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GVEA, BP Sign Gas Deal (USA)

GVEA announced that it has entered into a natural gas supply contract with BP Exploration (Alaska) Inc. Under the contract, the cooperative may purchase up to 23 billion cubic feet of natural gas each year for 20 years.

This positions GVEA as the aggregator, which is kind of like a wholesaler. All fuel purchases will flow through Golden Valley.

This contract benefits the Interior in many ways, including:

  • It meets GVEA’s needs for electrical generation. GVEA can convert the North Pole Expansion Power Plant to burn natural gas, displacing expensive oil-fired generation.
  • It allows for the expansion of a natural gas distribution infrastructure in the Interior. The high cost of space heating is crushing Interior Alaska. GVEA will be able to supply the natural gas, opening up opportunities for distribution system expansion.

“Beyond satisfying our own electrical generation needs, we recognized an opportunity to address the energy crisis facing Interior Alaska’s residents and businesses, in particular, the high cost of space heating,” said Cory Borgeson, GVEA Interim President & CEO. “BP’s willingness to work with our cooperative to address Interior Alaska’s energy crisis is appreciated and is crucial to the long-term success of our communities.”

It is difficult to determine the precise impact this natural gas contract will have on the average Interior resident’s electric bill. Savings are contingent on the price of other fuel sources, including oil. Adding natural gas to our fuel mix will help GVEA stabilize rates and provides an opportunity for decreased fuel costs.

Providing the project stays on track, natural gas is expected in the Interior by 2015.

GVEA, BP Sign Gas Deal (USA) LNG World News.

China steps up Afghan role as Western pullout nears

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By Sanjeev Miglani
KABUL – Sun Jun 3, 2012 3:38am EDT

(Reuters) – China and Afghanistan will sign an agreement in the coming days that strategically deepens their ties, Afghan officials say, the strongest signal yet that Beijing wants a role beyond economic partnership as Western forces prepare to leave the country.

China has kept a low political profile through much of the decade-long international effort to stabilize Afghanistan, choosing instead to pursue an economic agenda, including locking in future supply from Afghanistan’s untapped mineral resources.

As the U.S.-led coalition winds up military engagement and hands over security to local forces, Beijing, along with regional powers, is gradually stepping up involvement in an area that remains at risk from being overrun by Islamist insurgents.

Chinese President Hu Jintao and his Afghan counterpart Hamid Karzai will hold talks on the sidelines of the Shanghai Cooperation Organisation summit in Beijing this week, where they will seal a wide-ranging pact governing their ties, including security cooperation.

Afghanistan has signed a series of strategic partnership agreements including with the United States, India and Britain among others in recent months, described by one Afghan official as taking out “insurance cover” for the period after the end of 2014 when foreign troops leave.

“The president of Afghanistan will be meeting the president of China in Beijing and what will happen is the elevation of our existing, solid relationship to a new level, to a strategic level,” Janan Musazai, a spokesman for the Afghan foreign ministry, told Reuters.

“It would certainly cover a broad spectrum which includes cooperation in the security sector, a very significant involvement in the economic sector, and the cultural field.”

He declined to give details about security cooperation, but Andrew Small, an expert on China at the European Marshall Fund who has tracked its ties with South Asia, said the training of security forces was one possibility.

China has signaled it will not contribute to a multilateral fund to sustain the Afghan national security forces – estimated to cost $4.1 billion per year after 2014 – but it could directly train Afghan soldiers, Small said.

“They’re concerned that there is going to be a security vacuum and they’re concerned about how the neighbors will behave,” he said.

Beijing has been running a small program with Afghan law enforcement officials, focused on counter-narcotics and involving visits to China’s restive Xinjiang province, whose western tip touches the Afghan border.

Training of Afghan forces is expected to be modest, and nowhere near the scale of the Western effort to bring them up to speed, or even India’s role in which small groups of officers are trained at military institutions in India.

China wants to play a more active role, but it will weigh the sensitivities of neighboring nations in a troubled corner of the world, said Zhang Li, a professor of South Asian studies at Sichuan University who has been studying the future of Sino-Afghan ties.

