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[la forge] 14/11/2017 17:37

the chemical engineer

Bechtel signs US$15.2bn in LNG contracts with Tellurian

Article by Helen Tunnicliffe

TELLURIAN has awarded four contracts worth US$15.2bn to Bechtel for the engineering, procurement and construction (EPC) of the vast Driftwood LNG export facility planned near Lake Charles, Louisiana, US.

The facility, once complete, will consist of 20 liquefaction units producing 1.38m t/y of LNG, 20 GE refrigeration compressors, three 235,000 m3 full containment LNG storage tanks, and three marine loading berths. The completed facility will have a total capacity of 27.6m t/y of LNG.

The four lump-sum turnkey agreements are for each of the four phases of the construction of Driftwood LNG facility. Phase 1 will deliver 11m t/y of LNG from eight liquefaction units, storage tanks 1 and 2, loading berth 1 and related utilities. Phase 2 will deliver up to 5.5m t/y of LNG from four liquefaction units, loading berth 2 and related facilities. Phase 3 will add another 5.5m t/y of LNG from four units, storage tank 3, loading berth 3 and related utilities. Phase 4 will add a further 5.5m t/y of LNG from another four units and related utilities.

Construction work is expected to begin in 2018 and the first LNG will be exported in 2022, subject to a final investment decision from Tellurian and acquiring a permit from the US Federal Energy Regulatory Commission.

“The agreements with Bechtel guarantee performance and secure the EPC cost of Driftwood LNG at US$550/t, one of the lowest-cost liquefaction construction projects worldwide. Execution of the lump sum, turnkey EPC agreements concludes 18 months of open collaboration among Bechtel, Chart Industries, GE and Tellurian. We have worked as a team to reduce construction costs and improve operating reliability and efficiency,” said Tellurian president and CEO Meg Gentle.

[ariane] 13/11/2017 22:54

Natural Gas Prices Expected To Rise Further
November 13, 2017, 03:38:05 PM EDT By BLOOMBERG NEWS, Investor's Business Daily

Shutterstock photo

Winter hasn't even begun and natural gas is already spiking. Prices jumped sharply last week, as fundamental concerns about an arctic blast and future winter weather squeezed shorts. They are likely to rise further through the end of the year and into 2018.

The cold weather has been accompanied by a relative deficit of natural gas inventory. This surge in perceived demand along with tight supply triggered a technical breakout of prices to the upside.

For most of 2017, price movements have been relatively rangebound between a low of $2.56 in February, and a high of only $3.42 in May. This relatively narrow and somewhat low set of prices is a departure from historical levels, which have often had multidollar price swings in a matter of months. After exceptionally low average prices for 2015 and 2016, average annual prices are likely to rise both this year and next.

Prices have been held back in recent years by the shale revolution. Shale natural gas wells can bring on small amounts of gas quickly. As a result, natural gas has become a bit more like an agricultural commodity: It is driven by weather dynamics, and some short-term incremental, additional supplies are easier to bring online than they had been when supplies were dominated by large conventional asset plays.

Of course, there are some limitations to the price-dampening impact of shale natural gas wells, because these have steep decline curves. This means that the gas can also be gone relatively quickly from new wells.

Natural gas prices have also been contained this year because rig counts have more than doubled from the low levels of May 2016. And improved oil prices have also driven up shale oil well-drilling activity, which produces associated natural gas as a byproduct.

Yet, despite these apparently price-bearish supply dynamics, U.S. natural gas inventories have become relatively tight over the course of 2017. Since the 2016 inventory levels of natural gas were very high, it's not that impressive that inventories are down 5.5% from last year, even though that represents a sizable deficit. What's more impressive, is that current inventories are also 1.8% below the five-year average for this time of year. That's a bullish signal, and given the recent arctic blast, there's a risk that the deficit to the five-year average level of inventories could increase over the next two weekly natural gas inventory reports from the Energy Information Administration.

Natural gas traders were too short at the end of October, especially in light of the U.S. inventory situation, which was already showing a deficit, compared to both last year and the five-year average level. While winter weather triggered a short squeeze last week, natural gas prices could have more room to run. After all, the impact of cold weather has not even shown up in the weekly EIA natural gas storage reports yet. This means that prices only reflect some of the recent cold weather, and when markets see the full inventory impact, prices could rise further.

Trading technicals also turned sharply positive for natural gas last week, with prices rising sharply above the critical 130-day moving average for the first time since September. With current inventories in a deficit, more fundamental support could send prices toward the next critical technical level - the year's high close of $3.42. Closes above that level could trigger significant technical buying - and a sharp spike in prices. Given inventory dynamics and technical factors, natural gas price lows for the year are likely behind us, but the highs for the year may not be.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

[sarkasm] 13/11/2017 14:28

Shell's LNG Strategy A Great Complement To Overall Operations
Nov. 13, 2017 5:22 AM ET|
2 comments|
About: Royal Dutch Shell plc (RDS.A), RDS.B
Zoltan Ban
Zoltan Ban
Commodities, macro, gold & precious metals, long/short equity
(2,787 followers)
Summary

LNG is set to see robust growth on the back of growing global dependence on natural gas. The LNG industry will provide more supply security, which will be increasingly desired.

