GasLog signs 12-year LNG charter deal with JERA
* Liquefied natural gas (LNG) vessel owner GasLog Ltd has agreed a 12-year charter contract with world’s largest LNG buyer, Japan’s JERA, it said on Thursday. * The charter for a 180,000 cubic metre new build vessel will start in April 2020 when it is delivered from Samsung Heavy Industries’ shipyard in South Korea. * The rate for the vessel is “in line with mid-cycle rates,” GasLog said. * The firm did not disclose the exact price level but said it had previously quoted mid-cycle rates as being between $70,000 per day and $75,000 per day. * Earlier this year, GasLog concluded long-term charter deals with Spain’s Endesa and United States’ Cheniere but the 12-year deal with JERA is GasLog’s longest current charter. * GasLog owns 32 LNG carriers, including 25 ships on the water and seven LNG carriers on order. * Japan’s JERA Co. is a fuel trading joint venture between Tokyo Electric Power and Chubu Electric Power.
Germany takes steps to spur more investment in LNG terminals
Germany’s cabinet on Wednesday approved a plan that will make it easier for LNG project companies to invest in new LNG terminals as part of efforts to diversify the country’s sources of gas. Under the legislation, LNG companies will only pay a 10 percent share of the connection costs for LNG, giving them more scope to invest in LNG projects. At the moment, pipeline companies have to put up the initial cost of the pipelines and then recoup this over the long term via network usage fees that are part of customers gas bills. “It is important for the supply security of gas in Germany to be able to use as many supply routes and sources as possible,” economy minister Peter Altmaier said in a statement. “We are removing hindrances to private sector investments in the construction of LNG import terminals and we are strengthening competition between different gas imports,” he added. The government wants to complement gas arriving from Russia, Norway and the Netherlands with other origins to give consumers more choices, while LNG suppliers like Qatar and the United States are seeking more business. There are three LNG projects seeking applications for permits, including one at Brunsbuettel, supported by RWE , one at Wilhelmshaven, supported by Uniper, and another at chemical firm Dow’s Stade site. Germany also expects additional gas import volumes from the Russian Nord Stream 2 pipeline which will be under construction by the end of this year. The government’s move still has to be approved by the Upper House of Parliament, the Bundesrat, which represents Germany’s states.
Vitol’s head of LNG expects supply shutdowns due to market glut
Vitol Group’s head of liquefied natural gas trading said on Wednesday that the outlook was bleak for LNG in the short term due to an “incredibly” oversupplied market, which would lead to some LNG output shutdowns. “We had record imports of LNG into Europe. Three years ago we saw 63 cargoes in one month, in March we see 125 cargoes, April and May we expect 150 and 170 cargoes… This is really unprecedented,” Pablo Galante Escobar, Vitol’s head of LNG, told the FT Commodities Global Summit in Switzerland. “We said before that we expect a battle between the U.S. LNG and Russian pipelines. We believe that is happening now but it is being joined by LNG from the Middle East, Africa that is not finding the homes in Pakistan, Bangladesh or China, where the winter was mild but there are other factors, such as excess production.”
Denmark asks Nord Stream 2 to assess third route option for gas pipeline
The Danish Energy Agency has requested an environmental assessment of a third route option for the Nord Stream 2 gas pipeline in Danish waters, a move that could delay the project to pump Russian gas to Europe. The 1,225 km (765 miles) pipeline, now under construction, has come under fire from the United States and several eastern European, Nordic and Baltic Sea countries which fear it will increase the European Union’s reliance on Russian gas. The project has two pending permit applications with Danish authorities but the energy agency has asked that a third route secure an environmental assessment. The route would run in Denmark’s exclusive economic zone south of Bornholm island. “It is an area that has become available after a demarcation negotiation with Poland has ended,” Danish Energy Agency spokesman Ture Falbe-Hansen told Reuters, adding it should be environmentally assessed by Denmark and neighbouring states. “It will take several months, but it’s not possible to say how long it’ll take,” he said. Nord Stream 2 spokesman Jens Mueller said on Thursday the company would evaluate the request from the Danish Energy Agency, but did not say if it would delay the project. Four countries – Finland, Sweden, Germany and Russia – have approved the pipeline’s construction. Denmark has held out. Denmark passed a law in 2017 that could allow it to ban the pipeline from passing through its territorial waters on security grounds. That would lead to rerouting the pipeline but would not derail the project. Nord Stream 2 proposed an alternate route last year that would route the pipeline through Denmark’s exclusive economic zone waters but not its territorial waters. The company said this week there was “good reason” to believe Denmark would process the proposal within eight to 12 months, allowing the pipeline to be finished on schedule. The 11 billion euro ($12 billion) Nord Stream 2 project is led by Russian state energy firm Gazprom, with some 50 percent of the funding provided by Germany’s Uniper and BASF’s Wintershall unit, Anglo-Dutch firm Shell, Austria’s OMV and France’s Engie .
