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[sarkasm] 05/4/2019 13:30

Shell Breaks Market Mold With Deal Linking Gas Prices to Coal

Tsuyoshi Inajima, Stephen Stapczynski and Dan Murtaugh, Bloomberg 3:02 am CDT, Friday, April 5, 2019

Dallas pipeline operator Energy Transfer and Dutch oil giant Shell have signed an agreement that two companies say moves the proposed Lake Charles LNG export terminal towards a final investment decision. Photo: Energy Transfer LP

Photo: Energy Transfer LP
Image 1 of 3
Dallas pipeline operator Energy Transfer and Dutch oil giant Shell have signed an agreement that two companies say moves the proposed Lake Charles LNG export terminal towards a final investment decision.

Royal Dutch Shell Plc agreed to sell liquefied natural gas to a Japanese utility at prices that include a link to coal, the latest innovation in the booming LNG market where buyers are seeking -- o diversify risks.

In what Shell and its customer, Tokyo Gas Co., said Friday is the world’s first such contract, the 10-year deal includes a pricing formula that is based on coal indexation. By diversifying its price exposure for LNG, which has historically been linked to oil, costs of the fuel will be stabilized, Toshio Kawamura, a general manager with Tokyo Gas, said in a briefing Friday.

This type of deal would allow a utility to align the pricing of its LNG with changes in the coal market, and therefore better compete in its own power market, said Christopher Goncalves, chair of the energy practice at Berkeley Research Group.

RELATED: Shell enters into 20-year agreement with Rio Grande LNG

This is “a risk management strategy for somebody who is competing with coal-fired generation in the home market,” Goncalves said. “That is attractive in places which have a lot of coal-fired generation, such as China, India and Japan.”

Coal and natural gas face off as power generation fuel in several markets. In the U.S., cheap and abundant gas has decimated coal’s share from more than 50 percent as recently as 2008 to less than 25 percent last year, according to the Energy Information Administration. In Europe, utilities must add the cost of carbon emissions, which weighs more on coal users because it emits nearly twice as much carbon dioxide.

Pricing Rivalry

The rivalry hasn’t been as prevalent in Asia, where coal is typically the cheapest fossil fuel and most utilities in the region lack the ability to switch quickly to gas. Buyers like Japan, South Korea and China usually pay a premium for gas that is liquefied and shipped on ocean-going tankers. Spot LNG in early 2014 cost nearly $80 per barrel of oil equivalent more than coal, but has tumbled to a discount as wide as $12 last month, according to Bloomberg calculations.

The deal also highlights a growing diversity of pricing options in the LNG market as demand and spot trading booms. And it’s Shell’s second foray into unorthodox gas pricing this week. The company earlier announced a deal with NextDecade Corp. to buy U.S. LNG, which is usually linked to the American gas benchmark Henry Hub, on a Brent oil-linked basis.

Shell’s Singapore general manager last week piqued interest in the possibilities of coal-linked contracts when he mentioned in a panel discussion that it had reached such a deal with a Japanese buyer, which he said helped the company decide to build a gas-fired plant, rather than coal.

While Tokyo Gas in January did abandon plans for a coal-fired station near Tokyo, Kawamura pushed back against the idea that the two were connected.

“This contract has nothing to do with us giving up a coal-fired power plant,” he said. “We are still considering whether to use supplies from the Shell contract in our power business.”

[maywillow] 03/4/2019 12:19

LNG US China
Craig Guthrie
Shanghai
3 April 2019
BP's Dudley warns on LNG trade war vulnerability
Insecurity in global trade flows could have a particularly damaging impact on confidence in LNG as an energy source

Trade tensions could impact on LNG's prospects as the world transitions to cleaner energy sources, by encouraging countries to resume a dependence on domestic resources rather than imports, BP chief executive Bob Dudley told the LNG19 conference in Shanghai today.

"Gas is affordable, abundant, cleaner and easily transportable thanks to LNG", says Dudley, while noting that global trade in the liquefied gas is set to more than double from 400bn m³/yr to around 900bn m³/yr by 2040.

But trade wars only serve to remind countries that becoming dependent on imported energy can create political risk. "Countries need to have confidence in the security of their gas supplies," says Dudley.

