Oil and gas news briefs for Nov. 6, 2017
U.S. LNG providers hope to win share of expiring supply contracts
(Bloomberg; Nov. 2) - The $90 billion-a-year liquefied natural gas market will be reshaped in 2018 as several large, long-term contracts start to expire. Growing supplies from the U.S., higher demand in Europe and Asia, and geopolitical tension surrounding Russia and Qatar, the world’s top suppliers, promise to shift long-time trading patterns. For decades the majority of LNG bought and sold around the world was governed by long-term contracts of up to 20 years. A fifth of those will expire from 2018 to 2020.
Over the next decade, contracts governing 80 percent of all global LNG trade will be rewritten. For now, the LNG market is in the midst of an enormous supply glut, in part because of the advent of U.S. exports the past two years. That glut is likely to persist until at least 2020, keeping prices low. Most LNG contracts expiring next year involve buyers in Europe, where countries are trying to reduce their reliance on Russian pipeline gas. Europe’s quest for more LNG could offer an opening for U.S. exporters.
Meanwhile, the world’s top LNG exporter, Qatar, is looking to expand its market share. It recently announced plans to boost LNG production by 30 percent over the next several years. One of the key advantages for the U.S. is its vast shale reserves, along with a pipeline network that allows exporters to bring gas from all over the country to export facilities being developed along the Gulf Coast, ensuring a steady supply. U.S. LNG providers hope to sign big deals in 2018, which could shave billions of dollars off the trade deficit with Japan, South Korea and China. “(It’s) going to be a pivotal year,” said Kathleen Eisbrenner, CEO of NextDecade, which proposes a terminal in Texas.
Oil and gas news briefs for Nov. 2, 2017
Novatek says China will help raise money for Arctic LNG project
(UPI; Nov. 1) - Russian independent gas producer Novatek said Nov. 1 it reached an agreement with a Chinese bank to help proceed toward its second liquefied natural gas project in Russia’s Arctic. Novatek said it signed a memorandum of understanding with the China Development Bank to cooperate on steering capital toward LNG. "Our strategy envisages a rapid growth of LNG production using international financing sources," Leonid Mikhelson, chairman of the Novatek board, said in a statement.
Novatek, the largest privately owned gas producer in Russia, leads the $27 billion Yamal LNG project, the first in Russia’s Arctic. Its initial cargo is expected before the end of the year. Along with partners French major Total and China National Petroleum Corp. (CNPC), Novatek is looking toward gas markets in the Asia-Pacific. The Yamal LNG project will have the capacity to produce about 17.5 million tonnes of LNG a year.
Novatek said it has signed a strategic cooperation agreement with CNPC that outlines implementation of its second gas project, named Arctic LNG-2, including development of infrastructure and trading mechanisms. "We believe our strategic cooperation agreement will further enhance our mutual relationship as well as open up new opportunities for both companies … with the enormous opportunities in the Chinese market," Mikhelson said.
Oil and gas news briefs for Oct. 30, 2017
U.S. LNG hopefuls, including Alaska, will head to China with Trump
(Reuters; Oct. 27) - U.S. gas exporters and traders are aiming to grab a bigger chunk of the growing business of selling gas to China, the world’s third-largest buyer, when they join President Donald Trump and Commerce Secretary Wilbur Ross in China Nov. 8-10. But the talk may all be hot air if the U.S. suppliers can’t compete with bargain prices and long-term deals of rivals Australia, Qatar and Malaysia. A list seen by Reuters shows that 10 of the firms that will travel with Ross and Trump are involved in energy and gas.
Among them are Cheniere Energy, owner of the first U.S. Gulf Coast LNG export terminal, and several LNG hopefuls promoting their projects, including the state-owned Alaska Gasline Development Corp., which told Reuters it had no comment. The list underscores the U.S. ambition to sell more of its excess gas abroad as the shale revolution overwhelms the North American market. China’s appetite has soared as it embarks on an audacious bid to heat millions of homes across the north by gas for the first time this winter and switch tens of thousands of industrial boilers to the cleaner fuel.
“We’re on the mission to talk to Chinese companies to get something signed up,” said Frederick Jones, CEO of Delfin Midstream, which wants to anchor gas-liquefaction and storage vessels 50 miles off the coast of Louisiana. Delfin has no customers, but hopes to “showcase” the company to state-owned and large private companies in China.
A Chinese oil trading executive expects the delegation to yield several short-term supply deals. Uncertain when the global LNG market will bottom out, Chinese buyers are cautiously avoiding lining up new long-term contracts, but rather are looking at signing five-year or even shorter-term deals based on spot prices, sources said.
Oil and gas news briefs for Oct. 26, 2017
Japanese utilities sign 3-year LNG supply deal with Malaysia
(Reuters; Oct. 25) - Malaysian state energy company Petronas has signed a three-year liquefied natural gas supply agreement with JERA Co., with smaller volumes and for a shorter period than its previous deal with the biggest LNG buyer in Japan. JERA, the fuel-purchasing joint-venture between Tokyo Electric and Chubu Electric, will buy 2.5 million tonnes per year from Petronas starting in April 2018, the companies said Oct. 25.
JERA is currently in the middle of a 15-year contract with Petronas that expires in March for 4.8 million tonnes per year. The new deal’s shorter duration and smaller volume, along with changes to the destination clause that restricts where the cargoes could be resold by JERA, highlight the turbulence in the LNG market the past few years. Buyers have gained the upper hand as growth in new supplies, mainly from Australia and the U.S., has exceeded demand and depressed prices to less than half their 2014 peak.
