January 18, 2023


Oman LNG Signs Two More Supply Deals

Oman LNG has signed two more LNG supply deals, this time with Thailand’s PTT and TotalEnergies, the sultanate’s national news agency reported on Wednesday.

The binding term-sheet agreements will supply the companies with a total of 1.6 million tons per year of LNG starting from 2025.

Oman LNG has already signed four supply deals in previous weeks with international companies including Shell, Japan’s Jera, Mitsui and Itochu. Those deals also start in 2025 and amount to a total supply of 3.15 million tons of LNG, with a duration of five to 10 years.

As most of its supply contracts are set to expire in 2025, Oman LNG has been pro-active in signing new contracts with international companies supplying both the Asian and European markets in a bid to maintain its position as LNG supplier and strengthen its international partnerships.

The six recent contracts represent 4.75 million tons of newly contracted offtake, an apparent start on replacing six contracts representing 9 million tons of offtake. The latter contracts expire between December 2024 and December 2026, according to the International Group of LNG Importers.

New Contract Details

With the new deals, TotalEnergies and PTT will each receive volumes amounting to 800,000 tons of LNG. The contract with Total will kick off in 2025 for a duration of 10 years, while PTT will start receiving supplies in 2026 for a period of nine years.

Oman signed a long-term contract with Shell last week, also for the supply of 800,000 tons per year starting from 2025. The contracts with the Japanese firms were signed late last month and will see the import of a combined 2.35 million ton/yr of the LNG — 800,000 tons to each of Jera and Itochu, and 750,000 tons to Mitsui — also starting from 2025.

Also Wednesday, Shell Oman announced that gas production from the Mabrouk North East field in Block 10 had started, with a view to reaching 500 million cubic feet per day by mid-2024.
Yousra Samaha, Dubai

Shell's Prelude Resumes Loading After Fire

Production at the Shell-operated Prelude floating liquefaction unit in Western Australia has resumed shipments following a fire last month. LNG carrier Methane Becki Anne arrived near the 3.6 million ton per year FLNG facility on Jan. 11 and departed with a 164,900 cubic meter cargo on Jan. 16, according to ship tracker Kpler.

However, a Shell spokesperson was unable to provide an update on Prelude. The operator was also unable to provide an update on the restart of one of the two LNG trains at its 8.5 million ton/yr Queensland Curtis which was shut for maintenance on Dec. 7 after identifying problems with a pipe.

The Queensland Curtis train was due to be back in operation on Jan. 16, but this has reportedly been delayed to Jan. 21.

Since Prelude's initial startup in 2019, the leading destination for its cargoes has been South Korea, with Japan a distant second (see chart).

Created with Highcharts 9.0.0PRELUDE LNG EXPORT DESTINATIONS 2019-22(million tons)South KoreaSouth KoreaJapanJapanTaiwanTaiwanIndiaIndiaMalaysiaMalaysiaSource: KplerJapan 2019.2022: 1.46

Checkered Past

Prelude, a trailblazer in floating liquefaction, has a checkered history with many starts and stops.

Prelude was forced to suspend production after a fire broke out on Dec. 21 which was followed by an investigation. Shell owns an operated 67.5% stake in Prelude, alongside Inpex, Korea Gas and Taiwan’s CPC, all of which are also buyers of Prelude volumes.

The troubled facility has experienced several shutdowns as a result of fire accidents onboard and/or technical issues. Production at the facility was also interrupted for two months in the middle of last year due to a standoff between the operator and Australian unions.

Both recent unplanned outages are expected to hit Shell’s LNG production in the three-month period ending Dec. 31, knocking it down to between 6.6 million and 7 million tons, the lowest level in over six years.
Clara Tan, Singapore

China’s LNG Imports Still Losing Out to Other Gas Sources

China's LNG imports dropped by almost a fifth in 2022 as high prices and a slower economy conspired to knock the country off a briefly-held number one LNG importer perch.

Japan Retakes Crown

China’s LNG imports in 2022 declined significantly, with the country importing a total of 63.44 million tons of LNG last year, down 19.5% from 2021.

China overtook Japan as the world’s top LNG importer in 2021, however, the crown reverted to Japan in 2022.

In contrast, China imported 45.81 million tons of pipeline gas in 2022, up 8% compared to last year, the latest data from the General Administration of Customs showed.

Customs data showed that China imported 6.6 million tons of LNG in December 2022, a drop of 13% compared with last year. A similar drop occurred with piped gas. The country imported 3.68 million tons of pipeline gas last month, down 10% year-on-year.

