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Cheniere to sell Corpus Christi LNG under long-term contracts

Posted on September 19, 2012 at 7:01 am
by Bloomberg

Cheniere Energy Inc. (LNG) will sell as much as 90 percent of the output from its liquefied natural gas project in Corpus Christi, Texas, under long-term contracts.

The planned Corpus Christi site will produce 13 million to 15 million metric tons a year of LNG, Charif Souki, chief executive officer at Houston-based Cheniere, said today in an interview at a natural gas conference in Tokyo.

The company plans to follow the contracting model established at its Sabine Pass terminal in Louisiana, Souki said. Sixteen million tons of LNG from Sabine Pass, from a total output of 18 million tons, will be sold on long-term contracts of as long as 20 years, with the rest to be offered on the spot market, he said.

“Those are the volumes that we’re not sure we can produce year after year so these will remain in the spot market,” he said. The first spot cargoes from Sabine Pass will reach the market in late 2015 or early 2016, he said.

Cheniere’s Sabine Pass site is the first in the contiguous U.S. to be able to export LNG. The project is expected to cost about $5.6 billion.

Source

Tokyo Is Planning To Piss Off China By Buying These Disputed Islands In The East China Sea

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AP

TOKYO (AP) — Tokyo‘s outspoken governor says the city has decided to buy a group of disputed islands in the East China Sea to bolster Japanese claims to the territory, a move that could elevate tensions with China.

Gov. Shintaro Ishihara said the city is close to reaching an agreement with the private Japanese owner of three of the four islands in the group known as Senkaku in Japanese and Diaoyu in Chinese.

The islands, surrounded by rich fishing grounds, are also claimed by China and Taiwan. They have been a frequent flash point in diplomatic relations between Japan and China.

A collision between a Chinese fishing boat and Japanese coast guard vessels in 2010 near the islands set off a serious diplomatic spat, with Beijing temporarily freezing trade and ministerial talks.

“Tokyo has decided to buy the Senkaku islands. Tokyo will protect the Senkakus,” Ishihara said in a speech Monday at the Heritage Foundation, a conservative think tank in Washington. “The Japanese are acquiring the islands to protect our own territory. Would anyone have a problem with that?”

Ishihara, a strong nationalist, said the idea is to block China from taking the islands from Japanese control, as the central government is reluctant to upset China.

He did not indicate how much the city would pay, but said the deal would be finalized while he is visiting the United States.

In Beijing, Liu Weimin, a spokesman for China’s Ministry of Foreign Affairs, reacted harshly to Ishihara’s comment and reiterated China’s claim over the islands.

“Any unilateral measure taken by Japan is illegal and invalid, and will not change the fact that those islands belong to China,” he said in a statement.

Tokyo city official Tatsuo Fujii said details of the deal could not be released immediately and further discussions would be held with Okinawa prefecture, which has jurisdiction over the islands, and other related authorities.

The government currently pays rent to the owners of the four islands in the Senkaku group so they won’t be sold to any questionable buyer. It pays 24.5 million yen ($304,000) a year to the owner of the three islands, which are unused. The fourth island is used by the U.S. military for drills.

Chief Cabinet Secretary Osamu Fujimura reiterated on Tuesday that Japan has sovereignty over the Senkaku islands and said the central government might purchase them.

Japan and China also have disputes over undersea gas deposits in the East China Sea and Japan’s wartime history.

Ishihara previously helped to erect a lighthouse on one of the Senkaku islands, which a group of nationalists later replaced with a larger one recorded on navigation charts.

Ishihara’s comments about the disputed islands are also seen as politically motivated to discredit Prime Minister Yoshihiko Noda‘s government, which is struggling to gain public support.

 

Source

Forget The Election News: Keep Your Eye On Tim Geithner And The Love Trapezoid

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David Kotok, Cumberland Advisors 
Jan. 10, 2012, 11:50 AM

If you can take your eyes off the primary election coverage, watch GeithnerThe US is engaged in a love trapezoid.  The four corners are Beijing, Tehran, Tokyo, and Washington.  Treasury Secretary Geithner is the Obama Administration’s front person.  Track the news for the names of the other agents.

This is a very serious time.  The pieces are linked.  Some bullets as you watch the news flow.

