European gas prices hit decade highs

 

NBP is at 75p/therm (~33% increase YTD)

TTF is at €30.4/MWh (~65% increase YTD)

Despite the sharp rise in European gas prices and arbitrage opportunity for US LNG into Europe, LNG cargoes are being pulled to Asia where prices remain elevated and fetching premiums.

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TOTAL delivers its first carbon neutral LNG cargo

TOTAL has delivered its first shipment of carbon neutral liquefied natural gas (LNG) to the Chinese National Offshore Oil Corporation (CNOOC). The loading operation was carried out at the Ichthys liquefaction plant in Australia, and the shipment was delivered on September 29 to the Dapeng terminal, China.

“We are proud to have completed this first shipment of carbon neutral LNG with CNOOC, a long-standing partner of TOTAL. This first LNG shipment, whose carbon emissions have been offset throughout the value chain, represents a new step as we seek to support our customers towards carbon neutrality,” explains Laurent Vivier, President for Gas at TOTAL. “The development of LNG is essential to meet the growth in global demand for energy while reducing the carbon intensity of the energy products consumed.”

The carbon footprint of the LNG shipment was offset with VCS (Verified Carbon Standards) emissions certificates financing two projects: 

• Hebei Guyuan Wind Power Project, which aims to reduce emissions from coal-based power generation in northern China
• Kariba REDD+ Forest Protection Project, which aims to protect Zimbabwe's forests

The term “carbon neutral” indicates that TOTAL and CNOOC have offset the amount of carbon dioxide equivalent associated with the whole carbon footprint of the LNG Cargo (including the production, liquefaction, shipping, regasification, and end-use) through VCS certified emission reduction projects.

TOTAL: Second Largest Private Global LNG Player

TOTAL has made natural gas, the least pollutant of all fossil fuels, a cornerstone of its strategy to meet a growing global demand for energy while helping to mitigate climate change. We are focusing in particular on LNG, which can be easily transported and delivered as close as possible to consumer markets.

TOTAL is present across the entire LNG value chain, from production and liquefaction of natural gas to LNG shipping and trading, regasification using terminals and floating storage regasification units (FSRUs) and contributes to the development of the LNG sector for maritime transportation.

TOTAL is the second-largest global LNG stakeholder in the private industry, with an overall portfolio of nearly 50 Mt/year by 2025 and a worldwide market share of 10%. With over 34 Mt of LNG sold in 2019, the Group has solid and diversified positions across the LNG value chain. TOTAL sells LNG in all world markets via its stakes in liquefaction plants in Qatar, Nigeria, Russia, Norway, Oman, Egypt, the United Arab Emirates, the United States, Australia and Angola.

Original article link

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Cameron LNG Liquefaction-Export Facility Begins Production At Train 2

Press release as follows:

Sempra LNG, a subsidiary of Sempra Energy, today announced that Cameron LNG has begun producing liquefied natural gas (LNG) from the second liquefaction train of the export facility in Hackberry, Louisiana.  

"We are pleased to reach this important milestone in the development of the liquefaction facility," said Lisa Glatch, chief operating officer of Sempra LNG and board chair for Cameron LNG.

Train 2 and Train 3 are expected to commence commercial operations under Cameron LNG's tolling agreements in the first and third quarter of 2020, respectively. The facility's first liquefaction train started commercial operations in August 2019.

Phase 1 of the Cameron LNG export project includes the first three liquefaction trains that will enable the export of approximately 12 million tonnes per annum (Mtpa) of LNG, or approximately 1.7 billion cubic feet per day.

Cameron LNG is jointly owned by affiliates of Sempra LNG, Total, Mitsui & Co., Ltd., and Japan LNG Investment, LLC, a company jointly owned by Mitsubishi Corporation and Nippon Yusen Kabushiki Kaisha (NYK). Sempra Energy indirectly owns 50.2% of Cameron LNG.