Price Headwind, Capacity Tailwind

High international spot prices for natural gas have inevitably dampened China's import demand.

But rating agency Fitch Ratings said in a report that the declining trend in LNG imports will change in the medium term as a large number of LNG receiving terminals come online and long-term import contracts begin to take effect.

Customs data showed that the country’s LNG import cost last year increased 18.4% from 2021.

Pipeline gas import costs have also soared, by 53.1%, yet piped gas imports increased, likely due to the upswing in Power of Siberia flows.

Domestic Gas Production

China is making up some of the import shortfall by increasing its domestic production capacity.

In 2022, the country produced 217.8 Bcm of natural gas, an increase of 6.4% from last year, according to the latest data from the National Bureau of Statistics (NBS).

Last month, China produced 20.4 Bcm of natural gas, up 6.5% year-on-year, with an average daily output of 660 million cubic meters.

Gas Consumption and GDP

China’s natural gas consumption also declined for the first time in 2022.

NBS said that the country’s total energy consumption in 2022 increased by 2.9% compared to the previous year, but the proportion of natural gas decreased by 0.4%.

The proportion of non-fossil energy consumption in total energy consumption increased by 0.8% from 2021, the proportion of coal increased by 0.2% and the proportion of oil decreased by 0.6%.

China’s GDP grew 3% in 2022 from last year. NBS’s director said at a press conference on Tuesday that China's economy is bound to improve overall in 2023. The shift in China’s Covid-19 restriction policy will give a boost to its energy demand this year.

China's Gas Consumption
Domestic Production (Bcm)Y-o-YTotal Gas Imports (million tons)%Chg. Y-o-YLNG Imports (million tons)%Chg. Y-o-YPipeline Gas Imports (million tons)%Chg. Y-o-Y

Staff Reports

Davos Panel: Collaboration Key to Energy Security

Europe must strengthen collaboration and provide a stable regulatory environment to ensure energy security and attain climate goals, panelists told the World Economic Forum in Davos, Switzerland, on Wednesday.

Panelists discussing the energy crisis and its impact on Europe's climate targets agreed that collaboration between industry players and between industry and governments is critical to guiding Europe through the crisis and achieving carbon neutrality by 2050.

EU Energy Commissioner Kadri Simson suggested that Europe is currently in good shape with regard to energy security.

Simson highlighted the region's high levels of gas storage and robust LNG imports, which have helped offset a sharp decline in imports of Russian pipeline gas.

"We received record volumes of LNG in December from our trusted partners, and utilization of regasification was almost 95%," she said.

Europe's regas capacity will increase this year as more floating storage and regasification units start operations, and Simson suggested that this will enable Europe to import more LNG.

However, she warned that the additional regasification capacity "doesn't mean we will replace all lost Russian volumes with alternative suppliers" and that reducing gas demand is still crucial to ensuring the region's energy security.


Simson highlighted the numerous energy partnerships that have been formed — both between EU member states and with other nations — to strengthen security of supply.

"2022 was a wonderful year for acts of solidarity ... Europe witnessed wonderful partnerships with countries who were able to help us at the moment when Russia started to manipulate us," she said.

"The United States, Norway, Azerbaijan and even the UK were all able to increase gas production and help us fill our gas storage."

Simson said the best example of solidarity occurred last summer when the EU signed a memorandum of understanding with Israel and Egypt to collaborate on additional LNG supplies for Europe.

The commissioner also drew attention to the 27-nation bloc's plans for joint gas purchasing, which is expected to start before the summer to make sure there are sufficient supplies for next winter.

Protecting Infrastructure

Much of the discussion about energy security focused on supply, but Equinor CEO Anders Opedal highlighted the need for greater collaboration on physical security of infrastructure after the unexplained explosion that damaged the Nord Stream gas pipelines.

"Normally, companies have been able to maintain and develop the infrastructure themselves, and we do surveys for integrity purposes. But now it's also about protecting the pipelines and the critical infrastructure, making sure there is no sabotage," Opedal said.

"Companies cannot do that alone, so we need broader collaboration between companies and governments to protect this and also to ensure the right information flows," he said.

"We are working much more closely with intelligence services than before, and we also see we need military. Nato has been patrolling and we are grateful," he added.

Accelerating the Transition

Panelists agreed that Europe must accelerate the rollout of renewables to bolster the region's energy security and rein in carbon emissions, adding that this would require a stable regulatory environment and the removal of barriers for green energy projects.

