August 23, 2022

WWW.ENERGYINTEL.COM

Freeport LNG's Restart Delayed 6 Weeks to Mid-November

Freeport LNG said Tuesday that its Texas Gulf Coast export terminal will begin ramping up operations in mid-November, about six weeks later than the company projected earlier this month.

Freeport said the 15 million ton per year facility will see "initial production" commencing in mid-November, increasing to a sustained level of at least 2 billion cubic feet per day by Nov. 30. That represents more than 85% of the facility's export capacity.

About three weeks ago, Freeport was still signaling an early October restart of "initial operations" at the terminal, which was taken offline by a June 8 explosion.

But a 100% recovery is not expected until March 2023 — after the critical Northern Hemisphere winter season in which Europe, Freeport's top customer at the time of the explosion, hopes to bring in as much LNG as possible.

The news sent US gas futures tumbling Tuesday from a new fresh 14-year high earlier in the day and may have contributed to new heights for world spot LNG assessments.

Recovery Plan

Potential regulatory hurdles remain, with the company saying it "continues to coordinate closely with representatives of the Pipeline Hazardous Materials Safety Administration, the Federal Energy Regulatory Commission, the US Coast Guard and other applicable regulatory agencies to implement its recovery plan and corrective measures to ensure a safe and confident resumption of operations."

Freeport said that it has completed a detailed assessment of alternatives for resuming operations and has identified a recovery plan for reinstatement of partial operations.

Freeport believes the plan "ensures the long-term safety and integrity of the facility, provides recovery execution certainty and minimizes procurement and performance testing risks."

The recovery plan will use Freeport's second LNG loading dock as a lay berth until loading capabilities at the second dock are reinstated in March 2023, "at which time we anticipate being capable of operating at 100% of our capacity."

Kiewit Onboard

To that end, Freeport has engaged Kiewit to perform the engineering, procurement and reconstruction activities necessary to implement the terminal's recovery effort.

Freeport noted Kiewit's "significant LNG facility experience."
Michael Sultan, Washington

Argentina Said To Be Selling Back LNG Cargoes From Latest Tender

Argentina’s state-owned energy company Energia Argentina is heard to be selling back LNG cargoes to the market, which were purchased in its most recent buy tender.

Energia Argentina, previously known as IEASA, obtained a total of 11 cargoes for delivery between Jul. 20 and Aug. 25 in its tender that closed on Jun. 8, according to data from the company.

However, market sources indicate that the Argentinian firm is looking to sell back cargoes to the market and use other fuels for power generation, as global LNG prices soar to new records.

“The big swing factor would be power generation, in my opinion, as they bought a fair bit of oil,” a Europe-based LNG trading analyst said.

The same source suggested that cargoes that are sold back could be floated to capture a favorable time spread.

A separate LNG trader said that Energia Argentina is trying to avoid buying LNG due to skyrocketing prices and is looking to buy other fuels.

Cargo Diversion

Claims that Energia Argentina is selling back cargoes were reinforced with a recent cargo diversion from the country’s Bahia Blanca terminal.

The 178,804 cubic meter Castillo de Caldelas, laden with a cargo from the US Corpus Christi plant, was expected to arrive at the Argentinian terminal on Aug. 22. However, on Aug. 17 the vessel suddenly switched course, while sailing along Brazil’s Atlantic coast, and headed north.

On the same day, the vessel began broadcasting France’s Montoir terminal as destination.

The vessel is under long-term charter to Spanish utility Naturgy, however, the cargo for delivery on Aug. 22 was won by French major TotalEnergies in Energia Argentina’s tender in June.

This indicates that Naturgy and TotalEnergies have likely entered into a swap deal, in which the two companies mutually supply each others’ positions at different locations, although this could not be confirmed.

Swaps May Increase

A European shipbroker suggested that the number of swap deals could increase on the market in line with the decreasing vessel availability.

“I think as the shipping availability tightens [market participants] will try more of these kind of deals,” the shipbroker said, adding that this way companies could save on shipping costs, while also optimizing their fleets.
Daniel Stemler, Madrid

Thailand's Egat Issues Long-Term Supply Tender

Thailand’s state power utility Electricity Generating Authority of Thailand (Egat) has issued a tender seeking long-term supplies to meet the country’s growing gas demand from the power sector.

The firm is seeking offers for 1.2 million tons per year of supply from 2026 over 15 years. It has invited sellers to offer pricing against ICE Brent, US Henry Hub or a hybrid comprising both price indices.

