July 8, 2024 Freeport shut down Due to Hurricane Beryl
Freeport LNG Terminal Shutdown Due to Hurricane Beryl
Freeport LNG Gas Flows Hit Near Zero During Hurricane Beryl - Reuters Natural Gas Futures Jump as LNG Exports Seen Bouncing Back After Beryl - Natural Gas Intelligence
Insights:
Shutdown Details: Freeport LNG shut down its three-train liquefaction and export plant in Texas due to Hurricane Beryl. Production was ramped down on July 7, with operations to resume post-weather event.
Hurricane Impact: Beryl made landfall near Matagorda, Texas, with maximum sustained winds of 75 mph. Gas flows to the facility fell close to zero and are expected to remain near zero temporarily.
Capacity and Production: Freeport LNG has a capacity of 15 million tonnes per annum (mtpa), recently increased to 16.5 mtpa after a debottlenecking project. Train 4, once operational, would add 25% more capacity.
Export and Impact: Freeport LNG’s export capacity of 13.4 mtpa is contracted to Osaka Gas, Jera, BP, TotalEnergies, and SK E&S. Gas flows to the seven major U.S. LNG export plants dropped to an 11-week low of 11.0 Bcf/d.
Market Reaction: Natural gas futures increased due to the hurricane’s impact and expected rebound in U.S. LNG exports. August Nymex contract rose 5.1 cents to $2.370/MMBtu.
European Gas Prices Rise Due to Hurricane Beryl
European Gas Prices Rise as Hurricane Beryl Heads Toward Texas - Bloomberg
Insights:
Market Reaction: European gas prices rose as Hurricane Beryl approached Texas, affecting LNG operations. Benchmark futures increased by 1.7%.
Supply Disruptions: Europe’s gas inventories are well-stocked, but the global market faces disruptions and increased demand from hotter-than-normal temperatures in Asia.
Current Prices: Dutch front-month futures rose to €33.49/MWh. UK equivalent contracts also increased.
Tokyo Faces Tight Power Supply Amid Heat and Outages
Tokyo Faces Tight Power Supply on Scorching Heat, Outages - Bloomberg
Insights:
Heat Impact: Tokyo's grid is stretched due to hotter-than-normal temperatures, with mean temperature reaching 30°C compared to the 30-year normal of 24°C.
Power Generation: Unplanned maintenance shut a 413 MW unit at Kawasaki and a 300 MW unit at Kashima Kyodo. Jera increased power generation by nearly 400 MW.
Market Reaction: The day-ahead spot price for Tokyo spiked to 21.9 yen/kWh, the highest since February 2023. Nationwide rates hit 18.5 yen/kWh, the highest since September 2023.
Zachry’s Likely Exit from Golden Pass LNG Project
Insights:
Project Exit: Zachry is preparing to exit the Golden Pass LNG project, filing updated layoff notices affecting around 120 jobs. Over 4,400 layoffs have already been issued.
Legal Dispute: Zachry filed for bankruptcy protection in May, citing financial struggles due to Golden Pass. Exxon and partners seek to replace Zachry, claiming it failed to fulfill its obligations.
Project Status: Golden Pass, a significant LNG export project, faces uncertainty as Zachry’s role may end soon.
First Gen Defers Delivery of New LNG Cargo
First Gen defers delivery of new LNG cargo - Phil Star
Insights:
Deferral Details: First Gen Corp. deferred its fifth LNG shipment, awaiting regulatory approvals for cost recovery. The deferred shipment was 125,000 cubic meters of LNG from TG Global Trading Co.
Current Supply: First Gen’s four natural gas-fired plants (2,017 MW capacity) are supplied by Malampaya gas and LNG. Previous LNG deliveries were made in August 2023, December 2023, February 2024, and May 2024.
Capital Expenditure: First Gen allocated $1.27 billion for 2024 to enhance its renewable energy and natural gas portfolio. Energy Development Corp., a unit of First Gen, is investing around P29.3 billion in new projects.
Bangladesh's Summit LNG FSRU to Arrive at Chittagong Port
Bangladesh's Summit LNG FSRU to arrive at Chittagong port on July 11 - Reuters
Insights:
Arrival Details: Summit LNG’s FSRU will arrive at Chittagong port on July 11 after departing Singapore on July 6. The FSRU was damaged during Cyclone Remal and underwent repairs in Singapore.
Import Plans: Bangladesh is importing six cargoes through long-term deals and two spot cargoes in July. Excelerate Energy was awarded a spot cargo at $13.5580/mmBtu.
Operational Impact: The FSRU, with a regasification capacity of 500 million cubic feet per day, is crucial for Bangladesh’s power demand. The damage and repairs led to canceled spot cargoes and worsened the gas shortage.
EU's Dependence on US LNG Amidst Geopolitical Tensions
Why the EU needs US liquefied natural gas - Atlantic Council
Insights:
Market Conditions: Europe's gas market faces volatility due to geopolitical tensions, including the Ukraine war and Middle East conflicts. Russian LNG deliveries to Europe are increasing despite sanctions.