BP has researched the implications if trade tensions were to escalate — likely in reference to US president Donald Trump's tariff wrangle with China — and found that it could heighten concerns about energy security, leading to less oil and gas trading as countries return to domestic resources.

"This could have a profound implication for countries like China that have created a massive programme of replacing coal for energy," says Dudley

LNG shipments from the US to China have plummeted, at least partially as a consequence of the trade war and higher Chinese tariffs. While 25 US LNG vessels sailed there during the last six months of 2017, only six did during the same period last year, despite a boom in the US' LNG output, according to data from the Institute for Energy Research.

The Energy Information Administration (EIA) projects America could more than double its LNG export capacity by the end of 2019 and could become the world's top natural gas exporter as early as 2022.

But not all observers had a gloomy outlook for global trade tensions in the LNG market. "There are massive supplies sitting in America and I understand that China will currently be reluctant to buy them, as they represent a strong negotiation card in the trade war," Hans Kristian Danielsen, marketing and sales manager at consultancy DNV GL told Petroleum Economist. "But this is only an indirect impact and it could change quickly if relations improve, as I believe they will."

[the grumpy old men] 31/3/2019 09:45

Natural Gas: Look For Sustainable Break Above $3.20 To Buy
By Alexandros YfantisCommodities3 hours ago (Mar 31, 2019 01:10AM ET)

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Natural Gas futures market on the Nymex faced a negative week closing 2.90% lower than the week before at $2.67. EIA’s Thursday storage report for the week ending March 22 confirmed only a 36 Bcf withdrawal which pressed the price considerably. Last month’s small rally is now entirely sold, as expected, we need to stay patient while approaching a break area in this range we are in and figure out how much additional momentum there is going to be.

MACD turned bearish on March 26th, even on the daily chart and price vulnerability is what comes first in mind, while talking about the U.S. Natural Gas market for the longer run. Weather models showing milder conditions are coming in most of the Lower 48 while the underground stock refill season is approaching. For this market not to stay inside the normal $2.50 – $3.00 range in the coming months, will have to face important reverse in major U.S. macro figures. We still like to sell rallies on the first sign of weakness, on shorter periods as range bound movements are very probable for the coming months. We cannot buy this market for a longer course unless we see a sustainable break above $3.20. We might not be even close to this upper bound before next Fall. Daily, 4hour, 15min MACD and RSI build upon trading volumes are offering precision in our entry decisions.

[waldron] 26/3/2019 07:28

Royal Dutch Shell PLC and Energy Transfer LP said they are pursuing plans to convert a liquefied-natural-gas import facility in Louisiana into an export terminal, a bet that the future of U.S. shale gas lies in selling it for higher prices in overseas markets.

The Anglo-Dutch energy giant and U.S. pipeline operator said they are putting contracts out for bid to engineers and construction companies to reconfigure Energy Transfer's existing import facility in Lake Charles, La. The proposed facility would have the capacity to ship 16.5 million tons of U.S. natural gas a year, the companies said Monday.

"You can model and study it but the best way is to go out to tender and get a price that someone is willing to commit to," Maarten Wetselaar, Shell's director of integrated gas and new energies, said in an interview Monday in New York. "We are done theorizing on it; we just want to find out."

The move comes amid a prolonged period of low natural-gas prices in the U.S., where futures for April delivery settled Monday at $2.755 per million British thermal units. That is up 5% from a year ago but still low enough to put financial pressure on the producers that have flooded the domestic market with shale gas in recent years.

Shell and Energy Transfer own equal economic stakes in the Lake Charles project, which was built at a time when many believed the U.S. was running low on gas and would rely on imports. The partners will decide together whether they should proceed with converting the Louisiana terminal pending the outcome of bidding and their analysis of the global LNG market.

One key factor, Mr. Wetselaar said, would be finding the 5,000 workers the companies estimate they will need to build the export facility. Labor might be particularly tight at a time when Exxon Mobil Corp. and Qatar Petroleum have announced they will build a rival export terminal nearby in Texas.

Mr. Wetselaar said the Lake Charles plant should have advantages over competitors because much of the necessary infrastructure has already been built. "If you can be the cheapest Gulf Coast project, then you'll always be in the money because it's such a big source of supply," he said.

