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Kingdom of Jordan may be on track to be third Middle East nation to cease LNG imports

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The Kingdom of Jordan may be on track to become the third Middle East nation after Egypt and Israel to leave the liquefied natural gas market as more regional pipeline gas becomes available.

The only outcome that could stop Jordan no longer being an LNG importer at its facility at Aqaba is the withdrawal of Israeli pipeline gas supplies, which analysts believe is unlikely.

Jordan is an important market for Israel’s surplus gas and in fact an anchor for development of the first phase of the Leviathan gas project offshore Israel, according to an analysis from the consultancy, FACTS Global Energy.

“A short distance pipeline also provides Israel the highest netback for pipeline gas exports compared to other markets such as Egypt, and even Turkey,” said the report.

“The transportation cost for the Israel-Jordan section is estimated to be only US$0.12 per million British thermal units and the current netbacks are around US$5.90-US$6.40 per MMBtu,” added the report.

Jordan National Electric Power Corp. (NEPCO) is currently buying LNG from Shell based on a mid-term contract that expires in 2020.

However, the pipeline contract price agreed with Israel is lower than the LNG price per tonne for the country.

“NEPCO’s contract with Israel’s Leviathan consortium is linked to Brent prices and currently translates to a gas price of around US$6.00-6.50 per MMBtu (at US$70 per barrel Brent price), around US$2.20-2.70 per MMBtu lower than the MT LNG contract prices,” stated the FACTS report.

For Jordan, it makes economic sense to buy pipeline gas that is priced lower than LNG.

Jordan has already committed to import up to 350 million standard cubic feet per day of pipeline gas from Israel from December 2019, when the Leviathan gas project begins operating.

“The construction of a new 65-kilometres pipeline between Jordan and Israel is ahead of schedule and will be completed by the third quarter of 2019,” noted the report.

The Leviathan gas development project is also more than 80 percent completed and is set to start operation by the end of 2019. Jordan is already receiving small volumes of 10-12 mmscf/d of gas from Israel’s offshore Tamar gas field, owned by Noble Energy of the US and its main partners, subsidiaries of the Delek Group of Israel.

Jordan has also resumed gas imports by pipeline from Egypt on the back of new gas supply from the Egyptian Zohr gas field in the East Mediterranean.

The original contract was to import 250 mmscf/d of gas at a price of around US$2.50 per MMBtu.

However, following a gas supply shortage in Egypt, the pipeline flow to Jordan dropped substantially and was finally halted in late 2015.

During 2016 and 2017, NEPCO reversed the pipeline flow, and purchased 10 additional LNG cargoes per year to send to Egypt via the existing pipeline.

In August 2018, Jordanian and Egyptian Energy Ministers agreed to resume gas supply to Jordan and Egypt started sending interruptible volumes of gas to Jordan from September 2018.

“The current price of the Egyptian gas is estimated to be around US$5.00 per MMBtu, which is lower than Israel’s gas prices but the volumes are still negligible,” said the report.

Jordan’s pipeline gas imports from Egypt have been increasing in 2019 and are expected to reach 100 mmscf/d by the end of this year. Post-2020, gas imports from Egypt may reach 200 mmscf/d.

However, given the current supply/demand balance outlook for Egypt, it is difficult to see more gas supply to Jordan.

“Based on our estimates, Egypt will not have more than 200 mmscf/d of gas left for pipeline exports post 2020,” said the FACTS report.

“Interestingly, Egypt will also start importing Israeli pipeline gas from December 2019. Egypt has two contracts to import up to 640 mmscf/d of gas from Israel,” it added.

If everything goes as planned for pipeline deliveries, Jordan will reduce its LNG imports in the next couple of years and they can finally cease.

Jordan would still have flexibility to import occasional LNG cargoes post-2022 as the Golar floating storage and regasification unit contract with NEPCO is expiring in around 2025 and the Jordanians can keep the vessel until then.

“Jordan could decide to keep the FSRU for a longer period and import LNG or simply approach Israel for additional pipeline imports,” said the report.

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Australian Barossa gas field owners make more progress towards supplying Darwin LNG plant

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Australian LNG player Santos said that the Barossa natural gas field joint venture has entered into exclusive negotiations with the Darwin LNG stakeholders to the supply of backfill feed-gas and extend the lifespan of the ConocoPhillips-operated facility that came on stream in 2006.

Santos explained that the arrangement gives the Barossa venture an exclusive commercial negotiation period to reach a processing services agreement as well as settle on a tariff in anticipation of a final investment decision early in 2020.

