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LNG cargo price drops with only late North Asia deliveries staying above $5.00 per MMBtu

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Singapore LNG spot cargo prices dropped by an average of 2.4 percent from last week for Southeast Asia and the Middle East and India, with only North Asian cargoes maintaining values over US$5.000 per million British thermal units for November amid continued over supply.

The Singapore average index for October declined to US$4.192 per MMBtu from last week’s October average of US$4.239 per MMBtu, a drop of 2.6 percent.

Singapore’s latest LNG indices released on August 29 included a price of US$4.070 per MMBtu for southeast Asia for the second half of September, edging up to US$4.090 per MMBtu for the first half of October.

Prices fell as the market remained oversupplied while North Sea Brent crude was still steady at around $61 per barrel.

Southeast Asia cargo prices for the second half of October moved higher to US$4.293 per MMBtu and were highest for the first half of November at US$4.880 per MMBtu.

The Sling is an index series for LNG developed by the Singapore Exchange and its subsidiary Energy Market Company.

It is a spot index for cargoes “on the waters in the vicinity of Singapore which could go into any port” and based on cargo sizes of 135,000 cubic metres capacity to 175,000 cubic metres capacity.

The North Asian price fell by about 2.3 percent to an October average of US$4.425 per MMBtu.

North Asia cargoes for the second half of September were at an average of US$4.288 per MMBtu and were only slightly up for the first half of October at US$4.325 per MMBtu, before increasing again to US$4.525 for the second half of October.

The first half of November price for the North Asia market was down 1.4 percent compared with last week and was quoted at US$5.125 per MMBtu.

The North Asia prices are for delivery ex-ship (DES) to all ports in Japan, Korea, Taiwan and China.

The Dubai-Kuwait-India Sling index for regional cargoes shipped to India and the Middle East averaged US$4.219 per MMBtu for October, down 2.4 percent from last week.

The DKI index, based on a cargo of between 138,000 cubic metres capacity and 170,000 cubic metres, was at US$4.112 per MMBtu for the second half of September and was only slightly up at US$4.114 for the first half of October.

The second half of October DKI price gathered pace to US$4.324 per MMBtu and for the first half of November was short of US$5.00 per MMBtu at US$4.913.

The SGX LNG Index Group (Sling) is an initiative by SGX and EMC for spot LNG price discovery.

It is a benchmark based on assessments of LNG cargo value by market participants. They provide assessments based on the value of an LNG cargo at a specific location for delivery.

The Sling is based on participants submitting assessments to determine an index value.

“The participant pool consists of a broad group of market players to ensure that any Sling Assessment is as representative of actual market conditions as possible,” says the SGX, while pointing out that the participant is kept confidential at all times.

The SGX-EMC LNG prices include both lean and rich cargoes.

However, the Singapore Exchange and the EMC plan to cease publishing LNG prices soon.

The Singapore EMC explained that it would “endeavor to continue publishing the Sling for three months” after the end of July.

The SGX LNG Index Group (Sling) was launched in 2015 in response to expressions of need for a trusted price formation process for Asian LNG.

“However, usage of the Sling indices has remained low,” the SGX and EMC explained.

“Subscribers with linked financial contracts are advised to migrate such contracts to an alternative benchmark or to otherwise account for the Sling’s cessation,” they added.

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Sempra boosted by US-Mexico natural gas pipeline accords as Cameron LNG exports also rise

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Sempra Energy, the California-based utility and owner of the Cameron LNG export plant in Louisiana, said its Mexican subsidiary had reached agreement with the regulators in Mexico on two key natural gas pipelines supplying cross-border US supplies.

The Sempra unit, Infraestructura Energética Nova (IEnova), and the Mexican Federal Power Commission (CFE) said pricing was finalized on the Guaymas-El Oro pipeline and the Sur de Texas-Tuxpan marine pipeline crossing the Gulf of Mexico, which is a joint venture with Canadian company TC Energy Corp.

“Sempra Energy is pleased that IEnova was able to reach a mutually agreeable resolution to the contracts with CFE on these important pipelines,” stated Sempra.

“The Sur de Texas-Tuxpan and Guaymas-El Oro pipelines are among Mexico’s most important infrastructure projects, bringing more reliable supplies of clean US natural as to Mexico to help meet the growing energy needs of the country for generations to come,” added Sempra.

