July 27, 2022

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Angola LNG to Get Fresh Feedstock

Eni and Chevron have greenlighted a new project to develop gas feedstock for Angola LNG (ALNG).

The project, which will develop the Quiluma and Maboqueiro fields marks Angola’s first non-associated gas scheme, which will top up the associated gas feedstock to the plant.

Eni has been taking various actions to help Russia-dependent Italy with gas supply amid the Ukraine crisis.

Can Angola Help Europe?

ALNG has been performing below its capacity of 5.2 million tons a year due to a shortage of feedstock which reduced output to 3.77 million ton/yr in 2021 according to Kpler.

Since a full-year 2015 shutdown, Angola LNG has primarily supplied Asia, with overall LNG exports having slipped from a 2020 peak (see graph).

However, the Asia trend flipped in 2022 with about 62% of Angolan LNG exports headed to Europe so far, and only 38.5% headed to Asia.

After a maintenance shutdown back in June, the plant resumed exports on July 8th with a cargo sent to Spain's Huelva terminal, according to Kpler.

Created with Highcharts 9.0.0(million tons)ANGOLA LNG EXPORTS TO THE RESCUE?AsiaEuropeAmericasAfrica2016201720182019202020212022012345Source: Kpler

Project Details

Project development, due to start this year, will deliver first gas in 2026 — at a rate of 330 million standard cubic feet a day at plateau, or roughly 4 billion cubic meters per year.

The Eni-Chevron project was facilitated by legislation in 2017, which sought to open up the gas sector and extend the life of Angola’s ageing oil fields.

The New Gas Consortium executing the project is operated by Eni, which holds 25.6%. Partners include Chevron (31%), Sonangol P&P (22.8%), along with BP and Total Energies, which each hold 11.8%.

Christina Katsouris, London

Russia Boosts First-Half LNG Production

Russia’s LNG production increased 7.7% on the year to 16.8 million tons in the first half of 2022, according to data released by the federal state statistics service on Wednesday.

In June, Russia produced 2.5 million tons of LNG, up 0.7% from a year ago, but 9.8% down from the previous month.

Yamal Overproduces

The six-month growth was mainly driven by the ramp-up of Novatek’s Yamal LNG plant in the Arctic, which launched the 900,000 ton per year Train 4 in May 2021. The plant was producing well above its 17.4 million ton/yr nameplate capacity in the first half of 2022.

In the summer, Yamal reduced production as ambient temperatures increased but it kept operating at around 104% of capacity, a source told Energy Intelligence recently.

Sakhalin-2 Down in June

The only other large LNG plant in Russia, Gazprom-controlled Sakhalin-2, is understood to have reduced LNG output in June, judging by a sharp 20% month-on-month drop in the project’s natural gas production. In the first six months, however, Sakhalin-2 gas production increased 3% on the year to some 9.4 billion cubic meters.

Sakhalin-2 is set to change operators at the request of the Kremlin, which might squeeze out foreign shareholders Shell, Mitsui and Mitsubishi from the project.

Natural Gas Production Falls

Russia’s natural gas production, excluding associated gas produced by oil companies, decreased 6.6% on the year to 314 Bcm in January-June, the statistics service said.

In June, natural gas production dropped 23.2% on the year and 19.9% on the month to 39.26 Bcm, mainly because of a sharp reduction in gas flows via Gazprom’s Nord Stream gas pipeline from Russia to Germany, which resulted in a significant decrease in Russia’s pipeline gas exports to Europe.

Novatek Won’t Report Q2 Results

Separately, Russia’s LNG export champion Novatek said Wednesday it decided not to publish its financial results for the second quarter of 2022 and to not hold an investor call to discuss them.

The decision is in line with the general trend of less transparency at publicly traded Russian companies in response to Western sanctions over the Kremlin’s war in Ukraine. Russian companies have reduced the amount of information they are sharing with investors and the wider public, including regular financial reports.
Staff Reports

Exxon Signs on at Rio Grande LNG

NextDecade signed up an Exxon Mobil unit to a 20-year sale and purchase agreement for LNG from its proposed Rio Grande export project in Brownsville, Texas.

Under the agreement, Exxon Mobil LNG Asia Pacific (EMLAP) will purchase 1 million tons of LNG from the first two trains of the proposed five-train, 27 million tons per year Rio Grande LNG, with the first train expected to start commercial operations as early as 2026.

FID Trajectory

"Based on current expected demand for LNG and assuming the achievement of further LNG contracting and financing," NextDecade sees a positive final investment decision (FID) on up to three trains — 5.4 million tons/yr each — at Rio Grande in the second half of 2022, with FIDs of its remaining trains "to follow thereafter."

