Gas & LNG in Review: February 21-26, 2016

Alexandra Marie Ferraro's picture
Alexandra Marie Ferraro, Energy Analyst, Guest Reporter
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This week’s gas news was full of ‘firsts’. There is a new company to look out for, new LNG in the global market, new reserves, and new agreements to advance LNG as marine fuel. Check it out.

Former CEO of Cheniere and Former BG Group COO Launch Tellurian Investments.Former CEO of Cheniere Charif Souki has teamed up with Parallax Energy Chairman and former BG Group COO Martin Houston to form a new LNG liquefaction and export company, Tellurian Investments, operating along the U.S. Gulf Coast. In the company’s first press release, Tellurian states its goal is to deliver more flexible, reliable, and low-cost LNG to global customers by acting upon the low manufacturing costs and well-suited regulatory environment of the U.S. The company will partner with Bechtel and Chart Industries for plant construction and liquefaction, respectively.

Souki and Houston state that Tellurian has a long-term vision, “…we are thinking about the energy needs of the world from 2020 to 2040. We are absolutely in this for the long haul.” What do you expect to see from Tellurian Investments? Leave us a comment.

Gazprom Halts 10 Percent of Gas Supplies to Turkey. On Thursday, Turkey’s energy ministry told Reuters that a price dispute had prompted Gazprom to cut 10 percent of its natural gas supplies to Turkish private companies who refused to pay a bill reflecting higher-than-agreed-upon prices. An original pricing deal between the two countries to reduce prices was cancelled.

Reuters reported that an industry source said that Turkey has not yet sought natural gas deliveries from elsewhere to off-set the reduction as demand in the country remained low this winter. Turkey receives around 60% of its gas from Russia, according to Reuters.

Geopolitical tensions between Moscow and Ankara are high with recent events in Syria and appear to be escalating as news breaks of these gas cuts. To whom will Turkey turn should Gazprom continue to deliver bills with price hikes? Let us know your thoughts.

First LNG Tanker Departs Sabine Pass Making U.S. a Shale Gas Exporter. In an historic first, and move that would not have been predicted five years ago, the contiguous United States has become an exporter of LNG. An LNG tanker departed Cheniere’s Sabine Pass on Wednesday, according to Reuters shipping data. The first cargo of nearly 3 billion cubic feet of gas is destined for Petroleo Brasileiro, the state-owned Brazilian energy company, the executive vice-president of marketing at Cheniere Meg Gentle has said according to Reuters.

The shipment comes at a time when the global supply of LNG is swelling simultaneously with a slump in demand, especially from Asia. Brazil which primarily depends on hydropower for its power production has experienced a prolonged drought during what is usually their rainy season. Bloomberg reported that Brazil has increased LNG imports in recent years and is expected to buy about 50 LNG cargoes in 2016, citing a Porto-Alegre-based Gas Energy consultancy.

Will other LNG suppliers begin shifting their sights toward the South American market?

Qatargas, Maersk Line and Shell Sign MOU to Evaluate LNG as a Marine Fuel.Qatargas announced on Tuesday that it had signed a technical cooperation agreement with Maersk Group to explore the use of LNG marine propulsion. The press release also stated that the state-owned company had signed a Memorandum of Understanding with Maersk Line and Shell International Trading Middle East Limited to evaluate LNG as a marine fuel.

In the statement, CEO of Qatargas Mr. Khalid bin Khalifa Al Thani commented, “Qatargas has a proven track record of technology innovations for different uses for LNG.” The agreement is perhaps the most significant among a handful of early endeavors to transition a heavily oil-dependent shipping industry to LNG, which is less emissions intensive and more readily compliant with existing and future emissions rules. This was confirmed by Mr. Nils S. Andersen, CEO of Maersk Group, in the release: “The possible use of LNG propulsion technology for ships presents an opportunity to reduce both SOx (sulphur oxides) emissions and to reduce the transport sector’s CO2 footprint.”

How feasible will it be to transition the shipping industry to LNG fuel? Let us know.

Tanzania Discovers Significant Additional Natural Gas Reserves. According to Reuters, local Tanzanian news sources reported on Thursday that 2.17 trillion cubic feet of potential onshore natural gas reserves were found at the Ruvu basin area near Dar es Salaam. The deposits are in a field that is licensed to the United Arab Emirates’ Dodsal Group.

In a country whose economy predominantly depends on agriculture exports, findings such as these could begin to significantly shift Tanzania’s export portfolio. Especially as the East African region gains greater attention for recent oil and gas discoveries, do you believe hydrocarbon investment will increase in East Africa? Leave us a comment.

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