July 19, 2022

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Gazprom's Former Unit Fails to Deliver India LNG Cargoes

A unit of Gazprom Germania, earlier owned by Russia’s Gazprom, has failed to deliver contracted LNG cargoes to India’s state-owned Gail India, squeezing supplies to the world’s fourth largest LNG buyer, people familiar with the matter said.

Though the people did not specify the number of undelivered cargoes by Gazprom Marketing and Trading Singapore, a unit of Gazprom Germania, the Press Trust of India said that the supply of at least five cargoes has been impacted so far since June.

Gazprom halted LNG supplies to subsidiaries of Gazprom Germania after it was blacklisted by Russia due to its take-over by the German state. It has been remanded as Securing Energy for Europe. Russia has blacklisted 30 former subsidiaries of Gazprom including Gazprom Germania.

Plans Awry

In May, Gail said that it expected to source 40 LNG cargoes, equivalent to 2.5 million tons, in 2022, or three cargoes a month, under its 20-year LNG sale and purchase agreement with Gazprom Marketing and Trading Singapore. The supplies under the deal began in 2018 and have to be ramped up to 2.85 million tons in 2023.

The cut in supplies from Gazprom comes at a time when the markets are already tight with Europe competing for cargoes with Asia in order to trim its dependence on Russia. India’s neighbor Pakistan, in a recent tender for ten cargoes for July-September delivery, could not get even a single bid.

Gail could not be reached for a comment. People familiar with the matter said that Gail has no clarity as to when the lost cargoes will be delivered, making it difficult for it to line up supplies from alternate sources. It is in talks with multiple suppliers for a term deal for at least one million tons of supplies.

Crude Example

India has been buying up cheap discounted crude barrels, Urals from Russia, which helped Moscow displace Saudi Arabia to become Delhi's second biggest crude supplier in June. But India has not been able to replicate that for LNG due to logistical issues.

India’s LNG imports declined 9.6% to 5 billion cubic meters during April, May, or the first two months of the current financial year that began Apr 1, according to the latest government data.

India's LNG imports saw a near-term peak in 2020 of about 26.7 million tons (see graph below), which corresponded to a peak in Russian LNG imports at about 644,000 tons.

Created with Highcharts 9.0.0(million tons)INDIA'S LNG IMPORTSQatarNigeriaUAEUSAngolaAustraliaOmanEquatorial GuineaTrinidad and TobagoEgyptAlgeriaRussian FederationOthers20182019202020212022051015202530Source: Kpler2018 Nigeria: 2.917613847

Rakesh Sharma, New Delhi

Delfin LNG Requests Extension

Delfin Midstream aims to sanction its innovative LNG export project later this year, but the nine-year-old scheme first needs to ensure approval for the project doesn’t expire Sep. 28.

The developer of the Delfin Deepwater Port project, a series of floating liquefaction vessels in the Gulf of Mexico connected to a floating export terminal, has asked the US Federal Energy Regulatory Commission to extend the project’s certificate for another year.

This is the fourth extension requested by Delfin LNG, which has languished since its first approval in 2013. But that changed after a surge of European demand revitalized Delfin and other zombie projects.

Earlier this month, Delfin inked a 15-year binding sale and purchase agreement with Vitol, which also agreed to take a stake in the project. Delfin would supply 500,000 tons per year, or 68 million cubic feet of gas per day, to Vitol.

Delfin plans to have as many as six floating liquefaction vessels, each with a nameplate production capacity of 3.5 million tons/yr, (480 MMcf/d).

Delfin is one of several projects in the US now involving offshore liquefaction.

Earlier this month, New Fortress Energy advanced plans to deploy two 1.4 million ton/yr LNG production units in the Gulf of Mexico as part of a broader plan to deploy a total of eight, or 11.2 million tons of export capacity.
Tom Haywood, Houston


In Brief

Spot LNG Prices Fall

Northeast Asian spot LNG prices fell by $5.50 to $36.50 per million Btu, according to Energy Intelligence assessments for deliveries four to eight weeks ahead. Spot LNG prices in Southwest Europe also fell by $2.35 to $37.85 per million Btu, pushing the region into a slight premium over Northeast Asia (see graph).

Prices fell on lower European gas hub prices and tepid demand in Asia.

Nevertheless, traders say that the market for prompt physical cargoes is tight. But little activity is taking place partly due to the recent volatility, even though successive heat waves have eaten into LNG inventories

In Japan, inventories kept by utility companies have dropped for the fifth week in a row to 1.94 million tons of LNG, below both last year’s level and the five-year average. But Japanese buyers are not scrambling to secure more cargoes due to high prices and the prospect of cooler weather.

