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Leaders of gas exporting powers to urge return to oil-linked price

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Doha (Platts)–14Nov2011/616 am EST/1116 GMT

Ministers of the world’s leading gas exporting countries with control over 70% of global natural gas reserves met in Doha Sunday to prepare for the group’s first summit and agreed a communiqué to be issued by their leaders that will call for the restoration of a price link to oil, a senior delegate said.

A communiqué issued after the ministerial meeting made no mention of price and was thin on details of discussions during a closed session of ministers, which saw Iranian Oil Minister Rostam Ghasemi make his first visit abroad as representative of his country since his appointment in August. He will be joined Tuesday by President Mahmoud Ahmadinejad for the summit of the Gas Exporting Countries Forum, or GECF.

But a senior delegate said the ministers of the GECF, now numbering 12 after Oman was admitted as a member, approved the wording of a communique for their leaders, due to meet in Doha on Tuesday. He said the final statement includes a call, endorsed strongly by host Qatar, of the need to attain oil price parity for gas while upholding the principle of long-term contracts as the main basis for gas exports.

Qatari Emir Sheikh Hamad bin Khalifa al-Thani set the tone for the GECF’s first gathering at heads of state level when remarks he made two years ago calling for a restoration of the oil-gas price link were reproduced by all Qatari state-owned media on Sunday.

“It is time for the members of this forum to work together to restore the link between gas prices and oil prices and achieve parity between them,” official news agency QNA quoted the emir as saying at a GECF ministerial meeting in Doha in 2009, when gas prices had slumped in the wake of the global financial crisis.

The agency noted that former Algerian Oil Minister Chakib Khelil last year warned that long-term gas sales contracts were under threat after spot prices in 2009 fell to less than a quarter of their previous value.

The communiqué said ministers “took note of the key elements of the Secretariat presentation on gas market developments and discussed the challenges facing the natural gas industry as well as effective cooperation among GECF members for developing a stable and transparent gas market.”

The ministerial statement made no mention of prices, which have diverged in recent months with Asian markets securing higher prices in the wake of Japan’s rising imports of LNG in the wake of the Fukushima nuclear crisis, leaving a big gap with gas prices in the US, where shale gas is rapidly displacing imported LNG.

Indeed Kevin Ramnarine, energy minister of Trinidad and Tobago, once the biggest exporter of LNG to the US, told Platts he expected exports of LNG from the Atlantic LNG complex in Trinidad to the US to fall to zero in the future as a result of rising shale gas output there.

He said exports to the US had fallen to just 25% from 70% four years ago and Trinidad had adapted to the change by diverting supply to South America, Europe and Asia, which this year accounted for 22% of Trinidad’s LNG exports.

The so-called shale gas revolution in the US and plans by several other countries in Europe and Asia to develop their shale gas reserves is one of the major challenges facing the producers and exporters of conventional gas gathered in Doha, the capital of the world’s largest producer with a capacity now at 77 million mt/year.

But Qatar has no plans now to expand its capacity to meet the surge in demand from Asia with a moratorium on further development of the massive North Field expected to remain in place, Qatari Oil Minister Mohammed al-Sada said.

He was evasive when asked whether Qatar would now revise its decision on the moratorium given that it had boosted shipments to Japan in the wake of the tsunami and expectations of strong growth in demand for gas over the next two decades.

“We have to take care of the reservoir management and the technical side of the production of the North Field. It is important to us and a lot of valuable information can only be obtained after producing and seeing physically the performance of the field and this is what we are looking at,” Sada said, adding that Qatar would honor its commitments to customers.

Although Sada did not say that the moratorium would not be lifted, his remarks suggested Qatar had no plans to review the moratorium on the North Field, the world’s biggest concentration of non-associated gas.

“This is a depletable resource and one should look carefully at how to produce it and maintain the productivity of the field for as long as possible,” he said.

A senior Qatari gas industry source said there were no plans to lift the moratorium, which had been due for a review in 2014 after completion of reservoir studies on the North Field’s performance.

The source said the mortorium applied to gas development from the North Field, which meant that there would also be no expansion to current lNG trains at the RasGas and Qatargas plants.

