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Australia-Pacific LNG plant revenues jump for largest shareholders Origin and ConocoPhillips

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Origin Energy, a shareholder in the Australia-Pacific liquefied natural gas export project in Queensland with ConocoPhillips of the US and Chinese major Sinopec, reported a year-on-year jump in the plant’s LNG revenues because of the higher effective oil price.

Origin said it received A$943 million (US$649.7M) in cash from APLNG in the past fiscal year.

The APLNG project’s full commodity revenue was up 36 percent at A$2.78Bln (US$1.91Bln) compared with A$2.05Bln in the previous year.

Origin also said its average LNG price in the quarter to the end of June was US$9.13 per million British thermal units.

Origin said its share of LNG volumes from its 37.5 percent stake in APLNG had fetched a 4 percent higher average price in the quarter compared with last year’s US$8.99 per MMBtu, though 14 percent lower than the previous 2019 quarter’s US$10.84 per MMBtu.

The APLNG plant produces almost 9 million tonnes per annum from two Trains and 7.6MTPA is contracted to Sinopec, whose formal name is China Petroleum & Chemical Corporation.

Sydney-based Origin said its share of production from the APLNG plant on Curtis Island was 799,800 tonnes in the quarter, a 12 percent rise on the 711,900 tonnes taken in the year-ago quarter.

Origin’s annual share of LNG offtake was 3.24 million tonnes, just 1 percent higher than 3.20MT it received in the previous year.

The company’s LNG revenues were 21 percent higher than the year-ago quarter at A$553.7 million compared with A$456.4M in the same three months of 2018, though 20 percent lower than the previous 2019 quarter when revenue was A$688.8M.

Origin runs two divisions, Integrated Gas, including upstream coal-seam gas for LNG, and Energy Markets, its gas and electricity retail and wholesale business.

APLNG’s production remained stable in the past year despite planned upstream maintenance outages.

“JCC (Japanese LNG) prices recovered in the June-19 quarter, largely driven by OPEC supply cuts and supply outages in Russia,” said Origin.

“Spot LNG prices continued to soften in the quarter, driven by additional supply from new projects and subdued demand growth,” it added.

LNG production decreased 4 percent compared with the previous quarter, driven by an increase in gas being directed to the domestic market.

Total fiscal-year oil and LNG hedging and trading costs for Origin amounted to A$199M

Quarterly domestic gas revenue increased by 19 percent compared with the previous quarter and revenue was up 6 percent for the fiscal year.

In Energy Markets, annual electricity volumes decreased 3 percent due to lower customer accounts and usage.

“Australia Pacific LNG continues its strong operational and financial performance,” said Origin Chief Executive Frank Calabria.

“Revenue was up 36 percent on the prior year driven by higher effective commodity prices which translated to A$943 million of cash flow to Origin,” added the CEO.

“Pleasingly a number of APLNG gas supply contracts were signed during the quarter with domestic manufacturing customers,” he stated.

Origin also expects the A$231M sale of the Ironbark gas assets to APLNG to be completed in August.

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Ten August deliveries

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July 31 (LNGJ) – The 75,000 cubic metres capacity Med-class carrier “Berge Arzew” will unload a shipment on August 2 at the Turkish import facilities at Aliaga from the Skikda plant in Algeria operated by Sonatrach, according to shipping data. The 170,050 cubic metres capacity “Hoegh Giant” will unload a cargo on August 4 at the Portuguese Sines terminal from the US Sabine Pass plant in Louisiana operated by Cheniere Energy.

   The 180,000 cubic metres capacity “SK Audace” will unload a shipment on August 4 at the Manzanillo terminal on the Pacific Coast of Mexico from the US Sabine Pass plant. The 217,000 cubic metres capacity Q-Flex vessel carrier “Al Kharsaah” will deliver a cargo on August 5 to the Mina Al Ahmadi terminal in Kuwait from Ras Laffan in Qatar. The 170,050 cubic metres capacity carrier “Hoegh Gallant” will unload a shipment on August 6 at the Indian Dahej terminal re-exported from the Montoir-de-Bretagne facility on the West Coast of France.

