October 19, 2022

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Exxon Shows Interest in Indonesia Abadi LNG Project

Exxon Mobil is looking at the Masela Block’s data, Indonesia’s upstream regulator SKK Migas told Energy Intelligence.

Masela contains an estimated 10.7 trillion cubic feet of gas which is due to feed the long-delayed 9.5 million ton per year Abadi LNG project.

Exxon's Entrance

Exxon declined to comment but the US major’s interest is understood to be recent.

Exxon is moving ahead with liquefaction projects in the US, Qatar and Papua New Guinea, but it has watched the timeline for its Rovuma LNG project in Mozambique slide, which might potentially leave room for other project interest.

Tutuka Ariadji, the energy ministry’s director of oil and gas, told Energy Intelligence in September that state-owned Pertamina is the only company looking at the Masela Block’s data. Ariadji said this during the Indonesian Petroleum Association conference.

That said, Indonesia’s minister of energy, Arifin Tasrif, told reporters at the conference that local firm MedcoEnergi is considering buying a 10% interest in the Masela Block.

This week, Inpex President and CEO Takayuki Ueda told Energy Intelligence that discussions are ongoing with “Indonesian companies like Pertamina about potential cooperation through Abadi which is not necessarily directly related to Shell's divestment activities.”

Shell's Exit

Shell opened a data room back in 2020 with a view to selling its interest in the block.

Shell is believed to have thrown in the towel on Abadi after the Indonesian government requested the conversion of a previously approved floating LNG project into a 9.5 million ton/yr onshore LNG plant back in 2016.

The European major has a 35% stake in Abadi; Japan's Inpex is operator with the remaining 65%.
Marc Roussot, Singapore

Valencia Port Liquid Bulk Traffic Rises to Record on Strong LNG Imports

Rocketing LNG imports so far this year have pushed liquid bulk traffic at Spain’s Valencia port to its highest level on record, with US cargoes making up the majority of incoming volumes, the port authority said on Wednesday.

The traffic surge on Spain's eastern coast represents yet another effect of the Ukraine crisis.

Sagunto

The 6.4 million ton/yr Sagunto LNG terminal, which belongs to the port of Valencia, has received a little over 3 million tons of LNG during the first nine months of the year, representing a 192% increase compared to the same period in 2021, according to data from the statistical bulletin of the port authority of Valencia (APV).

The statement added that around 60% of the volumes have come from the US, while data from commodity analytics firm Kpler suggested that Nigeria has been the second largest supplier of the Sagunto terminal, with around 0.57 million tons of LNG.

The terminal has also received LNG cargoes from Russia, Oman, Egypt and Cameroon, among others.

For 2022, the terminal has already imported the most LNG in 12 years (see graph below).

The terminal's operator, Saggas, is owned by Spanish gas grid operator Enagas, Japan's Osaka Gas and Oman Oil Holdings.

Created with Highcharts 9.0.0(million tons)SAGUNTO LNG IMPORTSAlgeriaQatarNigeriaEgyptUnited StatesTrinidad and TobagoPeruOmanNorwayRussian FederationOthers200820092010201120122013201420152016201720182019202020212022012345Source: Kpler

Reloads

Sagunto has also been an active LNG reloader of both small and large-scale cargoes this year, with around 0.29 million tons of LNG being exported out of the terminal, up from 0.21 million tons last year, Kpler data showed.

The last conventional-sized reload from the facility occurred in August, when the 138,000 cubic meter Castillo de Villalba, chartered by Spanish utility Naturgy, was reloaded.

Most of the reloaded cargoes from Sagunto this year have ended up in Italy, transported by smaller-scale vessels.

New Record

Overall, traffic of liquid bulk jumped by 80.46% year on year and rose to a new record, while solid bulk traffic increased by 8.74%, also close to a new record.

Bulk traffic indicators “show the complexity of trade and the international situation that are generating imbalances in the value chain that make many shipping companies opt for loading and unloading in safe ports and with great capacity to receive this type of product,” APV said in its statement.
Daniel Stemler, Madrid

Baker Hughes' Simonelli Sees Obstacles Ahead for Some LNG Projects

Baker Hughes CEO Lorenzo Simonelli remains bullish on prospects for global LNG projects, but during the oilfield service giant’s third-quarter results presentation he said some will have a smoother path forward than others.

Simonelli said increased uncertainty, cost inflation, and demand destruction that, in some areas, was delaying the phase-out of coal in favor of gas, might prove obstacles for some LNG projects.

Bigger players, More Flexible Projects

“The environment has become more challenging, in particular, for some of the independent developers ... we believe the landscape may be shifting in favor of established LNG players with the scale, diversity, and financial strength to navigate the risks and uncertainties,” said Baker Hughes’ chief.

