February 14, 2023


Gasunie Rules Out Dutch Port for New LNG Terminal

Gasuine has ruled out the Dutch port of Terneuzen to host a new floating LNG import terminal and the company is unlikely to look at a new terminal for the foreseeable future as the port was considered the best option for a new project, a Gasunie spokesperson told Energy Intelligence.

Gasunie said the results of a feasibility study showed that a temporary LNG terminal at Terneuzen would be “technically and commercially unfeasible,” even amid Europe's wartime rush to replace Russian piped gas imports.

The Dutch grid operator announced in December that it was looking at expanding regasification capacity in its home nation and suggested that one or more new floating LNG import terminals would be required in 2023 to ensure sufficient gas supply.

However, the company has changed its tune and is now unlikely to pursue a new terminal for the foreseeable future, a Gasunie spokesperson told Energy Intelligence.

“We continue to explore new opportunities. Incidentally, I don’t think we will look at this moment for a new floating terminal for the time being because we have previously looked at all the possibilities in the Netherlands and Terneuzen emerged as the best option,” the spokesperson said.

While a new terminal is unlikely to materialize any time soon, Gasunie will concentrate on expanding capacity at the country’s existing Gate and Eemshaven LNG terminals to a combined 30 billion cubic meters.

At Gate, the plan is to add a fourth storage tank with a capacity of 4 billion cubic meters. At the 8 Bcm capacity Eemshaven a technical optimization of the existing floating plant is being examined in a bid to increase its capacity by 1 Bcm before the end of the year and later boost capacity to 10 Bcm, according to Gasunie.

Tight Supply

Expanding existing regasification capacity and lowering demand should help ensure sufficient gas supply in future, the Gasunie spokesperson said. However, a spokesperson for the Dutch government told Energy Intelligence that supply could be tight this year as expanding capacity Gate and Eemshaven will not be completed before next winter.

The government spokesperson suggested the Netherlands could face a gas supply deficit of 1billion to 3 billion cubic meters this year and said the Ministry of Economic Affairs and Climate Policy will inform parliament of the outlook in March.

Like its European neighbors, the Netherlands has been scrambling to replace Russian gas imports following the war in Ukraine. Imports of Russian gas accounted for 25% of total imports before the war, however now there is virtually no Russian piped gas volumes entering the country, the Dutch government announced last week. As for LNG, volumes have halved from 30% of total imports in 2021 to approximately 15% currently.

Groningen Decision

While the Netherlands scrambles to increase regasification capacity, Gasunie has advised the Dutch government against closing the Groningen gas field in October amid uncertainty over gas imports.

Despite Terneuzen being ruled out to host an FSRU and uncertainty over LNG imports this year, the government spokesperson said it was unlikely that this boosts the case for keeping Groningen on line. The spokesperson highlighted the fact that the country cut its gas consumption from approximately 40 Bcm to 31 Bcm last year and said work is still ongoing to boost capacity at the nation’s gas storage, which can currently hold approximately 14 Bcm of gas.

“As far as the Groningen field is concerned, we are pressing ahead with closing the field. The field is now on the 'pilot light.'” However, Gasunie advises not to close the field yet, given the war situation.

"Just in case we need gas for (only) urgent situations,” the Gasunie spokesperson said.

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

CNOOC Secures Few LNG Cargoes in Latest Buy Tender

China National Offshore Oil Corp. (CNOOC) has awarded around 10 LNG cargoes in its most recent buy tender, which closed on Monday, mostly to commodity trading houses, a source with knowledge on the matter told Energy Intelligence, with Chinese demand still appearing limited.

CNOOC was seeking supply for the June 2023-June 2024 period, but without specifying the number of cargoes it intended to purchase, as the amount of awarded cargoes depended on the offer price levels the state-owned company received.

Energy Intelligence understands that the company was primarily seeking cargoes for trading and optimization purposes, rather than to satisfy domestic demand in China, which remains subdued following the end of zero-Covid-19 restrictions late last year (see graph).

Created with Highcharts 9.0.0(million tons)CHINA'S LNG IMPORTSJan'21Feb'21Mar'21Apr'21May'21Jun'21Jul'21Aug'21Sep'21Oct'21Nov'21Dec'21Jan'22Feb'22Mar'22Apr'22May'22Jun'22Jul'22Aug'22Sep'22Oct'22Nov'22Dec'22Jan'23Feb'230246810Source: Kpler

Second Tender

This was CNOOC’s second tender in recent months resulting in a rather limited amount of awarded cargoes, yet another sign that claims of a forthcoming sudden demand rise in China appear unfounded.

In its previous buy tender in last December, CNOOC secured only four to six LNG cargoes, blaming high price offers from interested market participants.

A Chinese trade source said that the country’s demand recovery is expected to “take some time,” even with “stimulus policies.”