Shell has become a global leader in LNG, after the BG merger.

The advantage of investing in Shell as a way to play the LNG growth story is the fact that its downstream segment will act as a hedge in bad times.

Beyond the recent hype created by the Saudi events, there is a trend of steady and sustainable advance in the price of oil, which I believe is likely to continue for as long as the current global economic cycle that started with the 2009 economic recovery is going to persist. In fact, I believe that the trigger for the next economic downturn will be an oil price spike, perhaps very similar to what we saw in the 2007-2008 period. This is how I saw the situation play out back in late 2015, which is when I decided to buy Shell's (RDS.A) (NYSE:RDS.B) stock, along with Chevron (CVX) and Suncor (SU). It is a long-term bet on a trend that I am certain will happen, although the timing of it was never something I was as certain of, which is why I opted to buy only solid names, with a diverse portfolio of projects.

The fact that collectively these three stocks I bought in late 2015, early 2016 provided an average dividend of about 5% was also a deciding factor. I figured if I have to wait years, through quite a bit of uncertainty and volatility for the trend I decided to play to reach its final destination, then I might as well get paid while I wait, while waiting with my investments in relatively secure companies, which are not likely to disappear or have their market cap reduced to nothing in case that oil price weakness lasts for longer than I expected. As I continue to wait, satisfied with the results of the first leg of the oil price recovery when it comes to my position in Shell, I am looking forward to reaping the results of the next two legs in what is a secular bull market in oil, which will likely go on for a few more years. Although, we should keep in mind the fact that this bull trend will be far more volatile that what we are used to.
Shell's profitability prospects

2015-2016 was perhaps one of the worst period so far this century for the global oil & gas industry. We had the 2009 experience when oil prices cratered, but we should keep in mind the fact that it was a very short dip and the fact that it came down from a very high price point and climbed back up into the $100/barrel range within a relatively short period of time.

Source: Macrotrends.net

Shell also had its terrible period, which came just on the heels of its BG merger deal, which was widely proclaimed to have been a mistake due to Shell over-paying. It is true that if it would have waited a while longer, it probably would have been able to get the deal done for much less, and indeed, it would have been far more advantageous. But as I pointed out on many previous occasions, I do not see the deal as being overall a net negative for Shell in the longer term. With 2016 having been a relatively bad year for the entire industry, Shell still managed to stay overall profitable. Looking at the first nine months of this year compared with the corresponding period from last year, operating profits tripled from $3 billion to $9 billion. For the quarter-on-quarter comparison, we have operating profits of $4.1 billion in the third quarter, compared with $1.5 billion in the previous quarter. This, in my view, is a testament in regards to what a big difference a small increase in oil & gas prices can make to Shell's results.

Source: Shell

Revenue increased by 30% during the same period, which in effect shows that there was a roughly 10% increase in operating profits for every percentage point increase in revenues. One of the reasons why this is the case is because the upstream segment is finally entering into profitability territory in terms of oil & gas prices. For the first time in a while, Shell reported a net operating profit of $575 million, while for the year, it is still down by $499 million for the upstream sector. When excluding capital expenditures related to the BG acquisition, capital spending declined from $16.4 billion for the first nine months of 2016, to $15 billion for the corresponding month of this year. In other words, Shell adjusted its capital expenditures downwards, even as higher oil & gas prices are driving revenues higher.

Looking forward, there is one very important aspect of Shell's overall business, which is in fact in part the result of the BG merger. It is an aspect that I liked from the very beginning when the merger was announced and I continue to like it, especially now that the global oil & gas market is starting to show signs of starting the second leg of the recovery. I am particularly excited about the prospects of Shell's dominant position in LNG. As we know, natural gas prices in the old world are set in large part by long-term pipeline supply agreements. Shell has plenty to be happy about in this regard, given that it does have significant pipeline gas contracts in Europe and elsewhere around the world, and the advance in oil prices will also cause natural gas prices to go up, which might not be the case in North America. While this is all good news for Shell, the fact that the LNG market is showing strong signs of recovery is starting to look like really good news for Shell.

Source: Economist

In my personal view, the longer-term global energy picture is one of more reliance on natural gas than most forecasts currently would suggest. Even Shell's outlook in this regard is too conservative in my view.