   The 174,100 cubic metres capacity carrier “Cesi Behai” will deliver a cargo on August 9 to the port of Tianjin, east of Beijing, for Sinopec from the Australia-Pacific plant in Queensland. The 210,100 cubic metres capacity Q-Flex vessel “Fraiha” will unload a Qatargas cargo on August 13 at the Shanwei terminal in the southern Guangdong province of China. The 172,000 cubic metres capacity “Vladimir Vize” will deliver a cargo on August 15 to the Chinese import facilities at Tianjin from the Yamal plant in Arctic Russia, operated by Novatek. The 173,400 cubic metres capacity carrier “Ribera Del Duero Knutsen” will deliver a shipment on August 16 to Chile’s Mejillones terminal from the US plant at Sabine Pass. The 148,300 cubic metres capacity “LNG Imo” will deliver a cargo on August 20 to the Port Qasim facilities in Pakistan from the Bonny Island plant in Nigeria.

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TC Energy of Canada sells gas-fired power plants to raise cash for LNG feed-gas pipelines

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TC Energy of Canada, one of the major natural gas pipelines owners and operators in North America, said it had agreed to sell its gas-fired power plants in the province of Ontario for around C$2.87 billion (US$2.18Bln) to raise cash for projects to deliver feed-gas to LNG plants under development.

TC Energy said it was selling two natural gas-fired power plants and a 50 percent stake in a third facility to Ontario Power Generation Inc.

The sale includes the 900-megawatt Napanee generating station, the 683-MW Halton Hills plant and half of the 550-MW Portlands Energy Centre in Toronto.

TC Energy said the it would be using the funds to pay for “near-term” capital projects.

These include the construction of the Coastal GasLink Pipeline, connecting gas production in the Montney shale basin of northeast British Columbia with the US$40Bln LNG Canada project, led by Royal Dutch Shell, in the town of Kitimat.

TC Energy is selling a total of C$6.3Bln of assets in 2019 and using the cash to fund its growth programme and “further strengthen its financial position.” The company had C$35.8Bln in long-term debt at the end of the first quarter.

“The sale of these facilities is part of our ongoing efforts to maximize value for our shareholders and fund our industry-leading secured growth program in a disciplined manner,” said Russ Girling, TC Energy President and Chief Executive.

“We continue to be a significant private sector power generator in Canada and are committed to the ongoing multi-billion-dollar life-extension program at the Bruce Power nuclear facility in Ontario,” he added.

“In addition, we remain interested in new low-risk investment opportunities in the electricity sector within our core North American markets,” stated Girling.

TC Energy agreed earlier in July to sell US shale basin midstream assets held by its subsidiary Columbia Midstream Group for US$1.27 billion to UGI Energy Services of the US.

TC Energy, which recently changed its name from TransCanada Corp., said the transaction was expected to close in the third quarter.

Columbia Midstream, which operates in the Appalachian Basin, owns four natural gas gathering systems and an interest in a company with gathering, processing and liquids assets.

However, TC Energy emphasized it would continue to own and operate its significant network of interstate pipelines in the Appalachia with its Columbia Gas Transmission system, which transports low-cost natural gas supplies from the shale production region to markets in the US, including LNG export facilities.

“Looking forward, we expect our strong operating and financial performance to continue as we are well positioned to fund our C$30Bln secured capital program, stated Girling.

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Lithuanian LNG terminal company seeks operator role in Asian bid for Cyprus facility

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Lithuanian LNG and oil terminal company Klaipedos Nafta said it had joined with Asian partners from South Korea and Japan in bidding in the tender process for an LNG import terminal on the Mediterranean island of Cyprus and gave more details of consortium plans.

Klaipedos Nafta has operated the Lithuanian LNG import terminal since 2014 at the Baltic Port of Klaipeda as well as an LNG re-loading station.

The Lithuania facility is a floating storage and regasification unit under charter from Hoegh LNG.

Klaipedos Nafta said it was bidding for the Cyprus project with consortium partners consisting of South Korean companies Samsung C&T and Posco E&C as well as the Japanese shipping company Mitsui OSK Lines (MOL) and the utility Osaka Gas.

The second consortium includes Monaco-based LNG shipping company Gaslog, a unit of Spanish utility Enagas and the Italian gas network and infrastructure company, Societa Nazionale Metanodotti (Snam).

The third group of bidders is led by China Petroleum Pipeline Engineering.

The original deadline had been set for the end of March and has now been moved to September 6.

The Cypriot Natural Gas Public Company (DEFA) has also invited expressions of interest for the supply of LNG for the FSRU.

The tender for the supply of the LNG is the second part of the gas-to-power project.

Klaipedos Nafta said it was participating in the tender as a contractor and partner of the consortium.

