December 30, 2022

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Spain's Gas Demand Falls 4% in 2022

Natural gas demand in Spain, Europe’s largest LNG importer, fell 3.7% year on year to 364.3 terawatt hours (32.78 billion cubic meters) following a decrease in industrial gas use, according to Spanish grid operator Enagas.

This year’s record-high wholesale prices for European natural gas, used as a feedstock for different industrial processes, have forced many European companies to temporarily close production or consider moving permanently out of the region.

Whether or not the industrial demand reduction in Europe is permanent is yet to be seen, but the EU has mandated a 15% gas reduction target between August 2022 and March 2023 compared to the five-year average, with exemptions for Spain and Portugal.

Opposite Directions

Conventional demand in Spain, which includes gas used by households, businesses and the industrial sector, fell 21.4% year on year to 226.4 TWh, Enagas says.

Consumption for gas-fired power generation, however, rose 52.6% to 138 TWh, its highest level in 12 years, due to lower hydropower generation.

Spain and Portugal implemented a price cap on gas-fired electricity generation earlier this year, which sources say also contributed to an increase in gas consumption in the power sector and gas and electricity exports to France.

Wartime Levels

Spanish piped gas exports to France and Portugal were at their highest levels since 2016, shipping 41 TWh in 2022, of which 35 TWh went eastward to France, Enagas says.

LNG reloads from Spanish import terminals have increased by 40% this year, without giving a specific volume, Enagas says. Spain imported gas from 19 different countries in 2022, the operator says, including new or rare suppliers such as Oman, Mozambique and South Korea.

Spain imported around 291 TWh of LNG in the January to November 2022 period, a 45% rise on the year, according to the latest data from Enagas. The US was Spain’s largest LNG supplier during the 11-month period, followed by Nigeria and Russia.

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

Jaime Concha, Copenhagen

Oman to Create State Natural Gas Company

Oman plans to create a national company to manage the state’s natural gas interests, the latest in a series of domestic reform initiatives that have also targeted the energy sector.

Under the plan, Oman's finance ministry will set up an an integrated gas firm that will act on behalf of the government in managing the country's natural gas assets, rights and obligations related to the purchase, sale, import, export and transport of gas and its byproducts.

“By establishing this company, the ministry aims to improving Oman’s financial performance indicators by excluding gas purchase and transport expenses from the state budget, supplying the treasury with gas sales net revenues [and] upgrading the efficiency of this sector’s management,” the ministry said in a statement on Twitter.

The ministry didn't provide further details.

Gas Growth

Oman's gas sector has seen a major change of fortune in recent years as new developments such as BP's Khazzan and Ghazeer tight gas projects boosted output, feeding the domestic power and industrial sectors and supporting the country's LNG exports.

Earlier this week, Japanese players Jera, Mitsui and Itochu signed binding sheet agreements with five-to-10-year tenures with Oman LNG for the import of a combined 2.35 million tons per year of the supercooled fuel, a sign that tight energy markets have led to renewed appetite for longer-term gas supply deals.

The establishment of a national gas champion would be in line with similar initiatives implemented since Sultan Haitham bin Tariq al-Said succeeded the country's long-term ruler Sultan Qaboos bin Said in January 2020 and accelerated domestic economic reforms.

Self-Funding Entity

In late 2020, Sultan Haitham established state-owned Energy Development Oman (EDO) via royal decree to manage the government's assets in the oil and gas sector, which were previously held through the government's 60% stake in Petroleum Development Oman (PDO), in which Shell, TotalEnergies and Partex are shareholders at 34%, 4% and 2%, respectively.

Oman at the time said EDO was created as a self-funding entity to free the government from funding oil and gas development work through the national budget.

Unlike PDO, EDO's finances are not controlled by the finance ministry, which gives it the flexibility to access debt markets as needed. It also means that spending on the assets transferred to EDO are not part of the sultanate's budget.

Oman, the largest Arab oil producer that's not a member of Opec, has pressed ahead with its country's Vision 2040 social and economic reform agenda since 2013, with a view to tackle issues such as sluggish economic growth, rising debt and costly subsidies.

