July 7, 2022

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Pakistan’s Ambitious LNG Tender Sinks Without Bids

Pakistan LNG’s tender for 10 LNG cargoes for a July-September delivery window, proved disastrous as it failed to get even a single bid.

The result highlights tight markets and the reluctance of suppliers to sell to an economy stuck in a balance of payments crisis.

The state-owned company was seeking two cargoes for July, five for August and three for September delivery.

Fourth Failure

This was Pakistan's fourth consecutive tender for spot cargoes that ended in disappointment.

Last month, its tender for four spot cargoes for July delivery got just a single bid for a late July delivery while the three other cargoes did not get any response. That single bid was by QatarEnergy at $39.80 per million Btu, which was too high and was rejected. Pakistan is getting LNG under two term deals with Qatar at a price range of $11-$14/MMBtu.

Pakistan earlier scrapped two tenders for Jul. 3-4 delivery as it did not get any valid bids.

Spooked by the tight supply situation, Northeast Asian spot LNG prices increased by $4 week on week to $41/MMBtu, its highest level since March, according to Energy Intelligence assessments for deliveries four to eight weeks ahead.

It is doubtful that Pakistan would agree to pay those high spot prices.

Price-sensitive South Asian LNG buyers India, Bangladesh and Pakistan have been badly hit due to a sharp surge in LNG prices, making the fuel unaffordable for them. Bangladesh has decided not to buy any spot cargoes for July due to unaffordable rates. Bangladesh also struck out in a spot tender back in March.

Power Shortages

Pakistan has been trying to arrange for LNG cargoes to fight its ongoing power crisis that is leading to blackouts lasting several hours daily. Federal Power Minister Khurram Dastgir Khan told reporters Wednesday that the daily power shortfall of 4,000-5,000 megawatts has been reduced by half due to a surge in generation at hydropower plant Tarbela and as demand has dropped due to a dip in temperature with monsoon rains.

The government is struggling to ensure power outages do not bother citizens during the five-day-long Eid holiday beginning Friday. Pakistan is in talks with Afghanistan for importing coal and expects to settle payment in Pakistani rupees, which will help ease demand for dollars and hence pressure on the rupee, Khan added.

Khan said that after commissioning the 5,000 MW of power capacity that is likely to come online in the current fiscal year that began Jul. 1, any fresh capacity addition will only be based on solar, wind, hydro or domestically available coal to ensure the nation is no longer hostage to imported fuel prices.
Rakesh Sharma, New Delhi

Shell Books Capacity at Dutch Eemshaven LNG Terminal

Dutch grid operator Gasunie is forging ahead with the Eemshaven LNG terminal project after its subsidiary, EemsEnergyTerminal, announced that UK major Shell has also booked regasification capacity at the future facility.

A spokeswoman at Gasunie already confirmed to Energy Intelligence at the end of June that Czech utility CEZ has reserved capacity at the terminal, but in a statement on Jul. 7, the Dutch company said that Shell has also booked capacity.

The two companies together hold 7 billion cubic meters (Bcm) of regasification capacity, with the remaining 1 Bcm also expected to be sold in the coming months.

The two floating storage and regasification units that will compose the project are set to to arrive at the port of Eemshaven in northern Netherlands at the end of August, according to the statement.

Upon arrival, the Golar Igloo will be connected first to the Dutch gas grid followed later by the S188 regasification barge.

Gate Expanding

At the same time, the Gate terminal, Netherlands’ sole LNG import facility in the port of Rotterdam, is looking to expand its regasification capacity by an additional 4 Bcm per year.

Currently, the terminal offers 12 Bcm/yr of firm capacity, while 4 Bcm/yr is available on an interruptible basis.

However, the terminal operator is expected to launch an open season on Aug. 15 to increase firm capacity by 4 Bcm/yr, it said on Jul. 6.

Reducing Dependence

Progress on the Eemshaven LNG terminal and the potential increase in regasification capacity at Gate comes as the Netherlands aims to reduce its dependence on Russian pipeline gas supplies.

“That is an important part of our approach to becoming less dependent on Russian gas as soon as possible, but also to preparing for the coming winter”, said Rob Jetten, Dutch minister for climate and energy policy, referring to Gasunie’s efforts to increase the country’s LNG import capacity.

Russian state exporter Gazprom cut gas supplies to Dutch gas company Gasterra on May. 31 after it refused to comply with the Kremlin’s rubles payment scheme.

