Copy
December 1, 2022
Issue 22  |  View Past Issues
Inside Gas
Published by Global Energy Monitor

Editor's Note

Increased attention is falling on Europe’s developing – and record high – reliance on Russian LNG imports even as pipeline flows have declined sharply. Europe’s statistical agency recorded EU member states spending €12.5 billion on Russian LNG between January and September this year, five times more than the same period last year. In Germany, emergency gas measures continue to play out in varying ways on a daily basis. A new 15-year LNG contract with Qatar has been hailed by the government, though at what price? The hoped for commissioning this week of the country’s first LNG terminal has fallen victim to an overly ambitious, potentially reckless, construction timetable which has been challenged by the German public and groups. Bavaria is joining with Austria and Croatia in a bid to secure EU money for yet more gas infrastructure on the Adriatic coast and beyond. 

A major offshore extraction project proposed in South Africa has provoked the formation of the latest international campaign collaboration to challenge TotalEnergies. The state government of Sarawak in Malaysia has approved a new pipeline project, part of its US$14 billion gas hub ambitions. The gas detour currently delaying a sustainable energy future for Southeast Asia, comments a Filipino campaigner, has to be and is being resisted in the region. 

Grieg Aitken

Features

Early retirement for Australian gas “kettle” comes as no surprise

Closure of the Torrens Island B 600 megawatt plant, South Australia’s main gas power station, will happen ten years ahead of schedule in mid-2026, as the state’s electricity grid rapidly pivots to cleaner and more flexible energy technologies, writes Giles Parkinson in Renew Economy.  

Central and eastern Europe can’t afford to burn public money on gas

The region’s district heating systems are reliant on EU funding for their sustainable modernization, but outmoded rules and political horse-trading may lead to hundreds of millions of euros going to new gas investments, write Morgan Henley and Marta Anczewska in Energy Monitor

Japan and South Korea’s push for blue hydrogen brings global risks if it goes unchecked

The influence of the fossil fuel industry on major drives for so-called “clean hydrogen” is palpable as Asia’s two big importers and overseas gas financiers look to extend the fossil fuel supply chain, writes Robert Howarth in Nikkei Asia.

Battle against gas and for survival is on in Southeast Asia

A decade-long civil society fight to secure a coal moratorium in the Philippines has now shifted to challenging a raft of gas proposals, and the drastic economic and climate effects of fossil fuel dependence are swelling resistance across Southeast Asia, writes Gerry Arances in The Philippine Star.

Campaigns

Battle lines drawn over South African extraction project

South African NGO The Green Connection and French NGO Bloom have joined forces to launch the “Our Ocean: Total Destruction” campaign in a bid to stop TotalEnergies’ development of its US$3 billion Luiperd and Brulpadda gas and condensate project located 175 km off South Africa’s southern coast. The French major is aiming to have the Luiperd field on stream as early as 2026, with the estimated output of 210 million cubic feet per day of gas to be sent to the Mossel Bay gas-to-liquids plant and eventually to South African power stations. After recently applying for a production license, the company has begun an environmental and societal impact assessment process, with a first public meeting due before the end of the year. Campaigners are planning a nationwide picket of Total fuel stations on December 7. (Upstream, Energy Voice)

Top News

Germany goes long-term on Qatari LNG, commissioning of first fast-track floating terminal postponed: After several months of reportedly fraught negotiations, QatarEnergy will provide Germany with 2 million tonnes of LNG per year from 2026 via the U.S. company ConocoPhillips. The 15-year contract, potentially the forerunner of more long-term deals between Germany and Middle East suppliers, has been questioned as both not being able to address Germany’s urgent supply needs and potentially undermining the country’s efforts to hit decarbonisation targets in the 2040s. The commissioning of a floating LNG terminal in Lubmin, which promoter Deutsche Regas had been aiming to start up in early December as Germany’s first operating terminal, has been postponed due to a lack of necessary permitting. Environment and consumer group Deutsche Umwelthilfe described the Lubmin project as “a farce” after identifying a list of deficiencies and gaps in the project approval documentation. Over 1,000 objections to the project have been received by the local authorities. (The Guardian, Norddeutscher Rundfunk [German], Deutsche Umwelthilfe [German])

African NGOs warn Tema LNG project could lead to US$1.5 billion losses for Ghana: A group of African NGOs, convened by the think tanks African Centre for Energy Policy and the IMANI Centre for Policy Education, has called for the suspension of the Tema LNG project in Accra, which they say has been marred by “perverse bid-rigging and attendant procurement irregularities [that] have heightened the corruption risk associated with the project.” The under-construction US$350 floating import terminal is central to Ghana’s plans to become a gas hub for West Africa but has been hit by extensive delays. The most recent official projection for its commissioning is some time next year. The NGOs’ concerns have been heightened by comments from an official at the Ghana National Petroleum Corp, as reported by Bloomberg, that there is no immediate demand for gas from the terminal. (Newsbase, Bloomberg, GEM.wiki)