The International Monetary Fund, in its latest Article IV consultation in November, said Oman's GDP was expected to grow at 4.2% this year compared with 3% in 2021 and a contraction of 3.2% in 2020, when the Covid-19 pandemic hit the country hard.
Oliver Klaus, Dubai


In Brief

Clock Ticking for Tellurian's Gunvor Deal

US LNG developer Tellurian has gotten more time to meet the conditions of its offtake agreement with commodities broker Gunvor as it makes slow progress on its flagship Driftwood export facility in Louisiana.

The amendment filed Friday with securities regulators moves forward the deadline for meeting the conditions from Dec. 31 to Jan. 31. Under the deal signed in May 2021, those conditions include securing financing to build the facility and issuing an unconditional notice to proceed to contractors for the plant’s construction.

The amended deal also allows either Tellurian or Gunvor to terminate the sale-and-purchase agreement immediately, canceling a previous provision that required 45 days’ notice.

In the same filing, Tellurian said it would sell up to $500 million in common shares to investment bank TR Winston, while terminating bond deals with Credit Suisse and B. Riley.

Tellurian has suffered a number of setbacks this year including the expiration of its other two offtake deals and problems securing financing, but it issued a limited notice to proceed to contractor Bechtel earlier this year for initial site work.

Earlier this month, Executive Chairman Charif Souki said work was progressing at a pace that is “slower than we would like,” but he was optimistic about growing investment in the sector.

The company is targeting first LNG in 2026 or 2027, he added.
Caroline Evans, Houston

Notice to Subscribers

There will be no issue of LNG Intelligence published on January 2, 2023. The next issue will be dated January 3, 2023.


Data Snapshot

LNG Netbacks at Key Receiving Terminals

LNG Exporter Netbacks Between Key Receiving Ports
($/MMBtu)AlgeriaAustralia WestAustralia EastMalaysiaNigeriaNorwayOmanPeruQatarRussiaTrinidadUS GulfUS East Coast
Dahej, India32.6033.0832.5933.0832.1331.9733.6431.4833.5432.6631.7831.4531.85
Sodegaura, Japan33.0734.6834.6934.8232.9628.8134.2131.6234.0735.2332.1131.0433.19
Zeebrugge, Belgium17.4615.6815.2315.7816.9017.2816.5215.2116.3715.2617.0316.0017.13
Huelva, Spain30.4328.5728.0928.6829.8129.5629.4427.9829.3028.1329.8728.6829.88
Isle of Grain, UK20.8719.0518.5919.1520.3320.6920.0318.5819.7718.6320.4319.3820.53
Everett, US1.69-0.000.360.081.361.180.010.890.66-0.411.92----
Created with Highcharts 9.0.0($/MMBtu)QATAR TO NORTHEAST ASIANetbackNetback25. Jul8. Aug22. Aug5. Sep19. Sep3. Oct17. Oct31. Oct14. Nov28. Nov12. Dec26. Dec10203040506070Energy Intelligence

LNG Market Indicators

Spot LNG Pricing
Latest WGIDailyDaily Chg.Chg. From Latest WGI
NE Asia36.00------
SW Europe31.10------
Futures Pricing
($/MMBtu)Chg.LatestPreviousWeek Ago
Henry Hub, US (futures)-0.084.484.565.08
NBP, UK (futures)-0.9822.4323.4224.13
European Spot Pricing
Chg.LatestPreviousWeek Ago
Dutch TTF-1.2023.7024.9026.03
Zeebrugge (Belgium)--------
German NCG-1.9019.9221.8223.00
NBP (UK)2.3321.7119.3718.69
US Markets
US Spot Prices
Sabine Pass, Louisiana-0.213.513.726.14
Corpus Christi, Texas----0.006.25
Cove Point, Maryland-0.572.613.1828.17
Elba Island, Georgia--------
Nymex Henry Hub Futures
Near Month-0.084.484.565.08
Second Mth-0.014.104.124.98
Third Mth-0.013.923.934.42
Created with Highcharts 9.0.0($/MMBtu)GLOBAL GAS PRICINGUS NymexDutch TTFNE AsiaJan '22Feb '22Mar '22Apr '22May '22Jun '22Jul '22Aug '22Sep '22Oct '22Nov '22Dec '22Jan '23Jan …0255075100125Energy Intelligence