Qatari officials have said previously that they could increase LNG production by debottlenecking existing LNG trains to provide an additional 10-12 million mt/year.

However, the source said, with the moratorium in place, there would be no gas available for any expansion.

There had been some speculation that Qatar halted further development of the North Field, which is an extension of Iran’s South Pars gas field, because of fears in Tehran that rapid development on the Qatari side would lead to depletion of reserves on its side of the offshore field.

Iran, which has the second-largest conventional gas reserves after Russia, has been unable to raise its gas production capacity as rapidly because of restrictive international sanctions that have deterred foreign investment.

Previous talk of a possible collaboration between Iran and Qatar to jointly develop the shared gas field has come to naught.

The GECF, which is dominated by Russia, Iran and Qatar, has often spoken of the need for cooperation among its members though there has been no concrete action to that end in the ten decades of its existence.

Russian Energy Minister Sergey Shmatko told the news conference Russia was open to collaborative efforts, noting that the opportunity for Qatar to join Russia’s Yamal LNG project had been discussed. But the Russian minister gave no indication as to whether Qatar was any closer to joining France’s Total as a partner in the Yamal project, a subject that has been on the cards for some time.

Sada said in response to a question that the issue of swapping LNG for Russian pipeline gas, once touted as a possiblity, was not raised.

Amid talk of achieving gas price parity with oil, now trading around $115/barrel for benchmark Brent Blend crude, the GECF was keen to reiterate that there was no plan to transform the Doha-based forum into a cartel.

Prices “depend on commercial interactions among the exporting countries and their customers but does not fall under the GECF’ jurisdiction,” said Bokhanovskiy, who was elected to a second term as secretary general.

“It is not our role to coordinate price policy or quotas for production of gas … all our members are free to formulate their own commercial policy. It is not a question to create some kind of formula. We are for the connection between oil prices and gas prices and for the oil indexation of gas prices.”

The next ministerial meeting will be held November 2012 in Equatorial Guinea.

–Kate Dourian, kate_dourian@platts.com

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Petronet in Talks to Buy Capacity at US, Australia LNG Terminals

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Petronet LNG Ltd, India’s largest liquefied natural gas importer, is in talks to acquire capacity at proposed LNG terminals in the US and Australia with a view to tie up long-term gas supplies.

Five projects (in the US) have applied to US authorities for approval to export gas,Petronet CEO and Managing Director A K Balyan told reporters in New Delhi. “We are talking to some of them with an aim to tie up long-term volumes.

He refused to give details. With domestic gas output falling, companies are looking at new LNG contracts to meet the growing energy demand.

Besides Petronet, state-owned gas utility GAIL India, too, is looking to acquire capacity at proposed LNG terminals on the US Gulf Coast.

So far, Cheniere’s Sabine Pass, Freeport LNG and Southern Union’s Lake Charles are the three projects that have applied to export LNG.

We have to see how export permissions work out,” Balyan said, adding Petronet was looking at picking up an equity in the terminals to get better pricing of gas.

Petronet imports 7.5 million tons a year of LNG from RasGas of Qatar on a long-term contract at its Dahej terminal.

It is also looking at supplies from the US and Australia among others to feed the 25 million-tons-a-year LNG import capacity it will have by 2015-16.

Balyan said Petronet is expanding the Dahej terminal capacity to 15 million tons a year from 10 million tons in next 40 months while building a new import facility at Kochi in Kerala.

Another 5 million tons facility is planned on the east coast for which three sits – two in Andhra Pradesh and one in Orissa have been shortlisted.

Petronet reported almost doubling of its net profit at Rs 260.33 crore in the quarter ended September 30, on the back of higher volumes it imported in the three-month period.

We regassified 135.08 trillion British thermal units of gas in July-September as against 99.78 trillion BTUs in the same period a year ago,” he said, adding that besides the long-term LNG contract from Qatar, the company imported 12 cargoes from the spot market in the quarter.

It had not imported any shipload of LNG in Q2 of previous year.

We hope to maintain the trend (during the current quarter). Import from spot market should be 12 to 14 cargoes,” he said.