US LNG Role: The US is seen as a reliable LNG supplier to Europe. From January 2021 to March 2024, the US supplied 153.8 bcm of LNG to Europe. US LNG reduced European gas prices post-Ukraine invasion.
Regulatory Hurdles: The US pause on new LNG export project approvals affects around 115 bcm of export capacity. Pending projects could meet Europe’s demand, especially if Russia's gas transit agreement with Ukraine ends in 2025.
Russian LNG Modules Redirected to China
U.S. Sanctions Send Russian LNG Modules Back to China’s Wison Yard - gCaptain
Insights:
Sanctions Impact: Two LNG modules for Novatek’s Arctic LNG 2 project were redirected back to China due to US sanctions. Wison New Energies ceased work with Russia, complicating module deliveries.
Project Delays: US sanctions affect Chinese construction yards and heavy lift vessel operators. Novatek delayed module deliveries for Train 3, with further modules still in China.
Strategic Adjustments: Chinese yards and shipping companies fear sanctions, impacting Novatek’s LNG plans. Arctic LNG 2 faces moderate delays, with six key Arc7 ice-capable LNG carriers in limbo in South Korea.
Construction Progress on Sempra’s Port Arthur LNG Export Project
Construction progresses on Sempra’s Port Arthur LNG export project - LNG Prime
Insights:
Project Details: Sempra and Bechtel are advancing the $13 billion Port Arthur LNG export project in Texas. Phase 1 has a capacity of 10.5 mtpa, with commercial operations expected in 2027 and 2028.
Investments and Partners: ConocoPhillips holds a 30% stake in the project. Sempra sold a 42% interest in Phase 1 to KKR. Bechtel awarded contracts to Air Products, Elliott, and Great Lakes Dredge & Dock.
Phase 2 Plans: Phase 2, approved by FERC, will add two more liquefaction trains, increasing capacity to 26 mtpa. Saudi Aramco signed a non-binding deal to buy 5 mtpa from Phase 2 and may take a 25% equity stake.
Gladstone Exports
Gladstone LNG exports almost flat in June - LNG Prime
Insights:
Export Data: In June 2024, 1.88 million tonnes of LNG (29 cargoes) were shipped from Gladstone, similar to 1.86 million tonnes (28 cargoes) in June 2023.
Destination Breakdown: China received 1.02 million tonnes, a 22.8% decrease from June 2023. Other destinations included South Korea, Singapore, Malaysia, Thailand, and Japan.
Annual Exports: In 2023, the three Gladstone terminals shipped 22.97 million tonnes of LNG (350 cargoes), compared to 22.64 million tonnes (354 cargoes) in 2022.
Petronas Expands Fleet Ahead of LNG Canada Launch
Malaysia’s Petronas adds new vessels to its fleet as LNG Canada launch nears - LNG Prime
Insights:
New Vessels: Petronas added three LNG carriers (174,000 cubic meters each) named Puteri Sejinjang, Puteri Mahsuri, and Puteri Mayang. These are part of six new vessels for operations in North America.
LNG Canada Project: Petronas holds a 25% stake in LNG Canada, set to start later in 2024. The terminal's first phase includes two liquefaction trains with a 14 mtpa capacity.
Project Partners: Other partners include Shell, PetroChina, Mitsubishi Corporation, and Kogas. The Coastal GasLink pipeline will supply gas to the terminal.
Slovakia’s ZSE and Poland’s Orlen Sign LNG Supply Deal
Slovakia’s ZSE, Poland’s Orlen ink LNG supply deal - LNG Prime
Insights:
Supply Agreement: ZSE signed a deal with Orlen to buy LNG from the US, delivered to the Klaipeda FSRU in Lithuania. The contract covers 30% of ZSE Energia's demand in 2025.
Delivery Route: Regasified LNG from Klaipeda will be transported to Slovakia via the Gas Interconnection Poland-Lithuania (GIPL) and the Vyrava interconnector.
Regional Cooperation: The deal highlights growing cooperation in Central and Eastern Europe to diversify supplies and enhance gas security.
Mexico’s Altamira LNG Terminal
Mexico LNG terminal set to ship first cargo, others remain in limbo - Gas Outlook
Insights:
Operational Start: Altamira LNG, backed by New Fortress Energy, will ship its first cargo in July. The terminal will export gas from Texas to Puerto Rico.
Other Projects: Energia Costa Azul in Baja California will soon export gas to Asia. Mexico has several proposed LNG projects that could make it a major exporter, potentially reaching 60 mtpa.
Key Developments: Saguaro Energia LNG, a large proposed project, faces uncertainty due to financial risks and regulatory hurdles. President Biden’s LNG “pause” affects new export proposals.
Aramco Denies Interest in Santos Acquisition
Aramco denial fuels doubts over Santos’ portfolio - The Australian Financial Review
Insights:
M&A Speculation: Saudi Aramco distanced itself from a rumored takeover bid for Santos, an ASX-listed company with LNG interests in Papua New Guinea and Australia.
