July 3, 2024 Charif Souki Attempts to buy stake in Tellurian
Company Announcements and Deals
Tellurian Inc.: Charif Souki plans to raise $100 million to buy a stake in Tellurian Inc. after being ousted from the company in December. Tellurian's proposed Driftwood LNG project in Louisiana, fully permitted, has not reached a final investment decision since 2016 and requires billions of dollars in funding. Bloomberg
Texas LNG: Texas LNG signed a non-binding Heads of Agreement for a long-term LNG FOB sale and purchase agreement for 0.5 MTPA of LNG. The deal positions Texas LNG close to full capacity, with 1 MTPA remaining. Offshore Energy | LNG Global
Infrastructure and Capacity Expansion
Egypt LNG Imports: Egypt received the first two cargos of LNG out of 21 contracted shipments to address power outages, with the first shipment arriving at Ain Sokhna port. Hoegh LNG’s FSRU Hoegh Galleon also received its first LNG cargo in Ain Sokhna, delivered by Hellas Athina from the Freeport LNG terminal in Texas. Egypt Streets | LNG Prime | Reuters
Golden Pass LNG Project: Settlement talks may be underway in the Golden Pass LNG export terminal expansion project following Zachry Holdings Inc.'s bankruptcy filing. The $10.5 billion project faces a potential six-month startup delay due to payment and work disputes. ENR
Security and Geopolitical Issues
Houthi Threat and Piracy: Attacks by Iran-backed Houthi militants on the Red Sea have increased piracy incidents off the Somalia coast, disrupting global shipping. Pirates have targeted commercial vessels, with 30 attacks reported since November. Bloomberg
Russian LNG and Sanctions: The Yakov Gakkel tanker, operated by British company Seapeak, continues to transport Russian gas to Europe despite sanctions. This highlights Europe's ongoing economic ties with Russia despite political tensions and sanctions following the Ukraine invasion. Sky News Australia
Market Trends and Prices
Asia's LNG Demand: Henry Hub Natural Gas futures volume during Asian hours averaged around 34,000 contracts per day in 2024. U.S. LNG exports are projected to grow 2% in 2024 and 18% in 2025 as new export terminals start operations, according to the EIA. CME Group
Legal and Regulatory Developments
Biden's LNG Export Pause: In January, the Biden administration paused the approval of new LNG exports, but a federal judge ruled this week that individual projects must still be considered for approval, negating the pause. Grist
Corporate and Industry Insights
Vietnam LNG Power Project: Quang Tri province aims to approve a feasibility study report for a 1,500-MW LNG-fired power project by August 30. The project has an investment of $2.3 billion and involves a consortium of South Korean and Vietnamese companies. The Investor
Vitol's LNG Bunkering: Vitol has secured three LNG Bunkering Vessels through a time charter agreement with Avenir LNG and an order at the CIMC Sinopacific Offshore & Engineering Co. Ltd shipyard in China. The time charter agreement is for one newbuild 20,000m3 LNGBV, commencing in Q4 2026 for a period of seven years. LNG Global
Gorgon Gas Project in Western Australia: Chevron’s Gorgon gas export project supplies about 25% of WA’s needs and could leave the market around 2037 due to a deal struck in 2003. This raises concerns over a predicted gas shortage in WA over the next 10 years. Brisbane Times
Arctic LNG 2 Project: Bomesc Offshore Engineering halted work on two modules for Novatek’s 20 million tonnes per annum Arctic LNG 2 project to avoid potential US sanctions. This move follows disruptions caused by Western sanctions on Russia's largest LNG projects. Upstream Online (Subscription)
Egypt: Recent News Overview
1. Emergency LNG Shipments to End Power Cuts
Shipments Received: Egypt received the first two cargos of LNG out of 21 contracted shipments as part of an emergency strategy to address ongoing power outages. Another vessel is currently offloading natural gas to be integrated into the national gas network. Egypt Streets
2. Hoegh’s Egypt FSRU Receives First LNG Cargo
FSRU Operations: Hoegh LNG’s 170,000-cbm FSRU Hoegh Galleon received its first LNG cargo in Ain Sokhna, delivered by Hellas Athina from the Freeport LNG terminal in Texas. The agreement with EGAS is for the period of June 2024 to February 2026 to address potential gas shortages and fuel power plants during summer months. LNG Prime
3. Current Gas Production and Import Strategy
Production Levels: Egypt's gas production is currently at 5.7 billion cubic feet per day. It was agreed that 21 LNG cargos will arrive in Egypt during the summer, with the first shipment already being discharged for supply into the national gas grid. Reuters
4. Largest LNG Tender in Years
Tender Details: Egypt fully awarded 20 LNG cargoes in its biggest tender in years, aimed to cover heavy summer demand from July through September. The tender was originally for 17 cargoes but was increased by three more, all awarded on a 180-day deferred payment basis. Reuters
5. FSRU and Infrastructure Utilization
Tender Logistics: Most cargoes will be received at the Hoegh Galleon FSRU at the Ain Sokhna port, while some will be received at the Aqaba port in Jordan. The tender was awarded at a premium of $1.60-$1.90 to the benchmark Dutch TTF hub gas price. LNG Prime | Reuters
6. Impact on Energy Sector
Power and Industrial Impact: Egypt returned to being a net importer of gas due to dwindling gas supplies, which led to rolling blackouts and temporary shutdowns of chemical and fertilizer plants. The tender and subsequent shipments aim to stabilize the national energy supply. Reuters
7. Financial and Market Aspects
Financial Terms: The cargoes were awarded mainly to trading houses including Glencore, Vitol, and Trafigura, with major players like BP and TotalEnergies also securing a few cargoes. The financial arrangement included a premium over the Dutch TTF hub gas price, reflecting the urgent demand for prompt deliveries. Reuters
