Gas & LNG in Review: October 02-07, 2016

Alexandra Marie Ferraro's picture
Alexandra Marie Ferraro, Energy Analyst, Guest Reporter
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This week’s natural gas news demonstrated just how far-reaching the industry is: Iran is back in the oil and gas export game, BP signed on to a 20-year deal for LNG from Mozambique, Japan’s Hokkaido Gas struck an LNG agreement, and Shell and Carnival partnered for an LNG-powered cruise ship future. Take a look at our highlights below.

Iran Boosting Oil and Gas Exports, Production. The director of international affairs for the National Iranian Oil Company Mohsen Ghamsari announced on Monday that his firm had delivered Iran’s first cargo of natural gas condensate to BP, one million barrels-worth, according to Reuters.

The sale marks the first of its kind in a post-sanctions Iran and sets the country back on track for becoming a dominant oil and gas supplier as Ghamsari indicated NIOC is seeking long-term contracts with BP and Royal Dutch Shell, Reuters reported. Bloomberg cited an unnamed NIOC official who detailed that the NIOC’s agreement with BP will see condensate supply from the South Pars field delivered to the British firm until the end of this month.

Riding a high from last week’s OPEC decision which exempt Iran from curbs in production, the NIOC also agreed on a new investment contract this week with Persia Oil & Gas Industry Development Co. which will allow the country to increase production at three fields, Bloomberg cited Iran’s Oil Minister Bijan Namdar Zanganeh. Do you think Iran will maintain stable progress in increasing its production and export numbers in the coming months? Leave us a comment below.

BP Agrees to Buy LNG from Eni’s Mozambique Field. In a deal with Italy’s Eni this week, BP agreed to buy all of the LNG produced from Mozambique’s Coral South Field for the next 20 years, according to BloombergReuters clarified that the next step in the project will be Eni’s final investment decision on an offshore floating terminal which would produce the 3.3 million tonnes of LNG per year destined for BP. Production is expected to begin towards the end of 2021, Bloomberg referred to Filippo Gotti, vice president of LNG Mozambique at Eni.

The Financial Times emphasized that the deal signifies major progress for the Coral South field project by ensuring the sale of the field’s output. It is one of several of Eni’s big gas discoveries in the African country and the guarantee on its development would facilitate the sale of stake—something which, according to the FT, Eni’s CEO Claudio Descalzi has said his firm has in sight. Who do you think would be most likely to partner with Eni in developing its Mozambique projects? Give us your opinion below.

Japan’s Hokkaido Gas to Receive LNG from Mitsui for 10 years. Reuters highlighted this week that Japan’s Hokkaido Gas signed on to a 10-year agreement for the purchase of two to three cargoes of LNG from Mitsui & Co. per year. Citing the announcement, Platts detailed that the sale encompasses 130,000-200,000 mt/year and the first cargo is set to ship to Hokkaido’s Ishikari LNG terminal in April 2019.

According to Platts, Hokkaido Gas already purchases 300,000-400,000 mt/year of LNG from Tokyo Gas. This latest agreement speaks to Japan’s long-term interest and investment in the fuel; it is likely to remain the world’s largest importer of LNG for the time being. How do you expect to see Japanese firms’ roles in trading LNG change over the coming years? Let us know what you think below.

Shell and Carnival Team Up for World’s First LNG Cruise Ships. In an unprecedented deal, Shell signed an agreement with Carnival corporation to supply LNG for the world’s first LNG-powered cruise ships, Reuters reported on Monday. According to Platts, the LNG will be fired up in dual-fuel engines on two of company’s ships. Per the agreement, one ship will use Shell’s LNG bunker vessel at the GATE terminal in the Netherlands and the other is likely to refuel at a western Mediterranean port, beginning in 2019.

Platts emphasised that this is the latest in a series of new LNG bunkering projects for Shell. Pressure by governments to limit maritime emissions is growing and an LNG-fuelled shipping industry is likely to emerge as the answer to tighter environmental regulation. Evidently, this also applies to commercial cruises and Shell is looking to get ahead of the curve in what will likely be a surge in demand for LNG on the seas. Who else do you think will get in on the bunkering game? Share with us your take on the story.

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