Egat is expected to bring LNG supplies to the existing 11.5 million ton per year Map Ta Phut terminal and a newly started up terminal at Nong Fab in which Egat is a co-investor with state energy firm PTT.

Thailand's LNG Appetite Expands

As the largest LNG market in Southeast Asia, Thailand’s LNG imports have been increasing this year which bucks a declining trend in China and India. Shipping data from Kpler shows Thailand’s imports spiked by 41% to 5.4 million tons in the first seven months due to declining domestic gas production at its ageing fields and a high reliance on gas-fired power generation.

In 2019, Egat picked Petronas in a tender for supplying 1.5 million tons/yr of LNG for up to 10 years which would break up PTT’s monopoly over LNG imports. However, this was eventually cancelled by the government on concerns at being overly contracted. The government asked Egat to import spot cargoes instead. But current spot prices have soared through the roof above $50/MMBtu, prompting buyers to seek security from term contracts.

PTT's subsidiary PTT Global LNG recently signed a 20-year, 1 million ton/yr contract with Cheniere which represents its first direct US LNG supply deal. The new deal would expand PTT’s existing contracted LNG supply from Qatar (2 million tons/yr), Petronas (1.2 million tons/yr), Shell (1 million tons/yr) and BP (1 million tons/yr).

Apart from PTT and Egat, several independent power producers have received licenses from the government to import LNG directly. They include B.Grimm Power, Gulf Energy Development, Hin Kong Power, Electricity Generating (Egco) and Siam Cement. B.Grimm Power has signed a terminal use agreement with PTT LNG, making it the country’s first private entity to import LNG. But high prices may have slowed LNG import plans.

Created with Highcharts 9.0.0(million tons)THAILAND'S LNG IMPORTS20112012201320142015201620172018201920202021202202468Source: Kpler

Clara Tan, Singapore

Trudeau Says Canada Could Supply LNG to Europe

Prime Minister Justin Trudeau stated again that Canada would be willing to consider easing burdensome red tape on new gas export facilities to Europe, though he acknowledged that financing LNG export ventures in Eastern Canada could prove difficult.

Speaking at a joint press conference with German Chancellor Olaf Scholz, Trudeau said there is no easy solution to the difficulty of supplying LNG export terminals on Canada’s Atlantic coast with gas sourced thousands of miles away in Western Canada.

Canada will “explore ways to see if it makes sense to export LNG, and if there’s a business case for it to export LNG directly to Europe,” Trudeau said, adding that businesses in Canada and Germany are involved in “economic conversations.”

Previous German Interest

Calgary-based Pieridae Energy, developer of the proposed 10 million ton per year Goldboro LNG export project in Nova Scotia, reported progress in 2018 in garnering US$1.5 billion in "untied" German federal government loan guarantees to help finance upstream activities within the Goldboro LNG project.

This was in addition to a similar confirmation of eligibility for up to US$3 billion in German financing for construction of Goldboro LNG's first liquefaction train.

Canaport Discussions, Bear Head Buy

Earlier this month, Spain's Repsol confirmed that it was in discussions about exporting gas to Europe from its Saint John LNG terminal in eastern Canada, which currently operates as a regasification facility.

Canada’s Deputy Prime Minister Chrystia Freeland said at the time that the resource-rich country had a political responsibility to support its allies in Europe with energy security.

Meanwhile, the long-dormant Bear Head LNG — currently a plot of cleared land in a Nova Scotia industrial site — was acquired by infrastructure fund Buckeye Partners back in May.

Nevertheless, Canadian LNG backers see rough sailing ahead despite favorable economic conditions in the wake of the Russian invasion of Ukraine.
Tom Haywood, Houston


In Brief

Spot LNG Finds New Heights

Northeast Asian spot LNG prices skyrocketed by $9 to a new record of $60/MMBtu. Southwest Europe soared still higher, assessed at new highs, rising $8.85 to $62.30/MMBtu.

Spot LNG prices this week are at their highest levels since Energy Intelligence assessments started in 2010, following a price surge in European gas hubs.

European prices skyrocketed on the announcement that Gazprom will shut its Nord Stream pipeline for three days for maintenance, tightening an already-difficult supply landscape even further.

The high prices will likely put spot LNG procurement plans on pause across Asia until levels fall.

