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Malaysia EGCS ban

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Nov 19 (LNGJ) – Malaysia has become the latest country to prohibited ships from discharging wash water from open-loop exhaust gas cleaning systems, also known as scrubbers, while operating in its waters. The systems are one of the options to meet the International Maritime Organization’s 0.5 percent sulfur cap from January. Malaysians energy company Petronas has emerged as new Southeast Asian bunker market participants and is offering LNG as fully compliant fuel from 2020 at its terminals at Pengerang in Johor and Sungai Udang in Malacca. Ships entering Malaysian waters or ports have been advised to change over to low-sulfur fuel oil or to closed-loop scrubber systems.

   Open-loop scrubbers spray exhaust with seawater, causing sulphur oxide to react and form sulphuric acid. However, EGCS manufacturers contend that the natural alkaline qualities of seawater neutralizes the acid, while opponents argue that the discharge is harmful to the marine environments. Malaysia is the latest to ban open-loop scrubbers following the same move by China, Singapore, the United Arab Emirates and Panama.

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Total and BP sign supply agreements with UEA

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Abu Dhabi National Oil Co. (Adnoc) has signed two-year LNG supply agreements with BP of the UK and French major Total for the majority of its production through the first quarter of 2022 after scaling back its supplies to Japan.

The signing of the Abu Dhabi agreements was witnessed by Bob Dudley, Group Chief Executive of BP, Total Chairman and CEO Patrick Pouyanné and their Adnoc counterpart Ahmed Al Jaber, who is also a Minister of State for the United Arab Emirates.

“BP is delighted to have concluded this LNG supply agreement,” said Robert Lawson, Chief Operating Officer for BP Gas, Integrated Supply and Trading.

“Adnoc LNG is a long-standing supplier to BP’s integrated supply and trading business. We are very pleased to have secured this new multi-year supply agreement,” added Lawson.

Laurent Chevalier, Vice President in the Total Gas, Renewables and Power division said the two-year LNG supply deal contributed to the growth and flexibility of Total’s LNG portfolio and strengthens its longstanding relationship with Adnoc.

“With these new supply agreements, Adnoc LNG has shown that it can react quickly and decisively to changing market conditions while ensuring the security and quality of delivery,’’ said Adnoc LNG’s CEO Fatema Al Nuaimi.

“We have also successfully demonstrated our ability to shift from one customer to multiple customers while maintaining our plant’s high reliability and accepting ships from different customers at our jetty,” explained Al Nuaimi.

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New Fortress Energy makes more Jamaica and Puerto Rico headway

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New Fortress Energy, the owner of LNG facilities in Florida and in Jamaica and projects in Puerto Rico and the US northeast, posted a third-quarter rise in revenues while its net losses widened to $54.4 million amid continuing start-up costs and other venture expenses.

New Fortress said the quarterly loss was bigger than the $13.7M registered in the year-ago quarter while revenues came in at $49.7M compared with $28.4M in the same three months of 2018.

The New Fortress company is led by Wes Edens, co-founder of the private equity group Fortress Investment.

New Fortress made its debut on the Nasdaq global exchange in January 2019 after an initial public offering. Its main corporate focus now is introducing LNG to markets that lack access to the fuel.

“Revenue increased from the Old Harbour terminal and new commercial and industrial customer contracts coming online,” said New Fortress.

The increase was also due to $10M of construction revenue recognized for one of its customers, the Jamalco Alumina plant for projects in Puerto Rico.

“Cost of goods sold was higher due to LNG costs as our weighted average cost of gas increased from $0.57 per gallon ($6.92 per million British thermal units) in the third quarter of 2018 to $0.66 per gallon ($8.02 per MMBtu) in Q3 2019,” said New Fortress.

“The increase in cost of goods sold was also due to costs associated with construction services provided to customers of $9M.” it added.

In addition to its 100,000 gallons per day liquefaction plant in Miami, it operates a floating LNG terminal in Montego Bay, Jamaica, along with a fuel-handling facility and an associated contract in the US territory of Puerto Rico.

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Delek of Israel completes UK deal after East Med pipeline

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Delek Group of Israel, the company with stakes in the huge Leviathan field in the Eastern Mediterranean set to come on stream to supply Egypt and regional buyers and with LNG output plans, said its Ithaca Energy subsidiary completed the purchase of the UK North Sea oil and natural gas assets from Chevron Corp. for around $2 billion.