Source: Shell

I think at some point during the first half of this century, natural gas will become the most important energy source on the planet. If that is true, it will need to have a lot more supply flexibility than it does currently, given that supply is dominated by pipelines. The only way that the supply security issue can be addressed worldwide is to have a robust LNG industry complementing the rigid pipeline system. In this respect, Shell is a global leader and LNG production increased by 11% for the first nine months of this year compared with last year. With new potential uses for LNG, such as in marine transport, in addition to the already growing need to have LNG as a way of keeping natural gas supplies flexible and diversified, this leadership role is likely to prove to be a valuable long-term asset within Shell's portfolio.

With growing production of LNG, while in the shorter and in the longer term prices are set to increase due to growing global demand, which by some estimates might be twice the rate of overall natural gas demand increase, Shell is in my view a great way to participate in the LNG story, given that it also has its robust downstream segment, which provides a hedge against the many bumps along the way, which I am sure will be a part of the longer term story. As was the case with the recent oil & gas price collapse, Shell's downstream operations will keep the company afloat during such bad times, while its other segments will struggle, including its growing LNG segment, while the same may not always be the case with some of the companies that are pure LNG players. With the potential for growth coming from LNG, while its downstream operations provide a hedge against bad times that may potentially be on the way, Shell is the oil major that one can own and expect relatively nice gains as the oil & gas market continues to recover, while at the same time it provides enough comfort that one can sleep at night, not having to worry about the next what if.

Disclosure: I am/we are long RDS.A, SU, CVX.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

[waldron] 11/11/2017 11:05

SHOULD I GET A LITTLE CONCERNED ABOUT LEVERAGED LOANS




OR JUST STAY WITH POTENTIAL WAR AND SANCTION FEARS

[the grumpy old men] 10/11/2017 18:37

Paradise Papers Reveal U.S. Selling Russian LNG In Europe
By Irina Slav - Nov 10, 2017, 11:00 AM CST Putin

The new massive data leak that has been making headlines for several days now has revealed that a company with U.S. ownership has been buying Russian gas and selling it in Europe at higher prices.

According to a report in Belgian daily Le Soir, taken up by other media outlets, such as The Guardian and Eurasia Review, Wilbur Ross holds a 35-percent interest in Navigator Holdings, a shipping company registered in the Marshall Islands.

According to the leaked documents, four cargo carriers owned by Navigator Holdings were used to load Russian natural gas at the port of Ust Luga before heading to the Anwerp LNG terminal in Belgium.

The documents suggest that a company with U.S. ownership is buying Russian gas from petrochemical giant Sibur, and then selling it—at a profit, of course—to the European Union, which is in a rush to build as many LNG terminals as it can in a bid to reduce its dependence on Russian gas.

If the reports are true, the situation is an ironic one for Europe: while trying to reduce its dependence on Russian gas it is inadvertently increasing it and is even paying more for it than it would if it bought the extra loads directly from Gazprom.

One might wonder how a U.S. company is able to do business with a Russian one. It’s simple: Wilbur Ross himself said earlier this week that Sibur is not a subject to sanctions, so for Navigator Holdings and the petrochemical giant, everything is business as usual.
Related: Is OPEC Deal Compliance About To Crash?

Meanwhile, Gazprom is showing no concern whatsoever about potential challengers of its market share in Europe. Recently, the executive in charge of Gazprom’s export division, Elena Burmistrova, told media that there is nothing that can get in the way of Gazprom’s supplies of natural gas to the continent, even U.S. LNG, which some European gas consumers have hailed as a much needed alternative to Gazprom gas.

This alternative is for the time being more expensive than Russian gas, which makes it economically non-competitive. Yet, there are other drivers behind, say, Poland’s praise of U.S. LNG shipments—drivers that have to do more with history and politics than common sense—and this has increased the viability of U.S. LNG supplies to Europe. Even, as it may turn out, if they are actually Russian supplies sold by a U.S.-owned company.

By Irina Slav for Oilprice.com

[sarkasm] 10/11/2017 17:23

Author`s name Dmitriy Sudakov
Today at 19:41
China's Alaska deal makes Russia shudder
Business » Companies

Three Chinese state-run corporations signed an agreement with the government of the US State of Alaska on the production of liquefied natural gas on the territory of the state with its subsequent transportation to China. The contract is evaluated at 43 billion dollars.
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Noteworthy, the deal is paid for by US securities - USA's "debt receipts" to China. Their holders are the Bank of China and the state fund of the PRC.

In a nutshell, the USA will give China shale gas as debt payment. It is clear now why the Chinese have decided not to sign new gas contracts with Russia.

Representatives for the Chinese administration said that they did not see the need for the Power of Siberia-2 gas pipeline (with a capacity of 30 billion cubic meters per year), nor does China need the pipeline to deliver natural gas from Sakhalin Island (8 billion cubic meters per year), even though Russia and China were discussing these projects for the last two years.