Commissioning for Bangladesh’s second LNG import terminal delayed to April
Bangladesh’s second liquefied natural gas (LNG) import terminal is expected to start commissioning in mid-April, a month later than initially expected, officials told Reuters. Summit Corp, a subsidiary of Singapore-based Summit Power International, and partner Mitsubishi Corp are expected to start commissioning at their floating storage and regasification unit (FSRU) off the country’s coast on April 20, a spokeswoman from Summit Corp said on Wednesday. The FSRU will be named “Summit LNG” and will pick up its commissioning cargo from Ras Laffan in Qatar before sailing to Bangladesh, she said. It is currently dry docked in Ras Laffan Nakilat NKOM yard, she added. The cargo will be supplied by Qatargas, two industry sources familiar with the matter said. Operations at the FSRU were expected to start in mid-March, ahead of schedule. The new timeline still puts the arrival of the FSRU ahead of schedule, the spokeswoman said. “Our economy is expanding and (the second FSRU) will help meeting our growing consumption needs,” Nasrul Hamid, Bangladesh’s state minister for energy and power, told Reuters. “We are taking more initiatives to meet the demand.” The FSRU start-up date had also been partially hampered by construction delays on a pipeline that will carry regasified gas from the coastal city of Chattogram, near where the FSRU will be anchored, to the capital Dhaka. “The work is going on in full swing. We hope we can complete all the connecting pipelines by the end of April,” Ali Al-Mamun, managing director of the Gas Transmission Company Limited, a subsidiary of state-owned energy company Petrobangla, said on Wednesday. “Only the weather could hamper it. If it rains for a day, we need to stop work for the next two days.” Summit LNG’s FSRU will anchor 6 km (3.6 miles) off the island of Moheshkali in the Cox’s Bazar district of the Chattogram division, where it will regasify LNG procured by Petrobangla. The planned LNG import volume of the project is about 3.75 million tonnes a year, which will double the country’s LNG import capacity to 7.5 million tonnes per year once fully operational. Bangladesh has scrapped plans to build additional floating LNG terminals in favour of land-based stations after the start-up of the country’s first FSRU was delayed by several months due to technical problems and bad weather.
Asian LNG prices fall to near three-year low as buyers shun spot cargoes: traders
The spot prices for LNG cargoes to be delivered into Northeast Asia in May fell this week to a nearly three-year low of $4.30 per million British thermal units (mmBtu), according to several trade sources. The spot price for Northeast Asia LNG was last assessed at $4.65 per mmBtu on March 21, Refinitiv Eikon data showed. The price quoted by the trade sources on Wednesday is the lowest since the week of April 15, 2016, when Refinitiv data showed it at $4, the lowest ever for data going back to 2010. Gas inventories in Asia are high and buyers are shunning cargoes and re-directing them to Europe, the sources said. “It’s tank top situation in many places and inventories are high,” a Singapore-based LNG trader said, speaking on condition of anonymity. “There’s really no or minimal demand… it’s an oversupplied market.” Many companies were offering cargoes which were also weighing on spot prices, the traders said. Several Chinese companies were reselling cargoes they did not need while at least one Indian company had diverted a cargo to Europe, two traders said. With Chinese companies having signed up mid- to long-term contracts last year to receive LNG in anticipation of a big pick up in demand during winter which never happened due to mild weather, supply into the country was ample, a Chinese LNG trader said. “It’s not about price but about demand and the capacity in China. We cannot receive more cargoes and right now many sellers are trying to sell cargoes into west,” he said. LNG import volumes into Northeast Asia in March are set to rise by 3 percent from February while imports of the super-chilled fuel into North West Europe are set to jump by 70 percent to a record high in March, Refinitiv data showed. The Japan Korea Marker, the benchmark for Asian spot LNG cargoes, has fallen below the Title Transfer Facility price in the Netherlands, an European benchmark which is currently at about $4.80 per mmBtu, the traders said. That is encouraging the diversion of cargoes from Asia to Europe, they said. While Indian buyers were taking advantage of lower spot prices to buy cargoes, limited import capacity will curb their purchase volumes, a trader familiar with the market said. Globally, LNG supply is expected to grow by an estimated record 40 million tonnes, or 13 percent, this year, potentially putting further pressure on Asian LNG prices.
GAIL sells US LNG cargo to Europe amid high stocks in India
Full storage tanks of liquified natural gas (LNG) in India have prompted GAIL India to sell a U.S. cargo bound for the Asia nation to northwest Europe, industry sources said on Wednesday. The sale of a cargo already on the water is the latest example of an oversupplied LNG market that has resulted in Asian spot LNG prices falling to an almost three-year low of around $4.30 per million British thermal units (mmBtu) this week. It also signals that India’s LNG demand, considered substantial compared to northeast Asia, is weaker than expected. Europe has become a top destination this year for cargoes that cannot find a home in Asia because of high stock levels and low delivery prices. The cargo on board of the Meridian Spirit that loaded at the U.S. Cove Point plant on March 20 was offered in a tender on March 25 when it was crossing the Atlantic Ocean. It was sold at about $4.30 per mmBtu, three industry sources said. The cargo will be delivered to Belgium’s Zeebrugge terminal, one of them added. The vessel turned to northwest Europe on March 26 when the tender was closed, Refinitiv Eikon data showed. There is a tank top situation at India’s west coast terminals, meaning the storage facilities were full, the industry source said, adding this had led to the cargo being sold to a European destination. Prices in India are at a slight discount to those in northeast Asia. But sources said that, even if the prices were going down further, it did not mean that India would be able to buy significantly more LNG. GAIL has 20-year deals to buy 5.8 million tonnes a year of U.S. LNG, split between Dominion Energy’s Cove Point plant and Cheniere Energy’s Sabine Pass site. The Meridian Spirit is expected to be used by GAIL to load a new cargo in the U.S. Gulf in mid-May. There are at least two tenders from other India’s companies, trade sources said. Indian Oil Corp (IOC) is looking to buy a mid-May delivery cargo. Petronet is looking for three cargoes for delivery between July and December. Regasification capacity has constrained LNG imports in India in recent years. India has four terminals receiving LNG on the West coast. India’s first East coast terminal Ennore was commissioned by IOC this month. Two more terminals, GSPC’s Mundra and H Energ’s Jaigarh, are expected to start up this year.