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

Marc Roussot, Singapore and Daniel Stemler, Madrid

Papua LNG Awards Upstream Feed Work

A consortium formed by Technip Energies and Clough has been selected to undertake front-end engineering and design (Feed) work on the upstream facilities of TotalEnergies’ 5.4 million ton/yr Papua LNG project in Papua New Guinea.

The Feed work will cover the development of the Elk and Antelope onshore gas fields including the well pads and the central processing facility. It also incorporates a carbon capture and sequestration scheme to remove the fields’ native CO2 and re-inject it into the reservoirs.

Total said earlier Feed studies for Papua LNG's liquefaction facilities are progressing and the plan is to launch the integrated Feed in the fourth quarter of this year.

Papua LNG — in which operator Total is partnered by Santos and Exxon Mobil — is targeting to sanction the project around end-2023 with start-up envisaged by end-2027.

Total is seen as a likely buyer for Santos' 5% stake in PNG LNG, the sole operating facility in Papua New Guinea which is operated by Exxon Mobil.
Clara Tan, Singapore

Abadi’s Costs Climb With CCS

The cost of the Abadi project in Indonesia is set to increase by $1.2 billion to $1.3 billion with the addition of technologies to capture and store carbon dioxide from the reservoir.

This means Abadi would cost about $21 billion.

This is the result of a study conducted by Japanese operator Inpex, Indonesia’s upstream regulator SKK Migas told Energy Intelligence.

Inpex is currently negotiating a revision of Abadi’s plan of development to make the project cleaner and cheaper, the company said recently.

Inpex is aiming to sanction Abadi “in the latter half of the 2020s” and to start production in the early 2030s, the company also said.

In turn, SKK Migas is hoping for first gas in the second quarter of 2027.

SKK Migas also said that state-owned Pertamina is looking at the data room with a view to potentially take a stake in the proposed 9.5 million ton per year project as UK major Shell seeks to sell down its 35% stake.
Marc Roussot, Singapore


Data Snapshot

LNG Netbacks at Key Receiving Terminals

LNG Exporter Netbacks Between Key Receiving Ports
($/MMBtu)AlgeriaAustralia WestAustralia EastMalaysiaNigeriaNorwayOmanPeruQatarRussiaTrinidadUS GulfUS East Coast
Dahej, India56.7157.1756.7757.1656.3756.2057.6455.8657.5556.8256.0455.7656.11
Sodegaura, Japan57.3858.7758.7958.8857.3553.9858.3956.2858.2659.2356.6055.7757.52
Zeebrugge, Belgium37.9136.4636.1436.5237.4737.7837.1236.1237.0036.1437.5836.7737.66
Huelva, Spain61.6159.9459.5460.0261.0660.8560.6959.4760.5759.5661.1260.0961.13
Isle of Grain, UK47.4045.8445.4845.9046.9447.2546.6545.4846.4245.4947.0446.1747.12
Everett, US8.427.227.507.268.188.080.017.837.666.968.57----
Created with Highcharts 9.0.0($/MMBtu)QATAR TO NORTHEAST ASIANetbackNetback21. Mar4. Apr18. Apr2. May16. May30. May13. Jun27. Jun11. Jul25. Jul8. Aug22. Aug10203040506070Energy Intelligence

LNG Market Indicators

Spot LNG Pricing
Latest WGIDailyDaily Chg.Chg. From Latest WGI
NE Asia0.0060.008.3860.00
SW Europe0.0062.30-4.8062.30
Futures Pricing
($/MMBtu)Chg.LatestPreviousWeek Ago
Henry Hub, US (futures)--
NBP, UK (futures)--------
European Spot Pricing
Chg.LatestPreviousWeek Ago
Dutch TTF--------
Zeebrugge (Belgium)--------
German NCG--------
NBP (UK)--------
US Markets
US Spot Prices
Sabine Pass, Louisiana-0.069.779.839.27
Corpus Christi, Texas0.179.319.148.80
Cove Point, Maryland0.409.328.928.26
Elba Island, Georgia--------
Nymex Henry Hub Futures
Near Month--
Second Mth--
Third Mth--
Created with Highcharts 9.0.0($/MMBtu)GLOBAL GAS PRICINGUS NymexDutch TTFNE AsiaSep '21Oct '21Nov '21Dec '21Jan '22Feb '22Mar '22Apr '22May '22Jun '22Jul '22Aug '22020406080100Energy Intelligence