Bullying, sexual harassment, and racial discrimination widespread at Chevron Australia’s gas business – report: Chevron Australia has said it is “determined to take meaningful action” following the findings of an independent report, commissioned by the company, which found that almost half of surveyed workers had been bullied at work in the past five years, nearly a third experienced sexual harassment and almost as many had been harassed in other ways. 417 workers were interviewed out of the 1800 employees who work on the company’s major gas projects in western Australia along with a similar number of contractors. Australia’s national resources sector is under pressure to reform workplace cultures following similar findings at other companies and an inquiry from the Western Australia government in June. (Bloomberg, The Sydney Morning Herald) 

Environmental justice concerns mount over proposed LNG export terminal in Florida: Miami-based Nopetro LNG’s plans to develop an initially small-scale LNG terminal in Port St. Joe have received backing from federal and local authorities, but are stoking worries amongst the predominantly Black community in the city’s north side. The project, one of the newest schemes in a growing list of U.S. export terminal proposals, is to be located at the site of a former paper mill widely blame for high cancer rates, and a principal demand from residents at this stage is for information disclosure and transparency from Nopetro. (E&E News) 

Limitation served on oil and gas exploration as Norway postpones licensing round: As part of a deal over the state budget with the opposition Socialist Left Party, the Norwegian government has announced that it will not issue oil and gas exploration licenses in frontier areas until 2025 when the current parliament ends. The postponement does not include licensing for mature areas on the Norwegian continental shelf. State-controlled oil and gas company Equinor expressed its disapproval, saying it had not been consulted on the decision. The company also confirmed that it intends to drill 25 offshore exploration wells mostly in the North Sea next year, compared with 22 wells this year. (Reuters, Reuters)

Gas bans for new buildings – momentum growing in the U.S. despite strong industry opposition: Legislators in Montgomery County, in the state of Maryland, have voted in favor of introducing a ban on gas as a heat source for new buildings from 2026, making the county – population 1.1 million – the first on the U.S. east coast to do so. The typically lower costs associated with electrically heated buildings, along with decreased emissions, are expected to “disproportionately benefit” Black, Indigenous and other residents of color, according to Montgomery’s Office of Legislative Oversight. While 20 U.S. states currently prevent cities from prohibiting gas use in buildings, and a further ten prohibit utilities from encouraging customers to switch to electric, restrictions on fossil-fueled heat by the end of the decade have been approved in Washington and California, with New York also considering a gas ban. (E&E News)

“If the state had not helped Uniper … it would have caused a domino effect, a Lehman crisis moment for the German, if not European gas supply,” 

said Klaus-Dieter Maubach, CEO of Uniper, as the utility and gas importer’s proposed bailout total from Berlin climbed to €51 billion (US$53 billion). 

News

Algeria: Sonatrach has agreed with project partners Naturgy and U.S. investor BlackRock to carry out a study next year into the feasibility of blending hydrogen and gas in the 757-km Medgaz pipeline, which runs from Algeria to Spain.

Australia: A gas leak has forced Santos to shut down the normally unmanned John Brooks platform offshore Western Australia for up to six weeks. 

Australia: The Northern Territory’s state government has been accused of greenwashing after deleting the word “petrochemicals” from its websites in reference to the Middle Arm industrial hub, the beneficiary of a recent A$1.5 billion (US$1 billion) federal funding pledge.  

Canada: TC Energy has said that costs for the under-construction 670-km Coastal GasLink pipeline are going up again. 

China: To fuel a fleet of planned gas plants, Shenzhen Energy Group has signed a long-term (duration unspecified) LNG supply agreement with BP. 

Egypt: Italy’s Eni has begun drilling the potentially “huge” Thuraya prospect on the Northeast Arish block in the Egyptian Mediterranean.

Egypt: Government data suggests that LNG exports will rise by 14% to eight million tonnes in 2022, with 90% of these exports destined for the EU compared with 80% in 2021.

Mexico: State-owned power utility Comision Federal de Electricidad has signed an initial agreement with France’s Engie aimed at expanding the 780-km Mayakan gas pipeline on the Yucatán Peninsula.

Trinidad and Tobago: BP has started producing gas at its offshore Cassia C project, which is expected to produce, at peak, 200-300 million standard cubic feet per day of gas. 

U.S.: The Boston Globe has revealed that gas interests funded and made changes to an “independent”, peer-reviewed study from the University of Massachusetts that recommended hydrogen for heating to state policymakers.