“Those with brownfield projects and projects that utilize faster-to-market modular designs may be particularly advantaged in the coming years,” continued Simonelli, adding that "it is plausible that some projects change pace, the build cycle becomes smoother and more prolonged.”

Despite the challenges and what Simonelli has in the past termed the inherent “lumpiness” of LNG development, Simonelli stressed that prospects for LNG remained bright.

“We believe that significant investment is still required over the next 5 to 10 years to ensure natural gas' position as a key part of the energy transition,” said Simonelli, who said he was still expecting the greenlighting of 100 million to 150 million tons per year of LNG in the next two years.

IRA Incentives

Simonelli was also upbeat about opportunities on the energy transition front, given policy moves in both the US and Europe to support the transition away from fossil fuels.

“In the US, the Inflation Reduction Act should be particularly impactful in accelerating the development of green hydrogen, CCUS [carbon capture, utilization and storage], and direct air capture,” said Simonelli.

“The attractive tax incentives could accelerate development ahead of previously expected forecast,” he noted. “We also believe that the bill will create favorable economic conditions for our portfolio of new energy investments.”

The Bottom Line

Looking at the quarter, Baker Hughes’ operating income came in at $503 million, which Tudor, Pickering & Holt said was ahead of expectations. EBITDA in turn came in at $758 million, which beat Goldman Sachs' estimate by 9%.

Free cash flow came in at $417 million, up from the second quarter’s $147 million, with performance driven by, said the investment banks, improved margins in its Turbomachinery and Process Solutions segment and Oilfield Solutions division.

The company nonetheless reported a quarterly net loss of $17 million due to a $230 million charge stemming from the company’s latest reorganization.

Simonelli was sanguine about the loss, noting that restructuring better positioned the company.

"Many of the key challenges should be behind us," he said.
Jeffrey Cavanaugh, New Orleans


Data Snapshot

LNG Netbacks at Key Receiving Terminals

LNG Exporter Netbacks Between Key Receiving Ports
($/MMBtu)AlgeriaAustralia WestAustralia EastMalaysiaNigeriaNorwayOmanPeruQatarRussiaTrinidadUS GulfUS East Coast
Dahej, India26.2126.9026.0326.9425.2525.1027.8924.0527.7126.1424.7424.1624.86
Sodegaura, Japan25.8128.4928.5128.7725.5018.1927.6623.0527.4029.4624.1022.1925.99
Zeebrugge, Belgium-0.73-3.72-4.54-3.51-1.68-1.05-2.25-4.57-2.50-4.47-1.50-3.33-1.32
Huelva, Spain33.3130.0529.1430.2932.2131.7031.6328.9631.3829.2432.2630.0732.28
Isle of Grain, UK5.122.061.212.264.214.783.791.213.321.304.332.474.51
Everett, US3.440.230.900.452.822.410.012.031.54-0.583.88----
Created with Highcharts 9.0.0($/MMBtu)QATAR TO NORTHEAST ASIANetbackNetback16. May30. May13. Jun27. Jun11. Jul25. Jul8. Aug22. Aug5. Sep19. Sep3. Oct17. Oct10203040506070Energy Intelligence

LNG Market Indicators

Spot LNG Pricing
Latest WGIDailyDaily Chg.Chg. From Latest WGI
NE Asia30.0030.360.360.36
SW Europe32.4034.041.641.64
Futures Pricing
($/MMBtu)Chg.LatestPreviousWeek Ago
Henry Hub, US (futures)-0.285.465.756.44
NBP, UK (futures)-2.1120.5122.6232.99
European Spot Pricing
Chg.LatestPreviousWeek Ago
Dutch TTF-2.7218.0420.7629.14
Zeebrugge (Belgium)----1.9417.91
German NCG2.0219.2417.2231.49
NBP (UK)1.686.174.4919.66
US Markets
US Spot Prices
Sabine Pass, Louisiana-0.415.495.906.51
Corpus Christi, Texas-0.724.855.576.27
Cove Point, Maryland-0.725.035.755.36
Elba Island, Georgia--------
Nymex Henry Hub Futures
Near Month-0.285.465.756.44
Second Mth-0.315.936.246.77
Third Mth-0.286.216.496.95
Created with Highcharts 9.0.0($/MMBtu)GLOBAL GAS PRICINGUS NymexDutch TTFNE AsiaNov '21Dec '21Jan '22Feb '22Mar '22Apr '22May '22Jun '22Jul '22Aug '22Sep '22Oct '220255075100125Energy Intelligence