Tag Archives: LNG

Russian Oil Giant Rosneft Plans to Build LNG Plant in Venezuela – CEO

Rosneft and Venezuelan PDVSA have signed an agreement on the basic terms of a joint venture for the extraction, preparation and monetization of gas fields of Patao, Mejillones and potentially of Rio Caribe.

Source: Russian Oil Giant Rosneft Plans to Build LNG Plant in Venezuela – CEO

Kinder Morgan Gets Go-Ahead for LNG Project – 24/7 Wall St.

Kinder Morgan Inc. (NYSE: KMI) reported Thursday morning that two company subsidiaries have received authorization from the Federal Energy Regulatory Commission (FERC) to proceed with the company’s Elba Liquefaction Project on Elba Island, near Savannah, Ga. The company also received approval to proceed with a modification project to expand the Elba Express Pipeline.The $2 billion Elba Liquefaction Project expects to have the first of 10 liquefaction units up and running by the second quarter of 2018, with the rest entering service by the end of the year.

Source: Kinder Morgan Gets Go-Ahead for LNG Project (NYSE: KMI) – 24/7 Wall St.

LNG Traders Have Five Issues on Their Mind After Price Collapse – Bloomberg

After spot liquefied natural gas prices plummeted by two-thirds since May 2014 amid a global glut, European traders are trying to assess how much of the fuel will arrive in the region.These five questions dominated discussions at the LNG summit Monday in Amsterdam at Flame, Europe’s biggest annual gas conference.

When will the glut end?

Over the next five years, Australia and the U.S., the biggest new producers of LNG, will add more than 120 million metric tons of annual capacity, said Andrew Walker, vice president for strategy at Cheniere Energy Inc.’s marketing unit. That’s more than a third of current total capacity.Cheniere in February started the first exports of U.S. shale gas in liquefied form, while Australia is on track to overtake Qatar as the biggest LNG supplier by 2018.“The global market is going to an oversupply situation,” Luis Sanchez, head of LNG trading at Uniper Global Commodities, said at the conference. “U.S. LNG volumes are coming, new Australian LNG volumes are coming.”The market may become balanced by early to mid-2020s, according to Ajay Shah, a vice president at Royal Dutch Shell Plc, which supplies about 15 percent of global LNG. Centrica Plc also sees gas markets heading to equilibrium in the next decade, with “price formation reverting to fundamentals,” said Nazim Osmancik, the utility’s director of fundamentals.

Source: LNG Traders Have Five Issues on Their Mind After Price Collapse – Bloomberg

Icahn takes 8.2 percent stake in Cheniere Energy – HBJ

Billionaire investor Carl Icahn has chosen his next Houston company to shake up.The CEO of New York-based Icahn Capital LP disclosed an 8.18 percent stake in Houston-based Cheniere Energy Inc. (NYSE: LNG), which amounts to 19.4 million shares, various media reports and the Associated Press have confirmed.In his typical fashion, Icahn reported in his filings with the U.S. Securities and Exchange Commission that he wants to discuss the liquefied natural gas producer and exporter’s business plan, capital spending and executive compensation. He added that he may also seek a seat on Cheniere’s board of directors.

via Carl Icahn takes 8.2 percent stake in Cheniere Energy – Houston Business Journal.

Gas Awakening From U.S. Shale Slumber as LNG Shipments Near – Bloomberg Business

After years of languishing in a shale-induced coma, the U.S. natural gas market is waking up.Seasonal price swings will intensify as the country begins shipping liquefied natural gas cargoes to Asia and Europe later this year, said Bank of America Corp., RBC Capital Markets LLC and Wood Mackenzie Ltd. While that’s good news for traders yearning for volatility, it could be bad news for consumers.Exports will help prices rebound from the slump caused by the U.S. pumping record amounts from shale formations. Growing domestic winter demand is already causing spikes and trading volumes in futures markets have rebounded to the highest level in three years. Average retail gas prices also will rise with LNG exports, according to Bloomberg New Energy Finance.“Connecting U.S. natural gas prices into the global market could result in wider spreads at home,” said Francisco Blanch, the head of commodities research at Bank of America Corp. in New York. “Global LNG spot prices are notoriously seasonal.”Cheniere Energy Inc. will start operating a liquefied natural gas terminal this year in Louisiana, the first new export site in 46 years. The U.S. will be the third-largest supplier by 2020, the International Energy Agency says.In a sign of what may be coming, futures for January 2017 are already trading at a 37.2-cent premium to October 2016 contracts, the biggest premium for this time of the year since 2012. That seasonal spread may widen to as much as a dollar as LNG exports expand, Blanch said.

via Gas Awakening From U.S. Shale Slumber as LNG Shipments Near – Bloomberg Business.

