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Mitsui Buys Stake in Gas Natural Mexico

Mitsui & Co., Ltd., through its holding company, MIT Gas México, S. de R.L. de C.V., will participate in the gas distribution business in Mexico.

MGM concluded a share purchase agreement with Iberdrola Energía, S.A.U., a wholly owned subsidiary of Iberdrola, S.A. on September 18, for Mitsui’s acquisition of a 13.25% share in Gas Natural Mexico, S.A. de C.V.  with the purchase amount of US$ 82million (Approx. J¥ 6.5bil.). The completion of the transaction is subject to the relevant regulatory approvals.

In addition, Mitsui has also reached an agreement with the remaining shareholders in GNM to acquire 1.75% of an additional shareholding in GNM with the purchase amount of US$ 10.8milliion (Approx. J¥ 0.9bil.) to reach 15% in total. The completion of this transaction is also subject to the relevant regulatory approvals and closing of the purchase to Iberdrola.

GNM is providing natural gas distribution for residential, commercial and industrial segments in 6 zones in Mexico, including Mexico City and Monterrey, which are two of the largest cities, and Toluca and Bajio, which are two of the most developing cities in the country. GNM is providing its services to 1.3million customers and is the leading natural gas distribution company in Mexico, having a top market share both in terms of the number of clients and gas distribution volume.

Mitsui is currently engaged in various natural gas related businesses in Mexico, including the LNG receiving terminal at Manzanillo on the Pacific coast and 6 gas-fired power plants in the country, as well as a gas distribution business in 7 states of Brazil. Mitsui considers this transaction as a part of the vertical and horizontal expansion of Mitsui’s activities in gas related business and aims for further improvement of operation and service in each business utilizing its accumulated know-how in management and operation from existing businesses.

Mitsui expects further strong growth in the natural gas related market in Mexico based on the continuous demand increase caused by the steady and sustainable economic growth of the country and on the diversification of supply thanks to the shale gas development in Mexico and the US.

Mitsui, through this participation in GNM, continues to pursue further expansion of its activities in gas related infrastructure businesses in Mexico, contributing to the social and economic development of Mexico through the realization of infrastructure for a stable and sustainable energy supply.

Mitsui Buys Stake in Gas Natural Mexico LNG World News.

USA: Cheniere CEO Sees Domestic Gas Prices at USD 2/MMBtu

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In an interview on E&ETV yesterday, Cheniere CEO Charif Souki said that domestic natural gas prices could drop to $2 per million British thermal units as a result of improved drilling technologies, regardless of whether LNG exports are increased.

The rationale is this is no longer an exploration play. We know where the resource is. This is now a technology play. Technology plays become better, not worse.

We are learning how to image better, so we know where we have to drill. Our drill bits are getting better, so we know how to manage them and get them to the right place faster and better with less intrusion.

John Berge was talking last week about being able to reduce the amount of water used in the fracking process by 80 percent over the next few years. So, this is going to become a better and better process,” he said.

“We’re very early in the learning curve and we’re going to be able to find this resource more easily, faster and cheaper over a long period of time.

Whatever we can do to export is not going to be sufficient to make any impact at all. Most of the studies talk about 20 cents, I would propose that 20 cents statistically is insignificant, because gas prices can go up or down 20 cents every week. So, over a 20 year period, if our impact by modeling is 20 cents, that’s fine,” he added.

Cheniere of USA is developing a project to add liquefaction and export capabilities to the existing infrastructure at the Sabine Pass LNG terminal.

The Liquefaction Project is being designed and permitted for up to four modular LNG trains, each with a nominal capacity of approximately 4.5 mtpa.

In November 2011, Sabine Liquefaction, a unit of Cheniere, entered into a lump sum turnkey contract for the engineering, procurement and construction of the first two trains of the project with Bechtel Oil, Gas and Chemicals.

Sabine Liquefaction has also entered into four long-term customer sale and purchase agreements for 16 mtpa of LNG volumes, which represents approximately 89 percent of the nominal LNG volumes.

The customers include BG Gulf Coast LNG for 5.5 mtpa, Gas Natural Fenosa for 3.5 mtpa, KOGAS for 3.5 mtpa and GAIL (India) for 3.5 mtpa.

LNG World News Staff

USA: Cheniere Urges FERC to Approve Sabine Pass Liquefaction Project

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Cheniere Energy of USA has urged Federal Energy Regulatory Commission (FERC) to approve construction of its Sabine Pass liquefaction project by Thursday to prevent any project delays.

In a letter sent to FERC, Cheniere said failure to receive FERC authorization by Thursday could result in delays in construction of the liquefaction project and significant price increases.

Cheniere is developing a project to add liquefaction and export capabilities to the existing infrastructure at the Sabine Pass LNG terminal.

The Liquefaction Project is being designed and permitted for up to four modular LNG trains, each with a nominal capacity of approximately 4.5 mtpa.