Delek said that after the close of the deal Ithaca signed a five-year marketing and distribution agreement for the acquired Chevron fields with UK major BP.

Chevron had off-loaded its central North Sea assets in a sale by tender won by the Israeli company.

The assets obtained by Delek’s unit include the Alba, Alder, Captain and Erskine fields as well as the Britannia, Elgin-Franklin and Jade non-operated projects.

Other companies in the bidding for the Chevron North Sea fields had included UK chemicals firm Ineos, Premier Oil of the UK and Oman’s Petrogas.

The Delek subsidiary’s transaction adds a further 10 producing fields to the existing Ithaca portfolio.

Delek Chief Executive Asaf Bartfeld said the latest transaction would enable the international energy business to grow after it also sold its Phoenix insurance unit.

“The closing of the Chevron transaction, concurrently with the closing of the Phoenix sale, are two significant steps in the group’s strategy for turning from a local company to a leading international energy company,” stated Bartfeld.

Delek, which is a partner in the Leviathan and Tamar natural gas fields offshore Israel with Noble Energy of the US, recently gained a stake in the Egypt-Israel natural gas pipeline to supply Egyptian company Dolphinus Holdings with Israeli volumes.

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Awilco LNG pay-out

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Nov 15 (LNGJ) – Awilco LNG, the Norwegian shipping company with the smallest fleet in the business numbering two vessels, said the 156,000 cubic metres capacity carrier “WilForce” had completed repairs at a shipyard in Singapore after it was involved in a collision with another ship off the Asian city-state on May 30, 2019. “Loss-of-hire insurance of US$65,000 per day compensated for some of the lost time-charter hire in the period,” said Awilco.

   “Awilco LNG has a substantial claim towards the ship responsible for the collision. Settlement and collection of the claim is expected to take some time,” added the company. Awilco made its statement as it reported a narrowed loss of $1.1 million in the third quarter compared with $11.4M of losses in the same three months a year ago and a $8.6M loss in the second quarter of 2019. Awilco said its second carrier, the 156,000 cubic metres capacity “WilPride”, was chartered in July 2019 to an oil and gas major for eight months until March 2020.

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Angola forms consortium for large LNG project

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Angola has formed a consortium with five international oil companies, including Eni and Chevron, to develop LNG for its Soyo plant, the recently formed national oil, gas and biofuels agency ANGP said.

This project will have an initial cost of $2 bill, and aims to start production by 2022, an ANGP spokesman told Reuters on the sidelines of the Africa Oil Week conference in Cape Town.

Italy’s Eni will operate the project, and the consortium members will share costs according to their participation.

Chevron will take a 31% stake, Eni 25.6%, Sonangol P&P 19.8%, Total 11.8% and BP a 11.8% stake in the project.

The Soyo LNG plant is designed to process 1.1 bill cu ft of natural gas per day and has the capacity to produce 5.2 mill tonnes of LNG per year, as well as propane, butane and condensate. 

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Two more Mozambique trains planned

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French energy major Total aims to expand its Mozambique LNG project by adding two extra trains.

“We’re starting to look at studies for train 3 and train 4, because the resources are clearly there to develop,” Mike Sangster, head of Total Exploration and Production for Nigeria, told the oil conference in Cape Town, South Africa.

Total concluded the acquisition of Anadarko’s 26.5% interest in the Mozambique LNG project for $3.9 bill in September, as part of its takeover of Anadarko’s Africa assets that included projects in Ghana and Algeria.

Sangster added that the company expected to close its acquisition of Anadarko assets in Ghana and Algeria early next year once regulatory approvals were cleared.

In September, Total said that the Mozambique project would include the construction of a two-train liquefaction plant with a capacity of 12.9 mill tonnes per year.

Total claimed that 90% of Mozambique LNG was already sold under long-term contracts largely linked to the oil price. 

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GasLog looks to the future

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GasLog has taken its usual snapshot of the market in the company’s third quarter 2019 results presentation.

Compared to 3Q19, this quarter’s supply is expected to grow by 6%, to 95 mill tonnes, which will principally be driven by a full quarter of production from new US projects, as well as initial production from the Elba Island facility, the LNGC owner said.

Including projects approved earlier in the year, 2019 has set a record for LNG FIDs, totalling 63 mill tonnes per annum year-to-date and surpassing the 2005 record of 46 mill tonnes.