The Mexican CFE reached new contract terms with pipeline companies to allow the start of commercial operations, which had been delayed by disagreements.

Contracts had already been signed but the government found that they were unfavourable for Mexico.

The CFE in July filed arbitration requests with the developers of seven stalled pipelines in an attempt to amend the “force majeure” clauses of the 25-year firm capacity agreements built into the original contracts.

Among the pipelines in the agreement is the 2.6 billion cubic feet per day Sur de Texas-Tuxpan pipe, a crucial outlet for Texas natural gas and fundamental to reliable gas service in the southeast of Mexico.

The marine pipeline from Texas to Mexico was built at a cost of $2.5 billion and is owned by Sempra’s IEnova and TC Energy.

The Sur de Texas-Tuxpan pipeline is inter-connected to the Valley Crossing Pipeline completed by Enbridge Inc., another Canadian company based in Calgary.

The 168-mile Valley Crossing pipeline runs from the Agua Dulce hub in Texas to the Gulf of Mexico east of the port of Brownsville.

Its transport capacity is half the average daily production of the entire Eagle Ford shale basin and will account for more than 10 percent of the average daily production for the entire state of Texas.

Analysts say that Mexico’s present overall natural gas markets needs are around 8 Bcf per day with about 5.5 Bcf a day coming from the US, and much of that from Texas.

The new terms for the US-Mexico pipelines include fixed natural gas transport fees, longer contract terms, new “force majeure” clauses and an end to further arbitration requests.

In addition to the Sur de Texas-Tuxpan pipeline and IEnova’s Guaymas-El Oro pipeline, contracts were also agreed for three other pipelines, Tuxpan-Tula (TC Energy), Tula-Villa de Reyes (TC Energy) and Samalayuca-Sásabe (Grupo Carso).

Two pipelines that have yet to reach agreement are La Laguna-Aguascalientes and Villa de Reyes-Aguascalientes-Guadalajara, owned by the Fermaca company.

Mexico’s monthly natural gas price index in July averaged $2.624 per million British thermal units as more expected US pipeline move the price into closer alignment with the US Henry Hub and New York Mercantile Exchange benchmarks.

 

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Norwegian company wins equipment contracts for ‘Bergen LNG’ bunkering ship retrofit

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Norwegian company Hoglund Marine Solutions has been awarded a contract by shipping company Bergen Tankers to deliver a cargo-handling system for the LNG bunkering vessel “Bergen LNG”.

“As part of a long-term charter with Shell Gasnor, the vessel will be the first LNG bunkering vessel to operate in Norway and will be retrofitted from an existing fuel oil bunkering ship,” explained Hoglund.

“Previously known as ‘Oslo Tank’, the ‘Bergen LNG’ vessel will operate in Bergen harbour from the fourth quarter of 2020 and will serve future LNG-powered cruise ships in the Hurtigruten and Havila coastal routes,” added Hoglund.

Hoglund said it would supply both hardware and automation solutions to ensure safe and efficient operations, including an IMO Type C cargo tank, cargo pumps, bunker manifolds, custody transfer system, and a ship-to-ship transfer system.

“Hoglund has worked on several of the world’s current LNG bunkering vessels, and each project has demonstrated how specialist expertise is needed to integrate and control the systems of these vessels safely and reliably,” said Peter Morsbach, the Director of Projects at Hoglund.

“Retrofits should be an easy way for an owner to benefit from the shift to alternative fuels, but there are complications that can stand in the way that require more than the standard one-size-fits-all solution to overcome,” he explained.

“Unlike a newbuild, which belongs to the yard until delivery, a retrofitted vessel is the property of the owner throughout its refitting,” added Morsbach.

“At Hoglund, we support the owner by drawing upon our dedicated expertise and vast experience to ensure an in-time delivery, installation of our solutions and overall integration of loose ends,” he stated.

Ingemar Tonder Presthus, the Technical & Marine Manager at Bergen Tankers, said that a retrofit was a complex technical challenge from both a hardware and software engineering point of view.

“Hoglund was an ideal choice, based on their track record fitting automation systems for LNG bunker vessels and other vessel types elsewhere in the world, and their ability to execute a retrofit quickly,” he added.