The offshore Barossa gas field is located 300 kilometres north of Darwin and is part of the Santos Northern Australia portfolio.

The Darwin plant exports around 3.5 million tonnes per annum of LNG from a single liquefaction Train to Japanese utilities Tokyo Electric Power, now under the JERA Global Trading banner, and Tokyo Gas.

Santos has a 11.5 percent stake in Darwin LNG in Australia’s Northern Territory.

Adelaide-based Santos is also operator of the Gladstone LNG plant in Queensland and a stakeholder in Papua New Guinea LNG and its expansion project.

The Barossa project entered the front-end engineering and design phase of development in April 2018 and in May 2019 announced the contract to supply the Subsea Production System (SPS) and associated SPS installation support.

“This exclusivity confirms the confidence we had to commit to long-lead items last month and maintain project schedule to deliver gas to DLNG as early as possible,” said Santos Chief Executive Kevin Gallagher.

“Clearly, it also confirms Barossa’s status as the lead candidate for the supply of backfill gas to Darwin LNG,” he added.

“Bids have also been received and are being evaluated for the FPSO, gas export pipeline and development drilling. We’re getting on with the job,” stated Gallagher.

Santos holds a 25 percent interest in the Barossa-Caldita joint venture along with partners ConocoPhillips (37.5 percent and operator) and South Korea’s SK E&S (37.5 percent).

The project area encompasses petroleum permit NT/RL5 and, with future phased-development in the Caldita field to the south, petroleum permit NT/RL6.

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Gassco names Chairman

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June 27 (LNGJ) – Gassco, the Norwegian natural gas pipeline operating company and a main competitor to LNG, has elected Jan Skogseth as its new Chairman of the board at the general meeting in Oslo. He takes over after Mimi Berdal, who has been a director since 2007 and Chairwoman of the board since 2016. Skogseth has more than 35 years of experience in the oil, gas and renewables industry, both in Norway and internationally. He was President and Chief Executive of Aibel from 2008 to 2017, and played a key role in establishing a new presence for the Norwegian oil and gas services and engineering company on several continents.

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Awilco loses charter contract

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Following collision damage, which necessitated a visit to a Singapore shipyard, ‘WilForce’s’ charterer has advised Awilco LNG that it will cancel the remaining charter period.

‘WilForce’ currently remains at the yard for hull repairs, which are progressing as planned. They are expected to be completed by end-August/early September, Awilco said.The costs are covered by insurance.

When she was allegedly struck by another vessel, ‘WilForce’ was employed on a nine to 12 month timecharter, which commenced in September, 2018.

The charterer notified Awilco LNG of its decision, due to the prolonged off-hire period required to repair the vessel in accordance with the c/p terms.

She has loss of hire insurance in line with market rate levels, which will compensate for most of the lost timecharter hire.

Awilco stressed that based on a preliminary assessment of the facts, the company held the other vessel fully and completely liable for the collision, and expects to be able to recover all costs and expenses, including insurance deductibles, off-hire and lost timecharter hire in due course.

‘WilForce’ is expected to be available for charter ahead of the seasonally stronger Northern Hemisphere winter period, the company added.

Awilco also said that it foresaw the chartering market tightening during the fourth quarter of this year on the back of newbuilding deliveries tapering off in the second half of 2019, coupled with most of the new LNG production capacity scheduled for start up in 2019 being commissioned in the second half of the year and increased demand ahead of winter.

This view was supported by the current soft rates for prompt vessels, compared to higher rates obtainable for contracts starting in 4Q19, Awilco claimed. 

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MOL to supply FSRU for Hong Kong LNG import project

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Mitsui OSK Lines (MOL) has signed a long-term charter contract with Hong Kong LNG Terminal Limited for an FSRU.

Under the terms of the deal, MOL will supply the unit, as well as jetty operations, maintenance and port services for the Hong Kong Offshore LNG Terminal project.

MOL will charter out the 2017-built ‘MOL FSRU Challenger’, which has a storage capacity of 263,000 cu m. The FSRU is currently employed on a mid-term charter for a Turkish project.

The FSRU will arrive in Hong Kong to begin testing and commissioning when the facility is built, currently expected in 2021.

It will supply gas to two utilities in Hong Kong, the Black Point Power Station located in the New Territories and Lamma Power Station located on Lamma Island.

In addition, MOL has entered into an agreement with Vopak to assist in the development of the jetty operations and maintenance services.