"Up until now, Europe has not been where it needs to be [to realize its green ambitions]. Last year onshore Denmark put up [only] three [wind] turbines … because of all kinds of obstacles," including slow planning and permitting processes, said Orsted CEO Mads Nipper.

Equinor's Opedal suggested that windfall profit taxes implemented by several European countries could impede "massive investments" needed in the energy sector to underpin security of supply.

"It's important for the competition level in Europe to make sure the regulatory and economic framework stays stable over time," he said.

For more coverage of the Ukraine crisis, visit Ukraine Crisis: Energy Impact
Eric Thorp, London

In Brief

Russia Weighs Pakistan Pipeline Options

Russia is looking at the option of feeding pipeline gas from Iran or Turkmenistan into the proposed Pakistan Stream pipeline, according to Energy Minister Nikolai Shulginov.

Pakistan Stream was originally conceived as a way to supply Pakistan with gas delivered as LNG to a terminal in the south of the country.

But Shulginov told Pakistani newspaper, The Nation on Wednesday that the option of feeding the line with gas moved by pipeline from Iran or Turkmenistan was also under consideration.

Last year Russia also floated the idea of moving its own gas by pipeline to Pakistan via Central Asia and Afghanistan.

The Pakistan Stream project has been discussed for many years, but it has been held up by Western sanctions against Russian companies.

However, Shulginov said the various parties involved will work out a roadmap for the project "in the nearest future."

He said the pipeline is on the agenda for a three-day meeting of the Russia-Pakistan intergovernmental commission that started in Islamabad on Wednesday.

Russia has been seeking to strengthen ties with non-Western nations after its invasion of Ukraine led to a rift with the West and a collapse in its energy trade with Europe — previously its main market.

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

Data Snapshot

LNG Netbacks at Key Receiving Terminals

LNG Exporter Netbacks Between Key Receiving Ports
($/MMBtu)AlgeriaAustralia WestAustralia EastMalaysiaNigeriaNorwayOmanPeruQatarRussiaTrinidadUS GulfUS East Coast
Dahej, India16.6717.0916.7117.0816.3116.1717.5415.8117.4616.7516.0115.7416.08
Sodegaura, Japan17.3618.6918.7118.7917.3013.9018.3216.2318.2019.1316.5915.7117.47
Zeebrugge, Belgium20.8319.2018.8019.2820.3320.6819.9618.7819.8318.8220.4519.5120.54
Huelva, Spain16.1114.5814.2114.6515.6115.4115.2914.1015.1714.2215.6614.7015.68
Isle of Grain, UK18.8617.2516.8517.3218.3818.7018.1116.8317.8716.8718.4817.5618.57
Everett, US2.020.520.840.581.731.580.011.301.090.162.22----
Created with Highcharts 9.0.0($/MMBtu)QATAR TO NORTHEAST ASIANetbackNetback15. Aug29. Aug12. Sep26. Sep10. Oct24. Oct7. Nov21. Nov5. Dec19. Dec2. Jan16. Jan10203040506070Energy Intelligence

LNG Market Indicators

Spot LNG Pricing
Latest WGIDailyDaily Chg.Chg. From Latest WGI
NE Asia20.0019.86-0.14-0.14
SW Europe14.1516.762.612.61
Futures Pricing
($/MMBtu)Chg.LatestPreviousWeek Ago
Henry Hub, US (futures)-0.283.313.593.67
NBP, UK (futures)+0.3918.9218.5319.75
European Spot Pricing
Chg.LatestPreviousWeek Ago
Dutch TTF0.7319.5818.8519.83
Zeebrugge (Belgium)--14.64----
German NCG0.6517.0016.3517.66
NBP (UK)2.6119.7017.0919.05
US Markets
US Spot Prices
Sabine Pass, Louisiana-
Corpus Christi, Texas-0.042.812.852.95
Cove Point, Maryland-0.142.782.922.78
Elba Island, Georgia----2.85--
Nymex Henry Hub Futures
Near Month-0.283.313.593.67
Second Mth-
Third Mth-
Created with Highcharts 9.0.0($/MMBtu)GLOBAL GAS PRICINGUS NymexDutch TTFNE AsiaFeb '22Mar '22Apr '22May '22Jun '22Jul '22Aug '22Sep '22Oct '22Nov '22Dec '22Jan '230255075100125Energy Intelligence