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US LNG headed for weaker month-on-month performance in August

Final August figures likely to improve but outlook suggests fewer exports in August, with the majority of shipped LNG still at sea and headed for the Pacific

As of 28 August, US LNG is likely going to see a significant drop of 0.99mmt in month-on-month this month, with Sabine Pass LNG accounting for c. 79% of that retreat. Accordingly, capacity utilisation is also set to drop, from 97% to 71%, on average. 

Whilst we expect those performance figures to have improved by 31 August, we do not currently see US LNG export continuity from July levels. Although, for example, July’s mid-month slump was quickly overcome by a spurt of exports towards the end of the month, current market visibility suggests only around 5 additional LNG cargoes will leave the United States before 1 September out of the 12 currently scheduled over the next 10 days (not including those earmarked for Freeport LNG, where a start-up date remains open). 

Cargo lifting outlook suggests volumes insufficient to close gap between August and July

Even when assuming two cargoes we see taking place on 1 September manage to leave port on 31 August, US LNG would still close the month down approximately 0.40mmt compared to July.  It is yet unclear what the underlying reasons for that drop are, though we suggest it is mainly down to capacity leaseholders’ vessel scheduling. Whilst we did report on ongoing maintenance issues at two of Sabine’s LNG storage tanks, implicating 40% of storage capacity, these issues did not hamper the terminal’s performance in July.

Most of August’s US LNG still in transit

The vast majority of US LNG cargoes are still at sea. Notably, 29 of the 34 cargoes shipped so far in August are still in transit, with the majority still lacking confirmed destinations. Meanwhile, 1.44mmt of 2.49mmt shipped by US LNG terminals in August so far are headed for or have already arrived in the Pacific. 

Two Cameron shipments headed for Sines in Portugal and Naoetsu in Japan

As such, all of Cameron LNG’s August cargoes are still at sea en route to the Pacific region, with current visibility suggesting 0.08mmt aboard the SK Resolute will arrive at Naoetsu in Japan in mid-September. Meanwhile, the Flex Ranger is currently en route to the Sines terminal in Portugal, due to arrive by Friday morning. The cargo is likely traded by Naturgy (formerly Gas Natural Fenosa) as part of its T2 contingent of 1.5mtpa from Corpus Christi.

Considering Corpus Christi, apart from a BP cargo delivered aboard the Kinisis to Mexico’s Manzanillo terminal on Monday, all remaining 6 cargoes shipped in August are still at sea.

Two Cove Point cargoes sold to Chile

The only Cove Point cargo reaching its destination so far has been aboard the BW-operated Pan Asia, which delivered 0.08mmt to Chile’s Endesa via the Quintero terminal on 27 August. Sovcomflot’s SCF Mitre is also headed for Chile, with an expected arrival in the first week of September. 

Dahej potentially single largest recipient of Sabine Pass August cargoes

For Sabine Pass, meanwhile, our LNGUnlimited market tracker indicates that three cargoes amounting to 0.23mmt are headed for India, two of which – the Maran Gas Hydra and the Maran Gas Agamemnon – are scheduled to arrive at Dahej a week apart around mid-September. Provided neither are diverted, Dahej (operated by Petronet) would then constitute the single largest recipient for Sabine’s August production.

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Chinese led consortium to build Cypriot LNG terminal

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August 29 – A consortium led by China Petroleum Pipeline Engineering Corporation (CPPEC) has been chosen as the preferred bidder for the construction of an LNG terminal at Vassiliko Port in Cyprus.

The consortium, comprising Wilhelmsen Ship Management, Aktor, Metron and Hudong-Zhonghua Shipbuilding, is to build the LNG import terminal, which will include an FSRU, a mooring jetty, jetty and onshore pipelines, as well as additional ancillary facilities.

The consortium will now be invited to finalise the process and sign the contracts with ETYFA (Natural Gas Infrastructure Company).

Symeon Kassianides, Chairman of Cyprus Natural Gas Public Company (DEFA), reportedly said that, if the project goes according to plan, contracts would be signed in mid-October, 2019.

The €300 mill project, scheduled for completion in 2021, is co-financed by a grant of 40%, or up to €101 mill, from the European Union’s Connecting Europe Facility (CEF) financing facility.

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North America to drive global LNG liquefaction industry – report

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North America is to drive capacity growth in the global LNG liquefaction industry from planned and announced projects between 2019 and 2023.

