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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.

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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.

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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?

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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!

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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.

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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!

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!