Petronas, the world’s third-biggest LNG exporter, is looking to sell its rising output after start-up of Train 9 at its Bintulu export terminal and also its first floating LNG production unit. Petronas officials said in May they were open to shorter-term LNG contracts and smaller cargo sizes to entice buyers. “New demand terms and conditions are becoming a norm,” said Ahmad Adly Alias, vice president of Petronas’ LNG Trading & Marketing. Neither Petronas nor JERA disclosed pricing terms of the latest deal.
Oil and gas news briefs for Oct. 23, 2017
South Korea reverses policy, will restart work on two nuclear reactors
(Reuters; Oct. 20) – The South Korean government said it will bow to public support for nuclear power and will resume construction of two new reactors after a public opinion survey found a majority of people support the reactors — contrary to a government policy to steer the country away from nuclear-generated electricity. President Moon Jae-in came to power in May after calling for reducing South Korea’s nuclear and coal-fired power generation in a push to use more natural gas and renewables.
Those plans were dealt a blow Oct. 20 when a public opinion survey found almost 60 percent in favor of resuming the stalled construction of two 1,400-megawatt nuclear reactors. Building the reactors could cut into liquefied natural gas demand of the world’s second-largest LNG buyer. “Full implementation of Moon’s election promises could have resulted in around 10 million tonnes (a year) of extra LNG demand by 2030. This now seems unlikely,” said Kiah Wei Giam, of energy consultancy Wood Mackenzie.
Stability of power supply was cited as a primary reason for the choice in survey responses, said the government-organized committee to study the nuclear projects. “We respect the will of the committee,” said a presidential spokesman. The size of the win in favor of the projects meant the government likely had no choice but to go with the committee’s recommendation.
We conducted a comprehensive survey of residents to improve boroughwide services to the public. Thousands participated in the survey by answering our questions and providing valuable comments. Your documented comments and feedback are directly helping guide improvements to road service and the many other roles the borough plays on the Kenai. We will continue to ensure that KPB residents receive quality services that they pay for at the lowest cost possible.
We have placed ourselves in the shoes of the taxpayer. Under the Micciche administration, for the first time in a decade, a balanced boroughwide budget was passed by the assembly. We accomplished this while reducing your mill rate (property taxes). Prior to my administration, the previous two years saw a 16% increase in the KPB budget. The Micciche administration’s overall budget increased by only 2.55%. The general fund budget was also reduced from last year’s and, leading by example, my Mayor’s Department budget decreased as well.
Working with the Kenai Peninsula School District, we are helping to bolster and improve home-school options. Trying to see things through the eyes of home-school parents, students and families helps us be responsive to the 30% of our students who are home-schooled. It is imperative that we understand and meet their needs.
We are working to make KPB Emergency Services as efficient as possible to better serve the people of the Kenai. Our view and current national practices demonstrate that combined regional services are far more efficient, and effective, and are provided at a lower cost to taxpayers than many smaller service areas. We also procured and distributed life-saving extrication equipment for our emergency responders to help them meet the highway rescue challenges faced in rural areas of the borough.
We updated and implemented anti-harassment and anti-bullying policies to ensure the safety of KPB employees and protect taxpayers from legal and settlement costs. This includes a confidential reporting system, a mixed-gender review panel, and improved public official bonding requirements to protect the borough from financial liability.
We responded in record time to condemn and remove the collapsing Zipmart building in Sterling, which had become a serious hazard to children and youth in a location right next to the elementary school and the community center.
We created a limited-in-scope ordinance that will update and clarify borough code regarding KPB elections. These changes will ensure that our elections continue to be safe, secure, transparent and accurate. A few of the improvements this ordinance will make include giving more information to the public about when the canvass board meets, requiring the hand-counting of ballots in at least one randomly selected precinct even in the absence of any discrepancies, creating a clear process for write-in candidates, and adding additional and improved viewing areas for citizen election observers.
We are tackling long-standing issues within the borough in partnership with KPB constituents, local governments and state and federal agencies. These issues include K-Beach and Eastern Peninsula flooding, KPB housing shortages (particularly in the southern and eastern Kenai Peninsula), rural emergency services support, and communication service gaps. We are also mitigating the overregulation of our citizens through common-sense solutions in partnership with those we serve within the KPB.
We awarded 44 capital improvement and professional services design contracts, as well as servicing pass-through funding to the private sector and non-profit grant recipients for services ranging from senior citizen programs to community groups. Funded projects include the new Central Emergency Service station, the new Soldotna Elementary School, CPH and SPH hospital projects, Eastway Road drainage improvements, the replacement of siding on Homer Elementary School, and many others.
We made improvements to KPB Solid Waste Management to reduce the enormous cost increases in that department that have occurred in previous years. We have reopened reuse areas, such as the “Sterling Mall” and are evaluating how to further reduce storing marketable materials in perpetuity in our landfills. The team is also evaluating the most efficient methods to reduce and process regulated leachate to reduce costs to taxpayers.
In accordance with KPB code, senior center funding is redistributed every 10 years after the census is conducted and shows how many seniors currently live in each area of the borough. Many centers had their funding increased through the current formula in the FY24 budget, but several were dramatically reduced. Working with KPB staff, Mayor Micciche created a “hold harmless” solution to fully fund all centers and to ensure that none of our seniors will go without critical services. The “hold harmless” solution passed the assembly unanimously.
We have created open lines of communication so that all citizens can participate in our efforts to challenge how the KPB does business through common-sense solutions to long-standing, inefficient practices. Government is known for falling into ruts of inefficiency. By working with you, we are challenging each department to break out of long-standing ruts and take the fast road of maximum efficiency. In other words, we seek to provide quality services at the lowest cost to the taxpayer with an objective to keep the KPB affordable today, tomorrow, and for our kids and grandkids.