Sempra Energy is also developing other LNG export projects in North America, including Cameron LNG Phase 2, previously authorized by the Federal Energy Regulatory Commission, which could include up to two additional liquefaction trains and up to two additional LNG storage tanks; Port Arthur LNG in Texas; and Energía Costa Azul (ECA) LNG Phase 1 and Phase 2 in Mexico.

Development of any of these LNG export projects is contingent upon obtaining binding customer commitments, completing the required commercial agreements, securing all necessary permits, obtaining financing, other factors, and reaching final investment decisions. In addition, the ability to successfully complete construction projects, such as the Cameron LNG export project, is subject to a number of risks and uncertainties.

Sempra LNG develops and builds natural gas liquefaction facilities and is pursuing the development of five strategically located LNG projects in North America with a goal of delivering 45 Mtpa of clean natural gas to the largest world markets.

See also:
Cameron LNG Commences Commercial Operations For Train 1 Of Liquefaction-Export Project

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McDermott, Chiyoda and Zachry Group Announce First Cargo from Freeport LNG Train 2

• First cargo of liquefied natural gas shipped from Train 2 of the Freeport LNG project
• Project team maintains a continuous focus on safety and quality
• Accomplishment is a precursor to substantial completion of Train 2

Below is the full press release from McDermott

HOUSTON, Dec. 18, 2019 McDermott International, Inc. along with its partners, Chiyoda International Corporation and Zachry Group, announced today that the first commissioning cargo of liquefied natural gas (LNG) has been shipped from Train 2 of the Freeport LNG project on Quintana Island in Freeport, Texas. Production of LNG from Train 2 was announced on Dec. 6 and today's announcement of first cargo is a precursor to substantial completion of Train 2.

"The ongoing momentum of this project has accelerated us past multiple accomplishments, including Train 1's introduction of feed gas, first liquid and first cargo. And, we are well on our way toward commercial operation for Train 2," said Mark Coscio, McDermott's Senior Vice President for North, Central and South America. "I commend the project team for delivering these results and getting us closer to substantial completion."

Zachry Group, as the joint venture lead, partnered with McDermott for the Pre-FEED in 2011, followed by FEED works to support the early development stage of the project as a one-stop shop solution provider for Trains 1 and 2. Later Chiyoda joined the joint venture partnership for work related to Train 3. The project scope includes three pre-treatment trains, a liquefaction facility with three trains, a second loading berth and a 165,000 m3 full containment LNG storage tank.

Freeport LNG Trains 2 and 3 remain on schedule with Train 3 initial production of LNG scheduled for Q1 of 2020.

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PGNiG confirms termination of Russian gas imports from end 2022

Poland's PGNiG has notified Gazprom of its intention to terminate imports of Russian pipeline gas from the end of 2022.


This will now increase the country's reliant on US LNG (which at this time many US Gulf Coast LNG projects still have to be sanctioned and not guaranteed to come online) and the long awaited Baltic pipeline to take Norwegian gas to Poland.


The move is not a big surprise and is completely consistent with all the messages the Poland has been giving over the past few years including aggressively signing up US LNG volumes.


Poland consumes around 17 bcm of gas annually, more than half of which comes from Gazprom under a long-term contract that expires at the end of 2022. It has used the upcoming expiry as an opportunity to diversify its gas supply ahead of time and has consistently stressed that Gazprom is charging Poland too much for the gas noting that Russia has taken advantage of the historic lack of other sources of gas which is now rapidly changing with the advent of LNG.


Related links:

• Nov 2018: PGNiG shuns Russian gas
• Nov 2018: PGNiG expands footprint in Norway
• Jun 2019: PGNiG acquires Total's 22.2% stake in King Lear
• Jun 2019: Tommeliten Alpha Project passes important decision gate towards production in 2024

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Cameron LNG Commences Commercial Operations For Train 1 Of Liquefaction-Export Project

• Cameron LNG to Start Recognizing Revenues from Train 1
• Sempra Energy's Share of Full-Year Run-Rate Earnings from the First Three Trains are Projected to be Between $400 Million and $450 Million Annually

Press release as follows:

Sempra LNG, a Sempra Energy subsidiary, today announced that Cameron LNG's first train of the liquefaction-export project in Hackberry, Loiusiana, has begun commercial operations under Cameron LNG's tolling agreements.