U.S. LNG exports have surged since early 2016. There are now three export facilities operating from the U.S. mainland, with several more slated to come online over the next few years as big energy companies seek to mop up the cheap shale gas and ship it in liquefied form to customers overseas, where the price is better.

China has emerged as a key buyer of U.S. gas as the country combats air pollution by replacing coal-fired power plants with those that produce electricity from cleaner inputs, such as natural gas, wind and solar.

Lately, LNG prices in Asia have sunk below $5 per million British thermal units, their lowest level in nearly three years. Shell, which supplied roughly 25% of China's LNG last year, is bullish on the market regardless of current price moves because of the Chinese government's goal to boost the amount of gas used to produce electricity there to 15% from about 7% by 2030, Mr. Wetselaar said.

"Even if the Chinese economy decelerates, the quest to clean up the air in the big cities is going to continue," he said.

Houston investment bank Tudor, Pickering, Holt & Co. told clients on Monday that the recent weakness in global LNG prices may prompt U.S. exporters to schedule extended downtime for maintenance this summer or to delay starting up new facilities if international prices languish. LNG export facilities have been counted on to absorb domestic production that has been soaring to new highs, and delays could push local prices lower.

"With the U.S. accounting for more than 80% of global new export capacity expected online through 2020, U.S. gas prices will become progressively more influenced by the strength of the Chinese economy," Barclays analysts said in a report last week.

Shell, which last year accounted for about a quarter of all LNG sold globally, has already committed, along with several large Asian investors, to build a $30 billion LNG export facility in British Columbia that will transport gas gathered in western Canada to markets abroad.

Shell's leadership staked the company's future on natural gas in 2016 with the $50 billion purchase of rival BG Group PLC, a major player in LNG markets.

In the U.S., natural gas surpassed coal in 2016 as the top fuel for generating electricity. The U.S. Energy Information Administration on Monday said gas widened its lead over coal in 2018, accounting for 35% of electricity generation, compared with coal's 27%. Overall, domestic natural-gas consumption rose 10% last year to an all-time high, the EIA said.

Write to Ryan Dezember at [e-mail] and Inyoung Hwang at [e-mail]



(END) Dow Jones Newswires

March 25, 2019 17:45 ET (21:45 GMT)

[maywillow] 16/3/2019 11:07

One of the most expensive energy projects in Canada could soon get larger.

Construction ramped up this month on LNG Canada's massive natural gas export facility in northern B.C., but the consortium is now talking about possible expansion.

LNG Canada is a consortium of companies led by Shell Canada and includes Petronas, PetroChina, KOGAS and Mitsubishi Corporation. The project includes a pipeline across B.C., a port and terminal that liquifies the gas so it can be transported on tankers. The potential price tag of the entire project has been estimated to be upwards of $40 billion.

[florenceorbis] 08/3/2019 19:21

Dutch gas market could become world's most important
By Mathew Carr on 3/8/2019

LONDON (Bloomberg) -- Intercontinental Exchange says its Dutch natural gas market has the potential to become a world beater in energy trading.

When the owner of the New York Stock Exchange bought an energy bourse in Amsterdam seven years ago, the Netherlands was just one of several regional markets dominated by the UK. But roles reversed as the region increased imports and utilities adopted contracts in euros to peg imports from Russia, Norway and far-flung places via liquefied natural gas tankers.

And with Brexit curbing UK activity, trade on the Dutch Title Transfer Facility, as the market is known, is surging. Volumes have jumped 13-fold in the past four years on ICE Endex and TTF has cemented its position as Europe’s most important hub for the fuel.

But ICE, which took control of the Brent futures contract when it bought the International Petroleum Exchange in 2001, has loftier ambitions than that. The company is seeking to develop the market into a global benchmark akin to the crude marker, said Gordon Bennett, ICE’s managing director of utility markets.

And while the value of open positions on its gas market is today only about 5% of its Brent contract, volume is far from peaking, he says.

“It will become more important,” said Bert den Ouden, who founded the company that sold its Endex unit in 2012 to ICE and is now managing director for energy at consultant Berenschot Holding BV. “It was already clear at that point LNG would become very important.”

The fuel has since the 1960s been linked to U.S.-dollar denominated oil in sales contracts, but the emergence of the Dutch market as the regional benchmark enabled utilities to seize more control over how they pay for the many billions of euros of gas imported every year.