Demand is also expected to remain muted in China. The country is bracing for yet another heat wave with temperatures set to cross 40ºC (104ºF) but strict anti-Covid-19 measures are limiting power demand. Several large cities including Shanghai have initiated new mass testing or imposed lockdowns on millions of residents over the past few days. In addition, heavy rain over recent weeks has been supporting hydropower generation and limiting the need for LNG.

Created with Highcharts 9.0.0($/MMBtu)REGIONAL SPOT PRICESNortheast AsiaSouthwest EuropeAug '21Sep '21Oct '21Nov '21Dec '21Jan '22Feb '22Mar '22Apr '22May '22Jun '22Jul '22020406080Energy Intelligence

Marc Roussot, Singapore and Daniel Stemler, Madrid

Indonesia to Miss Output Targets

Indonesia looks set to miss its target this year for oil and natural gas lifting, or ready-to-sell production, due to delays to major projects.

The country's oil lifting over the first six months of the year averaged 614,500 b/d, much lower than its 703,000 b/d target, while gas lifting averaged 5,326 MMcf/d, well below the target of 5,800 MMcf/d.

Indonesia’s oil and gas lifting fell short of expectations partly because of delays at the Jambaran Tiung Biru project, upstream regulator SKK Migas said in a statement.

The 190 MMcf/d project was expected to be on line in May but is now only set to achieve first gas by the end of July or early August.

SKK Migas was also expecting the 3.8 million ton/yr Tangguh LNG Train 3 to start late last year, despite operator BP repeatedly flagging delays due to the Covid-19 pandemic. SKK Migas now expects Tangguh Train 3 to come on line on March next year.

BP said earlier this year it expects Train 3 “to start up by the end of next year.”
Marc Roussot, Singapore


Data Snapshot

LNG Netbacks at Key Receiving Terminals

LNG Exporter Netbacks Between Key Receiving Ports
($/MMBtu)AlgeriaAustralia WestAustralia EastMalaysiaNigeriaNorwayOmanPeruQatarRussiaTrinidadUS GulfUS East Coast
Dahej, India33.2533.6933.3333.6832.9132.7434.1532.4034.0733.3532.5832.3132.68
Sodegaura, Japan33.9335.3035.3235.4033.9030.5034.9432.8334.8035.7433.1632.3234.10
Zeebrugge, Belgium31.8830.2729.9330.3531.3931.7331.0229.8930.8829.9031.5130.6031.61
Huelva, Spain37.1735.5535.1935.6236.6436.4336.2935.0836.1635.1736.7035.6936.72
Isle of Grain, UK22.3820.8720.5620.9321.9422.2321.6820.5221.4420.5322.0321.1922.13
Everett, US7.496.076.426.137.217.080.016.816.605.757.67----
Created with Highcharts 9.0.0($/MMBtu)QATAR TO NORTHEAST ASIANetbackNetback14. Feb28. Feb14. Mar28. Mar11. Apr25. Apr9. May23. May6. Jun20. Jun4. Jul18. Jul102030405060Energy Intelligence

LNG Market Indicators

Spot LNG Pricing
Latest WGIDailyDaily Chg.Chg. From Latest WGI
NE Asia0.0036.50-6.5236.50
SW Europe0.0037.858.4737.85
Futures Pricing
($/MMBtu)Chg.LatestPreviousWeek Ago
Henry Hub, US (futures)-0.227.267.486.16
NBP, UK (futures)+2.7325.8923.1629.18
European Spot Pricing
Chg.LatestPreviousWeek Ago
Dutch TTF-2.0745.4347.5052.35
Zeebrugge (Belgium)----24.4537.17
German NCG-1.2843.9145.1949.56
NBP (UK)3.9523.2019.2530.25
US Markets
US Spot Prices
Sabine Pass, Louisiana-0.217.357.566.80
Corpus Christi, Texas-0.177.127.296.57
Cove Point, Maryland1.198.807.616.05
Elba Island, Georgia--------
Nymex Henry Hub Futures
Near Month-0.227.267.486.16
Second Mth-0.237.157.386.02
Third Mth-0.247.137.376.00
Created with Highcharts 9.0.0($/MMBtu)GLOBAL GAS PRICINGUS NymexDutch TTFNE AsiaAug '21Sep '21Oct '21Nov '21Dec '21Jan '22Feb '22Mar '22Apr '22May '22Jun '22Jul '22020406080Energy Intelligence