"This is an exciting moment for Cameron LNG and for Sempra Energy," said Carlos Ruiz Sacristan, chairman and CEO of Sempra North American Infrastructure. "Cameron LNG is exporting liquefied natural gas (LNG) to customers in the largest world markets, helping to support economic growth in the U.S. and abroad."

Sempra Energy's share of full-year run-rate earnings from the first three trains at Cameron LNG are projected to be between $400 million and $450 million annually when all three trains achieve commercial operations under Cameron LNG's tolling agreements.

"We are proud that Cameron LNG has realized this key milestone with an excellent safety record and zero lost-time incidents," said Lisa Glatch, chief operating officer of Sempra LNG and board chair for Cameron LNG. "We remain focused on safely achieving commercial operations of Train 2 and Train 3."

Train 1 is part of Phase 1 of the Cameron LNG liquefaction-export project which includes a projected export capacity of 12 million tonnes per annum (Mtpa) of LNG, or approximately 1.7 billion cubic feet per day of natural gas.

Cameron LNG is jointly owned by affiliates of Sempra LNG, Total, Mitsui & Co., Ltd., and Japan LNG Investment, LLC, a company jointly owned by Mitsubishi Corporation and Nippon Yusen Kabushiki Kaisha (NYK). Sempra Energy indirectly owns 50.2% of Cameron LNG. 

Cameron LNG Phase 1 is one of five LNG export projects Sempra Energy is developing in North America: Cameron LNG Phase 2, previously authorized by FERC, encompasses up to two additional liquefaction trains and up to two additional LNG storage tanks, Port Arthur LNG in Texas and Energía Costa Azul LNG Phase 1 and Phase 2 in Mexico.

Development of Sempra Energy's LNG export projects is contingent upon obtaining binding customer commitments, completing the required commercial agreements, securing all necessary permits, obtaining financing, other factors, and reaching final investment decisions. In addition, the ability to successfully complete construction projects, such as the Cameron LNG facility, is subject to a number of risks and uncertainties.

Sempra LNG develops, builds and invests in natural gas liquefaction facilities and is pursuing the development of five strategically located LNG projects in North America with a goal of delivering 45 Mtpa of clean natural gas to the largest world markets, which would make Sempra Energy one of North America's largest developers of LNG-export facilities.

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PNG seeks to renegotiate Papua LNG

The PNG Minister for Petroleum issues the below release on re-opening the Papua LNG terms for negotiation.


PRESS RELEASE


STATE TEAM HEADING OUT TO RE-NEGOTIATE WITH TOTAL


The National Executive Council has authorized a State Negotiating Team (SNT) lead by the Minister for Petroleum, Kerenga Kua, to head off to Singapore to seek to re-negotiate the terms of the Papua LNG Gas Agreement previously signed on 19 April 2019. The SNT left today 15 August for Singapore.


The Papua Gas Agreement was signed by the previous O'Neill led Government inside the period when serious moves were afoot to remove and replace that Government.
The Marape led Government on taking office on 30 May 2019, took the firm view that the Papua Gas Agreement was disadvantageous to the State and the people in certain respects and resolved to seek a renegotiation.


Mr Kua cautions that considering what's at stake, the peoples expectations must be guarded during this period. The negotiations could work out well or even disastrously, but either way, the people must be ready to accept whatever the outcome. As a Nation we have reserved all our rights in law as we move down this path.


Success in the discussions could lead to an early progress of the project. By the same token failure could have very serious ramifications. But failure must not be ruled out and must remain within our contemplation. This is a risk we take as we try to move in the direction of taking PNG back and making it wealthy. The final outcomes will be briefed to the Prime Minister James Marape and the National Executive Council, and the final decision will be taken by the National Executive Council.