Petronet in all imported 42 cargoes or shiploads of LNG. Of these, Petronet imported six cargoes from spot market by itself and an equal number were contracted by its promoters, GAIL and Gujarat State Petroleum Corp (GSPC).

(economictimes)

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Why LNG is the new (black) gold

Nathan Bell
April 18, 2011 - 2:50PM

There’s an old joke among oil drillers: “We didn’t hit oil, but at least we didn’t hit gas”.

Just 10 years ago, gas was an irritating, near-worthless by-product of oil production. Now an oilman’s job depends on it.

There are two main reasons for this incredible change. First, what’s left of the world’s oil reserves rest mainly in the hands of national oil companies like Saudi Aramco and Petrobras of Brazil.

Major oil producers like Chevron and ExxonMobil are chasing gas because they can’t get their hands on any more oil.

What’s more, it’s now much less expensive to transport, to the point here gas is now a real substitute for oil. The switch to LNG is on.

But what really accelerated the pace of change was the advent of Liquefied Natural Gas, or LNG.

Prior to this development, gas had to be transported through huge, and hugely expensive, pipelines. Only those projects close to customers or existing pipelines made economic sense. LNG did away with all that.

Through a process known as liquefaction, gas is chilled into LNG, occupying a volume just 1/600th of its gaseous state. This small fact changed the face of the industry.

Where once large and expensive pipeline networks were required to transport gas point-to-point, now ships deliver it anywhere in the world.

Nevertheless, it’s still a complex process. Once LNG reaches its destination, it has to be turned back into its gaseous state – a process somewhat unimaginatively known as regasification – and transported conventionally via pipelines to end users.

At both ends of the LNG chain, nature and technology collide. And the costs of that battle aren’t cheap.

The supply glut

LNG prices are traditionally linked to the oil price. In days when oil fetched $US20 a barrel this quirk was seen to benefit buyers of gas. Today, with oil prices at over $US100 a barrel, it’s a boon to gas producers.

Producers have responded by scrambling to increase output. There’s now every sign of a global glut of LNG.

Qatar is home to the world’s largest gas fields, where enough oil and condensate by-product lowers the effective cost of gas production to almost zero. Cost-free cargoes of Qatari LNG thus ply the world’s oceans, holding prices down.

In Australia, new capacity worth nearly 60 million tonnes per annum (mtpa), has already been committed. With coal seam gas reserves yet to come on stream, that figure is likely to grow.

The shale gas revolution in the US will also have an impact, turning what might have been an importer of LNG into a possible exporter.

And shale and coal seam gas discoveries that have transformed the North American gas market may also occur in new markets like China, India and Brazil. If that occurs, some of the world’s largest potential markets may not need to import LNG at all.

A glut of LNG over the next few years appears likely. Indeed, we’ve been warning of this possibility.

But over the longer term, demand for LNG should easily catch up and perhaps even exceed new capacity.

Growing demand for LNG

The world’s biggest and hungriest energy consumers have barely embarked on their conversion to gas.

In 2005 China had no re-gasification terminals at all. Today, there are six in various forms of development. Each will be able to process millions of tonnes of LNG each year. Currently, Chinese LNG imports are less than 6mtpa. In 15 years’ time, they’re forecast to increase 10-fold. India, Brazil, South Africa, Vietnam and others are constructing new terminals to import LNG.

Overall, demand is expected to grow 15mtpa for the foreseeable future. That’s the equivalent of a new North West Shelf every year.

With Qatar indicating it has reached its supply limit – volumes are not expected to exceed 77mpta for some years – Australian producers are well placed to fill that supply shortfall.

The switch to gas is already on. Developing countries are increasingly seeing LNG, not oil, coal or renewables, as the primary solution to their growing energy demands. Investors take note: this is a sector that will offer rich pickings for investors.

( Original Article )

Qatar: Nakilat-Keppel O&M Drydock Receives its First Ship

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N-KOM’s (Nakilat-Keppel Offshore Marine) new state-of-the-art dry dock at Ras Laffan Port has received its first ship – the RasGas’ chartered LNG Vessel, Simaisma. This historic event marks a new phase for the RasGas fleet and RasGas’ drive to ensure the security and reliability of LNG supply.