LNG Glut To Get A Lot Worse This Year | OilPrice.com

Another LNG train is up and running in Australia, adding to the growing abundance of capacity.

BG Group announced that its second LNG train at its Queensland Curtis LNG (QCLNG) facility in northeastern Australia is now up and running. When the facility ramps up and reaches its highest production level – expected in mid-2016 – it will be able to ship 8 million tonnes of LNG per year (mtpa), or the equivalent of ten ships per month.

The $20 billion LNG project is not the only one expected to come online this year. Santos is planning on starting up its GLNG facility later this year, a unique project that will turn natural gas from coal seams into LNG. Santos is joined by its partners Petronas, Total, and KOGAS. GLNG will have the capacity to ship 7.8 mtpa of LNG. Origin Energy, another LNG producer, is expected to bring its Australia Pacific facility online this year as well, another coal seam gas project.

But the long list of projects nearing completion will only add more capacity to a marketplace that is relatively well-supplied. Spot LNG cargoes in Asia have seen their prices fall precipitously over the past year. The collapse in oil prices has contributed to weaker LNG pricing, as LNG prices are often linked to the price of crude oil. However, soft demand in Asia for LNG has also tempered prices. China, although expected to be a major consumer of LNG over the longer-term, has disappointed producers.

Lower prices could cut into revenues of LNG suppliers, who built their facilities on the assumption that prices would be higher. With that said, however, LNG export facilities are planned for decades of operation, so short-term price weakness won’t necessarily alter long-term returns on investment.

Nevertheless, with a wave of LNG export capacity hitting the market this year – with even more slated to begin over the next two to three years – LNG prices may stay weak for some time.

There are a few variables to watch out for, which could have a major effect on prices. The extent to which Japan returns to nuclear power, which would slash gas imports, could cut into demand. China’s stock market turmoil could offer an even more dangerous downside risk. And of course, the movement of oil prices will also affect the trajectory of LNG spot cargoes.

via LNG Glut To Get A Lot Worse This Year | OilPrice.com.

Most U.S. LNG projects won’t cross the finish line, new study says – Fuel Fix

Most of the proposed U.S. liquefied natural gas export projects won’t get built amid stiffening competition from foreign competitors who will flood the market with the supercooled gas as demand begins to slow, a new study finds.

Five U.S. LNG projects already under construction, including Cheniere’s two terminals in Louisiana and Corpus Christi, will cross the finish line, but beyond that, construction appears “increasingly unlikely” for the remaining proposals, according to the latest study unveiled Tuesday by a task force of natural gas experts assembled by the Brookings Institution, a Washington D.C.-based thinktank.

It’s the latest report to raise doubts about the flurry of multi-billion dollar proposals announced in recent years that would soak up vast supplies of cheap U.S. natural gas destined for markets in Asia.

“We believe it will be increasingly difficult to finance new LNG projects, due to high upfront costs in combination with a substantial number of uncertainties which influence supply and demand,” the report said.

Developers have been rolling out proposals on the assumptions that U.S. natural gas prices will remain at record low levels while LNG prices in Asia and Europe remain high, offering North American exporters attractive margins. Developers also placed bets that U.S. LNG, which is linked to natural gas prices, would allow them to hold a competitive edge over foreign suppliers, whose LNG is tied to crude prices, which were relatively high until they began falling late last year.

The report found that there are flaws in those assumptions that call into question whether U.S. LNG projects will be successful.

“While the projected number of North American LNG export facilities is massive, closer examination of the projects’ financial realities offer a more nuanced story,” the report stated.

U.S. natural gas prices are expected to rise slowly, which could undercut the competitive advantage of U.S. LNG exports unless developers figure out cheaper ways to liquefy, transport and re-heat the gas. Natural gas faces stiffer competition from other competing fuel sources, such as cheap coal and renewables, and that waning demand makes it increasingly difficult for North American LNG projects to turn a profit, the report found. And collapsing crude prices gave a fresh advantage to rival oil-linked LNG projects in other countries.

via Most U.S. LNG projects won’t cross the finish line, new study says – Fuel Fix.

Kinder Morgan to buy Shell’s stake in Elba Liquefaction LNG joint venture – Houston Business Journal

Houston-based Kinder Morgan Inc. (NYSE: KMI) said July 15 it agreed to buy Royal Dutch Shell’s (NYSE: RDS-A, RDS-B) interest in Elba Liquefaction Company LLC.

Also on July 15, Kinder Morgan announced an increased dividend and reported second-quarter earnings that missed analysts’ expectations.

Kinder Morgan currently owns 51 percent of the ELC joint venture, and Shell owns the remaining 49 percent. Terms of the transaction were not disclosed.

As a result of the deal, Kinder Morgan expects to invest another $630 million in the Elba Liquefaction Project, bringing the company’s total incremental investment in all of Elba’s liquefaction and terminal facilities to approximately $2.1 billion.