According to the published specifications, the LNG terminal will include an FSRU, a jetty for mooring the vessel and a jetty-borne gas pipeline to secure supply of natural gas to the Vasilikos power plant, the largest in Cyprus.

The project has been granted European Union support amounting to a grant of 100 million euros ($111.4M).

If winning the tender, Klaipedos Nafta said it would join with MOL and Osaka Gas to provide terminal operator services for a period of up to 20 years.

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Eni of Italy says installation work has started in Korea on Mozambican Coral South FLNG hull

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LNG Journal editor

Italian energy company Eni said it started installation work on the hull of the Coral South floating liquefied natural gas production plant to be deployed offshore Mozambique for start-up in 2022.

The FLNG hull is part of the Coral South project, which will put in production 450 billion cubic metres of natural gas from the giant Coral feed-gas reservoir.

Launch

The hull is expected to be launched in 2020 at the Samsung Heavy Industries shipyard at Geoje Island in South Korea where it is being constructed for the partners in the Eni Area 4 offshore resources licence in the Mozambican Rovuma Basin.

The Coral South FLNG facility will have a gas liquefaction capacity of 3.4 million tonnes per annum when completed and will be the second FLNG vessel to be deployed offshore Africa.

An FLNG project has been operational offshore Cameroon in West Africa since 2018 led by European energy firm Perenco and two further FLNG ventures are being developed off Mauritania and Senegal by BP of the UK and US company Kosmos Energy of Dallas, Texas.

The vessel, which will be 432 metres long and 66 metres wide and weigh about 220,000 tonnes, will house up to 350 personnel in its eight-storey accommodation module.

The facility will be anchored at a water-depth of around 2,000 metres by means of 20 mooring lines that weigh a combined 9,000 tonnes.

US major ExxonMobil has signed an agreement to acquire a 25 percent interest in Area 4 from ENI’s stake. The remaining interests in Area 4 are held by China National Petroleum Corp. (CNPC) through its exploration and development subsidiary CNODC (20 percent), Korea Gas Corp. (10 percent), Galp Energia of Portugal (10 percent) and Mozambique’s state-owned Empresa Nacional de Hidrocarbonetos (10 percent).

Construction works on Coral FLNG started in 2018 and is ongoing in seven operational centres across the world.

Construction of the mooring turret began in March and construction of the hull’s 24 modules that contain the LNG storage tanks and sections of the treatment facilities began in September in South Korea.

Construction of the topside, consisting of 12 gas treatment and LNG modules, started last November, along with the living-quarters.

“By the end of 2019 the overall progress of the project is expected to exceed 60 percent completion,” said Eni.

“Drilling and completion activities for the six subsea wells that will feed the liquefaction unit will begin in September 2019,” noted the Italian company.

“The wells will have an average depth of approximately 3000 metres and will be drilled in about 2000 metres of water depth,” stated Eni.

These activities are being carried out by the Italian-owned “Saipem 12000” drilling rig and will be completed by the end of 2020.

“Alongside the LNG infrastructure under construction, the Coral South project also includes a number of initiatives aimed at enhancing the overall capabilities of the local workforce,” said Eni.

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Osaka Gas and Japan Bank for International Cooperation invest in Asian LNG expansion

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LNG Journal editor

Japanese utility Osaka Gas and the Japan Bank for International Cooperation (JBIC) have decided to invest in AGP International Holdings of Singapore to help expand the city-gas and LNG markets in southeast Asia and India.

Under the agreement, AGP International has sold a minority stake to Osaka Gas and the JBIC for $100 million.

Direction

The funds will be invested in AG&P’s growing city-gas distribution and LNG import terminal activities in Asia.

AGP International is part of the Filipino infrastructure group AG&P.

Osaka Gas has also entered into a collaboration agreement specific to AGP International and its natural gas value chain.

AGP Group has expanded from its construction and engineering business to the acquisition of Gas Entec Co., Ltd. (Gas Entec), which designs small-scale to medium-scale LNG vessels.

“AGP possesses high engineering skills and marketing abilities in LNG industry, actively involved in developing the LNG businesses with floating LNG platforms and city-gas business to meet the growing demand mainly in Southeast Asia and India,” said Osaka Gas.

The Japanese utility said it was presently active in Singapore, Thailand and Indonesia, growing the gas supply business for industrial customers, as well as the energy services business.

Osaka Gas said there were also plans to begin operating in Vietnam this year.