This will contribute around 73% of global growth by 2023, according to GlobalData, in a report entitled ‘Global LNG Liquefaction Industry Outlook to 2023 – Capacity and Capital Expenditure Outlook with Details of All Operating and Planned Liquefaction Terminals’

The report reveals that North America is expected to have a newbuild liquefaction capacity of 243 mill tonnes per annum by 2023. Already announced projects account for most of the newbuild capacity in the region.

Soorya Tejomoortula, Oil and Gas Analyst at GlobalData, said: “North America is expected to add 26 newbuild LNG liquefaction terminals during the outlook period. Among these, Rio Grande is the largest newbuild liquefaction terminal, which is expected to start operations in 2023 with a capacity of 27 mill tonnes per annum.”

Following North America, GlobalData said that the Middle East was the second highest region in terms of global LNG liquefaction capacity growth.

This region will add newbuild liquefaction capacity of 32 mill tonnes per annum by 2023. Qatar’s LNG terminal expansion project was the only announced terminal in the Middle East and thus accounted for entire capacity growth by 2023.

The Former Soviet Union (FSU) stands third with newbuild LNG liquefaction capacity of 29 mill tonnes per annum during the period under review. Russia accounts for all the capacity growth in this region with four projects, the report said.

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Flex LNG receives sixth LNGC

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Flex LNG took delivery of the newbuilding 173,400 cu m LNGC ‘Flex Courageous’ from Daewoo Shipbuilding & Marine engineering on 27th August.

This is the sixth vessel to join the fleet. Another five newbuildings are due to join the fleet in 2020 and another two in 2021.

She is powered by a 2-stroke MEGI and fitted with a partial reliquefaction system (PRS) and claims to have an industry low boil-off rate of 0.0075%.

She has left South Korea for the Pacific Basin and following this voyage, she will be available fir employment opportunities during the fourth quarter of this year. Flex LNG said that she “will be well positioned for the winter market.”

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SEALNG expands US membership

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LNG industry coalition, SEALNG, has expanded its US membership network by welcoming Houston-based Stabilis Energy to its ranks.
 
Peter Keller, Chairman, SEALNG, commented: “Welcoming Stabilis Energy as a new member demonstrates SEALNG’s continued commitment within the ever expanding North American LNG market. LNG is growing in importance in both the energy and marine bunkering markets. Stabilis operates at the forefront of this expansion.”
 
Stabilis Energy provides small-scale LNG production, distribution and fuelling services to multiple end markets in North America. It owns and operates a liquefaction and storage facility in George West, Texas, as well as a fleet of over 150 cryogenic rolling stock equipment pieces throughout North America. Stabilis supplies LNG for use in the industrial, mining, energy, utility, pipeline, and transportation end markets, as well as marine bunkering services. 

Jim Reddinger, Stabilis Energy President and CEO, said: “LNG is an increasingly important part of the marine bunkering infrastructure throughout North America and across the globe. We specialise in producing LNG and delivering it to its last port of call, as it were, where it is ready for transfer to ocean-going vessels. As members of SEALNG we look forward to supporting this integral part of the growing LNG bunkering network throughout North America and beyond.”
 
To help fund growth plans and operating presence, as well as investments in LNG production and distribution, Stabilis recently completed a number of initiatives, including a public listing on the Nasdaq stock exchange (ticker symbol: SLNG), investment from Chart Industries and two strategic transactions in Mexico.
 
Keller added: “Communication and collaboration across the LNG value chain is essential to breaking down barriers to the adoption of LNG as an important and economically viable marine fuel. It is encouraging to see Stabilis Energy engaging with its partners to strengthen the small-scale LNG network. We look forward to working with them to expand LNG bunkering infrastructure in the Americas.”
 

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Third Sabine Pass terminal receives positive assessment

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Cheniere’s Sabine Pass LNG has received a positive environmental assessment from the US Federal Energy Regulatory Commission (FERC).

This latest assessment was for the LNG exporter’s terminal expansion project to provide a third berth, which should allow and extra 180 LNGCs per year to be handled, brining the possible total up to 580 LNGCs annually. 

In the 23rd August assessment, FERC said that the building of a third berth would not have any major environmental impact, if the developer complies with the recommended construction and mitigation measures.

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