European Supply Looks Safe

The sluggish demand in China puts European buyers into a comfortable position ahead of the rapidly approaching summer storage injection period.

Without Russian pipeline supplies, European countries will be even more reliant on LNG to fill up underground storage tanks during the April-September gas summer in preparation for the next winter.

However, underground storage tanks across the European Union are at 66% of capacity on Feb. 12, according to data from Gas Infrastructure Europe, as the mild winter and demand reduction limited the need to withdraw gas from storage sites.

With the end of the high-demand winter season nearing, the healthy storage levels mean that European buyers will face less pressure to inject into storage during the summer.

And with competition from China, the world’s second-largest LNG importer, also expected to be limited for spot volumes, Europe is unlikely to experience the sky-high spot gas and LNG prices of last year.
Daniel Stemler, Madrid

Coastal GasLink Costs Could Rise Another $1.2B

The costs to complete the coastal GasLink Pipeline in British Columbia, which are already double original estimates, could rise even higher if construction continues well into next year, operator TC Energy said Tuesday.

The Canadian pipeline giant said that it was continuing to target “mechanical completion” by the end of 2023, with commissioning and restoration work continuing into 2024 and 2025.

But a comprehensive cost and schedule risk analysis that estimated the project’s cost at $14.5 billion also found that an “extension of construction well into 2024” would increase costs by another $1.2 billion.

The 415-mile, 2.1 billion cubic feet per day cross-province pipeline, which is now 84% complete, is a crucial connection between the gas fields of northern British Columbia and the LNG Canada project on the coast. LNG Canada's first phase is expected to come online in 2025.

Executive Vice President of Strategy Bevin Wirzda said during TC Energy’s fourth-quarter earnings call the company remained confident it could reach its mechanical completion target by the end of the year. Wirzda added that the company would “shortly” introduce gas at the Wilde Lake compressor station, which is where gas will be introduced at the start of commissioning.

Wirzba also told analysts the company was contemplating an expansion of the project to serve the proposed second phase at LNG Canada as well as the planned Cedar LNG project.

“Getting this corridor on the ground is really — it's very similar to our broader footprint, and we've established the right corridors to the right markets, connecting supply and demand,” Wirzda said.
Caroline Evans, Houston

Taiwan Moving Down to Last Nuclear Plant

Taiwan's Bureau of Energy and state-owned Taiwan Power have reassured the island's public that the stability of power supplies will not be affected by the retirement of Taiwan's second-to-last nuclear plant at the end of March.

The reassurance is due in large part to the contribution of LNG-fired power generation.

Taiwan was the world's sixth largest LNG importer last year, according to Kpler, having seen a rising trend in imports for the last decade.

KMT Warning

Four lawmakers from the opposition Kuomintang (KMT) party warned Feb. 13 that power shortages were likely to follow in the wake of the retirement of the 985 megawatt unit two at Taipower's Kuosheng plant on Taiwan`s northern tip at the end of March, after operating for 40 years.

The retirement of Kuosheng-2 will leave the Maanshan nuclear power plant, with two 951 MW reactors, as Taipower`s last nuclear power plant.

Maanshan is scheduled for retirement by May 2025.

Taipower Response

Taipower spokesman Wu Chin-chung said the company is rearranging maintenance and repair schedules so that more than enough power capacity will be available to compensate for the Kuosheng-2 retirement.

Taipower said that by the end of May, several generators will complete repair and maintenance outages and resume operation. These include the 893 MW Tongsiao-3 and the 288 MW Nanbu-3 LNG-fueled combined cycle generators, as well as the 500 MW Hsiehho-4 oil fired burner and the 550-MW Taichung-7 coal fired furnace. The combined total is over 2.2 gigawatt.

Taipower said that the addition of the LNG-fueled Datan-8 generator, originally slated to come on line last fall, and the 180-MW small scale facility at Tongsiao, to the grid this year will add nearly 1,300-MW more in installed capacity, which is more than enough to compensate for the retirement of the 985-MW Kuosheng-2 unit without even considering continued additions to Taipower`s grid from major solar and offshore wind power projects.

In a separate statement, a Bureau of Energy spokesperson observed that power demand is expected to be relatively moderate in the first half of 2023 due to slow economic conditions, especially in export manufacturing, which is not expected to rebound until the second half of the year.
Dennis Engbarth, Taipei

Chinese Government Pushes for Gas Contracting

China’s National Development and Reform Commission (NDRC) recently issued a document asking local governments to organize the signing of medium and long-term gas contracts for 2023, and to negotiate between upstream gas suppliers such as PetroChina, Sinopec, CNOOC and city gas companies.

The contracts for gas in the world's second-largest LNG importer should be completed by the end of February, with a separate contract for residential gas, according to local media reports.