Hong Kong LNG Terminal Limited is a joint venture between Castle Peak Power Co Limited (CAPCO) and Hongkong Electric Co, Limited. In turn, CAPCO is a joint venture between CLP Power Hong Kong Limited and China Southern Power Grid International (HK) Co, Limited.

The Hong Kong joint venture has also signed an agreement with Shell Eastern Trading (Pte) Ltd, a subsidiary of Royal Dutch Shell, to supply gas to the FSRU. 

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INPEX moves Abadi’s goal posts

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INPEX Masela, Ltd, a subsidiary of INPEX Corp, has submitted a revised plan of development (POD) to the Indonesian Government for the Abadi LNG project.

The revised POD is based on an onshore LNG development scheme with an annual LNG production capacity of 9.5 mill tonnes instead of an offshore facility.

The project involves developing the Abadi gas field in the Masela Block located in the Arafura Sea in Indonesia.

A submission of a revised POD follows a series of dialogues between the authorities and INPEX, as the operator of the project on behalf of the joint venture – INPEX Masela and Shell Upstream Overseas – to secure its competitiveness through a Heads of Agreement (HOA) signed with the authorities on 16th June, 2019.

INPEX said that it anticipated that the revised POD will be approved at an early stage, after which the company will work in partnership with Shell toward reaching FID and ultimately commencing production, with the co-operation of the Indonesian Government.

Li P’ing Yu, Shell’s Vice President for Abadi, said of the new submission, “Shell is pleased with the progress made by the joint venture, led by INPEX as operator, towards the development of the Abadi project. The submission of the revised POD is a significant milestone for the project,which advances the joint venture closer to delivering a major National Strategic Project for Indonesia.”

”Utilising the knowledge and experience gained through operating the Ichthys LNG Project in Australia, INPEX will continue to work closely with its partner Shell to make the necessary preparations to commence FEED work at an early stage, following the authorities’ approval of the revised POD, and aims for the production startup in latter half of 2020s,” INPEX said. 

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GasLog and SQLearn SA collaboration, a major success!

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SQLearn has collaborated with GasLog Ltd to provide e-learning services from its Dolphin Platforms for the entire fleet of 27 LNGCs.

“Through our strategic co-operation with SQLearn, and its innovative suite of e-learning products and services, we are able to provide our crew with specialised training, while at the same time we can manage all e-learning activities on board and ashore,” said GasLog Ltd’s Competency Assurance Manager, Archontia Leni.

SQLearn’s Dolphin Library – part of Dolphin Platforms – consists of interactive e-learning courses. The courses are based on STCW topics that cover national, international and flag requirements.

Dolphin System is a web-based e-learning system, specifically designed for the shipping industry, offered via a hardware solution for on board training.

“Through our e-learning courses, seafarers’ training becomes effective and user-friendly, incorporating flexible, interactive and reflective learning techniques. Our co-operation with GasLog is greatly appreciated and we look forward to continuing it,” said Spyros Goumas, SQLearn’s CEO. 

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Finnish gas company Gasum seeks more ARA business after Rotterdam LNG bunkering

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Gasum, the Finnish natural gas company, said its liquefied natural gas bunkering vessel “Coralius”, has conducted its first fuel operation in the port and refining area of Rotterdam, one of the most important logistics hubs in Europe.

Gasum said the 5,800 cubic metres capacity ship-to-ship bunkering vessel has now proved her worth in the Amsterdam-Rotterdam-Antwerp (ARA) area.

Liquefied natural gas (LNG) was supplied to the vessel “Bit Viking”.

“Finally, being able to bunker our clients in the ARA area, increases LNG availability and security for the LNG fueled fleet,” said Kimmo Rahkamo, Vice President of natural gas and LNG at Gasum.

“The amount of LNG driven vessels is growing rapidly globally, and we will definitely be part of the growth in being present where LNG is needed,” he added.

The “Coralius” has her main operation area in the North Sea and the Skagerrak area.

The Skangas LNG business is now fully under the Gasum banner and during the quarter of 2019 the bunkering vessel “Coralius” performed its 100th ship-to-ship fuel operation.

The “Coralius” delivers LNG through ship-to-ship bunkering at sea and in port.

Gasum said this has significantly increased Gasum’s flexibility and responsiveness to vessels that require LNG but are unable to visit a terminal or a port.

“We are happy with this opportunity to get LNG by ship-to-ship bunkering also in the Port of Rotterdam,” said Anders Hermansson, Technical Manager of Tarbit Shipping.

“Our vessel ‘Bit Viking’ converted to LNG already in 2011. Since then we have operated on LNG about 97 percent of the time, mainly supported by Gasum,” he added.

