Gas & LNG in Review: April 17-22, 2016

Alexandra Marie Ferraro's picture
Alexandra Marie Ferraro, Energy Analyst, Guest Reporter
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LNG stole the spotlight in this week’s news: big developments in the US LNG export industry, a Sinopec terminal began commercial operations, and another deal was signed for the use of LNG as marine fuel. Check out the highlights below.

US LNG to Hit European Market: US shale LNG will arrive in Europe from Cheniere’s Sabine Pass by the end of April, according to several sources. The Wall Street Journal referred to shipping data saying that the cargo is aboard the Creole Spirit tanker. Bloomberg cited two sources close to the matter who said the shipment was expected in Portugal in the coming week; the cargo has reportedly been purchased by Portugal’s Galp Energia. Port data cited by the WSJ confirmed the tanker will dock at the Port of Sines on April 26.

The shipment to Europe is significant because it represents the US becoming a global LNG supplier, having now shipped its shale gas to three continents, according to Bloomberg. Investors plan to take advantage of unused capacity in existing European LNG import terminals to keep costs reasonable.

Should the US LNG continue to be competitive, particularly in Europe, on the one hand it would help the EU secure gas supply in the face of geopolitical tensions. On the other hand, cheap US LNG may evolve as fierce competition for well-established Russian and Norwegian suppliers in the region. Might we be on the verge of a gas price war in this case? Let us know your thoughts.

Qatargas Pursues Additional Agreements for LNG as Marine Fuel: According to a Qatargas press release, the company signed an MOU on Sunday with Shell and United Arab Shipping Company (UASC) to pursue the development of LNG as marine fuel in the Middle East. Only a few months ago, Qatargas and Shell signed an MOU of a similar nature. This MOU agrees to develop new markets for LNG as propulsion fuel, as well as to support the conversion of UASC’s ships to the greener fuel. Under the MOU, Qatargas 4 will provide UASC the LNG supplies for its recent fleet of container ships.

In the announcement, Chairman of Qatargas Board of Directors Saad Sherida Al-Kaabi said, “LNG as a marine fuel is gaining momentum in the deep sea transportation industry as the best alternative to meeting increasing environmental standards.” However, also this week, Reuters reported that consistently low oil prices have slowed the uptake of LNG as marine fuel despite agreements such as Qatargas and Shell’s. Will there be sufficient oil stress in the future to trigger more moves toward LNG as propulsion fuel? Let us know.

US Senate Bill Facilitates LNG Export Process: The US Senate passed an energy bill on Wednesday aimed at speeding up US LNG export processes and updating the power grid, various media outlets reported. Reuters said the Energy Policy and Modernization Act, as it is known, would increase LNG exports from the US. Should the bill advance to the White House it would be the first significant energy bill in 9 years to do so, the New York Times noted.

Specifically, the bill lays out language that would require the Department of Energy to accelerate issuing permits for the construction of LNG export terminals, according to NYT. The Wall Street Journal quoted analysts at FBR & Co. regarding the bill, “The progress is a small positive for LNG projects still hoping to win approval, because it would require expedited LNG project consideration”.

Already the LNG export terminal at Cheniere’s Sabine Pass has cut 35.4 billion cubic feet of supply glut from the US market since beginning to receive pipeline deliveries late last year, Bloomberg reported on Tuesday. Is this new bill going to attract companies to take on similar projects as Cheniere’s? What impact do you predict this will have on the US LNG market? Leave us a comment.

China’s Sinopec Beihai Terminal Launches Commercial Operations: The Beihai LNG receiving terminal in the region of Guangxi, China, has begun commercial operations, according to a Sinopec announcement cited by Reuters on Tuesday. The newly operating terminal has a capacity of 3.0 million mt/yr and has already received its first delivery. Platts reported that Beihai received a 160,000 cubic meter shipment from the Australia Pacific LNG project on Tuesday, kicking off the terminal’s commercial processing.

According to Platts, Sinopec has indicated that a second phase of the Beihai project would augment the terminal’s capacity to 9.0 million mt/yr, but no concrete plans or timelines have been established. Is this a sign that demand for LNG is alive and well in China? Or do project delays and an import capacity lower than the contracted volumes signal to tread carefully? Send us your opinion.

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