“I don’t think that the U.S. withdrawal also means a Chinese withdrawal, but especially in security affairs in Afghanistan, China will remain low-key and cautious,” he said. “China wants to play more of a role there, but each option in doing that will be assessed carefully before any steps are taken.”

JOSTLING FOR INFLUENCE

Afghanistan’s immediate neighbors Iran and Pakistan, but also nearby India and Russia, have all jostled for influence in the country at the crossroads of Central and South Asia, and many expect the competition to heat up after 2014.

India has poured aid into Afghanistan and like China has invested in its mineral sector, committing billions of dollars to develop iron ore deposits, as well as build a steel plant and other infrastructure.

It worries about a Taliban resurgence and the threat to its own security from Pakistan-based militants operating from the region.

Pakistan, which is accused of having close ties with the Taliban, has repeatedly complained about India’s expanding role in Afghanistan, seeing Indian moves as a plot to encircle it.

“India-Pakistan proxy fighting is one of the main worries,” said Small.

In February, China hosted a trilateral dialogue involving officials from Pakistan and Afghanistan to discuss efforts to seek reconciliation with the Taliban.

It was first time Beijing involved itself directly and openly in efforts to stabilize Afghanistan.

Afghan foreign ministry spokesman Musazai said Kabul supported any effort to bring peace in the country. “China has close ties with Afghanistan. It also has very close ties with Pakistan and if it can help advance the vision of peace and stability in Afghanistan we welcome it.”

(Additional reporting by Chris Buckley in BEIJING; Editing by Daniel Magnowski)

USA: Total Close to Sign Sabine Pass LNG Deal

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French oil and natural gas major Total is close to signing a firm long-term sales agreement with Cheniere Energy to lift 3.5 million tonnes per annum (mtpa) of LNG from its Sabine Pass liquefaction project, according to sources close to the deal.

The structure of the deal is understood to be virtually identical to Cheniere’s 20-year sales and purchase agreement signed with BG Group last week, the first firm offtake deal signed by the project. Under that agreement BG will pay the US developer a fixed take-or-pay fee of $2.25/MMBtu to cover the procurement, liquefaction and loading costs at the Sabine Pass plus an interruptible 115% of US Henry Hub natural gas futures fetching fee paid to Cheniere to provide free on board (FOB) cargoes.

Total is also understood to be taking the commercial export agreement one step further by assuming an ownership stake in Cheniere’s Sabine Pass Liquefaction company. Specific terms of the equity stake were undisclosed.

Bringing an equity partner into the project has been seen as crucial for Cheniere if it is to secure its financial future and reduce its $3.14bn debt, which includes $2.2bn specifically related Sabine Pass.

While credit rating agency Standard & Poors (S&P) called Cheniere’s deal with BG a “significant milestone” in its efforts to generate future cash flows, it has reaffirmed its CCC+ junk-status rating with a negative outlook.

Assuming its current liquidity does not materially improve, Cheniere will not be able to make its 2012 maturity payments,” S&P said in a report released on Monday.

The company must generate significantly more liquidity to avoid further credit deterioration or default. We believe its options include further asset sales and terminal use agreements (TUAs), incremental LNG marketing activity, equity offerings, and debt restructuring.”

Closing in on sales threshold

A firm 3.5mtpa sales commitment from Total would bring Cheniere to the 7mtpa threshold, a figure that chief executive Charif Souki told ICIS Heren last week was the target for moving forward with the first phase of the liquefaction project.

Phase One at Sabine Pass is planned for two liquefaction trains of 4.5mtpa capacity each, with Cheniere indicating that it will retain and market the remaining 2mtpa.

Cheniere and Total both declined to comment when contacted to confirm the deal.

Total is already an import capacity holder at Sabine Pass where it has 1 billion cubic feet/day – 0.2 million cubic metres/day – of regasification capacity as part of 20-year terminal utilization agreement.

The agreement with Cheniere follows Total’s declaration last week that the company has been studying the possibility of exporting US gas but provided no additional details.

Total secured a firm upstream US unconventional gas presence in December 2009 when it purchased 25% of Chesapeake Energy’s portfolio in the Barnett Shale Basin in Texas.

Source

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