Including this agreement with EMLAP, NextDecade has offtakers for about 8.3 million tons per year over a set of six deals with counterparties including portfolio players Shell, EMLAP and Engie, as well as with Chinese companies Guangdong Energy, ENN, and China Gas.

The offtake represents about 77% of a two-train 10.8 million ton/yr FID, or 51% of a three-train 16.2 million ton/yr FID.

Exxon's Perspective

From Exxon's perspective, this deal with NextDecade puts the supermajor's US LNG dealmaking in 2022 ahead of its Qatari dealmaking.

Exxon obtained 2 million tons/yr of equity LNG when it was selected to partner in the Qatar's mega-expansion in June.

However, combined with a pair of deals signed with Venture Global in May, Exxon has now purchased 3 million tons of offtake from US LNG projects this year.

“LNG will play an increasingly important role in helping society reduce emissions during the energy transition,” said Peter Clarke, senior vice president of LNG for the ExxonMobil Upstream Company.
Michael Sultan, Washington

Australia's Viva Takes Step Forward for FSRU Project

Australian refiner Viva Energy has signed commercial agreements with Geelong Port for the construction, and provision of necessary pier and berthing infrastructure, for its proposed floating LNG import terminal.

Geelong Port will construct an extension to the existing refinery pier and license the pier to Viva, while the latter will construct the related infrastructure including a gas pipeline and treatment facility to enable gas to be supplied into the network.

Viva said the agreements provide a clear pathway to the construction and delivery of the necessary infrastructure underpinning the project. The commencement of construction is subject to Viva taking a final investment decision (FID) and securing environmental approval from the government of Victoria state.

Viva previously said it aims to take an FID in mid-2022, but it has yet to provide a revised timeline. Its project is one of several being planned in Southeast Australia which are facing competition for FSRUs from Europe.

Viva is seeking to diversify its business by looking at LNG imports and exploring renewable energies at Geelong. It plans to continue running its 120,000 b/d refinery at Geelong until Jun. 30, 2027, with the option of a three-year extension to Jun. 30, 2030.

The firm said its planned terminal will provide a flexible and reliable supply of gas to meet Victoria and Southeast Australia’s ongoing energy needs amid declining local gas production and anticipated shortages which would impact consumers over the next few years.
Clara Tan, Singapore

European Gas Prices Extend Gains on Supply Worries

European natural gas prices extended their recent gains on Wednesday as Russia implemented a previously announced reduction in exports to Germany via the Nord Stream 1 pipeline to 20% of its capacity from 40% previously.

Adding to the uncertainty around Russian gas supplies to Europe, Ukraine's gas pipeline system operator posted a preliminary transit nomination for Thursday of 10 million cubic meters — just one quarter of recent daily levels.

The front-month (August) Dutch TTF gas futures contract surged to €227.5 per megawatt hour (about $68/MMBtu) in early trading on Wednesday, before drifting lower to close at €205/MWh — a gain of 2.5% versus Tuesday.

Prices have risen sharply from around €160/MWh at the end of last week after Russian state-controlled gas giant Gazprom announced the latest reduction in Nord Stream 1 volumes on Monday.

The EU finalized a plan on Tuesday to lower member states' gas consumption by 15% from August through March so that the 27-nation block can stockpile enough gas for the winter heating season. But that has failed to rein in prices so far.
Created with Highcharts 9.0.0(MMcm)RUSSIAN GAS FLOWS TO EUROPENord StreamUkrainian TransitBelarusian TransitTurk Stream to EuropeImatra to Finland5-1-225-4-225-7-225-10-225-13-225-16-225-19-225-22-225-25-225-28-225-31-226-3-226-6-226-9-226-12-226-15-226-18-226-21-226-24-226-27-226-30-227-3-227-6-227-9-227-12-227-15-227-18-227-21-227-24-22020406080100120140160180Source: Gazprom, GTSOU, Nord Stream AG, Entsog, Energy Intelligence

BASF in 'Crisis Mode'

Germany's Federal Networks Agency warned on Wednesday that if Nord Stream 1 flows remain at their current low level of 33 MMcm/d, Germany will have difficulty meeting its gas storage target unless it takes additional measures.

Germany wants to fill its gas storage facilities to 95% of capacity by Nov. 1 — a higher level than the EU target of 80% by the same date.

Martin Brudermuller, CEO of German chemicals giant BASF, a major industrial consumer of natural gas, said on Wednesday that the company is "in a crisis mode but not in a panic mode" as it scrambles to adapt to the situation.

"So I would say we are, on all levels, engaged, fully prepared for all kind of scenarios, but we are optimistic that we can get through this," he added.

Onward shipments of Russian gas to other European countries — including France, Austria and the Czech Republic — are also being affected by the lower flow rates.

Austria's OMV was quoted as saying that Gazprom had only confirmed 40% of nominated supply volumes for Wednesday.