In November, Sabine Liquefaction entered into a lump sum turnkey contract for the engineering, procurement and construction of the first two trains of the project with Bechtel Oil, Gas and Chemicals.

Sabine Liquefaction has also entered into four long-term customer sale and purchase agreements for 16.0 mtpa of LNG volumes.

The customers include BG Gulf Coast LNG for 5.5 mtpa, Gas Natural Fenosa for 3.5 mtpa, KOGAS for 3.5 mtpa and GAIL (India) for 3.5 mtpa.

Source

Norwegian LNG on Way to U.S.

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The latest LNG cargo to be loaded at Norway’s Hammerfest terminal has been dispatched to United States, according to shipping data.

The 165,500 m3 Maersk Meridian departed Hammerfest yesterday, and is expected to arrive at U.S. Sabinne Pass terminal on February 17.

Statoil said on January 20 that it has resumed production at the Hammerfest LNG plant following a temporary shutdown due to rupture of a firewater line.

The Hammerfest terminal has a capacity to produce 4.3 million mt/year of LNG.

Articles

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USA: Cheniere, KOGAS Ink Sabine Pass LNG Deal

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Cheniere Energy Partners, L.P. said today that its subsidiary, Sabine Pass Liquefaction, LLC, has entered into a LNG sale and purchase agreement (SPA) with Korea Gas Corporation (KOGAS) under which KOGAS has agreed to purchase approximately 3.5 mtpa of LNG upon the commencement of train three operations.

Under the SPA, KOGAS will purchase LNG on an FOB basis for a purchase price indexed to the monthly Henry Hub price plus a fixed component. LNG will be loaded onto KOGAS’s vessels. The SPA has a term of twenty years commencing upon the date of first commercial delivery for train three, and an extension option of up to ten years.  Deliveries from train three are expected to occur as early as 2017.  The SPA is subject to certain conditions precedent, including but not limited to Sabine Liquefaction receiving regulatory approvals, securing necessary financing arrangements and making a final investment decision to construct the second phase of the liquefaction project.

KOGAS is our fourth foundation customer and we have now sold 16 mtpa of the 18 mtpa being developed at the Sabine Pass LNG terminal.  KOGAS is a strong addition to our portfolio of customers as it is the largest LNG importer in the world and the dominant gas provider for the Republic of Korea, a nation that is soon to become a Free Trade Nation with the U.S.” said Charif Souki, Chairman and CEO.We look forward to finalizing all necessary steps in order to begin construction of the first phase of our project early this year and more importantly, to becoming the first LNG exporter in the Continental U.S.

Articles

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USA (Sabine Pass): BG Ups Sabine Pass LNG Volumes to 5.5 MTPA

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Cheniere Energy Partners, L.P. announced today that its subsidiary, Sabine Pass Liquefaction, LLC , has entered into an amended and restated LNG sale and purchase agreement with BG Gulf Coast LNG, LLC, a subsidiary of BG Group plc, under which BG has agreed to purchase an additional 2.0 million tonnes per annum (mtpa) of LNG, bringing BG’s total annual contract quantity to 5.5 mtpa of LNG.

BG will purchase 3.5 mtpa of LNG with the commencement of train one operations and will purchase a portion of the additional 2.0 mtpa of LNG as each of trains two, three and four commence operations.

Under the SPA, the purchase terms essentially remain the same, whereby BG will pay Sabine Liquefaction a fixed sales charge for the contracted quantity and will pay a contract sales price for LNG purchases based on the applicable Henry Hub index traded on the New York Mercantile Exchange, with the exception that the fixed sales charge will increase ratably in order to account for the increased fixed sales charge on the additional volumes.

In assessing the optimal contracting strategy for the Sabine Liquefaction Project, we have decided to sell part of the additional volumes on a long-term basis to BG, our first foundation customer,” said Charif Souki, Chairman and CEO.  “There’s a trade-off in whether we sell the additional volumes on a long-term basis or in the open market.  Contracting a portion of the additional volumes adds further certainty to the long-term cash flows of the project and preserves the opportunity for additional upside.

Articles

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Gas Exports Ignite a Feud

Seal of the United States Department of Energy.

Energy Firms Promote Exports, but Manufacturers Fear Their Costs Will Climb

By TENNILLE TRACY

U.S. officials will soon weigh in on a fight between companies that want to export some of America’s fast-growing supply of natural gas and big manufacturers that oppose the exports because they rely on cheap domestic gas.

In the next few weeks, Washington’s number-crunchers are set to estimate whether exports would cause U.S. prices to swell—a finding they will use in deciding the fate of more than a half-dozen projects across the nation.

The battle, which pits manufacturers such as Dow Chemical Co. against energy producers like ConocoPhillips, shows how the boom in U.S. fossil-fuel production is upending markets and forcing policy makers into decisions they didn’t imagine facing just a few years ago.