Santos Portfolio: Santos has LNG projects in northern and eastern Australia, domestic gas activities, and an oil project in Alaska. The company’s market value is $25.8 billion.
Australian Gas Supply Concerns
Australian Competition & Consumer Commission Gas Inquiry 2017-2030 - ACCC East coast of Australia gas crisis to hit sooner than expected: ACCC - Sydney Morning Herald
Insights:
Supply-Demand Balance: LNG producers control 90% of 2P reserves on Australia’s east coast. LNG exports are forecast to reach 1,369 PJ in 2025.
Market Dynamics: LNG producers forecast a tighter domestic market, with a net withdrawal of 45 PJ from the domestic market. Contracted domestic demand is forecast at 160 PJ.
Regulatory Changes: The Gas Market Code, effective from September 2023, aims to ensure supply availability. However, contracting for supply remains low, indicating market uncertainty.
Government Actions: The Australian Government aims to reduce emissions by 43% from 2005 levels by 2030. New gas production sources and increased competition are needed to avoid supply shortfalls post-2026.
Rising Russian Gas Imports into Belgium
Russian gas imports into Belgium are on the rise - Brussels Times
Insights:
Import Increase: Belgium's LNG imports from Russia increased by 2.7 times since 2021, now constituting 7.7% of its supply, up from 5.6% in 2022.
Strategic Location: Belgium, a major EU LNG importer, plays a crucial role in global trade due to its strategic location and the port of Zeebrugge.
Sanctions Impact: EU sanctions on Russian LNG are set to take effect in March 2025, potentially impacting Belgium’s gas network operator, Fluxys, which has a long-term agreement with Yamal LNG.
Company Report
First Gen Corporation
Why: Deferred procurement of its fifth LNG shipment due to awaiting regulatory approvals. The contract for the fifth shipment, awarded to TG Global Trading Co., was for 125,000 cubic meters of LNG.
Category: Imports
Country/Region: Philippines
Source: Phil Star
Date: 7-8-2024
Summit LNG
Why: FSRU arriving at Chittagong port on July 11. Damaged by Cyclone Remal and sent to Singapore for repairs. Resuming operations mid-July. 15-year charter agreement with Excelerate Energy.
Category: Imports
Country/Region: Bangladesh
Source: Reuters
Date: 7-8-2024
Novatek
Why: Two LNG modules for Arctic LNG 2 project returned to China due to US sanctions. Sanctions affecting Chinese yards and shipping companies.
Category: Exports
Country/Region: Russia
Source: gCaptain
Date: 7-8-2024
Sempra
Why: Advancing construction of the Port Arthur LNG export project in Texas, valued at $13 billion. Phase 1 capacity is 10.5 mtpa with contracts with ConocoPhillips, Ineos, Engie, RWE, and PKN Orlen.
Category: Exports
Country/Region: USA
Source: LNG Prime
Date: 7-8-2024
Santos
Why: LNG exports from Gladstone port nearly flat in June compared to last year. Shipped 1.88 million tonnes of LNG in June 2024.
Category: Exports
Country/Region: Australia
Source: LNG Prime, The Australian Financial Review
Date: 7-8-2024
PETRONAS
Why: Added three new LNG carriers in preparation for LNG Canada terminal launch. Vessels named Puteri Sejinjang, Puteri Mahsuri, and Puteri Mayang.
Category: LNG Carrier
Country/Region: Canada
Source: LNG Prime
Date: 7-8-2024
ZSE
Why: Signed a deal with Poland's Orlen to buy LNG, delivered from the US to the Klaipeda FSRU in Lithuania. Contracted volumes to cover 30% of ZSE Energia's demand in 2025.
Category: Imports
Country/Region: Slovakia
Source: LNG Prime
Date: 7-8-2024
Freeport LNG
New Fortress Energy
Why: Altamira LNG terminal in Mexico to ship first cargo in July. Project includes exporting gas from Texas.
Category: Exports
Country/Region: Mexico
Source: Gas Outlook
Date: 7-8-2024
Zachry Holdings, Inc.
Why: Preparing for formal exit from Golden Pass LNG project. Filed updated layoff notices for around 120 jobs. Filed for bankruptcy protection in May.
Category: Corporate News
Country/Region: USA
Source: Houston Chronicle
Date: 7-8-2024
Tokyo Electric Power Co.
Why: Increased power generation to meet demand in Tokyo area during heatwave. Day-ahead spot price spiked to 21.9 yen/kWh.
Category: Price
Country/Region: Japan
Source: Bloomberg
Date: 7-8-2024
ExxonMobil
Why: Involved in Golden Pass LNG project. Speculated to be a key buyer of LNG capacity from Saguaro Energia LNG in Mexico.
Category: Mergers and Acquisitions, Exports
Country/Region: USA, Mexico
Source: Houston Chronicle, Gas Outlook
Date: 7-8-2024