Utilities from EON SE to Engie have reworked contracts through arbitration with Russia’s Gazprom PJSC to insert links to European gas prices. New LNG deals are also increasingly referencing the Dutch market and TTF is now used in Asian trades, too.

Massive bill

And while the euro is gaining prominence in energy trading, less than a fifth of the European Union’s 300 billion-euro ($339 billion) annual oil and gas bill is priced in the regional currency. The EU is trying to boost the use of the currency in everything from commodities to foodstuffs and transport to make companies less prone to international disputes and easier to finance, the commission said in December.

ICE Endex is also making its market more attractive. The futures curve was in June extended by a year so that traders can buy and sell as long as six years in advance. That’s still short of the 10 years offered in the U.S. Henry Hub market, and Bennett expects to add even more contracts in the future to meet customer demand.

To be sure, about three quarters of mainland Europe’s gas trades are still handled bilaterally between brokers, according to data published last month by Trayport Ltd., the main trading platform.

But a surge in LNG output from the Americas is providing a big opportunity for TTF. Almost a fifth of European supply has come from the U.S. in the past three months, an unprecedented number.

And for U.S. sellers, the two primary basins to supply are Europe and Asia, and the price difference between Asian spot and hub prices in Europe will shape where their volumes are directed, said Macquarie Group oil and gas analyst David Hewitt.

“The prevailing TTF price environment this year will be an important focus for the global LNG sector,” he said.

Other hubs will remain contenders. U.S. futures trade advanced about 6% to a record last year on CME Group’s Henry Hub, based on aggregate monthly futures. Transactions in ICE’s JKM contact in Asia rose to a record in January, but it’s a lot less liquid than its Dutch market.

ICE began offering on March 4 options for its Japan-Korea Marker LNG (Platts) contracts, the exchange group said today in an emailed statement.

Having a global price for gas only makes sense if the various regional markets are more integrated, according to Tor Martin Anfinnsen, senior vice president for marketing and supply at Equinor ASA of Norway, Europe’s second-biggest supplier. “I think we are nowhere near that.” No one hub will “reign supreme,” he said.

And TTF’s position in Europe isn’t completely unassailable, according to both Macquarie and Equinor. Germany’s plans to build out infrastructure with LNG terminals and a second pipe from Russia opening by the end of this year could spur more trade and potentially challenge the Dutch market.

Still, ICE’s Bennett isn’t too worried. Germany, while bigger in terms of consumption, remains much smaller than TTF in terms of traded volume. And it’s fragmented over several exchanges.

“The horse has already bolted,” Bennett said.

[waldron] 06/3/2019 08:41

GTT Receives LNG Tank Design Order for Capital Gas Carriers
alt

By MarEx 2019-03-05 18:50:21

GTT has received an order notification from the Korean shipyard Hyundai Heavy Industries (HHI), concerning the tank design of a new 174,000 m3 LNGC, on behalf of Greek ship-owner Capital Gas Carriers.

GTT will design the tanks of the vessel, which will be fitted with the Mark III Flex membrane containment system, a technology developed by GTT. The delivery of the ship is planned during the third quarter of 2021.

Philippe Berterottière, Chairman and CEO of GTT, declared: “After a first order in 2018, we are pleased to continue to accompany Capital Gas Carriers in its development in the LNG industry.”

The products and services herein described in this press release are not endorsed by The Maritime Executive.

[waldron] 05/3/2019 17:44

0
05/03/2019 | 6:26 p.m.
GTT announces that it has received an order notification from the Korean Hyundai Heavy Industries (HHI) shipyard. This order concerns the design of the tanks of a new LNG tanker with a capacity of 174,000 m3, on behalf of the Greek shipowner Capital Gas Carriers.

GTT will design the tanks for this unit, which will integrate the Mark III Flex membrane containment solution developed by GTT. Delivery will take place in the third quarter of 2021.

Philippe Berterottière, Chairman and CEO of GTT said: 'After a first order in 2018, we are pleased to continue to support Capital Gas Carriers in its development within the LNG industry. '

[sarkasm] 05/3/2019 07:36

Total (Paris:FP) (LSE:TTA) (NYSE:TOT) announces that it has signed the definitive agreements with Novatek for the acquisition of a direct 10% interest in Arctic LNG 2, a major liquefied natural gas development led by Novatek on the Gydan Peninsula, Russia.



