September 2, 2022

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Argentina Studies Yet Another Try at LNG Exports

Malaysia's Petronas has signed a joint study and development agreement with Argentina’s YPF for an integrated LNG export project. The project includes the development of unconventional gas resources from the country’s Vaca Muerta shale play.

“Today we are achieving the goal we have set for ourselves: not letting the gas sleep there in Vaca Muerta, get it out as soon as we can, use what we need, and export and bring in profits with it,” said Argentina’s President Alberto Fernandez.

Argentina has the second-largest unconventional gas reserves in the world, but its most recent prior effort to export LNG was abandoned.

Two Phases

The first phase of the proposed project would cost approximately $10 billion, allowing the production of up to 5 million tons per year of LNG.

“We plan to export 460 ships per year,” YPF President Pablo Gonzalez said in a statement released by Argentina’s presidency.

In a second phase, which would be achieved within 10 years, the project would produce more than 25 million tons/yr of LNG.

The study also covers the development of gas pipelines and infrastructure as well as international marketing and logistics.

“The final investment decision for the projects will be undertaken after diligent technical and commercial assessment has been conducted, backed by conducive fiscal terms, legislation and policies,” Petronas said in a separate statement.

Another Tango With Exports?

Argentina has tried to become an LNG exporter in the past.

The former Argentine floating export terminal, Tango FLNG, last month headed for the Congo (Brazzaville).

Last year, Argentine export plans were seen as scrapped for at least a decade amid political turmoil that inhibits domestic investment. Legislation to lead Argentina back toward self-sufficiency and exports was introduced in March 2021 to a lukewarm industry response.

Argentina exported seven LNG cargoes between June 2019 and September 2021, according to Refinitiv data.

La Amarga Chica

Petronas and YPF have been working together since 2014 in the development of the La Amarga Chica Block in the Vaca Muerta, which produces more than 40,000 barrels per day of oil and 1 million cubic meters per day of gas.

Petronas and YPF also signed a memorandum of understanding to continue collaboration in Argentina on oil production, petrochemicals and clean energy solutions.
Marc Roussot, Singapore

India’s New LNG Regas Terminals Delayed to 2023

India’s plan to expand LNG import capacity by 40% in 2022, with the commissioning of much-delayed terminals, is getting pushed to next year.

Project execution issues have led to delays alongside the sharp spike in LNG prices, which has dented demand for the supercooled fuel from the world's fourth-largest LNG importer.

But the project delays are a relief for India's six existing terminals that are seeing weak capacity use as record-high spot prices push consumers to alternative fuels.

Several developers jumped on the LNG regasification terminal bandwagon as Prime Minister Narendra Modi set a goal of raising the share of gas in the country's energy mix to 15% by 2030. Since domestic gas production has grown at a slow pace, most of the fresh demand was expected to be met by imported LNG.

But the sharp spike in LNG prices in the wake of Russia’s war on Ukraine, has upended those goals. India’s LNG imports are already in the doldrums with half of the six operational terminals, which have a combined nameplate capacity of 42.7 million tons per year, operating below 20% capacity during the April-June quarter.

Swan Progress

Swan Energy’s 5 million ton/yr capacity floating storage and regasification unit (FSRU) project at Jafrabad, in the western state of Gujarat, achieved 68% completion as of Mar. 31, the Mumbai-based company said in its latest annual report. The balance of the work is expected to be completed, and the project commissioned, during the current financial year that began Apr. 1, it noted.

Out of 5 million tons of capacity, Swan has executed regasification agreements for 4.5 million tons for 20 years with state-owned Gujarat State Petroleum, Bharat Petroleum, Indian Oil and Oil and Natural Gas Corp.

The project will be operated on a tolling bass.

Swan’s subsidiary Triumph Offshore took the delivery of FSRU Vasant 1 in September 2020, but it has been put on charter hire.

Giant Sails Away

Mumbai-based H-Energy’s 6 million ton/yr Hoegh Giant FSRU reached the Jaigarh terminal in the western state of Maharashtra in March, raising hopes for the start of operations in April.

However, Hoegh LNG terminated the contract in April and the FSRU left India in July, the Norwegian company said in its April-June quarterly earnings statement.

H-Energy did not reply to an email seeking comment on the reason for the termination.

Dhamra in December

There is still hope of India’s LNG capacity witnessing some growth this year.

Adani Ports and Special Economic Zone (Apsez) and TotalEnergies have a joint venture 5 million ton/yr LNG import terminal at Dhamra on India's east coast. It will get a commissioning cargo in November and will get fully commissioned by December, Apsez’s Chief Executive Officer Karan Adani told analysts during a conference call last month.

State-owned Indian Oil has booked 3 million tons of capacity at Dhamra. Gail India has 1.5 million tons/yr reserved at the terminal.
Rakesh Sharma, New Delhi

Sakhalin-2 LNG Sales to China Fell Last Year

LNG exports from Russia’s Sakhalin-2 project to China dropped 44% on the year to some 915,000 tons in 2021 after growing significantly in 2019 and 2020, according to a report by the project operator.