Since the beginning of last winter, northern China, especially Hebei, has seen a shortage of heating.

One reason for the shortage is that China’s natural gas imports were 109.25 million tons in 2022, a drop of 9.9% compared to 2021. There are also the problems left by China’s aggressive coal-to-gas policy in previous years which have not yet been resolved.

In addition, the price of natural gas for residential use in China is still controlled to some extent by the government. In 2022, with high international spot prices for natural gas, city gas companies purchased expensive gas from upstream suppliers but were unable to pass on the premium to residents, leading to a limit on the purchase of residential natural gas.

NDRC data showed that in 2022, the national apparent consumption of natural gas was 366.3 billion cubic meters, down 1.7% year on year.

China's gas demand in the baseline scenario for summer 2023 (April-September) will grow 7% from a year earlier as the economy recovers in the second quarter following the easing of Covid-19 restrictions, Bloomberg mentioned in a research note, adding that spot LNG imports are likely to be subdued as Chinese buyers are still weighing the impact of the reopening of the Chinese market on LNG consumption.
Staff Reports

In Brief

Asian Spot LNG Drops to Seven-Month Low

Spot LNG prices in Northeast Asia dropped by $2.30 to $15.70 per million Btu, their lowest level since July 2021, according to Energy Intelligence assessments for deliveries four to eight weeks ahead. Spot prices in Southwest Europe dropped $1.90 week on week to $14.30/MMBtu.

Asian spot prices have dropped for seven weeks in a row, largely driven by continued subdued demand for March cargoes and softer European gas hub prices.

Meanwhile, LNG imports into Southwest European countries fell during the week started Feb. 6, according to data from Kpler.

Created with Highcharts 9.0.0($/MMBtu)REGIONAL SPOT PRICESNortheast AsiaSouthwest EuropeMar '22Apr '22May '22Jun '22Jul '22Aug '22Sep '22Oct '22Nov '22Dec '22Jan '23Feb '23020406080Energy Intelligence

Marc Roussot, Singapore and Daniel Stemler, Madrid

Data Snapshot

LNG Netbacks at Key Receiving Terminals

LNG Exporter Netbacks Between Key Receiving Ports
($/MMBtu)AlgeriaAustralia WestAustralia EastMalaysiaNigeriaNorwayOmanPeruQatarRussiaTrinidadUS GulfUS East Coast
Dahej, India12.6513.0312.7413.0212.3912.2413.4011.9913.3312.7612.1211.9012.19
Sodegaura, Japan13.5014.6414.6614.7113.4910.6714.3512.6214.2415.0012.8812.1613.62
Zeebrugge, Belgium15.8914.5314.2214.5815.4715.7615.1614.1815.0414.2115.5814.8215.66
Huelva, Spain13.6612.3612.0712.4113.2313.0812.9511.9612.8512.0613.2912.4913.31
Isle of Grain, UK15.2913.9213.6213.9714.8915.1614.6413.5914.4413.6214.9814.2215.05
Everett, US1.08-0.200.09-0.150.820.720.010.450.28-0.491.24----
Created with Highcharts 9.0.0($/MMBtu)QATAR TO NORTHEAST ASIANetbackNetback12. Sep26. Sep10. Oct24. Oct7. Nov21. Nov5. Dec19. Dec2. Jan16. Jan30. Jan13. Feb020406080Energy Intelligence

LNG Market Indicators

Spot LNG Pricing
Latest WGIDailyDaily Chg.Chg. From Latest WGI
NE Asia18.0015.70-2.74-2.30
SW Europe16.2014.30-0.70-1.90
Futures Pricing
($/MMBtu)Chg.LatestPreviousWeek Ago
Henry Hub, US (futures)0.162.572.412.58
NBP, UK (futures)+0.0815.7715.7017.05
European Spot Pricing
Chg.LatestPreviousWeek Ago
Dutch TTF0.0516.6916.6417.46
Zeebrugge (Belgium)--12.67----
German NCG0.0314.6114.5815.34
NBP (UK)0.1816.0715.8917.22
US Markets
US Spot Prices
Sabine Pass, Louisiana0.002.422.422.35
Corpus Christi, Texas----0.00--
Cove Point, Maryland-0.131.892.022.32
Elba Island, Georgia----2.17--
Nymex Henry Hub Futures
Near Month0.162.572.412.58
Second Mth0.152.652.502.66
Third Mth0.122.812.692.82
Created with Highcharts 9.0.0($/MMBtu)GLOBAL GAS PRICINGUS NymexDutch TTFNE AsiaMar '22Apr '22May '22Jun '22Jul '22Aug '22Sep '22Oct '22Nov '22Dec '22Jan '23Feb '230255075100125Energy Intelligence