Taking into account Total's 19.4% stake in Novatek and Novatek's intention to retain 60% of the project, the Group's overall economic interest in this new LNG project will be approximately 21.6%. Should Novatek decide to reduce its participation below 60%, Total will have the possibility to increase its direct share up to 15%.



Novatek and Total also agree that Total will have the opportunity to acquire a 10 to 15% direct interest in all Novatek's future LNG projects located on the Yamal and Gydan peninsulas.



"We are delighted to have concluded the definitive agreements for our entry into this new world class LNG project based on the vast Russian gas resources alongside our partner Novatek. Arctic LNG 2 builds on the success of Yamal LNG and will introduce several innovative solutions to further increase competitiveness," commented Patrick Pouyanné, Chairman and CEO of Total. "Arctic LNG 2 fits into our strategy of growing our LNG portfolio through competitive developments based on giant low cost resources primarily destined for the fast growing Asian markets."



With production capacity of 19.8 million tonnes per year (Mt/y), or 535,000 barrels of oil equivalent per day (boe/d), Arctic LNG 2 will develop over 7 billion boe of resources in the Utrenneye onshore gas and condensate field. The project will involve installation of three gravity-based structures in the Gulf of Ob on which three liquefaction trains of 6.6 Mt/y each will be installed.



Arctic LNG 2 production will be delivered to international markets by a fleet of ice-class LNG carriers that will be able to use the Northern Sea Route and a transshipment terminal in Kamchatka for cargoes destined for Asia and one close to Murmansk for those cargoes destined for Europe.



The project's final investment decision is expected to be taken in the second half of 2019, with plans to start up the first liquefaction train in 2023.

[adrian j boris] 26/2/2019 19:41

BP contracts FLNG vessel for long-term service at Tortue Ahmeyim
02/26/2019

Offshore staff

OSLO, Norway – BP and Golar LNG have entered a 20-year lease and operate agreement for the charter of the FLNG vessel Gimi for the deepwater Greater Tortue Ahmeyim gas-condensate development off Senegal and Mauritania.

Operations are due to start in 2022, with the Gimi liquefying gas as part of the first phase development, at a near-shore hub location.

The vessel is designed to produce an average of 2.5 MM metric tons/yr (2.75 MM tons) of LNG, using Black & Veatch’s Prico liquefaction process.

Gas resources across the field are around 15 tcf.

Gimi MS will construct, own and operate the vessel. Conversion works of the LNG carrier Gimi should begin soon at Keppel Shipyard in Singapore.

Golar estimates the cost of construction at around $1.3 billion, excluding financing.

CEO Iain Ross said: “This landmark 20-year agreement with BP, which is Golar’s second FLNG tolling agreement, is the culmination of a lot of hard work and commitment from the project and commercial teams that commenced late 2017.

“The potential of Golar’s floating LNG solution was reinforced by FLNG Hilli Episeyo’s proof of concept, heads of terms were agreed with BP and its partners in April 2018 and work has been ongoing via the previously reported limited notice to proceed.”

02/26/2019

[sarkasm] 25/2/2019 11:06

LONDON--Global demand for liquefied natural gas surged last year, boosted by a growing appetite for cleaner-burning energy sources in Asia, Royal Dutch Shell PLC (RDSA.LN) said Monday.

In its third annual LNG outlook report, the British-Dutch oil giant said global demand rose by 27 million tons to 319 million tons in 2018. That compares with demand growth of 29 million tons last year, according to the company.

"We saw Asian LNG demand growth exceed expectations again in 2018 and we expect this strong growth to continue. Investment in new supply projects is picking up, but more will be needed soon," said Maarten Wetselaar, Shell's director for integrated gas and new energies.

Shell has bet big on natural gas with its 2016 acquisition of BG Group for roughly $50 billion, making Shell the world's largest non-state-backed competitor in the LNG market. Late last year, the company said it was moving ahead with a major Canadian LNG project after years of delay.

Shell on Monday said it expects world LNG demand to reach around 384 million tons in 2020. LNG supply is expected to rise by 35 million tons this year, the company added.