The drop could be partly attributed to lower spot sales amid a decrease in the project’s LNG production. There is also China's growing appetite for oil-linked long-term contract offtakes amid the post-Covid demand recovery and a faster growth in spot prices.

Gazprom-controlled Sakhalin-2 has no term contracts with Chinese buyers, but sells to China on spot, with some Sakhalin volumes also reaching the country from the trading portfolios of some long-term contract offtakers.

Active spot sales within new framework agreements in China were a key reason behind the sharp growth in Sakhalin-2 supplies to China in 2019 and 2020 to 1.04 million tons and 1.6 million tons, respectively, from around 450,000 tons in 2018.

Sakhalin-2 production fell 10% on the year to 10.4 million tons in 2021, mainly because of a major planned shutdown that lasted for more than a month in the summer.

The project shipped 160 standard LNG cargoes of 65,000 tons last year, the operating company said in a sustainable development report.

China’s Share Decrease

China accounted for 8.8% of Sakhalin-2 LNG sales in 2021, down from 14.1% in 2020, according to the report.

Japan, which has long-term contracts for 5 million tons per year remained the key market for Sakhalin-2, accounting for 57.7% of its sales in 2021, up from 51.6% in 2020.

South Korea accounted for 19.9% of Sakhalin-2 exports, up from 16.3%, while Taiwan received 13.6% of LNG from the project last year, down from 17.4% in 2020.

New Operator – New Buyers

Following the Kremlin-requested change in operatorship, Sakhalin-2 sales geography might change, as some long-term buyers, including 1 million ton per year offtaker Shell, might decide against re-signing their agreements with the new operator.

Another 1 million ton/yr offtaker, Gazprom Marketing & Trading (GM&T), formerly owned by Gazprom but now blacklisted by Moscow, can no longer take Sakhalin volumes as well.

The new operator, Russia-registered Sakhalin Energy LLC, was established in early August to replace Bermuda-registered Sakhalin Energy Investment Co.

Sakhalin Energy LLC CEO Roman Dashkov, who was also CEO of the previous operator, last week said the company continued exports in accordance with existing contractual commitments but was actively searching for new markets and expanding its customer portfolio.
Staff Reports


In Brief

Editor's Note: US Labor Day

LNG Intelligence will not be published Monday, September 5 due to a public holiday in the US.

Michael Sultan, Washington


Data Snapshot

LNG Netbacks at Key Receiving Terminals

LNG Exporter Netbacks Between Key Receiving Ports
($/MMBtu)AlgeriaAustralia WestAustralia EastMalaysiaNigeriaNorwayOmanPeruQatarRussiaTrinidadUS GulfUS East Coast
Dahej, India60.7061.1860.7461.1760.3260.1461.6859.7661.5960.8059.9759.6760.03
Sodegaura, Japan61.2962.7862.7962.9061.2457.6162.3660.0862.2363.2760.4559.5561.43
Zeebrugge, Belgium5.023.843.623.884.664.914.393.554.283.584.764.124.83
Huelva, Spain25.1123.7623.4723.8124.6724.5124.3723.3624.2623.4524.7323.9024.75
Isle of Grain, UK16.5415.2414.9715.2916.1616.4215.9314.9315.7314.9516.2515.5416.33
Everett, US6.965.705.995.756.716.610.016.356.175.427.12----
Created with Highcharts 9.0.0($/MMBtu)QATAR TO NORTHEAST ASIANetbackNetback28. Mar11. Apr25. Apr9. May23. May6. Jun20. Jun4. Jul18. Jul1. Aug15. Aug29. Aug10203040506070Energy Intelligence

LNG Market Indicators

Spot LNG Pricing
Latest WGIDailyDaily Chg.Chg. From Latest WGI
NE Asia0.0064.060.1064.06
SW Europe0.0025.77-22.0525.77
Futures Pricing
($/MMBtu)Chg.LatestPreviousWeek Ago
Henry Hub, US (futures)-0.488.799.269.30
NBP, UK (futures)-8.5847.2855.8673.94
European Spot Pricing
Chg.LatestPreviousWeek Ago
Dutch TTF-10.3655.5765.9396.27
Zeebrugge (Belgium)-9.1432.1541.2958.27
German NCG-12.0155.3567.3792.79
NBP (UK)-22.0617.3239.3863.51
US Markets
US Spot Prices
Sabine Pass, Louisiana8.918.910.009.46
Corpus Christi, Texas-0.388.608.988.71
Cove Point, Maryland-0.437.818.248.72
Elba Island, Georgia--------
Nymex Henry Hub Futures
Near Month-0.488.799.269.30
Second Mth-0.488.859.339.27
Third Mth-0.489.009.489.33
Created with Highcharts 9.0.0($/MMBtu)GLOBAL GAS PRICINGUS NymexDutch TTFNE AsiaSep '21Oct '21Nov '21Dec '21Jan '22Feb '22Mar '22Apr '22May '22Jun '22Jul '22Aug '22Sep '220255075100125Energy Intelligence