Gas & LNG in Review: March 13-18, 2016

Alexandra Marie Ferraro's picture
Alexandra Marie Ferraro, Energy Analyst, Guest Reporter
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This week’s natural gas and LNG news brought a game-changing announcement by the US, cargoes to Brazil and Argentina, ties between Russia and India, and a look at plastics in the industry. Check out the highlights in case you missed them:

Obama Administration Blocks Atlantic Offshore Drilling: In a policy change from a January 2015 proposal to open southeast Atlantic oil and gas drilling, the Obama administration has withdrawn plans to auction off drilling rights in the mid- and south-Atlantic in a new proposal released by the Department of the Interior on Tuesday, several news sources reported.

According to Bloomberg, the new proposal will block original plans to attract oil and gas drilling in up to 104 million acres of the Atlantic in 2021. This region will include the coasts of Virginia, Georgia, and North and South Carolina; however, leases for drilling rights off the coast of Alaska and the Gulf of Mexico will stand, the Atlantic reported.

The New York Times noted two main reasons for the decision in its analysis of the Department of the Interior’s announcement. The first is that the administration received opposition from local governments claiming the drilling would negatively impact communities, and the second is hesitance from the Department of Defense that drilling activities would threaten local naval bases. The administration has also received significant criticism from environmentalist groups since the release of the original proposal which favored Atlantic drilling, according to Bloomberg.

The new proposal will not change oil and gas companies’ current offshore drilling rights in the US, but has big implications for the future of industry giants’ exploration. Do you think this new proposal will stick? Let us know your thoughts.

Sabine Pass LNG Reaches Rio de Janeiro as Brazil to Import More: The tanker carrying the first cargo of US LNG from Cheniere’s Louisiana Sabine Pass arrived in Brazil on Tuesday, Bloomberg reported. The cargo had been purchased by state-owned Petroleo Brasileiro SA (Petrobras).

Droughts have placed significant strain on the country’s traditional hydropower generation capacity, increasing its need for natural gas. According to Platts, market sources said this week that Petrobras is likely to purchase up to seven of the upwards of 10 commissioning cargoes from the Sabine Pass export terminal.

Where do you expect to see Cheniere’s second cargo, which Platts says is currently being loaded, delivered? Give us a clue.

Ineos Looking to Add US Chemical Capacity: In an effort to benefit from the low cost of natural gas liquids, UK chemicals firm Ineos Group is considering expanding its US-based factories near Houston. Bloomberg cited Ineos’s chief executive officer for the US olefins and polymers unit Dennis Seith who stated the company was looking to add between 250 million and 1 billion pounds of ethylene production per year at its Chocolate Bayou location.

Ineos is also evaluating the possibility of owning shale gas fields in the US for gains similar to those of its shale activities in the UK. Ineos has been known to be working closely with the British government and local communities in areas where it is pursuing shale gas extraction in the UK. The company will soon start production at one of its sites on the Houston Ship Channel following a 1-billion-pound expansion, Bloomberg quoted Mr. Seith.

Will the price of crude threaten these expansions? Let us know below.

Argentina to Receive 15 LNG Cargoes for Spring Delivery; Suppliers Secured: Reuters reported on Thursday that Argentina has awarded a tender for the purchase of 15 LNG cargoes expected for delivery between April and May. Among the suppliers chosen are Trafigura, Statoil, BP, and Gazprom, the news source cited trade sources.

The deliveries will be split between two destinations: the Escobar terminal and the Bahia Blanca. This is the latest in a recent series of tenders launched by Argentina for the delivery of LNG cargoes. Is Argentina on its way to becoming a prized customer in the LNG market, especially as Asian demand becomes increasingly unpredictable? Let us know what you think.

India to Buy Significant Stake in Russia’s Siberian Field: Three Indian firms, all state-run energy companies will buy a $1.28 billion share in Russian Rosneft OJSC’s Taas-Yuriakh Siberian field, Bloomberg reported. Combined, the three Indian oil companies involved will now own a 29.9% share in Taas-Yuriakh and a 23.9% share in Rosneft’s subsidiary Vankorneft. According to Bloomberg, Rosneft is also proposing to add an 11% share of Vankorneft to the 15% that India’s Oil & Natural Gas Corp. already owns, an offer potentially worth up to $900 million.

Rosneft has turned to India in the face of challenges with its more traditional European market amid geopolitical tensions with Russia. How will India owning so much stake in Russian assets shake up old-time natural gas alliances? Leave us a comment.

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