Write to Christopher Alessi at [e-mail]



(END) Dow Jones Newswires

February 25, 2019 05:24 ET (10:24 GMT)

[sarkasm] 24/2/2019 10:28

Moscow And Beijing Discuss Natural Gas Megaproject
By Vanand Meliksetian - Feb 23, 2019, 10:00 AM CST
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Moscow And Beijing

Diplomatic relations between Moscow and Beijing have significantly improved over the past couple of decades. During the Cold War, the Soviet Union and China were on the brink of war which the U.S. exploited with the ‘Opening of China' during the Nixon administration. However, recent geopolitical and economic developments have created a new strategic environment: Russia controls some of the world’s largest reserves in terms of resources such as oil and gas while China’s expanding economy requires ever-larger volumes of raw materials.

The crisis between Russia and the West has created a rift between Moscow and Europe, its most important customer regarding natural gas. To maintain a steady flow of demand for Russian gas, a political decision was made to speed up negotiations between the state-sponsored companies Gazprom and China National Petroleum Corporation for new energy infrastructure. A historic deal was struck in 2014 concerning the Power of Siberia pipeline valued $400 billion for 38 bcm of gas over 30 years. While the first delivery of gas is set on December 1st, negotiations are ongoing for another pipeline which would make China Gazprom's most significant customer within a decade.

A critical moment in time

The Power of Siberia-2 or Altay pipeline is not a new idea. The infrastructure has been discussed on both sides of the border but with no actual plan for construction. New developments, however, have significantly increased the need for additional capacity. The most important circumstance is the fast-growing demand for natural gas in China for which domestic production is not sufficient.

Due to environmental reasons, Beijing has decided to implement the coal-to-gas policy which has increased demand by 23 percent from 195 bcm in 2015 to 240 bcm in 2017. The import of relatively expensive LNG increased by 44 percent in 2018 compared to 2017 to approximately 55 Mton or 75 bcm. Currently, China only imports pipeline gas from Central Asia which has reached 51 bcm in 2018.

Related: The Ultimate Tool To Prop Up Oil Prices

Due to the expectation that demand will keep on growing, Beijing has been looking for an alternative to LNG imports. Last year, during the economic forum in Vladivostok, Presidents Putin and Xi committed their state gas companies to reopen negotiations on a new pipeline option from Russia to China, the Power of Siberia-2 pipeline. Diversification in China’s most remote western regions would improve energy security by decreasing dependence on Central Asia.

SEE MAP

The existing infrastructure in the region, the so-called Central Asia-China pipeline, consists of the lines A, B, and C with a maximum capacity of 55 bcm. A project to extend the pipeline with line D is shelved due to specific concerns on the Chinese side. Beijing is worried about overdependence on the region. CNPC’s statement accused “frequent equipment failures” in Turkmenistan of causing shortages in China. Also, Kazakhstan is suspected of diversions of gas and the resulting pressure drops in China during the winter of 2012-13.

Gazprom’s long-time dream

It is painfully evident for Moscow that Europe has become a difficult market for Russian gas. The issue of energy security is high on the European political agenda. The construction of Nord Stream 2 is facing significant pushback from European politicians in several countries as well as Washington which has threatened with sanctions to derail the project. Recently, EU energy ministers have made an agreement that could delay the completion of Nord Stream 2, but probably not stop it. Also, in the case of Turk Stream Gazprom faced significant opposition. Despite a high probability that both projects will be completed, the limits of Russian gas in Europe is within sight.

Therefore, diversification is also high on the Russian agenda. Currently, Germany is the biggest buyer of Russian gas. That could change when the second interconnector with China is built. Energy security for Russia entails a steady flow of revenue for the state coffers. Furthermore, Gazprom has also been pushing for the western route which is much cheaper to construct because of pre-existing infrastructure in Western Siberia.

SEE MAP

Despite the ever-closer political relations between Moscow and Beijing, the Chinese are notorious for being formidable partners when it comes to negotiations. Although the current political climate is benefiting negotiations, several wild cards remain. China’s ongoing trade talks with the U.S. could alter the situation. Beijing could compromise on the trade imbalance through an agreement to buy additional American LNG. That could be bad news for alternative suppliers. However, it remains the question whether Beijing is willing to commit itself into a position of vulnerability vis-à-vis its strategic competitor.

