August 12, 2022

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Prelude's Strike Extended Again

An ongoing protected industrial action (PIA) at Shell’s Prelude facility off Western Australia has been extended by one week to Aug. 25.

This is the latest extension for the PIA which started Jun. 10. Production at the 3.6 million ton per year Prelude facility remains suspended. The strike was last expected to end on Aug. 18, but no progress was made in reaching a new enterprise agreement.

“Shell remains committed to reaching an agreement and working together to find a way forward with our workforce,” a Shell spokesperson said.

The extended Prelude suspension comes amid an already tight market featuring spot LNG pricing at over $40 per million Btu.

Delayed Turnaround

The Prelude operator said this week it will postpone a planned maintenance originally due in September-November to July 2023 at the earliest due to the ongoing PIA. The new timing would depend on a few factors including weather conditions, contractor availability and when the industrial action ends.

“As a result of the ongoing protected industrial action and inability to complete preparation work, we are not able to proceed with the planned turnaround at this time,” Shell said.

Shell applied to Australia’s workplace tribunal Fair Work Commission (FWC) on Aug. 3 to seek a suspension of the industrial action and impose a "cooling off period," which would have allowed it to go ahead with preparations for a turnaround. But the FWC rejected the request.
Clara Tan, Singapore

India Allocates More Gas for Pipeline Network

India’s federal oil ministry has increased the allocation of cheaper domestic gas for city gas projects.

The move was made in order to shield consumers from a sharp spike in prices. The spike resulted from its recent policy direction to increases supplies through costly imported LNG.

The domestic gas will help meet 94% of the overall city gas demand from Aug. 16 onwards, up from 85% earlier. The remaining demand may still have to be fulfilled by LNG.

City gas projects supply piped natural gas to households, as well as industrial, automotive and commercial entities in cities

In the April-June quarter, city gas projects got 20.9 MMcm/d from domestic gas and 13.2 MMcm/d from LNG.

The city gas projects have been allocated increased supply of cheap gas from blocks for which the government sets prices every six months in April and October. The gas from the blocks is presently priced at $6.10/MMBtu. Spot LNG is over $40/MMBtu.

Earlier in May, the government had directed state-owned Gail India to procure gas for city gas projects via LNG, both from spot markets and under term deals, and also domestic production from difficult deepwater fields for which the ceiling price has been set at $9.92/MMBtu. Gail was to supply this gas at a uniform base price to city gas suppliers. However, the city project developers were not happy as the pooling price forced them to sharply raise prices for compressed natural gas (CNG), which is supplied to automobiles, and piped natural gas (PNG), supplied to household and industrial consumers.

The government move to increase the supply of cheap domestic gas will reduce procurement costs, helping bring down prices of PNG and CNG, helping make gas competitive against diesel and gasoline, analysts at Mumbai-based Edelweiss Securities said in a note.

At 15% spot LNG blend, CNG is 27% cheaper than diesel and at 6% it is 38% cheaper, Edelweiss noted. The increased supply to city gas projects will however lead to a cut in supplies to petrochemical plants and industries.
Rakesh Sharma, New Delhi


Data Snapshot

LNG Netbacks at Key Receiving Terminals

LNG Exporter Netbacks Between Key Receiving Ports
($/MMBtu)AlgeriaAustralia WestAustralia EastMalaysiaNigeriaNorwayOmanPeruQatarRussiaTrinidadUS GulfUS East Coast
Dahej, India42.5743.0042.6442.9942.2642.0943.4341.7843.3542.6841.9441.6842.01
Sodegaura, Japan43.3044.6044.6244.7043.2840.1044.2542.2844.1345.0342.5741.7843.44
Zeebrugge, Belgium61.5259.7759.3559.8660.9861.3660.5759.3760.4359.3761.1160.1261.20
Huelva, Spain53.4851.8651.4751.9352.9552.7452.5951.3952.4751.4953.0152.0053.02
Isle of Grain, UK43.0941.5341.1841.6042.6442.9442.3541.1742.1241.1842.7341.8642.81
Everett, US6.705.485.775.526.466.360.016.105.935.216.86----
Created with Highcharts 9.0.0($/MMBtu)QATAR TO NORTHEAST ASIANetbackNetback7. Mar21. Mar4. Apr18. Apr2. May16. May30. May13. Jun27. Jun11. Jul25. Jul8. Aug102030405060Energy Intelligence

LNG Market Indicators

Spot LNG Pricing
Latest WGIDailyDaily Chg.Chg. From Latest WGI
NE Asia0.0045.78-0.2245.78
SW Europe0.0054.162.6954.16
Futures Pricing
($/MMBtu)Chg.LatestPreviousWeek Ago
Henry Hub, US (futures)-0.118.778.878.06
NBP, UK (futures)-0.7148.3549.0745.64
European Spot Pricing
Chg.LatestPreviousWeek Ago
Dutch TTF-0.5361.6162.1458.61
Zeebrugge (Belgium)----40.9630.42
German NCG-1.8158.5060.3055.80
NBP (UK)2.6943.9841.2933.59
US Markets
US Spot Prices
Sabine Pass, Louisiana0.208.738.538.14
Corpus Christi, Texas0.118.348.237.84
Cove Point, Maryland----7.477.83
Elba Island, Georgia--------
Nymex Henry Hub Futures
Near Month-0.118.778.878.06
Second Mth-0.128.748.868.05
Third Mth-0.128.828.948.12
Created with Highcharts 9.0.0($/MMBtu)GLOBAL GAS PRICINGUS NymexDutch TTFNE AsiaSep '21Oct '21Nov '21Dec '21Jan '22Feb '22Mar '22Apr '22May '22Jun '22Jul '22Aug '22020406080Energy Intelligence