ELC owns the Elba Liquefaction Project, which is proposed to be constructed and operated at the existing Elba Island LNG Terminal near Savannah, Georgia. The Hague-based Shell, which has its U.S. arm headquartered in Houston, will retain its 20-year contract to subscribe to 100 percent of the terminal’s 2.5 million tonnes per year of liquefied natural gas export capacity, which is equivalent to approximately 350 million cubic feet per day of natural gas.

Permitting is underway, and the next step in the regulatory approval process is for the Federal Energy Regulatory Commission to issue a draft environmental assessment.

Construction is expected to begin in the fourth quarter, depending on regulatory approvals, and initial production is expected in late 2017.

“Our current project backlog of expansion and joint venture investments is $22 billion,” Kinder Morgan President and CEO Steve Kean said in the company’s second-quarter earnings report released July 15.

That’s up approximately $3.7 billion from the first quarter.

via Kinder Morgan to buy Shell’s stake in Elba Liquefaction LNG joint venture – Houston Business Journal.

LNG Investing in the Next 10 Years

“Right now we have one of the largest LNG facilities in the world being built in Louisiana… in the next 3-4 years there are not enough gas ships in the world that can accommodate that growth.”

U.S. Coast Guard Commandant Paul Zukunft said this recently, as he commented on the dangers presented by the growing liquefied natural gas market.

Chief among these dangers, according to Zukunft, is that the new plants coming online in the U.S. — which include Sempra Energy’s (NYSE: SRE) Cameron LNG plant (the one he references in the quote) and Cheniere Energy’s (NYSE: LNG) Sabine Pass — won’t have enough tanker ships to support production.

Because of an oversupply, shipbuilders haven’t continued building LNG ships. This means the vast amount of LNG set for production in the next few years may find a bottleneck when it comes time for shipment.

Zukunft estimates that the U.S., with approved and proposed terminals, will hold 20% of the world’s LNG capacity, so the fact that there aren’t enough ships presents a daunting challenge for LNG producers like Cheniere.

Of course, there’s still time. Cheniere’s Sabine Pass Terminal won’t begin shipments until the end of this year, while Sempra Energy’s Cameron Plant won’t ship LNG until 2018 at the earliest.

Plus, all of the other major LNG projects are many years away from completion, so it won’t take too long to revitalize the fleet of tankers willing to ship the gas.

And even if there’s a bottleneck on shipments, it won’t matter for investors who take heed now…

LNG Demand is Going Through the Roof

Between now and 2025, demand for liquefied natural gas in Asia and Europe stands to send investments in LNG and its feedstock — natural gas — soaring.

When you take into account all of the LNG proposals on the table that, if approved, would start planning and construction by 2017, there will still be a huge shortfall.

That shortfall is projected to be somewhere around 67.6 million tons per year.

via LNG Investing in the Next 10 Years.

2015 Seen as a Pivotal Year for LNG in the U.S.

The unexpected plunge in the price of crude oil is throwing the energy markets in turmoil. It could force energy companies to defer $150 billion in future projects. However, it’s not expected to cause much near-term damage to LNG projects in the U.S, despite the fact that the price of oil is an important component in LNG prices around the world. At least that’s the view of analysts at energy intelligence firm, Wood Mackenzie, who see LNG’s momentum in America continuing in 2015.

Construction boom continues

Wood Mackenzie sees 2015 as a pivotal year for America’s budding LNG industry. The industry currently has four major LNG export projects under construction including Freeport LNG, Dominion Resources’ (NYSE: D  ) Cove Point LNG, Sempra Energy’s (NYSE: SRE  ) Cameron LNG, and Cheniere Energy’s (NYSEMKT: LNG  ) Sabine Pass LNG, which is expected to begin exporting its first LNG cargos later this year. None of these projects are expected to be affected by the current turmoil in the energy market as all have signed up much of their LNG capacity under long-term contracts meaning construction should continue as scheduled.

Meanwhile, Wood Mackenzie sees two more projects beginning construction before the end of the year. One of the two is expected to be Cheniere Energy’s Corpus Christi project, which is seen receiving its Final Investment Decision early this year. That project looks like a lock to begin construction as it recently signed a long-term transportation and storage agreement with Kinder Morgan (NYSE: KMI  ) , which is going to build a new pipeline to supply gas for Cheniere’s facility.

The other project that Wood Mackenzie expects to see begin construction this year is Elba Island, which is also known as Southern LNG. The project is a joint venture between Kinder Morgan and Royal Dutch Shell Plc (NYSE: RDS-A  ) (NYSE: RDS-B  ) , and according to Kinder Morgan’s timeline this project could begin construction in the second quarter of this year.

via LNG News: 2015 Seen as a Pivotal Year for LNG in the U.S..