In addition, the 2.1 mill tonne Woodfibre LNG project in Canada is expected to reach FID by the end of this year, while ExxonMobil recently awarded engineering contracts for the 15.2 mill tonnes per annum Rovuma LNG project ahead of an expected FID in 2020.

In total, Wood Mackenzie said that it expected 115 mill tonnes of new capacity to commence production between 2020 and 2024.

Demand increase

For the 12 months up to 30th September, 2019, LNG demand was 351 mill tonnes, compared with 308 mill for the previous 12 months, an increase of 14%.

The global gas market is well-supplied, given the combination of ample inventories following higher-than-average temperatures in the 2018/19 winter and LNG supply growth so far this year.

This has resulted in further inventory build ups, notably in Europe where storage is currently at 98% of capacity, according to Gas Infrastructure Europe, plus sustained pressure on gas pricing, with European and UK gas levels recently reaching their lowest since 2009. Similarly, Asian LNG prices are currently about 40% below 2018 levels.

A deteriorating macro-economic outlook, particularly in China, could present a near-term LNG demand problem by reducing natural gas consumption growth. However, the long-term fundamentals for gas and LNG demand growth were still very attractive, underpinned by continued energy demand growth and the significantly better emissions profile of gas versus coal.

In addition, GasLog said that Wood Mackenzie recently said that Europe’s gas import dependency will continue to grow, due to falling domestic production in many countries and declining pipeline flows from North Africa and Central Asia, as well as potential limits on Russia’s share of European gas imports.

GasLog said that it continued to believe that the ongoing LNG shipping market tightening will persist through at least early 2021, which may result in further term charter opportunities for on-the-water vessels, as their existing charters expire.

As of 28th October, 2019, the LNG fleet and orderbook (excluding FSRUs) and vessels with capacity below 100,000 cu m) stood at 507 and 110 vessels, respectively, according to Poten, with the orderbook representing 22% of the on-the-water fleet, unchanged from the beginning of 2019.

Out of the LNGCs in the current orderbook, 68, or 62%, have multi-year contracts attached. There have been 37 vessels ordered thus far in 2019, including 13 during 3Q19, compared to 63 in 2018, suggesting that the pace of newbuilding ordering has continued to moderate. 

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Delfin advances newbuild FLNG project

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At the end of October, Delfin Midstream entered into new agreements for front-end design and engineering work (FEED) for its newbuilding FLNG project with Samsung Heavy Industries (SHI) and Black & Veatch.

Delfin started co-operating with both SHI and Black & Veatch in 4Q18 and successfully completed a pre-FEED study for a an FLNG in the first half of this year.

In parallel, the parties have been developing a term sheet for a lumpsum, turnkey engineering, procurement, construction, installation and commissioning contract (LSTK EPCIC) for the unit’s construction and completion.

Delfin said that the company and its partners were on-track for completion of the engineering work, including a fully termed LSTK EPCIC, by the middle of 2020.

Many land-based LNG export projects seek ‘economies of scale’ to lower their costs by developing 10 – 20 plus mill tonnes per year projects.

However, by re-designing existing offshore pipelines and building FLNGs at efficient, low-cost Asian shipyards, Delfin can achieve total capital costs around $500-$550 per tonne per annum for 3.5 mill tonne FLNGs, the company claimed.

Separate development

In addition, each FLNG can be developed independently with its own commercial and financial structure, which enables Delfin to offer standard HH+ or tolling models with terms of 10 to 25 years, integrated structures or joint venture arrangements with offtakers, producers and/or traders.

Delfin’s existing offshore pipelines connect directly to the extensive network of onshore pipeline systems, with ample supply capacity for the first two or three FLNGs, the company said.

The company also claimed to have the lowest costs for FID thresholds of just 2 to 2.5 mill tonnes per annum of firm offtake and with full commercial flexibility.

With four FLNG slots at the Delfin project for a total of 13 mill tonnes of LNG export and with up to eight mill tonnes per annum expansion potential with the Avocet project, the company claimed to offer large scale LNG production at the bottom-end of the cost curve.

Commenting on Delfin’s progress, CEO, Dudley Poston, said: “The two most important innovations of the last 20 years in the global gas market have been the shale gas revolution and the emergence of floating LNG technologies for regasification and liquefaction. Delfin combines these two innovations to offer the LNG market a low cost, simple and flexible LNG supply solution.

