29
Oct
2018

Weekly news roundup (22-26 October)

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Analysis

US LNG developer Tellurian has performed a major U-turn by switching to a leveraged financing model for its Driftwood integrated LNG project that reverts to a more traditional debt-equity split and lowers the cost of entry to would-be investors.

International

Chinese independent distributor ENN has signed a wide-ranging agreement with Woodside to cooperate in LNG, power generation and E&P, in a move that appears incongruous with its equity holding in Woodside’s rival Santos.

Insufficient LNG carrier availability could become a “serious issue” for trade as early as 2020 and could even threaten security of global gas supply, the IEA has claimed – but impacts should be short-lived if a wave of newbuilds is delivered from 2021.

Japan’s trade ministry has released a draft “model diversion clause” containing a profit-sharing element it hopes will be adopted in supply contracts in order to remove restrictions on the resale of LNG cargoes – which the Japanese antitrust watchdog has ruled illegal.

LNG shipping rates are nearing a six-year high and carriers are lying laden with LNG due to a confluence of short and long-term factors including tepid demand for spot LNG and a lack of shipping capacity as new supply volumes come online.

Norway and Russia have signed an agreement on mutual rights to seismic acquisition in the Barents Sea, government officials announced last week.

US & Canada

Canada – TransCanada’s Coastal Gaslink pipeline that will feed LNG Canada faces another potential hurdle on the eve of construction, after Canada’s National Energy Board decided to consider a challenge to the project’s provincial authorisation.

US – Current commissioner of the Federal Energy Regulatory Commission (FERC), Neil Chatterjee has been appointed chairman of the government body.

Asia Pacific

China – The role of the yuan in Asian LNG trade is expected to rise significantly, particularly as a pricing hub is likely to emerge in China, according to Chinese LNG importer and low-carbon energy company Hanas.

China has reportedly relaxed air pollution rules for the coming winter and will allow local governments to control industrial production in a bid to drive economic growth and ensure people are not once again left in the cold.

Indonesia – Japanese state-owned credit agency JBIC is spearheading a consortium jointly lending USD 1.3 billion to a new 1.7 GW LNG-to-power project in Indonesia, in line with Japan’s aim of investing in infrastructure to build Asian LNG demand.

Australasia

Australia – The Inpex-led Ichthys LNG project has won the race to produce first LNG from gas reserves in the Browse basin, gaining a slight advantage over rival Shell's Prelude floating LNG project to tap a shared reservoir.

Cue Energy has once again extended the option for BP to acquire a 42% stake in its Ironbark permit (WA-359-P), which contains an estimated 15 Tcf of gas and has possible connections to the North West Shelf LNG project.

Red Sky Energy has agreed to purchase Bengal Energy’s 25% interest in PRL182 permit – part of the Innamincka Dome project in the Cooper basin, South Australia.

Europe

Belgium / Netherlands – RWE’s mothballed 1.3 GW Claus C gas-fired power plant in the Netherlands is set for a new lease of life generating on the Dutch grid and exporting electricity to Belgium, where nuclear power is to be phased out by 2025.

Cyprus / Turkey – Turkey has hired the world’s largest oilfield services firm Schlumberger to assist its contentious drilling campaign in the eastern Mediterranean Sea, where it claims territory pertaining to the Cypriot exclusive economic zone.

France – Total recorded a 45% year-on-year boost to Q3 profits, with net income totalling USD 4 billion thanks to higher hydrocarbon prices.

Romania – OMV has deferred a final investment decision on the Neptun block offshore Romania after the country’s lower house passed a legal framework that imposes a local content and domestic market obligations on upstream players.

UK – Cuadrilla paused exploratory drilling operations at its Preston New Road shale site in Lancashire twice last week following an “extremely low” tremor has reignited debate over the UK’s “cautious” limit on fracking-induced seismicity.

Latin America & Caribbean

Brazil – Petrobras and partners Shell and Petrogal have started production from the Lula Extremo Sul area in the offshore pre-salt basin off the coast of Rio de Janeiro.

The country is reportedly lining up its first auction for gas-to-power projects, with agreements said to run for 15 years.

Venezuela – A new draft constitution could spell trouble for the few foreign firms still operating in the country, as the government reportedly aims to transfer full control over E&P to a new state entity that would replace incumbent PDVSA.

Russia & CIS

Russia – Saudi Aramco is positioning itself to take a roughly 30% stake in Novatek’s Arctic LNG-2 project, in a strategic move that could freeze out other international equity investors vying for a piece of the action.

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