Gas Matters Today | news roundup | w/c 12 June 2023

International 

The Russian government two week's ago said it had allowed Novatek´s Yamal LNG project in the Arctic to resume LNG supplies to Securing Energy for Europe (SEFE), formerly known as Gazprom Germania. The LNG supplies under a long-term contract were interrupted last year after SEFE was nationalised by the German government, following Russia’s invasion of Ukraine. According to the order of the Cabinet of Ministers, the permit is valid until the end of 2024. 

Shell said last Wednesday it plans to reduce capital spending in 2024-25 compared with the current year and focus on growth in the upstream, integrated gas and LNG businesses. A previous target to cut oil production has been dropped and the company said it would invest in in hydrogen and carbon capture and storage (CCS) in a “disciplined manner”. In an investor presentation on Wednesday, Shell said capital spending would be USD 22-25 billion per year for 2024 and 2025, down from USD 23-27 in 2023.

Mediterranean

Egypt – Egypt and Jordan two weeks ago signed two agreements for cooperation in the gas sector including for joint use of the floating LNG import terminal in the Red Sea port of Aqaba and for gas supply from Egypt to Jordan via the Arab Gas Pipeline. A key part of the agreement is to supply industry and power plants in Jordan with natural gas in order to reduce operational costs. The agreements were signed in Jordan’s capital Amman two weeks ago.

Middle East 

Oman – Oman is on track to become the largest exporter of renewable hydrogen in the Middle East and the sixth largest globally by 2030, according to a report published by the International Energy Agency (IEA) last Monday. Initially, exports are likely to be transported in the form of ammonia, says the agency. Scaling up production to meet Oman’s target of 1 mtpa by 2030 would require investment of USD 33 billion, says the IEA. 

South Asia 

Pakistan – Pakistan LNG Limited (PLL), the government entity responsible for procuring LNG for Pakistan, last Tuesday published calls for two LNG tenders for a total of nine cargoes to be delivered from October 2023 to February 2024. The tenders come after a hiatus of almost a year, during which Pakistan stayed away from the spot LNG market because of high prices. Pakistan has suffered widespread power shortages over the past year because of the unprecedented level of prices for spot LNG.

A week of signals that the price-sensitive LNG-importing economies of South Asia are rediscovering their appetite for LNG culminated last week with news that Pakistan has agreed an LNG deal with Azerbaijan’s SOCAR and confirmation that a proposed third import terminal in Bangladesh is moving forward. In an announcement on Twitter, Pakistan’s Finance Ministry confirmed that the Economic Coordination Committee of the Cabinet, chaired by Finance Minister Mohammad Ishaq Dar, had approved a framework agreement.

North America 

US – LNG project developer NextDecade expects to reach final investment decision (FID) on the first phase of its Rio Grande (RG) LNG export project within a fortnight, after Global Infrastructure Partners (GIP) and TotalEnergies agreed to become investors. Achievement of FID would take the amount of new US LNG production capacity sanctioned in 2023 to 36.2 mtpa. NextDecade said last Wednesday that it had entered into framework agreements with New York-based GIP and TotalEnergies.

West Virginia’s Department of Environmental Protection (WVDEP) has issued a final state-level water permit needed for developer Equitrans Midstream to resume construction of the Mountain Valley pipeline (MVP). This comes shortly after President Joe Biden approved the Fiscal Responsibility Act of 2023, which includes a provision that expedites the completion of MVP despite opposition from green groups.

Europe 

New EU rules setting out more detailed definitions and criteria for renewable hydrogen have been adopted after the so-called Delegated Acts linked to the Renewable Energy Directive (RED) passed the scrutiny period in the European Parliament and the Council of the EU. The new rules aim to clarify the legal framework for green hydrogen in order to shore up investor confidence in the sector, although many uncertainties remain. The Delegated Acts were first proposed by the European Commission (EC) in February.

The price movements seen so far this calendar summer – with European benchmark futures more than doubling in just over two weeks – are suggesting that market volatility is back after a period of declining prices. Production outages in Norway, Europe’s main supplier of piped gas following the sharp decline in Russian deliveries, has supported the bullish trend. The Dutch TTF gas marker hit USD 13.18/ on 15 June, up from USD 7.3/MMBtu on 1 June, a 77% rise in what Rystad Energy referred to in its latest Gas and LNG Market Update as “an otherwise quiet summer”.

Moldova – Moldovan state-owned energy company Energocom announced two week's ago that it will procure gas from two companies in Greece and Romania this summer. The announcement comes as Moldova is trying to wean itself off Russian gas and will help the country meet current demand and planned storage injections in Ukraine. Energocom has chosen the suppliers – Greece’s DEPA and a Romanian company that under contract terms could not be revealed – as a result of a supply tender. 

The Netherlands – The Dutch government is expected to make a final decision later this month on whether to close the Groningen gas field permanently by 1 October 2023. The decision comes amid recent price volatility in European gas markets and an uncertain supply outlook for the coming winters. The Dutch cabinet will later this month decide how much gas that will be extracted from the Groningen next gas year, starting from 1 October 2023.

UK

Scotland – Scottish and Southern Energy Networks (SSEN) Transmission last Tuesday said it will invest GBP 10 billion (USD 12.6 billion) into the power transmission network across the north of Scotland. The company says the investment will play a vital role in enabling the connection of up to 11 GW of new offshore wind capacity through projects selected in the ScotWind leasing round. Known as the ‘Pathway to 2030 programme’, SSEN said its investment will deliver “billions in value” to the UK economy.

Europe’s largest LNG import terminal, the UK’s Grain LNG, has a launched an auction for berthing slots, storage and regasification capacity that will become available from January 2029, as existing long-term contracts expire. Primary capacity of 375 GWh/d –  around 9 mtpa – will be made available at what GLNG claims will be “a reduced cost and with shorter contract lengths when compared with new-build projects”. GLNG said its product has been designed specifically “for parties who wish to acquire a substantial stake in a major terminal in Northwest Europe”.

Africa 

Nigeria – TotalEnergies announced last Tuesday that it has made new oil and gas discovery in the OML 102 block offshore Nigeria. The development comes shortly after the French major announced a renewal of the OML 130 production license for 20 years. The new discovery is located in shallow waters, 60 km off the southeast coast of Nigeria, according to TotalEnergies.