RasGas chartered vessel, Simaisma, with its 23-strong crew, Captain Ilias-Chrysovaladis Kattidenios and Technical Director Mr Andreas Spertos of Maran Gas Maritime were greeted by Mr Tom Mc Hale, RasGas’ Acting Managing Director and his wife Mrs Sinead Mc Hale who is the ship’s sponsor. Together, they jointly presented a gift to Captain Ilias-Chrysovaladis Kattidenios in commemoration of this first dry docking at the new facilities.

Tom Mc Hale stated: “This is an important milestone for RasGas, our shipping operations and the country, placing Qatar at the forefront of not only regional, but global port development and the shipping industry.”

To ensure the highest standards in safety, the RasGas fleet of 27 vessels demands regular maintenance and has, until recently, required periodic dry docking abroad as Qatar did not have the necessary facilities. The completion of N-KOM’s new facility in Ras Laffan Port reduces the need for docking in foreign ports for maintenance and repair – further underlining RasGas’ position as a secure and reliable supplier of LNG with a sustainable model that ensures the integrity of their supply chain.

“RasGas aims to provide fast, secure and cost-efficient shipping solutions to its clients. The new dry dock at N-KOM facilitates this and is another first for Qatar” added Mc Hale.

Nakilat-Keppel O&M (N-KOM)

Nakilat-Keppel O&M (N-KOM) is a 43-ha world-class shipyard facility jointly developed by Nakilat (80%), the world’s leading transporter of liquefied natural gas (LNG), and Keppel O&M (20%), the global leader in offshore rig design and construction, ship repair and conversion, and specialised shipbuilding.

Located at the north-eastern tip of Qatar within the Ras Laffan Industrial City and close to the LNG terminals and the Ras Laffan Port, N-KOM boasts some of the most technologically advanced equipment for increased efficiency, quality and safety. The yard is designed with optimal flexibility to undertake the entire spectrum of repair, conversion and construction for a wide range of marine and offshore vessels and structures.

The state-of-the-art yard has been accredited by Det Norske Veritas (DNV) for its Integrated Management System covering ISO 9001 for Quality, OHSAS 18001 for Occupational Health & Safety and ISO 14001 for Environmental Management.

N-KOM Dry Dock was completed in the fourth quarter of 2010 and the docking of RasGas’ Simaisma represents the first in a number of phases that will see this dry docking facility grow into one of the largest in the world, providing maintenance and repair services for vessels in various industries as well as ship building facilities.

( Original Article )

offshoreenergytoday.com

Golden Pass LNG

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Year constructed:
2009

Major units:
two unloading berths, five full containment storage tanks, vaporization facilities, gas send-out system, ship unloading system, and a natural gas pipeline connecting to existing interstate and intrastate pipelines

Product:
Regasified LNG

Post-project processing capacity:
15.6 million MTA of LNG or 2 billion cubic feet per day of natural gas

Project cost:
$1B

Contractor:
Chicago Bridge & Iron Company N

Located two miles northwest of Sabine Pass, Texas, and 10 miles south of Port Arthur, Texas, the Golden Pass LNG Terminal is situated on the Sabine-Neches Waterway that separates Texas and Louisiana. The LNG terminal will include two ship unloading berths, five full-containment storage tanks, vaporization facilities, and gas send-out and ship unloading systems. The $1 billion contract for engineering, procurement and construction of the project was awarded to Chicago Bridge & Iron Company NV (CB&I) in August 2006. Construction began on the terminal the following month, with operation start-up slated for mid-2009 and total construction completion planned for 2010.

On September 28, 2010, Golden Pass announced that it expected to receive its first LNG cargo during October 2010. The commissioning cargo was en route from Ras Laffan, Qatar via a Q-Flex LNG carrier.

LNG will be shipped to the Golden Pass LNG Terminal primarily from the Ras Laffan 3 and Qatargas 3 projects in Qatar. The terminal will then re-gasify the hydrocarbons. Processing capacity for the terminal is 15.6 million metric tons per year of LNG, which is comparable to 2 billion cubic feet of natural gas a day.