Considering our Nations economic circumstances short and long term, no stone must be left unturned at such important junctures. Mr Kua said, it would be futile and worthless to say in the future we should have done this deal differently. That question must be asked and answered now. This is the only diligent approach given how we find ourselves in this spot. The SNT expects to return early next week and report back to the National Executive Council. But Mr Kua says the Prime Minister will be kept informed daily as the negotiations progressed.

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European TTF breaks through historical boundaries

S&P has highlighted in its recent webinar that the European TTF price has historically traded within a range but that recent gas pricing dynamics has seen it break out of this range.

TTF has historically been bound by the JKM price as a ceiling (spot LNG price in Asia) and the coal switching price as a floor.

• In a tight gas market, TTF traded closer to the JKM price to incentivise LNG supplies into Europe
• In a loose gas market, TTF traded closer to the coal switching price to incentivise more take uptake of LNG by the European power sector

However in H1 2019, there was a big collapse in both the JKM and TTF price. In fact, there has been a period when JKM fell faster than TTF, making it lose its traditional role as a price ceiling and trading below TTF for a brief period.

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Woodside's Pluto LNG restart delayed

Source: RBC

Woodside's restart from its planned Pluto LNG turnaround will be delayed until the end of June after initial restart efforts were unsuccessful. Vibration in the refrigerant compressor has delayed restart.

In the interim, Woodside will be purchasing cargoes from the market to fulfill its contractual obligations. However Woodside are making a healthy margin of  c.USD5/mmbtu with the current lull in Asian spot LNG prices due to subdued summer demand.

Spot LNG prices are c.USD5/mmbtu and Woodside's contractual supplies have achieved c.USD10/mmbtu.

#LNG

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Chevron-Anadarko: the overlooked jewel

As Chevron swallows up its USD50 billion acquisition of Anadarko, OGInsights turns its focus away form the heavily covered synergies in the Permian, DJ Basin and Gulf of Mexico, and towards its LNG portfolio as Chevron strives to join the ranks of the supermajors in LNG.

Chevron has a Australasia-centric LNG business, but Anadarko's 27% operated interest in Mozambique Area 1 now broadens the former's reach. The Mozambique position is a low cost, integrated LNG project in an ideal geography with reach into the European and Asian markets.

Area 1 is close to FID with c.9.5mtpa of its 12.88mtpa capacity already signed up. The stepping in of Chevron into Anadarko's shoes adds further weight behind the project. 

In February, it was noted that Anadarko had signed a 2.6mtpa LNG SPA with Tokyo Gas/Centrica
joint agreement with implicit destination flexibility which will help broaden Chevron's LNG marketing portfolio, although it is yet to fully launch its own trading portfolio like the Shells and Totals of this world.

The Area 1 LNG joint venture in Mozambique comprises Anadarko, Mitsui, ONGC, ENH (Mozambique NOC), Bharat PetroResources, PTTEP and Oil India. In addition to the Area 1 development, the Area 4 joint venture between Exxon and Eni is on track for sanctioning later in 2019.

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First step in reversion of LNG pricing structures

LNG has historically been priced to an oil price marker. This is because until recently, LNG has been a point-to-point business - LNG was produced in one country and shipped under a 20-30 year contract to a single destination and the LNG tanker would shuffle back-and-forth between the two end points. This underpinned the project financing for construction of liquefaction projects.

LNG prices were then linked to oil as both the LNG producing nations and importers typically had no mature domestic gas market, and hence no price discovery for the gas, but for the importing country, the LNG would have displaced oil for power generation.

Since the genesis of North American LNG, US Gulf Coast exports have been priced to Henry Hub ("HH"), with contracts being HH plus a liquefaction toll. However, buyers are starting to shift to being overweight HH contracts and the last few weeks have seen the first set of contracts away from HH linkage.