Companies + Markets

Record deliveries of Russian LNG to Europe, China wants closer energy ties with Moscow: Citing data from Refinitiv, The Financial Times reported a “record high” 42% rise in imports of Russian LNG to Europe between January and October this year compared with the same period in 2021. Terminals in France, Belgium, Spain and the Netherlands have received almost all of the 17.8 billion cubic meters sent chiefly from the Yamal LNG terminal in northwest Siberia. In the first three quarters of 2022, the EU has spent €12.5 billion (US$13 billion) on Russian LNG, five times more than a year earlier, according to figures from Eurostat. According to government sources in Moscow, seaborne exports of oil and gas to China also rose by 25% in the first nine months of 2022. Chinese state media reported comments from President Xi Jinping at a China-Russia energy forum expressing China’s willingness to forge a closer energy partnership with Russia. (The Financial Times, Bloomberg, Reuters, Reuters)

Plans progress for US$14.3 billion gas hub development in Borneo: Under its Gas Roadmap, the Malaysian state of Sarawak on the island of Borneo is developing plans to build four gas hubs over the next ten years. State-owned oil and gas company Petroleum Sarawak Berhad is lining up MYR65bn (US$14.3 billion) for the hubs in Miri, Samalaju, Bintulu and Kuching that will include the construction of new gas plants. The Sarawak government has already given the green light to a new gas pipeline project to Samalaju, which is expected to be completed by the end of 2025. Last month an explosion at the existing Sabah-Sarawak gas pipeline, the fourth since it began operating in 2014, killed one person and injured three others. (Newsbase, The Borneo Post, Offshore Energy) 

Third attempt at environmental approval for South African LNG-to-power projects is a rush job say critics: Turkish-controlled Karpowership South Africa has launched a latest series of public meetings to sell its plan for three LNG-to-power projects involving the mooring of powerships and supply ships at the Richards Bay, Ngqura and Saldanha harbors. Last year, South Africa’s environment minister Barbara Creecy dismissed Karpowership’s initial application after NGOs lodged complaints about its impact on fishing, local ecosystems, and potential greenhouse-gas emissions. An updated application was thrown out in August due to “various gaps and procedural defects”. This third attempt by the company, involving a new draft environmental impact assessment report, has been criticized by NGOs for the brevity of the public review period, a mere 33 days from November 10 to December 13. (Daily Maverick, Engineering News)

New partnership targets EU money for new Adriatic gas infrastructure: The leaders of Austria, Croatia, and the German region of Bavaria have set out their stall for European public money to support a doubling of LNG import capacity at the Krk floating terminal on the Adriatic coast as well as potential new pipelines to supply central Europe. “Our wish, in the spirit of European solidarity, is for gas and oil pipelines in Croatia to be of service to neighbouring countries,” said Croatia’s President Andrej Plenkovic during a visit by his counterparts Austrian Chancellor Karl Nehammer and Bavarian Minister-President Markus Söder. (Euractiv, GEM.wiki)

Norway’s massive blue hydrogen potential faces struggle to be marketable: Oslo-based consultancy DNV has warned that in spite of the Norwegian government’s ambitions to focus on blue hydrogen exports to the EU, hydrogen produced from gas with carbon capture and storage will struggle to find a foothold in Europe’s clean hydrogen market, and may need state subsidies to compete with green hydrogen. DNV’s study notes that “Big uptake markets in Europe such as Germany favour hydrogen from renewable power over hydrogen from natural gas, even if coupled with CCS,” a point backed up by Germany’s “H2Global” subsidy scheme for importing green hydrogen from countries outside the EU. (Hydrogen Insight)

Decarbonization drive needed soon for China’s petrochemicals sector: The booming petrochemicals sector, which accounts for roughly 4% of China’s CO2 emissions, is on track to miss a central government-decreed 2030 peak carbon target by five years, according to a report from researchers at Peking University. Measures to cut emissions could see the sector hit the target by 2025, however, and would be particularly beneficial for the plastics industry. Without efforts to drive down emissions, the researchers calculate that the full life-cycle carbon emissions of plastics in China will rise to 770 million tonnes by 2030 and 1.17 billion tonnes by 2050, compared with a figure for 2020 of 560 million tonnes. (South China Morning Post)

“We are aware of the energy emergency and that new gas supply measures are in the national interest, but this cannot disregard safety guarantees for the community in Piombino,” 

said Francesco Ferrari, mayor of Piombino, as a “precautionary request” to suspend work on Snam’s proposed floating LNG terminal was lodged in a legal challenge by the city, which the Italian government has said it intends to fight.

Resources

Snam, hands off Sardinia, ReCommon, November 25, 2022. (Pdf)

This eight-page briefing details how exploitation of the energy crisis is boosting long standing plans for “methanisation” of the Italian island.