“With this (AGP) investment and entry into a collaboration agreement, there will continue to be synergy from the project development know-how and engineering skills that the AGP Group has in LNG businesses as well as the knowledge that Osaka Gas has accumulated domestically for LNG and gas pipelines,” explained the Japanese company.

“Moving forward, the companies will be actively involved in developing LNG terminals, power plants and LNG supply businesses to create a natural gas value chain in Southeast Asia and other countries which have growing demand for LNG,” it added.

AG&P said it was developing LNG and gas-related projects in emerging markets including the ones in Southeast Asia and Osaka Gas was a good partner.

JBIC said that its investment supports the overseas business of Osaka Gas and contributes to Japanese industry in maintaining and enhancing its international competitiveness.

“In addition, based on the Japanese government’s policies, it is considered that expansion of the LNG market in Asia contributes not only to overseas business for the Japanese energy industry, but also to securing stable supply of LNG for Japan,” it added.

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Vietnam gas find won’t halt plan for two terminals

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Vietnam has logged another natural gas discovery in the offshore Song Hong Basin in a prospect explored by Italian energy company Eni and Essar Oil of India as the Vietnamese also advance with two LNG import projects.

The Milan-based oil and gas player, the operator of the discovery, said the well result indicated “significant potential” for hydrocarbon accumulation.

Eni has a 50 percent stake in Block 114 and the balance of the shares is held by Mumbai-based Essar.

The Italian company has been in Vietnam since 2013 and currently operates four blocks all located in the under-explored Song Hong and Phu Khanh basins, offshore central Vietnam.

The Vietnamese have emerged over the past few years as sizeable natural gas producers in Southeast Asia and the government is also contemplating LNG imports to help its economic expansion.

All of Vietnam’s natural gas output is consumed domestically and the nation as yet has no imports, neither in the form of LNG nor by pipeline.

Novatek, the owner and developer of two Russian Arctic region LNG export plants, is the latest company to have signed an accord to help Vietnam develop an LNG import terminal.

The latest project would be Vietnam’s second venture and would be sited next to a gas-fired power station in Ninh Thuan province south of Cam Ranh Bay.

The first LNG import terminal venture involves General Electric of the US and is located in Bac Lieu Province in the southern Mekong Delta. That venture is being developed with full foreign infrastructure investment.

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New wave of LNG arrives early to benefit TechnipFMC earnings

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Franco-US company reports revenue surge and boosts orders for LNG and subsea

LNG Journal editor

TechnipFMC, the Franco-US energy engineering company, signalled a resurgence in energy investment as it posted healthy second-quarter earnings amid a year-on-year increase in orders for LNG ventures in nations such as the US, Mozambique and Russia as revenues also jumped.

However, TechnipFMC reported a drop in net income of 8.2 percent even as its revenues grew along with the company’s backlog of contracts.

Jump

Company revenues jumped 16 percent to $3.43 billion from $2.96Bln in the prior-year quarter, while second-quarter net profits fell to $97 million compared with $105.7M in the same quarter of 2018.

Before the earnings were issued, TechnipFMC announced it had been awarded the engineering, procurement and construction contract by Novatek of Russia and its joint venture partners for the Arctic LNG II project proposed for the Russian Gydan Peninsula of northern Siberia.

TechnipFMC said the Arctic LNG contract was valued at around $7.6Bln. Technip had also worked on Novatek’s Yamal LNG plant in Russia that shipped its first cargo in December 2017.

The company, listed on the Euronext exchange and the New York Stock Exchange, said the year-on-year backlog of orders had soared 73.4 percent by July 2019 to $25.78Bln from $14.87Bln.

“We achieved record inbound orders in the quarter, with total company orders reaching $11.2Bln,” said Chairman and Chief Executive Doug Pferdehirt.

“In Onshore-Offshore, we are benefiting from the new wave of LNG projects,” said Pferdehirt.

“The LNG market growth continues to be underpinned by the structural shift towards natural gas as an energy transition fuel, helping to meet the increasing demand for energy while lowering greenhouse gases,” he added.

“Our demonstrated leadership in this important growth market will continue as we anticipate additional LNG awards in the coming quarters,” stated the CEO.

“In the second quarter, we were awarded the Arctic LNG II project. This award exemplifies our experience in the delivery of large-scale modularized fabrication for harsh environments,” he explained.

“Onshore-Offshore inbound of $8.1Bln was a new record for the business segment, driven by the award of Arctic LNG II,” he added.

In Subsea, first half orders have already exceeded the levels achieved in all of 2018, with inbound of $2.6Bln.

