion cubic feet per day. Cameron LNG is jointly owned by affiliates of Sempra LNG & Midstream, Total, Mitsui & Co., and Japan LNG Investment LLC, a company jointly owned by Mitsubishi and Nippon Yusen Kabushiki Kaisha (NYK). Sempra Energy indirectly owns 50.2% of Cameron LNG. The Cameron project is one of five LNG export projects being developed in North America by Sempra Energy. The Federal Energy Regulatory Commission had approved the project in June 2014, and construction started in October of that year.

[Source: Kallanish Energy 17/04/2019]


CS LNG comment: 5 years plant construction for a brownfield site? This must be a record! Still better late than never but more LNG into an already over supplied market can only be good news for end buyers but losses for sellers!

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3. GIMI FLOATING LNG VESSEL CONVERSION PROJECT GETS GO-AHEAD

Singaporean marine company Keppel has received the final approval from Golar LNG's subsidiary Gimi MS to start the conversion of an LNG carrier as part of the Gimi floating LNG project in West Africa, Keppel said Wednesday. Keppel will convert a Moss-type LNG carrier into an FLNG vessel, capable of producing around 2.5mtpa of LNG in the first phase of the BP's Greater Tortue Ahmeyim project, located offshore Mauritania and Senegal. The contract is worth $947 million, while the vessel delivery is expected in the first half of 2022, Keppel said. The contract includes the design, detailed engineering and procurement of the marine systems, as well as conversion-related construction services. The work will be similar to the FLNG vessel Hilli Episeyo's conversion, which Keppel already undertook for Golar, it said. On Tuesday, Golar LNG received a firm $700-million underwritten financing commitment from Clifford Capital, ING, Natixis, and ABN Amro for the FLNG conversion work. Keppel also completed the 30% equity stake in the Gimi MS, with Golar owning the remaining 70%. In February, Golar LNG entered into a 20-year lease and operate agreement with BP for the charter of the Gimi FLNG. BP and its partners US Kosmos Energy and National Oil Companies Petrosen and SMHPM took a final investment decision on phase 1 of the Greater Tortue Ahmeyim LNG development in December. The project is expected to expand its capacity to 10 million mt/year in later phases. The Greater Tortue Ahmeyim project is based on an estimated 15 Tcf of offshore gas and is expected to produce its first gas in 2022.

[Source: Platts 17/04/2019]


CS LNG comment: Torture, sorry Tortue, gets the go-ahead but does it really make sense using a 40yr hull as the base unit?

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