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Argentine energy firm YPF issues first bonds in a year as LNG and shale inspire confidence

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Argentine oil and gas producer, Yacimientos Petroleiferos Fiscales (YPF), has sold overseas bonds for the first time in more than a year amid a slow return of investor confidence as the company starts small-scale LNG exports and the nation’s huge Vaca Muerta shale basin continues to be developed.

YPF issued $500 million of 10-year, dollar-denominated notes to yield 8.75 percent. The sale on June 24 was managed by the US Citigroup, the UK’s HSBC Holdings and Itau Unibanco Holdings SA of Brazil.

Bankers said that proceeds from the sale would go towards working capital and refinancing existing debt.

State-owned YPF is traditionally among the country’s biggest corporate borrowers and it hadn’t issued bonds recently in international markets as an economic slowdown and a currency crisis affected investor confidence.

YPF is the largest investor in the Vaca Muerta shale basin of onshore oil and gas reserves in the northwest Argentine province of Neuquen.

Covering an area the size of a small European country, it has become one of the world’s leading shale basins and has attracted international companies such as US majors ExxonMobil and Chevron Corp., Qatar Petroleum, French major Total and Equinor of Norway.

Argentina also loaded its first shipment of LNG on June 3 for export at the “Tango FLNG” facility deployed at the Argentine port of Bahia Blanca.

YPF said the shipment included 30,000 cubic metres of natural gas from the Vaca Muerta shale.

An LNG carrier, the Malta-registered and Japanese-built “Fuji LNG”, lifted the cargo at Bahia Blanca after arriving on June 2 and then proceeded to Cheniere Energy’s Sabine Pass plant in Louisiana, arriving on June 24, according to shipping data.

The “Tango FLNG” plant is chartered under a 10-year agreement from Belgian shipping company Exmar.

The vessel is the former floating liquefaction unit, “Caribbean FLNG”, constructed for a cancelled venture in the South American state of Colombia and renamed before being sent to Argentina.

YPF did not at first specify the destination of the shipment, though said it was being helped by the marketing arm of US exporter Cheniere.

Argentina’s medium-term aim in the LNG sector is to halt its own LNG imports, which will number at least nine large-scale cargoes or more for the Southern Hemisphere winter, and to become an exporter.

Growing natural gas production from the Vaca Muerta shale will eventually meet all of the nation’s energy requirements and leave a surplus for export.

However, production costs for shale will have to be reduced to make exports economic and huge investment is needed in infrastructure to handle large-scale gas volumes and onshore liquefaction, though the floating LNG project is viewed as a good introduction to the export market for YPF.

The “Tango FLNG” plant will produce up to eight cargoes per annum from the Vaca Muerta supplies.

The shale-gas production has also enabled the resumption of pipeline supplies to neighbouring Chile.

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Dutch LNG fuel supplier by barge sets up ARA bunkering business

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Titan LNG, a Dutch supplier to the marine and industrial market with a pontoon system for the delivery of LNG to river barges and sea-going ships in the ports of Amsterdam, Rotterdam and Antwerp, has carried out its first barge-based operation in Rotterdam.

Titan’s LNG bunkering pontoon is called the Titan LNG Flex-Fueler. Long-term customer Nor Lines received the LNG cargo in the Dutch Port of Rotterdam from an inland waterways barge.

According to a statement, this makes Titan LNG the first accredited bunker supplier of the fuel able to deliver by inland barge.

Titan’s LNG bunker permit for Rotterdam and the overall LNG bunkering accreditation were granted in May 2019.

The “FlexFueler001” is just one in a series of vessels, with the “FlexFueler002” currently under construction and scheduled for completion by mid-2020 in the Port of Antwerp.

Titan LNG said that the construction of a third barge will be announced in the coming months to complete ARA barge-based fueling activities.

Ronald van Selm, Chief Operating Officer at Titan LNG, said his company was proud that the “FlexFueler001” was operating after successfully completing her trials.

“We can now offer safe, reliable and efficient bunkering that resembles conventional bunkering and are ready to serve more LNG-powered vessels in the ports of Amsterdam, Rotterdam and Antwerp,” stated Van Selm.

Samskip, operator of the LNG-powered Nor Lines vessels, the “Kvitnos” and the “Kvitbjorn”, has a weekly service into Rotterdam and requires a high reliability of LNG supply.

“We focus on economical, efficient, reliable and environmentally friendly transport,” said Paul Wielaars, Trade Manager for Nor Lines for West Coast Norway.

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