“Having completed permitting work with a positive ‘Record of Decision’ from the (US) Maritime Administration and a 13 MTPA non-FTA DoE export licence, Delfin’s successful technical co-operation with the two leaders in floating liquefaction, SHI and Black & Veatch, make the Delfin project one of the most advanced projects in the second wave,” he said. 

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Argentina Begins to Tango

YPF’s launch as an LNG exporter went to plan with the Tango FLNG barge at near capacity

YPF’s Tango FLNG barge moored at the port of LPG fractionator Mega – a joint venture consisting of YPF, United States chemicals major Dow and Brazil’s state-controlled petrochemical champion Petrobras – has exported its first LNG cargo aboard the LNG carrier Excalibur in the late evening hours of Friday last week. YPF has maintained throughout that formal trading will commence in 3Q 2019 despite various reports a cargo had already been shipped in June this year. The company’s LNG export last week thus marks the passing of a milestone in Argentina’s strategy to reverse the flow of the expensive fuel.

Tango born as Caribbean FLNG

The 0.453mmt Tango barge was installed as part of a 10-year charter signed with Exmar, a Belgian fleet owner/operator, in November 2018. The floating production facility was delivered to YPF in February. Tango had originally been built as Caribbean FLNG to serve a contract in Colombia where Pacific Rubiales Energy wanted to liquefy gas from its La Creciente gas field.

Argentina’s first LNG export in November, not June

Although it was widely reported that Cheniere had purchased Tango FLNG’s first production as a partial cargo via the Fuji LNG in early June this year, the 30,000m3 cargo at the time was not part of regular production but a result of the starting up of Tango. The process left YPF with the choice of either leaving it in the tank or selling it on the spot market. Unfortunately, the Fuji LNG was unable to berth alongside the Tango barge in June due to a strike called by the dockers’ union at Bahia Blanca, which makes last week’s cargo aboard the Excalibur Argentina’s first LNG export.

Exmar’s LNGC Excalibur shipped c. 0.054mmt, pegging Tango at near capacity

Before arriving at Bahia Blanca in the afternoon on 12 September, the Excalibur haddelivered a partial cargo of 0.027mmt to Argentina’s Escobar import terminal on 25 June. The vesselis currently headed for a yet-to-be disclosed destination in the Atlantic Basin and was carrying around 0.054mmt at load point, our LNG Market Tracker shows, suggesting the Tango FLNG barge is producing near capacity at eight cargoes p.a.

Next export aboard the controlled Methane Kari Elin

YPF has also lined up an export for Shell’s portfolio to be shipped via the STASCO-controlled Methane Kari Elin, which went alongside the Tango barge on Monday afternoon. We are currently expecting the 138,267m3 vessel to ship another 0.05mmt within the next 7 days. Whilst the Methane Kari Elin typically loads cargoes within 20 hours of arrival, we have allowed for more time in our outlook due to Tango’s size and potential teething problems.

Argentina is keen to monetise Vaca Muerta shale gas

State-owned YPF is keen to monetise excess supply growth from shale gas production at the Vaca Muerta play to improve its trade balance and place development on a more sustainable footing. As such, the company hopes to reach markets outside South America via the LNG route. The Tango FLNG project is intended to be the country’s first step on that journey, with a much larger liquefaction plant (20-25mpta) on YPF’s drawing board.

Whether this plan will come to fruition will to a large extent depend on foreign direct investment – not only in gas liquefaction infrastructure but also the Vaca Muerta play itself where constant drilling is required to stave off rapid production decline on an individual well level.

YPF under pressure to clear gas infrastructure backlog

Meanwhile, an extensive infrastructure backlog built up over the past decade is adding to Argentina’s capital demands. YPF is pushing to expand gas exports to Chile, where Enel Generación Chile and Colbún respectively signed new supply contracts with YPF over 365mln m3 p.a. and 1.095bln m3 p.a. Previous deliveries, however, have been volatile as Argentina’s pipeline capacity struggles to cope at times of high demand, which is both responsible for supply interruptions and LNG imports. Whilst there have not yet been indications this would impede operations at Bahia Blanca, Argentina is also currently not in high gas demand season. Nevertheless, the relatively small capacity of the barge is unlikely to introduce unmanageable strain to the national pipeline system.

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