Gas Matters Today | news roundup | w/c 10 October 2022

Australasia

Australia – US-based energy and infrastructure investor EIG is making a third attempt to enter Australia’s LNG sector – this time through its newly established unit MidOcean LNG, which has agreed to acquire Tokyo Gas’ stakes in four LNG plants. The proposed deal comes four months after EIG unveiled MidOcean LNG, with the deal potentially facing the same difficulties that scuppered the US firm’s bid to buy into Australia Pacific LNG (APLNG) last year.

Europe

A number of European countries are setting maximum prices for gas and electricity for households, business and industries. At a meeting in Prague last week, energy ministers from the EU 27 countries will also discuss possible intervention in wholesale energy markets in a bid to decouple power and gas prices.

Estonia and Finland have failed to reach an agreement to co-finance the lease of the Exemplar floating storage regasification unit (FSRU) – supplied by Excelerate Energy – raising questions over the proposed start-up of the terminal in December or early next year. Olli Sipilä, the CEO of Finnish TSO Gasgrid told Gas Matters Today that the negotiations with Estonian TSO Elering regarding its role in the project are still ongoing, however the Elering CEO was quoted as saying that the company is open to hosting a separate FSRU in Estonia.

The European Commission (EC) is this week expected to table a proposal for an alternative price benchmark to the TTF in a bid to reduce price volatility in gas imports. The proposal appears to have support from some member states, but there are a number of uncertainties concerning if and how a new benchmark would work in practice.

Spain and Poland are planning to withdraw from the Energy Charter Treaty (ECT) thus following the example of Italy who withdrew in 2016. Spain has cited the ECT’s incompatibility with climate policies as the main reason for its withdrawal, however a sunset clause stipulates that contracting parties will be subject to ECT litigation for 20 years after withdrawal.

Turkey – Russian President Vladimir Putin and Alexey Miller, the CEO of Gazprom, have said setting up a trading hub on the EU-Turkish border could be a solution to redirect export volumes from the damaged Nord Stream pipelines. However, this would likely require a costly capacity expansion on the 31.5 Bcm/y TurkStream pipeline and it seems doubtful that many European buyers would commit to buying Russian gas anytime soon.

Germany – A German expert group on gas and heating has submitted a proposal to the government concerning price subsidies for households and industries in a move to support the economy and boost energy security. The group has asked Berlin to foot gas bills for private households for the month of December and then subsidise residential and industrial gas prices for over a year starting in March next year.

German LNG Terminal (GLNG), developer of the onshore Brunsbuttel LNG terminal, has moved a step closer to launching the project after penning foundation capacity booking agreements with ConocoPhillips, Ineos and RWE Supply & Trading. Additionally, the project backers have awarded an engineering procurement and construction (EPC) contract to CS Gas North, a joint venture between COBRA and SENER, to construct the terminal.

Sweden – Sweden will not share findings from an investigation into the leaks on the Nord Stream pipelines with Russian authorities or Gazprom, the Nordic nation’s prime minister Magdalena Andersson said last week – days after Sweden’s Prosecutor’s Office said that “detonations” caused extensive damage to the pipelines. Running parallel, German federal prosecutors have this week initiated an investigation against “unknown persons” suspected of causing explosions on the pipelines.

Italy – Eni has started to ramp up LNG supplies to the Panigaglia LNG terminal in a bid to strengthen gas supply to its home market ahead of the winter. The Italian energy major said further supplies to the terminal on Italy’s north-west coast will come from Egypt and Algeria later this month.

France – France has exported gas to Germany for the first time, with the feat achieved after the completion of works to enable bi-directional flows via the Obergailbach interconnection point, French TSO GRTgaz said last Thursday. The flows, capable of reaching 100 GWh/day, will help ease gas shortages in Germany – which will in turn send electricity to France.

Ukraine – Ukraine is preparing to import power from Europe if it cannot sufficiently repair damage made to critical energy infrastructure by Russia’s latest attacks. Maxim Timchenko, CEO of Ukraine’s largest private energy investor DTEK, told press last Thursday the company’s fifteen power stations had been running at 30% capacity earlier in the week after Russian strikes damaged transformers and switch gears at three sites.

Russia & CIS Region

Russia – Russian president Vladimir Putin has signed a decree ordering the creation of a new operator of the Exxon-led Sakhalin-1 project in the country’s far east. The move marks Putin’s latest push to seize control of Russia’s oil and gas assets, and comes after he blocked Exxon’s attempts to sell its 30% stake in the project following the invasion of Ukraine.

International

Pakistan State Oil (PSO) company has reportedly won an arbitration case against commodities trader Gunvor over excess payments for LNG. The London Court of International Arbitration awarded PSO USD 14.6 million related to excess payments although few details about the case are yet known.

Wealthy countries will need to reach net-zero carbon emissions as soon as 2043 if the world is to meet its 2050 net-zero target, according to the sixth annual Energy Transition Outlook from DNV, an Oslo-based assurance and risk management firm. A two-speed approach will be needed to allow poorer countries more time to manage their energy transitions, with some of the poorest unlikely to reach net-zero before the end of the century.

UK

The North Sea Transition Authority (NSTA) has launched the 33rd licensing round for oil and gas development on the UK Continental Shelf (UKCS). Boosting domestic production is a key priority for the government, but there are concerns that a piecemeal approach to field development could lead to stranded assets and missed opportunities in the Southern North Sea (SNS) which has been identified as a key area.

North Africa

Algeria – EU Commissioner for Energy Kadri Simson said gas, renewable energy and hydrogen industry are three main points to be addressed at the fourth annual high-level meeting of the EU-Algeria Energy Dialogue, which kicked off in Algiers last Tuesday. The visit of the EU delegation comes hot on the heels of Eni announcing the start of production from two gas fields related to the Berkine Sud contract in Algeria.

Mediterranean

Lebanon – Israel and Lebanon have reached an “historic” agreement concerning a long lasting maritime border dispute in the Mediterranean Sea. The agreement paves the way for exploration in Lebanese waters by foreign companies although gas production and exports from there are not expected to commence anytime soon.

North America

US – US oil and gas production will continue to grow next year, hitting all-time highs, however growth will be at a slower pace than previously forecast, according to the US Energy Information Administration’s latest Short-Term Energy Outlook (STEO) published last week. The EIA suggests production growth will slow due to falling oil and gas prices, however slower growth coupled with OPEC’s recently announced production cuts and Europe’s expected growing hunger for US LNG could instead see prices increase in 2023.