Natural gas will be sent from the Golden Pass LNG Terminal by pipeline to US markets. In addition to the LNG terminal, the project scope includes the Golden Pass Pipeline, which is a 42-inch pipeline that will span 68 miles across four Texas counties and one Louisiana parish to connect with 11 interstate and intrastate pipelines, as well as a short pipeline that will tie-in to the Beaumont industrial area. Start-up for the pipeline coincides with the terminal start-up.

According to the Gulf Times DOHA, the Golden Pass Terminal will receive a third of the gas imports to the US, or 20 million tons, in two to three years of operation start up.

Related Articles

Golden Pass Becomes Fully Operational
May 10, 2011 – Golden Pass LNG Terminal LLC (Golden Pass LNG) announced Tuesday that it has been granted authority by the Federal Energy Regulatory Commission (FERC) to place into service the Phase 2 terminal facilities.

Golden Pass Begins Commercial Ops
Mar 14, 2011 – The Golden Pass LNG Terminal LLC and Golden Pass Pipeline LLC announced Monday that it has been granted in service authority by the Federal Energy Regulatory Commission (FERC) and has commenced commercial operations.

Golden Pass Expects First Cargo Next Month
Sep 28, 2010 – The Golden Pass LNG terminal announced Tuesday that the first cargo to be used for commissioning the facilities is anticipated to arrive during October 2010.

Coast Guard Issues Recommendation Letters for Eight Terminals
Apr 10, 2009 – The U.S. Coast Guard said Friday that it has issued letters of recommendation for eight liquefied natural gas facilities under development on the Gulf Coast.

Startup Delayed for Golden Pass
Dec 19, 2008 – Recently uncovered damage at Exxon Mobil Corp.’s (XOM) $1 billion natural gas import terminal under construction in southeast Texas will delay the facility’s scheduled startup next year.

ExxonMobil: Golden Pass May Face Delay
Dec 12, 2008 – The opening of the Golden Pass liquefied natural gas terminal in the United States will likely be delayed by hurricane damage, while Britain’s South Hook LNG terminal now looks set to open in early 2009, an executive from ExxonMobil said on Thursday.

Port Arthur Pipelines Pass Final Hurdle
Jan 04, 2008 – Two pipelines tied to upcoming industrial projects soon will snake their way through the city with the Port Arthur (Texas) City Council’s stamp of approval.

Port Arthur to Host Hearing on Golden Pass Pipeline Route
Dec 13, 2007 – A 42-inch pipeline running from the Golden Pass LNG facility through Port Arthur, Texas, en route to Calcasieu Parish, La., will be the subject of a Jan. 2 public hearing.

Port Arthur Council Okays Land for Golden Pass
Jul 19, 2007 – The City of Port Arthur, Texas, shed 180 acres of vacant land and another 26 acres of submerged land for the ExxonMobil LNG facility near Sabine Pass.

CB&I Garners LNG Terminal Contract
Aug 01, 2006 – CB&I has been awarded a contract by Golden Pass LNG Terminal LLC for the engineering, procurement, fabrication and construction of a liquefied natural gas (LNG) import terminal located near Sabine Pass, Texas.

FERC Okays Two LNG Import Terminals; Providence LNG Fails on Safety Issues
Jun 30, 2005 – In front of a packed crowd that included some local, state and federal officials Thursday, the last day of Chairman Pat Wood’s term, FERC conditionally approved the Weaver’s Cove LNG import terminal in Fall River, MA, and the Golden Pass LNG terminal in Sabine Pass, TX.

FERC Okays Two LNG Import Terminals; Providence LNG Fails on Safety Issues
Jun 30, 2005 – In front of a packed crowd that included some local, state and federal officials Thursday, the last day of Chairman Pat Wood’s term, FERC conditionally approved the Weaver’s Cove LNG import terminal in Fall River, MA, and the Golden Pass LNG terminal in Sabine Pass, TX.

Interior Takes Aim at FERC’s Assessment of Golden Pass LNG
Apr 11, 2005 – The Department of Interior has said that FERC, in its draft environmental impact statement (DEIS) on ExxonMobil Corp.’s proposed 2 Bcf/d Golden Pass liquefied natural gas (LNG) terminal and associated gas pipeline along the Gulf Coast, failed to adequately assess the project’s impact on endangered species and wetlands.

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