By Vanand Meliksetian for Oilprice.com

[maywillow] 24/2/2019 07:10

Oman signs upstream agreement with Total, Shell

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Created: Sunday, 24 February 2019 06:12

Total, the Ministry of Oil and Gas of the Sultanate of Oman (MOG), Oman Oil Company (OOC), Shell and Petroleum Development Oman (PDO) have signed an interim upstream agreement to further explore and develop gas resources of the Greater Barik area, northern part of Block 6 located onshore in the central west region of Oman

barikThe agreement is set to explore and develop in 2019 the gas resources of the Greater Barik area. (Image source: Derek Gavey/Flickr)

This agreement is the first step towards the implementation of the MoU signed between Total and MOG in May 2018 related to the development of an integrated gas project.

This integrated project includes an upstream development, in partnership with Shell and OOC, to produce the gas resources of the Greater Barik area and a downstream development by which Total and OOC will supply build and operate a one million tonnes per annum (Mtpa) LNG plant and develop an LNG bunkering hub in the port of Sohar.

Parties will continue to work diligently to finalise the definitive agreements which will guarantee the success of those integrated developments.

“We are confident that the project will help diversify the gas sector in Oman and support the economic development of the port of Sohar and its region,” commented Stephane Michel, senior vice-president for exploration-production of Total for the Middle East and North Africa (MENA).

With a strong exploration and production portfolio in Oman, Total’s SEC production reached at 38,000 boepd in 2018. Total holds four per cent interest in the PDO operated onshore Block 6, as well as in the Oman LNG (5.54 per cent) and Qalhat LNG (2.04 per cent) liquefaction complex located at Sur with an overall capacity of 10.5 mtpa.

[the grumpy old men] 23/2/2019 18:44

Bloomberg/London

They are slowly plowing their way across thousands of miles of ocean toward America’s Gulf of Mexico coastline. As they do, twelve empty supertankers are also revealing a few truths about today’s global oil market.
In normal times, the vessels would be filled with heavy, high sulphur Middle East oil for delivery to refineries in places like Houston or New Orleans. Not now though. They are sailing cargo-less, a practice that vessel owners normally try to avoid because ships earn money by making deliveries.
The 12 vessels are making voyages of as much as 21,000 miles direct from Asia, all the way around South Africa, holding nothing but seawater for stability because Middle East producers are restricting supplies. Still, America’s booming volumes of light crude must still be exported, and there aren’t enough supertankers in the Atlantic Ocean for the job. So they’re coming empty.
“What’s driving this is a US oil market that’s looking relatively bearish with domestic production estimates trending higher, and persistent crude oil builds we have seen for the last few weeks,” said Warren Patterson, head of commodities strategy at ING Bank NV in Amsterdam. “At the same time, Opec cuts are supporting international grades like Brent, creating an export incentive.”
The US both exports and imports large amounts of crude because the variety it pumps – especially newer supplies from shale formations – is very different from the type that’s found in the Middle East. Opec members are likely cutting heavier grades while American exports are predominantly lighter, Patterson said.
By industry standards, American oil is considered light and low in sulphur, making it great for churning out gasoline, with the result that a glut of the automotive fuel is starting to build up. By contrast, Middle East crude often needs more processing – not a problem for Gulf of Mexico plants that were designed specifically for that task – but it can have a smaller gasoline yield.
“There is still going to be a lot of growth from US tight oil this year,” said James Davis, director of short-term global oil service at Facts Global Energy. “This will continue to push US exports up.”
Shippers are counting on the US exports to help the tanker market withstand supply restrictions by the Organization of Petroleum Exporting Countries and allies including Russia. Industry analysts, who actually raised their estimates for what they think the ships will earn this year after the Opec+ pact was announced in December, are citing rising American shipments as a contributing factor.
There are usually three or four empty supertankers – very large crude carriers in industry jargon – that would sale empty to the US at any one time, according to shipbrokers.
The shift has produced knock-on effects around the shipping market. Daily earnings for the VLCCs, which can haul 2mn barrels of oil, on the benchmark Middle East-to-China route doubled to $29,337 in the past week, according to Baltic Exchange data.
“Following a fixing frenzy from the US Gulf Coast late last week, most available tonnage in the Atlantic basin has been soaked up,” said Espen Fjermestad, an analyst at Fearnley Securities AS in Oslo. “With ships ballasting West, rates have shifted up also in the East.”