1. The US faces the pressure of follow-through on Iran sanctions.  Iran is an exporter of oil to Asia.  Japan is dependent on imported oil.  China is not self-sufficient.  One part of this trapezoidal geometry is about oil.

2. Iran is feeling the heat from sanctions.  The US wants to tighten them.  It cannot do so without help from Asian “friends.”

3. China and Japan are each buyers of US Treasury securities.  They each help finance the American fiscal deficit and the ongoing current-account deficits.  They each want to diversify their reserves.  They are not sellers, but they are reluctant additional buyers.  This is truer for China than for Japan, but it is true in both cases.

4. China is glacially proceeding toward world reserve-currency status.  It gradually allows its currency to strengthen against the dollar.  It follows a policy that is fully rational for the Beijing oligarchs.  It shrugs off political threats from Washington politicians (Schumer, Graham) who love to bash China while talking to their American constituents.  China understands our political processes and our weaknesses.  However, China also understands “realpolitik” and uses it.  They learned US use of realpolitik from Nixon and Kissinger.  Expect them to smile publicly but put some very intense private heat on Geithner.

5. Japan faces enormous economic pressure and sees the yen strength as now threatening.  In order to weaken the yen, it must acquire other currency holdings in large quantity.  (See the Cumberland website, www.cumber.com, for G4 central bank charts, and flip to those on the Bank of Japan.  You will be able to observe how Japan expanded its balance sheet several years ago and subsequently contracted it.  We expect them to expand it in 2012 as they seek to arrest yen strength.)

6. Japan is negotiating with China so that it may acquire reserve debt instruments denominated in Chinese currency.  Beijing likes this because it is a step toward achieving world reserve-currency status.  Geithner now worries, because the trend points toward a gradual and long-term weakening of the US position, as the world’s second (China) and third (Japan) largest economies maneuver their global positions.

7. Our Asian friends know that the US election cycle creates maximum vulnerability for the United States.  That also makes circumstances more dangerous and raises risk profiles.  Europe is of no help to us, given its internal crises.

We recall that a three-legged stool is a stable form.  A four-legged stool is less stable.  A four-legged stool with a trapezoidal top is least stable.  Especially when one of the legs is Iran.

Watch Geithner in Asia and the news flow.  Read between the lines, since the public statements will all be scripted and self-serving.  Risk is high.  Also, stay overweight energy.  We are.

Read more: BI

Japan refiners want force majeure to cover Iran oil shipping ban

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Tokyo (Platts)–1Mar2012/501 am EST/1001 GMT

Japanese refiners have stepped up efforts to get an additional force majeure clause included in Iranian crude oil contracts that could be invoked if tankers cannot call on Iran‘s ports to lift barrels because of the loss of insurance cover, sources close to the matter told Platts Thursday.

The latest move comes as Japanese refiners are trying to conclude term contracts with the National Iranian Oil Company starting in April.

Negotiations have already been delayed and nominations for April supplies are now due to be submitted by March 5, sources said.

Japanese buyers, which normally conclude their Iranian crude contracts in February, have not been able to complete their term contracts as they wait for what the sources said are guidelines from the government on the outcome of talks between the government and the US.

Japan is seeking an exemption from US sanctions that would exclude any company or country dealing with Iran’s central bank from the US financial system by agreeing to reduce its imports of Iranian crude oil.

The EU sanctions not only forbid the import and transportation of Iranian oil, but also ban insurance cover for vessels carrying Iranian cargoes. And because of pooling arrangements for reinsurance between the various Protection and Indemnity clubs around the world, the sanctions will have an impact on non-EU shipping.

Reports so far about the talks under way with Washington suggest that Tokyo may agree to cut its oil imports from Iran by 10-20% from a 2011 level of 310,000 b/d to ensure that Japanese banks are not excluded from the US financial system. Iran was the fourth-largest supplier of crude to Japan last year.

Japanese refiners, the main buyers of Iranian oil in Japan, are now also concerned with the possibility that they may be unable to lift Iranian crude oil if shipowners cannot get insurance cover for voyages to Iran when EU sanctions come into effect on July 1, the sources said.

Japanese shipping sources said the EU sanctions on insurance provision for tankers carrying Iranian crude oil have become a matter of concern for both oil companies and shipowners.
A chartering source at a Japanese oil company said that “every oil company” in Japan that wants to renew its term contract with Iran in April “wanted a force majeure clause” inserted to cover the shipping ban.