On 2^nd April, NextDecade signed a 20 year SPA to deliver LNG from its Rio Grande facility with Shell. The pricing is c.75% linked to Brent with the remainder linked to HH, on a FOB basis. First LNG is planned to be in 2023. This was the first-ever LNG contracts out of the US to be indexed to Brent and comes with full destination flexibility.

On 5^th April, Shell went one step further by agreeing to sell LNG to a Japanese utility with a linkage to coal prices and is the latest innovation to help buyers seeking to diversify risks. This contract is for 10 years and is the first ever coal-linked contract.

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Understanding Mozambique's fiscal regime (Part I)

Government take across countries in East Africa are generally below the Sub Saharan Africa average of 62%. This reflects the relative infancy of the E&P industry in the region with high exploration risk and uncertainties on the path to commericialising discovered resources. A lower fiscal take is required to attract investment.

Mozambique’s government take lies in the middle of its East African neighbours - lower than Uganda where significant oil reserves have been proved up, and Tanzania where fiscal terms are less attractive. Mozambique's fiscal take is uncompetitive relative to Kenya and Ethiopia, which are considered to be important E&P players in due course.

It is also important to note that Mozambique's resources are gas and hence deemed significantly less attractive than oil. Such large scale gas discoveries are expensive to monetise but clearly LNG is becoming an increasing focus by global IOCs and there has been enough momentum over the years to fianlly get Mozambique LNG off the ground.

Mozambique operates a standard PSC regime with an R-factor based on cumulative income/cumulative costs.

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Anadarko signs SPAs for Mozambique LNG

Anadarko has signed three gas Sale and Purchase Agreements (“SPAs”) with Tokyo Gas/Centrica (2.6mtpa), Shell (2mtpa) and CNOOC (1.5mtpa) for its Mozambique LNG Area 1 development. This total 6.1mtpa of the planned 12.88mtpa ahead of FID expected in mid-2019. The LNG development will challenge upcoming projects given its fortunate location in between the Asian and European markets and will compete with Australian, Middle Eastern and North American suppliers.

These SPAs are conversions of existing Heads to Terms and there could be more SPA announcements on the way. Anadarko has made clear that it expects to debt finance c.USD12 billion of the USD20 billion Phase 1 development and these SPAs will help to support that financing.

The owners of Mozambique LNG Area 1 are:

Separately, the Area 4 LNG JV between ExxonMobil and Eni is also on track for sanctioning later in 2019.

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Valeura: Turkey's new gas supplier

Valeura continues to make good progress in Turkey where the company announced a technical success at the Inanli-1 well in November. The well continues to be tested into 2019.

Turkey is structurally short gas, importing gas by pipeline and LNG - LNG regasification capacity is 12bcm/year with cargoes from Algeria, Nigeria and the Middle East. Domestic gas production is therefore long awaited and with Valeura owning the local pipeline network around its licence areas, it is in a good position to start supplying the grid once it is in a position to proceed to development.

The recent gas price hike by BOTAS is useful as well - not only does it protect the gas price in USD terms, but the price increase for local buyers has incentivised such buyers to turn to Valeura gas which has the freedom to sell directly to end users.

The domestic gas prices for power producers are: USD9/mmbtu for power producers, USD6.8/mmbtu for industrial customers and USD5/mmbtu for domestic users. Valeura can make inroads with buyers who currently take gas at the higher end of the pricing range from BOTAS.

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Sponsor completion guarantees in LNG construction financing: Part II

As the world of North American LNG financings continue to evolve, OGInsights explores the use of completion guarantees in construction financings.

In Part II of this two part series, we look at the conditions precedent to project completion which typically need to be satisfied for release of the completion guarantee by lenders.

Construction criteria requires "substantial completion" under the EPC Contract. In addition, operational tests must be satisfactory and includes production of on-specification LNG for a continuous 90-day period.

At completion, maximum stated debt to equity ratio is not to be exceeded - should the ratio be too high, project sponsors are required inject capital to bring the ratio within covenanted levels. Operating account and Debt Service Reserve Accounts are also to be funded to required levels.

