Daily Archives: September 23, 2011
A significant flow of LNG shipments to the East of Suez is expected in the short-term, attracting cargo diversions from the Atlantic Basin and US, as demand spiked following the March 11 Fukushima earthquake, according to sources at an industry event in Singapore this week.
The first half of 2011 saw incremental LNG imports into the Pacific Basin increase by 8.3 million mt from H1 2010, accounting for 60% of the global incremental LNG demand, according to Anthony Barker, general manager of BG Singapore Gas, citing data from Waterborne Energy.
The Asian region accounted for more than 65% of world LNG imports in 2010, and its share is expected to increase to 70% by 2015, said Stephen Del Regno, Managing Director of Asia Region, Chevron Global Gas, citing data from Wood Mackenzie.
Japan’s Chubu Electric will buy 12 million mt of LNG in fiscal 2011-12 (April-March), up 20% from the 10 million mt it bought in fiscal 2010-2011, due to lost nuclear capacity, Yasushi Asano, general manager of the company’s LNG business, said.
The number of importing countries in Asia will grow from five to 13 by 2020, based on Wood Mackenzie’s forecast, Stephen added.
The emerging markets in Asia are expected to increase demand. By 2020, the “legacy markets,” comprising of Japan, South Korea, Taiwan, could see their share of Pacific Basin LNG imports reduced from 87% in 2010, to 62% by 2020, according to the Wood Mackenzie data presented by Barker.
The increasing demand in Asia for LNG is evident, as the emerging markets of Philippines, Thailand, and India emphasized the increased role that LNG will play in their future energy plans.
“Commercial LNG imports in the Philippines could start four to five years from now, with Luzon likely to be developed as a hub,” Jose M. Layug Jr, Undersecretary of the Department of Energy of Philippines, said.
“By 2015, domestic demand [in Thailand] could be roughly 3 million mt/year [from the current 1 million mt/year],” Terdkiat Prommool, vice president of state-owned PTT’s LNG supply department, said.
Rajeev Mathur, executive direct of India’s GAIL, identified the development of additional regasification capacities and the establishing of an LNG international trading desk, as key areas for growth. GAIL earlier said they were discussing internally the logistics of setting up a trading desk in Singapore.
Francois Rafin, general manager of Yemen LNG also pointed out that more attractive prices in Asia foster mid-term rerouting of cargoes to the region.
Sources variously said October delivery spot LNG cargoes are priced over $16/MMBtu.
Platts October LNG Japan Korea Marker averaged $16.038/MMBtu over August 16-September 15, up 92.5% year on year, and up 10% from September 2011.
The spread between the JKM and UK’s National Balancing Point gas futures averaged $5.731/MMBtu, while the spread between the JKM and US’ Henry Hub gas futures hit $12.103/MMBtu over the same assessment period.
BG diverted 76 Altantic cargoes to the Pacific Basin in 2010, compared to one cargo in 2005. Nicolas Zanen, Cheniere Energy vice-president of trading, said Cheniere was in talks with Asian buyers from Japan, South Korea, China, Taiwan and India for its exports of LNG from the US, adding the company could “conclude definite commercial agreements by the second half of 2011.”
He added that the cost of a US LNG export cargo could be worked out by adding $2.50/MMBtu for liquefaction to 115% of Henry Hub gas prices and shipping costs.
“The 115% of Henry Hub prices is due to the 15% loss in volume when you liquefy gas and we can’t be bearing that loss,” Zanen said, “Liquefaction costs can range from $2 to $3/MMBtu.”
Based on the current gas production economics, Henry Hub gas prices could be effectively capped at around $6/MMBtu, he added.
Meanwhile, there may be an insufficient Atlantic portfolio LNG to balance the Pacific market and some Asian buyers may become dependent on additional LNG supplies from Qatar.
Qatargas has concluded 5 million mt/year of additional short-term LNG deals with Japanese importers since the March 11 quake, taking the total amount of deals done to 9 million mt/year, Andrew B. Seck, assistant marketing director, East of Suez, Qatargas, said.
“[We work to] ensure that Qatargas emerges as the short-term boost in Asia Pacific sales, on top of firm long-term commitments,” Seck added. “Asia Pacific features largely in Qatar’s growth portfolio,” he added.
“Over the long term, Qatargas should be able to double the size of its portfolio to the Asia Pacific in excess of 20 million mt/year. This will be achieved through traditional sales, and to China and several new country entrants [in the LNG market],” Seck said, but declined to provide a specific time frame.
- You: Japan vies with China, India for LNG (search.japantimes.co.jp)
- India Seeks LNG From South-East Asian Countries (Oil and Gas Eurasia) (thuytinhvo.wordpress.com)
- Coos Bay LNG backers to apply for federal export license (oregonlive.com)
- LNG Surges as Japan Vies With China, Exxon’s Shipments Grow (businessweek.com)
- Chevron’s Deal to Supply LNG to Japan (energyindustry002.wordpress.com)
- USA: Wartsila, Shell Ink Cooperation Deal to Promote LNG as Marine Fuel (mb50.wordpress.com)
- InterOil, Pacific LNG sign supply deal with Noble Clean Fuels (mb50.wordpress.com)
- Paschalides: Cyprus can offer new oil and gas supply routes to Europe (destinationcyprus.wordpress.com)
- Tokyo Gas unveils huge LNG ship (search.japantimes.co.jp)
Roc Oil (Mauritania) Company and Roc Oil (Chinguetti) B.V., each wholly owned subsidiaries of ROC, have agreed to sell all of their respective interests offshore Mauritania to Tullow Mauritania Ltd, Tullow Petroleum (Mauritania) Pty Ltd and Tullow Chinguetti Production Pty Ltd, wholly owned subsidiaries of Tullow Oil plc (“Tullow”), for US$4 million subject to working capital adjustments.
ROC has interests of between 2.00% and 5.49% in offshore Mauritanian blocks, including a 3.25% interest in the producing Chinguetti oil field. The divestment will take place through the sale of three separate packages. The effective date of the sale is 1 January 2011.
The agreement and completion of each separate package is subject to normal industry terms and conditions, including the receipt of relevant joint venture waivers or approvals and all necessary government approvals. Completion of the sale for all of ROC’s interests may not take place during 2011 due to issues associated with the approval process.
Commenting on the sale, ROC’s Chief Executive Officer, Alan Linn, stated:
”The sale of offshore Mauritanian interests signals the final element of ROC’s objective to exit or farm down its African acreage exposure. The exit from Africa will allow ROC to redeploy capital and resources to pursue opportunities more consistent with the Company’s strategy to generate future growth through exploration, appraisal and pre-development opportunities located in the focus regions of China, South East Asia and Australasia. The recent award of the Balai Cluster Small Field Risk Service Contract in Malaysia is an example of how ROC is successfully pursuing this strategy.”
Source:ROC ,September 23, 2011;
- Tullow Discovers Oil Offshore French Guiana (mb50.wordpress.com)
- Shell, Tullow find oil offshore French Guiana (marketwatch.com)
- Mauritania and China (sahelblog.wordpress.com)
- Tullow Oil doubles dividend as profit surges (marketwatch.com)
- Investment Column: Tullow’s oil find has barrels of potential (independent.co.uk)
- Strong Results Lift Tullow (online.wsj.com)