“They have sent this to NIOC but there has been no reply [so far],” the source said, referring to the National Iranian Oil Company.
The chartering source said the Japanese companies want to insert a clause stating that “if shipowners cannot call” on Iranian ports and “the cargo cannot be lifted,” then force majeure can be invoked.

The sources said that at least one Japanese buyer of Iranian oil may not submit a nomination for April supplies because of uncertainty about the impact of the EU insurance ban and the negotiations with Washington.

–Takeo Kumagai, takeo_kumagai@platts.com
–Pradeep Rajan, pradeep_rajan@platts.com

IMF Chief Lagarde: Give Me More Money And China More Power

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Ben Walsh

On Thursday, the head of the International Monetary Fund, Christine Lagarde, urged members to approve an agreement reached last year that would double the funds available to the global organization and give currently under-represented nations like China increased voting power, Reuters reported.

If approved, the plan would make China the international lender’s third-largest member of the IMF:

The IMF said Lagarde “called on members to use their best efforts to make the 2010 reform package effective before the 2012 annual meetings.” The meetings take place in Tokyo in mid-October.

An IMF staff paper said “efforts to meet the 2012 deadline should not be spared.”

As of December 12, just 53 countries, holding 36 percent of total IMF quotas, had approved the increases. Approval by members holding about 70 percent of quotas is needed to implement the changes. Some countries require their legislatures to authorize the changes.

Lagarde’s push for approval of the measures comes as the Euro-zone crisis underscored the shift in global economic power away from traditional post-war leaders and and popular opposition to the government in China appeared to demonstrate the internal challenges faced by the world’s fastest growing large economy.

Source

Australia: Ichthys Cost to Exceed USD 30 Billion, Total CEO Says

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The huge Australian offshore gas project Ichthys will cost more than the anticipated total of $30 billion, the head of French oil major Total said on Thursday.

“It will cost a little more than expected for environmental reasons… We had originally said $30 billion,” Total Chief Executive Christophe de Margerie told Reuters on the sidelines of a G20 meeting of business leaders in southern France.

The project, developed by Total and Japan’s Inpex , *aims to build offshore facilities to produce natural gas and condensate, and an undersea pipeline stretching 885 km to a liquefaction plant in Australia’s northern city of Darwin.

It is expected to produce 8.4 million tonnes of liquefied natural gas, liquefied petroleum gas and condensate each year.

The project was initially estimated to cost $20 billion but de Margerie said that the company had in recent months been citing the figure of $30 billion in road shows.

Total currently owns 24 percent of the project, a stake the French company would be keen to increase, de Margerie said.

“We would like to have more than that,” he said, giving no details on whether Inpex, which holds the remaining 76 percent of Ichthys, would agree to let Total raise its stake.

The strict environmental conditions imposed by the Australian government to develop the project explain the upward revision in the project’s cost, de Margerie said.

De Margerie said he expected a final investment decision (FID) to be made by year-end, with a view to start production in four years.

He did not comment on the outcome of reported meetings by bankers in Tokyo and Sydney that were aimed at putting together the financing needed for the development.

“In Ichthys like for every big project we have been in, the FID will be made before the financing is in place,” de Margerie said.

LNG project developers typically seek and sign long-term deals to sell their gas before they begin construction. Inpex said earlier this year it had secured buyers to cover the whole annual output of 8.4 million tonnes from the Ichthys project.

Reporting By Marie Maitre (Reuters)

Source

Japan Urges Papua New Guinea to Improve Policing Around LNG Projects

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Japan has urged Papua New Guinea to improve internal security to allow the smooth implementation of the liquefied natural gas projects.

The Post Courier reports that Japan’s Foreign Minister, Takeaki Matsumoto, put the request to his PNG counterpart Don Polye in Tokyo.

Mr Polye has been in Japan for the signing of the investment agreement for the protection and promotion of Japanese investments in PNG. Japanese companies are participating in both the ExxonMobil-led project and the second LNG project operated by InterOil Corporation.

A number of disgruntled landowner groups have already disrupted the construction of the major gas pipeline being constructed for the first LNG project.

In recent months, killings and attacks have been reported in Southern Highlands, raising security concerns about the safety of developers and contractors.

The government has stationed police units in the oil and gas rich region.

Original Article

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