[sarkasm] 23/2/2019 08:27

Trump administration sees Germany’s coal closures as an opportunity to sell natural gas
by John Siciliano
| February 23, 2019 12:00 AM

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The Trump administration claims to be making significant headway in swaying Germany to import more U.S. natural gas, using the country’s recent plans to close all its coal plants by 2038 as leverage.

“In order to meet that goal, they have to replace it with something else, and that something else is going to be natural gas,” Deputy Energy Secretary Dan Brouillette told the Washington Examiner.

Around 40 percent of Germany's energy comes from coal, making it one of the biggest users of the fossil fuel in the European Union. Coincidentally, the country is the largest importer of U.S. coal in Europe, even though it imported 19 percent less coal last year than it did in 2017.
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Brouillette had just returned from talks with German government officials in Berlin and on the sidelines of the Munich Security Conference last week.

He has been traveling most of the year promoting the administration’;s 'energy dominance' agenda along with Energy Secretary Rick Perry and has made significant headway in the administration’;s push to sway the European Union to reduce its dependence on Russian natural gas in favor of imports from the United States.

The U.S. became a net natural gas exporter in 2017 and has supplanted both Russia and Saudi Arabia to become the largest oil producer in the world.

But now with Germany’s decision last month to close all its coal plants in the next two decades, the administration sees the prospects for liquefied natural gas as even more favorable.

A major milestone in the U.S. talks with Germany came late last year when the country announced it was going to construct its first-ever liquefied natural gas import terminal on the Elbe River, close to Hamburg. German Chancellor Angela Merkel said the government will be co-financing the project with private industry.

Brouillette said the Germans are now looking at building more import facilities in addition to the one announced last fall.

Now the challenge for the Trump administration is meeting the increased demand for natural gas coming from Germany, he said.

“Obviously, we would like to fill those terminals with U.S. LNG, but the challenge we’ve had, candidly, over the last few years has been while our production numbers have gone up, our ability to get our product to market has been constrained by our own infrastructure,̶1; Brouillette said.

But he remains confident that the U.S. is making headway in Washington, citing last week’s bipartisan decision at the Federal Energy Regulatory Commission to approval the first in a series of backlogged LNG export terminal applications.

FERC comprises four commissioners, two Democrats and two Republicans, with the chairman holding the same party affiliation as the president. The commission is the primary agency in charge of siting LNG terminals and conducting environmental reviews.

A sticking point in approving the LNG terminal was how to calculate its climate impact, but that problem was remedied with a 3-1 vote in favor of the projects.

With the commission one member short, the vote proved the key energy panel can get enough support to move ahead on these projects, sending an encouraging signal to investors and companies looking to build export terminals, Brouillette said.

The FERC action will “serve as a template for the approval of future facilities” and “is a very important step for America to meet the commitment we have made to our European partners and some of Asian partners to supply their needs for energy,” he said.

[maywillow] 20/2/2019 11:27

Natural Gas 20 Feb 2019 | 10:14 UTC Dubai

Oman, Shell sign interim upstream gas deal

Author Miriam Malek Editor Jonathan Fox Commodity Natural Gas

Dubai — Oman and supermajor Shell have signed an interim deal to develop gas acreage in block 6 in 2019, according to an emailed statement from Shell.
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The agreement covers investments in oil and gas and resources are to be used for domestic Omani projects. Petroleum Development Oman, Oman Oil Company and Total also signed the deal as partners.

The deal will integrate Shell and Oman Oil's upstream project with a planned gas-to-liquids plant that Shell and Oman Oil will also co-develop.

Shell last year signed a memorandum of understanding with the Omani government to develop a GTL plant in Duqm.

"We hope that the development of gas resources destined for the integrated projects will play an important role in generating in-country value and diversifying Oman's economy," Chris Breeze, chairman of Shell in Oman said.

Oman's gas resources are rapidly depleting and new resources will need to be exploited to meet rising domestic electricity demand. Oman in January signed new exploration and production deals with BP and Eni to shore up fresh reserves.

At the moment, Oman is a gas exporter and sells domestic resources through its Oman LNG export arm. But it has also mulled plans to import the fuel.

-- Miriam Malek, [e-mail]

-- Edited by Jonathan Fox, [e-mail]