Italy's Eni said that Gazprom planned to deliver some 27 MMcm of gas to it on Wednesday, down from around 34 MMcm/d in recent days.

Contradictory Numbers

Gazprom has not increased supplies to Europe via Ukraine to compensate for the drop in Nord Stream 1 volumes. Its Ukraine transit nomination for Wednesday was 42.2 MMcm, which is in line with average daily levels seen since mid-May.

Gazprom's preliminary transit nomination for Thursday was much lower at just 10 MMcm, according to data from Ukraine's pipeline system operator.

However, that appeared to be at odds with information from the Slovak system operator, which posted a nomination of 56 MMcm for gas entering Slovakia from Ukraine on Thursday, up from around 37 MMcm on Tuesday and Wednesday.

Gazprom declined to comment on the apparent anomaly.

The Russian gas giant and the Kremlin maintain that the reduction in gas exports to Europe has been caused by western sanctions which have delayed the maintenance of turbines at the Nord Stream 1 pipeline's Portovaya compressor station in Russia.

Gazprom Deputy CEO Vitaly Markelov told Russian television on Wednesday that only one of of six compressor units is currently working. Normally, five units would be working and one held in reserve, he said.

European officials have rejected these explanations, with EU Energy Commissioner Kadri Simson describing the reduction in gas flows from Russia as a "politically motivated step."


For more coverage of the Ukraine crisis, visit Ukraine Crisis: Energy Impact
Staff Reports


In Brief

Australian PM Rejects Fossil Fuels Ban

Australia's Labor government has rejected a call by the Greens party to halt the development of new coal and gas projects.

Such a decision "would have a devastating impact on our economy," Prime Minister Anthony Albanese told Australia's ABC television.

"If Australia today said we are not going to export any more coal, what you would see is a lot of jobs lost. You would see a significant loss to our economy, significantly less taxation revenue for education, health and other services," he said.

Albanese also said that ending exports of fossil fuels would not lead to a reduction in carbon emissions.

"What you would see is a replacement with coal from other countries that's likely to produce higher emissions because of the quality of our product," he said.

The Greens have been pushing Labor to implement a moratorium on new fossil fuel projects as part of negotiations on a bill to reduce emissions by 43%.
Marc Roussot, Singapore


Data Snapshot

LNG Netbacks at Key Receiving Terminals

LNG Exporter Netbacks to Key Receiving Terminals
($/MMBtu)AlgeriaAustraliaMalaysiaNigeriaNorwayPeruQatarRussiaTrinidadUS Gulf
NE Asia40.7242.1142.2240.6937.2539.6041.6042.5739.9339.08
SW Europe47.7346.0446.1247.1846.9645.5546.6845.6547.2346.18
India40.0640.5140.5039.7139.5439.1940.8940.1639.3839.10
UK42.9441.2441.3242.4542.7740.8641.8940.8642.5441.59
US Northeast7.075.705.756.806.686.416.215.397.24--
Zeebrugge66.0364.0964.1965.4365.8463.6464.8263.6565.5664.46
Note: Netback methodology can be found on the Energy Intelligence website.
Created with Highcharts 9.0.0($/MMBtu)QATAR TO NORTHEAST ASIANetbackNetback21. Feb7. Mar21. Mar4. Apr18. Apr2. May16. May30. May13. Jun27. Jun11. Jul25. Jul102030405060Energy Intelligence

LNG Market Indicators

Spot LNG Pricing
Latest WGIDailyDaily Chg.Chg. From Latest WGI
NE Asia0.0043.330.3343.33
SW Europe0.0048.423.4648.42
Futures Pricing
($/MMBtu)Chg.LatestPreviousWeek Ago
Henry Hub, US (futures)-0.318.698.998.01
NBP, UK (futures)+2.3745.1942.8232.63
European Spot Pricing
Chg.LatestPreviousWeek Ago
Dutch TTF2.4561.2558.8046.46
Zeebrugge (Belgium)2.8736.3033.43--
German NCG4.4861.1756.6946.00
NBP (UK)3.0443.7740.7332.10
US Markets
US Spot Prices
Sabine Pass, Louisiana-0.728.679.397.55
Corpus Christi, Texas8.548.540.007.31
Cove Point, Maryland-0.308.058.357.67
Elba Island, Georgia--------
Nymex Henry Hub Futures
Near Month-0.318.698.998.01
Second Mth-0.278.558.837.90
Third Mth-0.278.538.797.87
Created with Highcharts 9.0.0($/MMBtu)GLOBAL GAS PRICINGUS NymexDutch TTFNE AsiaAug '21Sep '21Oct '21Nov '21Dec '21Jan '22Feb '22Mar '22Apr '22May '22Jun '22Jul '22020406080Energy Intelligence