Texas LNG: Recent News Overview
1. Offtake Agreements and Capacity
Near Full Capacity: Texas LNG, a subsidiary of Glenfarne Energy Transition, signed a non-binding heads of agreement for a long-term LNG free-on-board (FOB) sale and purchase agreement (SPA) involving 0.5 mtpa of LNG. This positions Texas LNG close to full sell out with advanced negotiations for the remaining 1 mtpa. Offshore Energy, 07/03/2024 | LNG Global, 07/02/2024
2. Tax Abatement and Economic Impact
Tax Abatement: Texas LNG received a Texas Tax Code Chapter 312 tax abatement from Cameron County, expected to provide financial flexibility for added services and infrastructure. The projected revenues to the county over 19 years are $76.7 million, inclusive of the abatement. Press Release, 06/06/2024 | Rio Grande Guardian, 06/10/2024
3. Project Financing and Environmental Compliance
Project Financing: Texas LNG announced sufficient expressions of interest from project finance banks, allowing the project to move to the execution phase. The terminal plans to use electric motor compression driven by renewable power, resulting in 50% fewer emissions compared to other U.S. LNG export projects. Offshore Energy, 06/07/2024
4. Construction Timeline and Delays
Extension Request: Texas LNG requested a five-year extension from the Federal Energy Regulatory Commission (FERC) to complete construction and make the facilities available for service by November 22, 2029, citing delays due to litigation. The original FERC authorization was granted on November 22, 2019. E&E News, 05/31/2024 | Reuters, 05/28/2024
5. Employment and Economic Benefits
Job Creation: Texas LNG is proposing a $2.8 billion capital investment to construct two LNG trains, creating at least 1,274 construction jobs over six years and 100 permanent jobs with annual salaries of $90,000. The economic impact includes almost $1.5 billion in indirect revenue to Cameron County businesses. Rio Grande Guardian, 06/10/2024
6. Environmental and Legal Challenges
Litigation and Permits: The project faced delays due to litigation by the Sierra Club and other permit-related issues. Texas LNG secured necessary permits, including U.S. Army Corps of Engineers Section 10 and Section 404 permits and approval from the Railroad Commission of Texas. E&E News, 05/31/2024
7. Strategic Importance and Future Prospects
Strategic Developments: Texas LNG announced plans to begin construction later this year with commercial operations expected in 2028. The project aims to be one of the greenest LNG facilities in the world through the use of electric motor drives. Offshore Energy, 06/07/2024 | Press Release, 06/06/2024
U.S. LNG Exports : Recent News Overview
1. Texas LNG Offtake Capacity and Developments
Near Full Capacity: Texas LNG signed a non-binding heads of agreement for a long-term LNG free-on-board (FOB) sale and purchase agreement involving 0.5 mtpa of LNG. The terminal's fully permitted capacity of 4 mtpa is nearly reached, with 1 mtpa remaining. Offshore Energy, 07/03/2024
Offtake Agreement: Texas LNG signed a non-binding Heads of Agreement with an affiliate of a top-tier credit-rated market participant for 0.5 MTPA of LNG. Construction is slated to start in 2024, with commercial operations beginning in 2028. LNG Global, 07/02/2024
2. Golden Pass LNG Project Dispute
Settlement Talks: Settlement talks are underway in the Golden Pass LNG project, valued at $10.5 billion, following Zachry Holdings Inc.'s bankruptcy filing. The project faces potential delays and disputes over payments and work, with analysts speculating operations to start in 2025. ENR, 07/03/2024
3. Biden’s LNG Export Pause and Legal Challenges
Court Ruling: A federal judge halted the Biden administration’s pause on new LNG export approvals, requiring the Energy Department to resume permit application considerations. The ruling followed lawsuits from multiple states claiming economic harm from the pause. Grist, 07/03/2024
Industry Impact: The pause on new LNG export projects, announced in January, faced backlash from industry leaders and Republican-led states. The review process is expected to continue, potentially extending past the November presidential election. The Hill, 07/01/2024 | The Advocate, 07/01/2024 | The Washington Post, 07/01/2024
4. Tellurian’s Developments and Deals
Stake Buyback Attempt: Charif Souki, co-founder of Tellurian Inc., plans to raise $100 million to buy a stake in the company after being fired in December. Tellurian's proposed Driftwood LNG project in Louisiana is fully permitted but requires substantial funding to reach a final investment decision. Bloomberg, 07/03/2024
Asset Sale: Tellurian completed the sale of its upstream assets for $260 million to Aethon Energy Management. Proceeds from the sale were used to retire $230 million of senior secured notes maturing in 2025. LNG Prime, 07/02/2024
5. Venture Global’s CP2 LNG Project Approval
FERC Approval: The Federal Energy Regulatory Commission (FERC) approved Venture Global’s CP2 LNG Project in Louisiana. The project still awaits approval from the Department of Energy to export LNG to countries without free trade agreements. Axios, 06/28/2024 | Oil Price, 06/28/2024 | The Hill, 06/27/2024
6. Plaquemines LNG Export Plant Commences Gas Intake
Gas Intake Start: Venture Global LNG's Plaquemines export plant in Louisiana began receiving natural gas from pipelines on June 26, 2024. The plant is projected to be the next U.S. LNG export facility to commence operations later in 2024. Reuters, 06/27/2024
7. Weekly LNG Exports and Market Trends
Export Statistics: U.S. LNG exports reached 29 shipments in the week ending June 26, 2024, with a combined LNG-carrying capacity of 105 Bcf. Natural gas deliveries to U.S. LNG export terminals decreased by 0.4 Bcf/d from the previous week to 12.2 Bcf/d. LNG Prime, 06/28/2024 | U.S. EIA, 06/28/2024