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Associated Press

Natural gas is pumped at a hydraulic fracturing operation in Pennsylvania’s Marcellus Shale in July.

Once seen as a likely significant importer of natural gas—before the boom in domestic shale-gas production provided enough to meet demand—the U.S. is now emerging as a potential supplier of the fuel to nations overseas thanks to the newly tapped sources in shale.

Companies are setting their sights on markets in Europe and Asia where natural gas fetches three to four times the price in the U.S. According to Platt’s, natural gas in Japan and South Korea fetches more than $16 per million British thermal units, compared with a benchmark price of a little more than $3 per million BTUs in the U.S. The companies are looking to spend billions of dollars on new terminals that could ship out about 17% of U.S. daily production, or about 11 billion cubic feet per day, according to the Energy Department. But Dow Chemical and others say allowing exports will crimp the supply available to U.S. users and drive up prices here.

To send natural gas across the oceans, companies must supercool the fuel to minus 260 degrees and convert it to liquid form so it can be loaded onto tankers. Building massive coastal facilities to make liquefied natural gas requires multiple permits from Washington.

The Energy Department is looking at whether exports will drain U.S. supplies and inflate domestic prices. The Energy Information Administration, part of the department, is expected to deliver its analysis in a few weeks.

If the department finds export terminals will raise the domestic price of natural gas and fail to serve the country’s best interests, it could block applicants from exporting to most nations except those with free-trade agreements with the U.S. That could doom the projects.

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Sen. Ron Wyden (D., Ore.), whose state includes one of the proposed terminals, says he is concerned U.S. consumers and businesses will get “short shrift” if natural gas supplies are shipped abroad.

“If you see natural gas prices go into the stratosphere, it would make it difficult for other industries to create jobs in the United States,” Mr. Wyden said in an interview.

Among those taking a hit would be chemical companies, which use natural gas as a raw material in car parts, bottles, cleaners, mattresses and other products. Dow Chemical, one of the most outspoken critics of the export proposals, says the U.S. would be better off using its cheap natural gas for domestic manufacturing instead of exports.

“When natural gas is used as a chemical raw material, it creates eight times the value compared to other uses, and fuels higher-paying jobs, exports of finished goods and the vitality of the manufacturing sector,” Dow spokeswoman Kasey Anderson said.

Energy companies say there is plenty of natural gas in the U.S. to meet domestic demand and support exports at the same time. They say building the giant export facilities would create construction jobs and boost long-term employment by encouraging a faster rise in U.S. natural-gas output.

“American consumers are best served when markets rather than regulators determine outcomes,” said Cheniere Energy Inc. spokesman Andrew Ware.

While concern over price increases “gets the most airplay,” the Energy Department is also examining potential benefits of exports, such as creating jobs and offsetting the large U.S. trade deficit, said Chris Smith, the department’s assistant secretary for oil and gas.

Cheniere, which wants to start construction in 2012 on an export facility in Louisiana, is the only company to have cleared the Energy Department hurdle on exports. It got approval to export to most nations in May, before opponents had fully geared up to resist such plans. Cheniere has already signed long-term contracts to supply natural gas to the U.K.’s BG Group PLC, Spain’s Gas Natural Fenosa and GAIL (India) Ltd.

Many companies that are seeking permission to export natural gas had planned to import it just a few years ago. Then U.S. production rose 18% between 2005 and 2010, with the bulk of the increase coming from gas trapped in rock formations known as shale.

Import terminals are now gathering dust. Earlier this year, a terminal owned by Dominion Resources Inc. south of Baltimore had to buy a shipment of natural gas from overseas just to keep its equipment running.

With natural gas prices in the U.S. at multiyear lows, power companies can generate electricity more cheaply and pass the savings to consumers.

A study by Navigant Consulting Inc. found three of the export projects the government is studying could together increase domestic prices by 17% in 2020, with the impact declining over time as more natural gas is produced.

Deloitte, which looked at a separate set of three projects, said the long-term rise in prices would be much smaller.

Charles Ebinger of the Brookings Institution says the impact of exports on prices is “virtually an impossible question” because there are so many hard-to-measure variables. One is whether the popular drilling technique known as hydraulic fracturing continues to grow—boosting natural-gas supply and keeping prices down—or gets bogged down in safety questions.

Write to Tennille Tracy at tennille.tracy@dowjones.com

Source

Total Concerned With Possibility that Sabine Pass LNG Export Permit Could Be Rescinded

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Posted: December 21, 2011

A report in “Poten & Partners – LNG in World Markets” suggests that Total remains interested in an LNG export deal with Cheniere Energy at the Sabine Pass terminal, but that the French company is concerned about contractual provisions that would require Total to pay a fixed charge for two years following declaration of force majeure. According Platts LNG Daily [subscription required], force majeure provisions would apply if both of Cheniere’s LNG export authorizations are revoked.

Source

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