From a legal perspective, project agreements and finance documents must be in full force and all governmental authorisations need to be in place, together with certification of environmental and social compliance in line with covenant requirements.

Financing structures continue to evolve to support LNG projects with lenders and sponsors driving the innovation to (i) enable projects and (ii) improve project economics whilst managing the risk that lenders are exposed to.

In Part I, OGInsights covered the use of and reasons for project completion guarantees from a sponsor perspective.

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Sponsor completion guarantees in LNG construction financing: Part I

As the world of North American LNG financings continue to evolve, OGInsights explores the use of completion guarantees in construction financings.

At a high level, the project sponsor guarantees debt service under a guarantee until the construction is complete. To the extent that a project does not reach completion (normally by a certain long-stop date), then the sponsor will be obliged to repay all of the debt under the guarantee.

The provision of a guarantee comes with a number of benefits:

1. Lenders are more likely to agree to the equity funding of a project to be back-ended (i.e. construction costs are first funded by debt before equity rather than pro rata). This improves project economics (NPV and IRR).
2. Lenders will allow use of pre-project completion cash flows as a source of “equity” funding towards the project, thus replacing “hard” equity contributions. In the absence of a guarantee, lenders typically do not give credit to such uncontracted cash flow and such cash generated is trapped until project completion is achieved (as normally insisted upon by lenders). When a guarantee is in place, lenders are more or less agnostic to whether pre-completion LNG sales are contracted or spot sales and can give credit to such cash flows.
3. Lower pre-completion debt costs – reduced commitment fees and margins, reflecting that of the sponsor corporate credit strength (with normal adjustments for pricing and tenor). Pricing could be c.15-30bps cheaper under a construction guarantee structure fr example

One possible downside is that higher amounts of debt are drawn in the early years of construction (vs. when no guarantee is in place) if equity funding is back-ended, and hence interest costs could be higher, although this is partly offset by the lower debt pricing mentioned above.

Note that in a financing without a completion guarantee, lenders require hedging at financial close of the facility with a substantial amount (typically >60%) under either fixed interest rate or hedged throughout the construction and operations period. A construction guarantee provides more flexibility with regard to hedging during the pre-completion/construction period as the interest rate risk is borne by the sponsor; at project completion, lenders will require fixed rate/hedging in place concurrent with the release of the guarantee.

Financing structures continue to evolve to support LNG projects with lenders and sponsors driving the innovation to (i) enable projects and (ii) improve project economics whilst managing the risk that lenders are exposed to.

In Part II, OGInsights explores the conditions that constitute project completion.

#US #LNG #financing

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Petronas enables Cheniere Sabine Pass Train 6

Petronas has agreed to enter into a 1.1mtpa offtake deal with Cheniere on Sabine Pass Train 6 which should enable the train take FID shortly. With a foundation buyer now in place, Cheniere can continue with raising finance to progress the 4.5mtpa project.

Under the deal, Petronas has signed up to 1.1mtpa on a FOB basis for 20 years. As common with east coast LNG contracts, the pricing will be indexed to the monthly Henry Hub price, plus a toll for the liquefaction services plus margin.

Petronas vice president of LNG Marketing & Trading, Ahmad Adly Alias said: "Petronas is pleased to enter into this long-term relationship with Cheniere... With the addition of this new volume, it will enhance Petronas' supply portfolio and further strengthen our position as a reliable global LNG portfolio player."

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PGNiG shuns Russian gas

PGNiG is increasingly boldening its signals on shunning Russian gas as it turns to the west. The Polish state has historically been dependent on gas imports from its eastern neighbour but is looking to loosen its reliance to the communist state.

Poland consumes around 17 bcm of gas annually, more than half of which comes from Gazprom under a long-term contract that expires in 2022. It is seeing the upcoming expiry as the opportunity to diversify its gas supply ahead of time and has consistently stressed that Gazprom is charging Poland too much for the gas noting that Russia has taken advantage of the historic lack of other sources of gas which is now changing with the advent of LNG.

