Gas Matters Today | news roundup | w/c 13 December 2021

Caribbean

Aruba – US energy company Eagle LNG has signed a long-term supply contract with Aruba’s power and water utility WEB Aruba, which is planning a regasification terminal in the Caribbean Island. The planned new USD 100 million terminal is in line with Aruba’s ambition to become a regional LNG hub.

Mediterranean

Cyprus – The country signed a natural gas exploration and production sharing contract (PSC) with ExxonMobil and QatarEnergy (QE) for Block 5 offshore the Mediterranean island, despite Turkey’s opposition to the development. While Ankara has previously contested Cyprus’ rights to the natural gas reserves in the island republic’s Exclusive Economic Zone (EEZ), the deal seems unlikely to add “too much to the geopolitical pot,” according to an industry expert.

Australasia

Australia – The Northern Territory government awarded a major project status to a USD 10.75 billion project which will use water sucked from the air and solar power to produce green hydrogen. The 10 GW Desert Bloom Hydrogen project, developed by technology company Aqua Aerem, is planned to start in 2023.

North Africa

Egypt – QatarEnergy (QE) has farmed into Egypt’s upstream sector after acquiring stakes in two offshore exploration blocks from Shell, in line with the Qatari firm’s push to expand its international upstream presence. The step could be connected to QE attracting Shell’s involvement in its North Field East (NFE) LNG expansion project, as suggested by an industry expert.

Asia Pacific

Vietnam – US-based Energy Capital Vietnam (ECV) has landed financial support and a technology provider for its proposed USD 1.75 billion LNG-to-power project in the south of Vietnam as it revealed that Thai Power firm B.Grimm Power and Siemens Energy have joined the project. The Thai firm and ECV have signed a joint development agreement, with B.Grimm Power preparing to invest ~USD 200 million in equity at financial close of the project.

North America

US – Shell is set to expand its global solar portfolio with the purchase of 100% of Kansas City-based Savion from Macquarie’s Green Investment Group which specialises in solar power and energy storage projects. While the purchase price was not disclosed, Shell said the acquisition fits within the 2021 Renewables and Energy Solutions cash capital expenditure budget of USD 2-3 billion.

The Virginia State Water Control Board approved the application for a Clean Water Act 401 permit by the long-delayed Mountain Valley Pipeline (MVP), giving hopes to developer Equitrans Midstream Corporation that the pipeline can be in service next summer. However, the pipeline still requires state and federal approvals. 

The New York City Council has voted to ban natural gas in new buildings amid the city’s drive to reach carbon neutrality by 2050 or sooner. The vote in favour of the ban comes a month after National Grid warned the New York City Council that the legislation “takes viable options to decarbonize off the table.” National Grid has also suggested that the move could lead to higher energy bills for customers and disproportionately affect low- and fixed-income families.

Europe

Ireland – Cork County Council and Gas Networks Ireland have reportedly signalled support for an FSRU project offshore Cork amid a government moratorium on LNG projects which is pending a review. While Energy Minister Eamon Ryan has previously said that LNG will not be needed for energy security in the country, Jersey-listed Oil and Gas Predator seems determined to proceed with plans for the Mag Mell FSRU offshore Cork.

UK – BP has awarded two consortiums, led by Technip Energies and Aker Solutions respectively, front end engineering design (FEED) ‎contracts for the Net Zero Teesside Power (NZT Power) project and the Northern Endurance ‎Partnership’s (NEP’s) carbon compression infrastructure in Teesside, north of England. As the UK is preparing to fully decarbonise its power sector by 2035, CCS/CCUS is expected to be a key component towards the goal.

Norway – Engie and Equinor have embarked on a feasibility study to evaluate the "technical and economic suitability" of a site for blue hydrogen production and carbon capture and storage (CCS) in the Ghent area in Belgium. According to the companies’ plans they will incorporate autothermal reforming technology that allows for decarbonisation rates above 95% and transport the captured CO2 in liquid form to permanently store it in the Norwegian North Sea.

Germany – The Nord Stream 2 (NS2) pipeline does not seem likely to fulfil its plans of flowing gas before late next year as the head of German regulator Bundesnetzagentur said the certification process of Swiss-based subsidiary NS2 AG as an Independent System Operator would not be completed in the first half of 2022. The delay of the certification will not ease the currently tight supply situation in European gas markets.

Switzerland – Gazprom’s Switzerland-based holding announced that the gas-in procedure for the second string of the Nord Stream 2 (NS2) pipeline, to allow for commercial flows, commenced on Friday. This indicates that the pipeline could be filled with gas by New Year’s Eve as it took 14 days to fill the first line, however commercial flows are not expected to start until H2’22.

The European Commission tabled key regulatory proposals to boost gas supply security and facilitate a roll-out of renewable gases. The long-awaited ‘Gas Package’ is set to ban long-term supply contracts for unabated gas from 2049 and include proposals to allow voluntary joint procurement of strategic gas stocks.

The European Commission produced a legislative proposal to regulate methane emissions in the oil, gas and coal sector, including rules to detect and repair methane leaks and limit venting and flaring. However, the proposal will not involve methane emissions from fossil fuel imports from third countries at least until its review in 2025.

EU leaders failed to agree on how to tackle soaring energy and carbon costs at their latest Council meeting in Brussels, deciding to revisit the topic at the next meeting in March 2022. Meanwhile, prices for front-month natural gas have increased nearly seven-fold since the start of 2021 as Europe has struggled to refill inventories.

International

Global coal power generation is about to increase by 9% in 2021 to 10 350 TWh, marking a new all-time high as electricity demand is outpacing low-carbon supply and soaring natural gas prices, the International Energy Agency (IEA) revealed in a report.

Africa

Mozambique – The East African country is progressing in its fight against Islamic State-linked insurgents who forced TotalEnergies and its partners to cease construction work on the Mozambique LNG plant earlier this year, president Filipe Nyusi suggested. Addressing the nation last week, Nyusi said that all insurgents’ bases have been deactivated this year, which may give TotalEnergies hope that it can restart construction work next year.