Gas Matters Today | news roundup | w/c 05 June 2023

Australasia 

Australia – Gorgon LNG, Australia’s largest resource project, has begun receiving gas from new production infrastructure that will maintain its longevity for decades to come, according to an announcement last Tuesday by operator Chevron Australia. At the same time, the performance of Gorgon’s carbon capture and storage (CCS) facilities remains well below expectations – raising questions if the 4 mtpa CO2 removal target will be met. 

Australian gas company Tamboran Resources last Friday said it has secured land for a proposed 6.6 mtpa LNG liquefaction plant in the Northern Territory which will be supplied with feedgas from the Beetaloo Basin, according to plans. If deemed commercial, Tamboran aims to sanction the proposed LNG development by 2026, with first volumes expected by 2030, the company said. Tamboran said the Northern Territory government had provided the company with exclusivity over 170-hectares on the Middle Arm Sustainable Development Precinct (Middle Arm) for the LNG development, which is known as Northern Territory LNG (NTLNG). 

Asia Pacific 

Papua New Guinea – The developers of the Papua LNG project – which could become the second liquefaction plant in the country – appear to be on track to reach a final investment decision (FID) by the end of 2023 or early 2024, according to a statement released last Friday. This follows the news that operator TotalEnergies has sold a minority stake in the project to Japan's JX Nippon Oil & Gas Exploration. JX Nippon has acquired a 2.58% stake in the planned onshore Papua New Guinea plant from TotalEnergies, a project that aims to commercialise gas from the offshore Elk-Antelope fields.

Singapore – Singapore’s Sembcorp and Indonesia’s Medco Energi International have signed a gas sales agreement for a duration of four years which is valued at SGD 1.90 billion (USD 1.41 billion), Sembcorp has announced. According to the agreement, which is expected to take effect in the second half of 2023, the gas will be piped from Indonesia’s West Natuna gas field to Singapore. 

South Asia 

Turkmenistan and Pakistan last Thursday signed a Joint Implementation Plan (JIP) to impart fresh momentum to the long-stalled plan to build the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline. Nominally, construction of the pipeline began in 2015 but there has been little progress in the years since and there was no mention last week of Afghanistan and India being involved in the agreement. The JIP was signed in Islamabad by Maksat Babayev, State Minister of Turkmenistan and Head of TurkmenGaz, and Pakistan’s Minister of State for Petroleum, Dr. Musaddiq Malik.

North America 

US – The Energy Information Administration (EIA) has downgraded its forecast for US natural gas prices this year and next, despite expectations that LNG imports in 2023 will be higher than last year, with another rise expected in 2024. The downgrade is attributed largely to falling expectations of US economic growth and the impact this will have on domestic energy consumption. In its latest Short-Term Energy Outlook (STEO), published last week, the EIA forecasts the US Henry Hub benchmark natural gas price to average USD 2.66/MMBtu in 2023.

Mexico – US energy infrastructure company New Fortress Energy (NFE) has received an export permit for its Altamira Fast LNG facility from Mexico’s Ministry of Energy (SENER), the company said last Friday. The permit clears the way for NFE to begin commercial operation of its first Fast FLNG project in the third quarter of this year. Construction of the Fast LNG unit is over 90% complete and deployment is expected to begin this month to Altamira in Mexico, where it will be installed on offshore platforms.

Europe 

The European Commission (EC) is currently discussing potential insurance measures with banks that are targeting European companies interested in storing gas in Ukraine, the EC has confirmed. A total of 10-15 Bcm of gas storage capacity in Ukraine could be made available for European companies if the right insurance policies are found. The EC's vice-president Maroš Šefčovič told the Financial Times (FT) in an interview published last Friday that to encourage storage use “on top of the competitive prices the Ukrainians are offering, we need to work on guarantees for international actors”.

Lithuania – Uncertainties linked to LNG demand beyond 2030 are limiting the Baltic region’s commitment to long-term contracts for the fuel, delegates at the Baltic LNG & Gas Forum in Klaipeda, Lithuania heard last week. Moreover, LNG’s lack of flexibility compared with piped gas in terms of short-term volume adjustments remains an issue, delegates heard. LNG imports coupled with lower gas consumption have played a key role in boosting energy security in the Baltic region since Russia’s invasion of Ukraine.

France – Electricity consumption in France could increase by 10 TWh annually between 2025 and 2035 owing to the phase out of fossil fuels and increasing electrification of sectors including transport and buildings, French power grid operator RTE said in a report published last week. France can cope with this increase in power demand if it accelerates the development of renewable energies, maximises nuclear production from existing reactors and boosts energy savings, according to the report.

Denmark – Danish energy company Orsted said during an investor update last Thursday that it will invest DKK 475 billion (USD 68 billion) in 2023-2030 to achieve its goal of installing 50 GW of power capacity by the end of the decade. The company has also set a 2 GW electrolyser target by 2030, split 50-50 between Europe and the US, in a move to meet expected industrial demand growth for hydrogen, it said. 

Germany – Germany has announced that it has started a two-month preparatory process to implement a EUR 50 billion (USD 53.92 billion) funding scheme in a bid to decarbonise its industrial sector by 2045. The subsidy scheme will allow developers of hydrogen to bid for Carbon Contracts for Difference (CCfDs) in order to bridge funding gaps, however developers of green hydrogen from renewables will receive higher subsidies compared with blue hydrogen developers using carbon capture and storage (CCS) technologies, according to plans.

UK 

The UK government last Friday announced that it has reduced the Energy Profit Levy (EPL) from the current tax burden of 75% to 40%, but said the changes will only take place if average oil and gas prices fall to or below “normal” levels for two consecutive quarters. Industry observers say the low thresholds set for the price floor means it is unlikely to take effect anytime soon. If prices fall to “historically normal levels for a sustained period” – USD 71.40/barrel for oil and GBP 0.54/therm for natural gas – the tax rate for oil and gas companies will return to 40%.

Ofgem, the regulator of the UK’s electricity and natural gas markets, will be given a statutory duty to facilitate the government’s legally-binding 2050 net-zero emissions target when the Energy Bill becomes law later this year. The new mandate will affect Ofgem’s decisions on price controls and capital investment and could come into force by September. The amendment to the Energy Bill proposes re-wording Ofgem’s principal objective to protect consumer interests and could lead to rises in energy bill.

Russia & CIS Region 

Russia – The CEO of Russian independent LNG producer Novatek, Leonid Mikhelson, last Monday confirmed press reports suggesting the firm is considering a new LNG plant in the Russian Arctic. In response to the announcement, Russia’s deputy prime minister Aleksander Novak praised the initiative and said the plans were in line with the Kremlin’s LNG development programme.