Poland has also vehemently opposed plans by Russia to build a new gas pipeline across the Baltic Sea which is aimed at strengthening its dominant market position into Europe. Instead Poland is looking to sanction the Baltic gas pipeline later this year or beginning of 2019 which will bring gas directly from Norway.

The last month has seen a flurry of newsflow around PGNiG’s activity in sourcing new gas.

In mid-October, PGNiG finalised terms with Venture Global for 2mtpa of LNG. It will buy LNG for 20 years on a FOB basis with supplies commencing under two contracts for 2022 and 2023. The FOB contracts are deemed attractive for PGNiG as it can choose to take the LNG to Poland or use it in its trading portfolio. The terms are not disclosed but understood to be in line with other Gulf Coast LNG contracts being 115% x Henry Hub plus a toll of c.USD2.50/mmbtu. Venture Global is currently developing the Calcasieu Pass LNG terminal on the US Gulf Coast.

This has been followed by a 24 year LNG deal with Cheniere Energy at the beginning of November. PGNiG has signed up a 1.45mtpa deal with LNG supplied by Cheniere’s Sabine Pass, Louisiana and Corpus Cristi, Texas liquefaction plants. The contract is for delivery on a DES basis directly to the 5Bcm/year Swinoujscie terminal in Poland. Poland is also looking to expand the import terminal to 7.5Bcm/year in part of the countries grander ambitions to become a LNG and gas trading hub.

PGNiG also farmed-in to the Tommeliten Alpha in the Norwegian North Sea on the upstream side at the end of October. See PGNiG expands footprint in Norway.

#PGNiG #LNG #Russia #Gazprom #VentureGlobal #Cheniere

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Karish and Tanin to supply Cyprus

Energean announced earlier this month that it is seeking approval to build a pipeline from its Karish and Tanin fields to the shores of Cyprus from the Cypriot government. The company has already contracted 4.2bcm p.a. from its fields with Israeli buyers and is progressing with further gas supply contracts. The Karish and Tanin project has already been sanctioned, so further supply contracts are not necessary for FID but will strengthen the commercialisation of the project. Energean’s FPSO once online will have capacity to handle c.800mmcfpd.

There are ample of buyers in the Eastern Mediterranean for gas given gas shortages and growing demand in the region. Cyprus in particular is a country keen to secure more gas as it has just put out a tender for LNG import and Floating Storage and Regasification Unit construction.

Reuters noted that Energean will bid for further supply contracts in Israeli power plants with the coal-to-gas switching initiative providing further opportunities for the company.

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Anadarko close to Mozambique Area 1 FID and raising USD12 billion debt financing

On 26^th April, Anadarko had "in principle" secured sufficient offtake to enable FID of the first phase of Mozambique LNG on Area 1 offshore Mozambique. The huge resource of 75 tcf is planned to be initially developed via two trains with capacity of 12.88 mtpa. In time, this could eventually be expanded to eight trains producing 50 mtpa.

Since the announcement, Anadarko has also made clear that it expects to debt finance ~USD12 billion of the USD20 billion Phase 1 development, mainly from export credit agencies or ECAs.

In March, Anadarko noted that it had secured 5.1 mtpa of offtake and was close to achieving the 8.5 mtpa needed for FID. It is clear that the company is now very close or has surpassed that threshold with remaining efforts on converting heads of terms and discussions into signed SPA contracts.

Offtakers include a range of Chinese, Japanese and other NOC buyers as well as utilities. It has been reported that deals include France’s EdF, Thailand’s state-run PTT and Japanese utility Tohoku Electric.

This is a good piece of news for Mozambique LNG which is finally showing signs of moving ahead and follows finalisation of development concessions with the Mozambique government last year. The Area 1 FID could potentially overtake ExxonMobil's Area 4 project, in which ExxonMobil acquired a 25% from Eni in 2017 (the deal closed in December 2017).

Area 1 ownership stakes
Source: Bloomberg, Mozambique LNG

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