Nonetheless, LNG cargo deliveries from Russia’s Yamal export plant to the Netherlands during the January-June period rose from 0.94 million tons in 2021 to 1.15 million tons this year, according to data by commodity analytics firm Kpler.
Daniel Stemler, Madrid

New Fortress Launches Joint Venture With Apollo

New Fortress Energy and asset manager Apollo this week entered into a definitive agreement to sell 11 LNG infrastructure vessels owned by New Fortress into a newly formed joint venture (JV).

The JV will be owned approximately 80% by Apollo funds and 20% by New Fortress with the transaction valued at about $2 billion.

The 11-vessel portfolio consists of six floating storage and regasification units, two LNG carriers and three floating storage units.

The transaction is expected to close in the third quarter of this year.

Funds for Fast LNG

New Fortress will receive approximately $1.1 billion in proceeds after accounting for its share of the JV and paydown of existing debt.

New Fortress expects to use the funds from the transaction for its floating liquefaction projects, as well as for ongoing downstream infrastructure.

“Together with Apollo, we are creating a leading LNG marine infrastructure platform to help accelerate the energy transition while freeing up capital to continue to invest into our Fast LNG and downstream LNG projects worldwide,” said Wes Edens, chairman and CEO of New Fortress Energy.

The company is “partnering with Apollo...creating a maritime infrastructure company that will help support New Fortress Energy’s growing LNG infrastructure needs going forward," Edens added.

The company is planning to build eight modular liquefaction plants in the Gulf of Mexico under its Fast LNG program. The eight trains will be mounted on existing offshore infrastructure, each producing 1.4 million tons per year of LNG for a combined 11.2 million tons/yr, or roughly the size of a major onshore plant.

New Fortress is also developing several LNG projects in Mexico.

Charter Plan

As part of the JV transaction, New Fortress has agreed to charter 10 of the 11 vessels for a period of up to 20 years, starting either upon close of the transaction or upon expiration of the vessels’ existing third-party charter agreements.

"This transaction will create a global marine infrastructure platform underpinned by long-term contracts, benefitting from New Fortress Energy’s LNG downstream operations and development activities, as well as Apollo’s leading investment and maritime experience," the company said.
Michael Sultan, Washington


Data Snapshot

LNG Netbacks at Key Receiving Terminals

LNG Exporter Netbacks Between Key Receiving Ports
($/MMBtu)AlgeriaAustralia WestAustralia EastMalaysiaNigeriaNorwayOmanPeruQatarRussiaTrinidadUS GulfUS East Coast
Dahej, India37.9138.3937.9838.3937.5137.3338.9136.9338.8138.0037.1636.8537.27
Sodegaura, Japan38.4739.9940.0240.1238.4234.6039.5937.2139.4340.5037.6036.6638.66
Zeebrugge, Belgium44.5942.7042.2842.8044.0144.4143.5942.2543.4242.2644.1443.0644.26
Huelva, Spain36.8935.1334.7535.2236.3136.0835.9534.6235.8034.7236.3735.2736.40
Isle of Grain, UK25.4923.8023.4523.8825.0025.3224.7123.4024.4423.4125.0924.1425.20
Everett, US4.573.033.413.104.274.120.013.843.612.674.77----
Created with Highcharts 9.0.0($/MMBtu)QATAR TO NORTHEAST ASIANetbackNetback31. Jan14. Feb28. Feb14. Mar28. Mar11. Apr25. Apr9. May23. May6. Jun20. Jun4. Jul102030405060Energy Intelligence

LNG Market Indicators

Spot LNG Pricing
Latest WGIDailyDaily Chg.Chg. From Latest WGI
NE Asia0.0041.280.5941.28
SW Europe0.0037.585.4937.58
Futures Pricing
($/MMBtu)Chg.LatestPreviousWeek Ago
Henry Hub, US (futures)0.796.305.515.42
NBP, UK (futures)+2.6235.5832.9629.61
European Spot Pricing
Chg.LatestPreviousWeek Ago
Dutch TTF3.0455.1452.1044.58
Zeebrugge (Belgium)2.5637.8035.2428.55
German NCG2.7753.5850.8141.62
NBP (UK)5.4926.3620.8718.60
US Markets
US Spot Prices
Sabine Pass, Louisiana0.195.835.646.52
Corpus Christi, Texas----5.656.02
Cove Point, Maryland0.375.455.085.82
Elba Island, Georgia--5.83----
Nymex Henry Hub Futures
Near Month0.796.305.515.42
Second Mth0.786.265.485.39
Third Mth0.766.255.495.41
Created with Highcharts 9.0.0($/MMBtu)GLOBAL GAS PRICINGUS NymexDutch TTFNE AsiaAug '21Sep '21Oct '21Nov '21Dec '21Jan '22Feb '22Mar '22Apr '22May '22Jun '22Jul '22020406080Energy Intelligence