Professor of the Russian State University of Oil and Gas named after I.M. Gubkin, Valery Bessel, said in an interview with Pravda.Ru that the contract with the Americans and the refusal to implement new projects with Russia was a "normal business process," in which there is nothing to worry about. China and the USA are major trade partners, and a contract worth 43 million dollars is simply not serious from the point of view of the scale of the US-Chinese turnover.

"Russia needs to follow China's example and start building normal relations with the Chinese. We could, for example, offer China to develop Russian natural gas deposits and build pipelines together," the expert said.

China's needs for gas are so great that the country is ready to cooperate with both Russia and the USA at the same time.

"China's market is huge - it goes about the maximum figure of 3 trillion cubic meters of gas per year, which is unreal, of course, because the world produces only 3-4 trillion cubic meters of gas a year, but this is the amount of gas that the country needs," the expert said.

China accounts for 50 percent of the world consumption of coal, the burning of which releases enormous amounts of ash, and Beijing hopes to solve this problem by changing the balance in favour of gas. Therefore, Chine concludes gas contracts with everyone, the expert believes.

As for pipelines, Russia is China's only partner, plus the Turkmen gas from the West.

As for liquefied natural gas, it is profitable for China to receive this fuel from many regions of the world. There are supplies from Australia and Qatar, and now China will start receiving liquified natural gas from Alaska. China works with Russia on liquefied gas too - this is the Yamal LNG project, but the Chinese will expand their participation in the project and start investing in it only if it proves effective. "For the time being, we cannot offer them anything," the expert said.

"We need to work very seriously to create our image of a reliable partner who will not rush from revolution to revolution. This is what Russia has been doing lately, but it takes time," Bessel said.

If Russia develops projects that can engage the interest of the Chinese, they will be willing to invest in them.

"It is an open secret that China does not take any political positions - the country is primarily interested in internal development, plus the development of the region where it is located. The Chinese do not play political games," the expert told Pravda.Ru.

"Do you remember what Mr. Chubais said once about communism? He said that Russia hammered the last nail into the casket of communism. What do you think Chinese communists think of present-day Russia? They are being cautious," Valery Bessel said.

The expert believes that Russia should learn from China. "Unlike Russia that has experienced two revolutions over the past hundred years, China has been developing peacefully for five thousand years without any revolutions," said the expert. "The Chinese have shown Russia where the communist China is and where the free market Russia is. China's GDP in 2016 was 21.4 trillion dollars, and Russia's 3.4 trillion. In 1991, when we started "hammering nails into the casket of communism," Russia's GDP was slightly higher than that of China," he concluded.

Pravda.Ru

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[grupo guitarlumber] 08/11/2017 20:19

Total buys Engie's upstream LNG business for $1.49 billion

London (Platts)--8 Nov 2017 204 pm EST/1904 GMT

Total has bought Engie's portfolio of upstream LNG assets for $1.49 billion, the French oil and gas major said Wednesday.

The deal would boost Total's volumes to around 40 million mt/year of LNG by 2020, "making Total the second-largest global player among the majors with a worldwide market share of 10%," said Patrick Pouyanne, the company's chairman and CEO.

Engie assets acquired include participating interests in the Cameron liquefaction project in the US, long-term LNG sales and purchase agreements, an LNG tanker fleet as well as access to regasification capacities in Europe.

Additional payments of up to $550 million could be payable by Total in case of an improvement in the oil markets in the coming years, it said.

The deal accelerated Total's strategy to integrate along the full gas value chain "in an LNG market growing at 5% to 6% per year," it said.

A stake in the Cameron project would make Total an integrated player in the US LNG market, where the group was already a gas producer, Pouyanne said.

The deal, still subject to various approvals, is expected to close by mid-2018 but has an effective date of January 1, 2018. Engie's LNG operation has around 180 employees. The transaction involves:

-- 2.5 million mt/year of liquefaction capacity, bringing Total's portfolio to 23 million mt/year by 2020;

-- a 16.6% equity stake in the Cameron LNG liquefaction plant with three trains under construction in Louisiana, and the potential for two further trains; -- a 5% equity stake in the first train of the Idku LNG project in Egypt; -- a portfolio of long-term LNG purchase and sale contracts, increasing Total's portfolio to 28 million mt/yr by 2020, with diversified supply from Algeria, Nigeria, Norway, Russia, Qatar and the US, and outlets balanced between Europe and Asia;

-- access to regasification capacities of 14 million mt/year in Europe, adding to Total's 4 million mt/year, and;

-- a fleet of 10 LNG tankers which will be consolidated with the 3 LNG carriers of Total. Separately, Total and Engie are to cooperate in the use of biogas and renewable hydrogen, with Engie becoming Total's primary supplier in this field, Total said.

--Henry Edwardes-Evans, [e-mail]

--Edited by James Leech, [e-mail]