TechnipFMC said its integrated project awards exceeded $3Bln for the first half of the year.

“Importantly, integrated awards have accounted for more than 50 percent of ourinbound orders in 2019,” said CEO Pferdehirt.

“This momentum is evidenced by our recent award for Anadarko’s Golfinho development (for LNG) in Mozambique,” he added.

“TechnipFMC was a first-mover in the country, and this award further strengthens our leadership position. Golfinho is also our largest integrated subsea project to date,” said the CEO.

Pferdehirt concluded that the unprecedented level of order activity demonstrates that the company was winning, with an intense focus on project selectivity and commercial differentiation.

“The strength of these results and significant growth in backlog give us even greater confidence,” he said.

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Sembcorp narrows loss

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July 30 (LNGJ) – Sembcorp Marine, the Singapore ship and offshore platform builder and and repair yard, reported a 45 percent drop in first-half turnover to S$1.54 billion (US$1.12Bln) compared with S$2.81Bln in the same six months a year ago as it gained a contract for an LNG bunkering vessel. The group narrowed its first-half net loss to S$6.8 million from a loss of S$50.3M in the same six months of last year.

   “New contracts secured in the first half totaled S$175 million. They included the design and construction of a 12,000 cubic metres capacity LNG bunker vessel,” said Sembcorp, whose group order book stands at S$5.3Bln.  “The low level of orders will impact negatively on production activities in the second half,” added the company.

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US government report explores growing trends in the nation’s LNG exports and prices

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US exports of liquefied natural gas have been growing steadily to make the nation the world’s third-largest LNG exporter, averaging 4.2 billion cubic feet per day in the first five months of the year, exceeding Malaysia’s LNG shipments of 3.6 Bcf/d during the same period.

The US is expected to remain the third-largest LNG exporter in the world, behind Australia and Qatar, in 2019-2020.

“US shipments have risen as four new liquefaction Trains with a combined capacity of 2.4 Bcf/d, Sabine Pass Train 5, Corpus Christi Trains 1 and 2 and Cameron Train 1- started up since November 2018,” said the report from the US Energy Information Administration exploring current trends and prices.

“Although Asian countries have continued to account for a large share of US LNG exports, shipments to Europe have increased significantly since October 2018 and accounted for almost 40 percent of US LNG exports in the first five months of 2019,” added the EIA.

LNG exports to Europe surpassed exports to Asia for the first time in January 2019.

A warm winter in Asia and declining price differentials between European and Asian spot natural gas prices led to increased volumes of US LNG exports delivered to Europe.

Europe’s total LNG imports in the winter of 2018-2019 averaged 10.2 Bcf/d, 60 percent higher than in the previous two winters and the highest winter average since at least 2013.

“Total LNG imports in the three largest global LNG markets – Japan, China, and South Korea – started to decrease in February 2019 amid a milder-than-normal winter and, in Japan, the restart of nuclear power plants,” explained the report.

“Recent declines in price differentials between European pricing benchmarks (including National Balancing Point (NBP) in the UUK and Title Transfer Facility (TTF) in the Netherlands) and Asian spot LNG prices (including Japan LNG spot prices) have affected the flow of flexible (i.e., without a fixed destination specified in an offtake LNG contract) US LNG exports,” noted the EIA.

Because the round-trip transportation costs from the US Gulf Coast to Europe are about $1.50 per million British thermal units (MMBtu) lower than those to Asian markets, a sufficiently narrow price spread between European and Asian spot natural gas/LNG prices will make Europe the preferred destination for exporters of US LNG.

“The spread between Japan spot LNG and NBP/TTF prices was about $1.00/MMBtu in December 2018 and January 2019, and it reached a low of $0.60/MMBtu in April, which supported continued high US LNG exports to Europe,” said the EIA.

The EIA expects US LNG exports will continue to increase in 2019 as the first Trains at the two new liquefaction facilities (Freeport LNG in Texas and Elba Island LNG in Georgia) come online in the next few months.

In its latest Short-Term Energy Outlook, the EIA forecasts US LNG exports will average 4.8 Bcf/d in 2019 and 6.9 Bcf/d in 2020 as new liquefaction Trains at Cameron, Freeport, and Elba Island are commissioned in the next 18 months.

“By 2021, six US liquefaction projects are expected to be fully operational. Another two new US liquefaction projects (Golden Pass in Texas and Calcasieu Pass in Louisiana) that started construction this year are expected to come online by 2025,” stated.

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