Gas Matters Today | news roundup | w/c 22 November 2021

Australasia

Australia – Woodside Petroleum and BHP Group took a final investment decision (FID) on the integrated Scarborough field and Pluto Train 2 development, despite contracting only 60% of Scarborough’s capacity. In addition, Woodside and BHP signed a binding share sale agreement (SSA) for the merger of BHP’s oil and gas portfolio with Woodside.

Three LNG deals are tied to the second train expansion project at the Pluto LNG plant, Woodside’s CEO Meg O’Neil confirmed during an investor call where O’Neil was quizzed about the company’s supply agreements. However, the proposed supply agreement between Woodside and China’s ENN was not mentioned.

Asia Pacific

Vietnam – The country’s latest draft power plan reportedly includes a scaling back on LNG-to-power projects and places a heavier emphasis on renewables, in line with Hanoi’s recently announced net-zero 2050 commitment. But with rising power demand, and the phasing out of coal plants, gas is still anticipated to play a crucial part in the county’s energy transition. 

Singapore – Shell announced several proposals to decarbonise its petrochemicals complex in Singapore, with the Anglo-Dutch firm examining a “cornerstone” carbon capture storage hub. Parallel to Shell’s CCS plans, Singapore’s Economic Development Board (EDB) revealed that the city-state is looking to “realise” at least 2 mt of carbon capture potential by 2030.

South Korea – The government is planning to close up to 30% of its coal-fired power fleet for a three-month period over the winter in a bid to reduce air pollution, with the closures expected to boost South Korea’s LNG demand. Recent reports suggest KOGAS closed a tender last week for 10 spot cargoes for delivery over December and January.  

Africa

The world’s largest independent crude trader, Vitol, is set to gain full control of Africa-focused fuel retailer Vivo Energy after agreeing to buy the 64% stake it doesn’t already own in a deal worth USD 2.3 billion. The acquisition is set to provide an outlet for Vitol’s main oil business.

Mediterranean

Greece and Egypt signed a memorandum of understanding (MoU) in Cairo last week, under which the pair agreed to expand cooperation in LNG and examine the possibility of constructing a subsea gas pipeline. Separately, Egypt and Israel signed an MoU to potentially ramp up natural gas supplies from Israel to Egypt for re-exports as LNG.

North America

Canada – Woodfibre LNG awarded an engineering, procurement, fabrication and construction (EPFC) contract to McDermott International, taking Woodfibre a step closer to a final investment decision (FID) on what could be Canada’s third liquefaction plant. Woodfibre expects construction to start in September 2023.  target.

US – Cheniere signed a 20-year LNG sales and purchase agreement (SPA) with China’s Foran Energy Group marking the third long-term SPA Cheniere has concluded with Chinese firm this quarter. This has given the US LNG player momentum towards a final investment decision (FID) on the Corpus Christi Stage 3 expansion project.

The Texas electricity grid could be vulnerable to power cuts this winter if severe weather hits, despite preparations after February’s winter crisis, an assessment by the Electric Reliability Council of Texas (ERCOT) has found. While the Texas grid operator played down the likelihood of outages, federal regulatory bodies suggest power producers and gas suppliers in the state need to do more to mitigate extreme weather risks.  

NextDecade requested the Federal Energy Regulatory Commission (FERC) to change its approval for the proposed Rio Grande LNG plant in Texas, as to include a proposed carbon capture storage (CCS) project. Running parallel, FERC announced it is considering whether to suspend an approval on the proposed feedgas pipeline for the planned Jordan Cove LNG project.

The US government imposed fresh sanctions on the Gazprom-led Nord Stream 2 (NS2) pipeline by targeting two vessels and one entity. The US has so far sanctioned eight persons and has identified 17 of their vessels as blocked property in connection with NS2. However, it is unclear if these sanctions will impact the project as pipelaying on the two-string pipeline was already completed in September.

Industrial Energy Consumers of America (IECA) has suggested that increasing LNG exports from the country are driving gas prices in the US up, with the trade association calling on the US Department of Energy (DOE) to cap exports.

Europe

Portugal – The country became the fourth EU country to completely phase out coal after closing the Tejo Energia 628 MW Pego plant. However, environmental campaigners have voiced concern that the coal plant may be repurposed to run on wood pellets instead.

Moldova – Gazprom threatened to cut off gas supply to Moldova unless the Eastern European nation paid its outstanding debt. The country’s deputy prime minister Andrei Spinu announced parliament intended to amend the state budget on 25 November and issue funds to Moldovagaz for the payment to Gazprom.

Germany – E.ON announced plans to invest EUR 22 billion in the expansion energy networks including electricity and hydrogen until 2026. The company said in a presentation that hydrogen could account for 10-15% of final energy demand in the EU by 2040.

Germany’s new coalition government revealed an ambitious target for renewables, accelerated coal phase-out and green hydrogen in its political agreement presented last week. While the plan will need an approval by Germany's Bundesrat and Bundestag, it has also outlined that new gas plants can only be built if they are hydrogen ready.

Serbia – Serbian President Aleksandar Vučić announced that Russia will freeze the price Serbia pays for its gas at the current levels of USD 270/Mcm over the next six months while the volumes of gas from Russia will also increase during that period. In comparison, the average price Gazprom’s European customers pay is expected to stand at USD 300/Mcm in 2021, according to Reuters.

Spain – Endesa announced during its Capital Markets Day that it will “exit” its gas business by 2040 as part of a drive to fully decarbonise its operations by the same date. Driven by its net-zero strategy, Endesa is planning to spend EUR 31 billion (USD 35 billion) over the next decade, with the majority of the capital directed towards renewable power generation and power grids.