Morbid LNG symptoms grow in Bangladesh, India, and Pakistan
Hammered by last year’s price surge, blackouts and economic downturns are provoking civil unrest in the region. The situation is crying out for far greater renewable energy ambition, particularly in Bangladesh and Pakistan, writes Rakesh Sharma in Gas Outlook.
Dreams of green hydrogen imperiled by the Wall Street Consensus
In 1985, pan-African political leader Cheikh Anta Diop imagined an African-led green hydrogen revolution. Now as major projects like Namibia’s Hyphen project shape up under the public-private partnership model, the opportunity for structural transformation is being surrendered to private and mostly foreign capital, write Daniela Gabor and Ndongo Samba Sylla in Boston Review.
Gas market volatility — get used to it
Record-high temperatures across Europe over the new year combined with the EU’s LNG panic-buying to flip a potential supply crisis into a period of relative price calm for European and international energy consumers, but market sensitivity and volatility are here to stay, writes Seb Kennedy in Energy Flux.
Opening ceremony more of a priority than due process in latest German LNG controversy: With the project promoters of Germany’s second floating LNG terminal determined to officially open the project on January 14, the Berlin-based environmental and consumer organization Deutsche Umwelthilfe (DUH) has said that the draft permitting documentation for the Lubmin FSRU, released at the eleventh hour by regional authorities, addresses neither the project’s climate impacts nor the impacts of shuttle ships that will cross the ecologically sensitive Bay of Greifswald up to six times a day. DUH’s Head of Energy and Climate Protection Constantin Zerger questioned the need for a rush job in light of a recent announcement from Germany’s Federal Network Agency allaying fears of gas shortages across the country this winter. (DUH [German], LNG Prime, GEM.wiki)
Scottish government lays out position for accelerated oil and gas exit: A draft energy strategy published by the Scottish government proposes “the fastest possible just transition” away from oil and gas and abandons the concept of maximizing economic recovery from North Sea reserves. The draft strategy is now open to consultation for four months. Industry body Offshore Energies UK said it was “concerned at the statement’s suggestion of accelerating the decline in oil and gas production.” The licensing and approval of oil and gas in the North Sea continues to be reserved to the UK government. Friends of the Earth Scotland expressed disappointment at the draft’s lack of ambition and detail and also warned the government to “reject the dodgy technology of carbon capture and storage and fossil hydrogen which is being pushed by the profiteering oil and gas industry who want to keep us locked into this harmful system.” (BBC, The Financial Times, Friends of the Earth Scotland)
Doubts persist over EU-financed terminal in Cyprus: Just days after local media warned of a potential “fiasco” shaping up at the proposed floating LNG terminal at Vasilikos in Cyprus, it has emerged that construction work on the highly delayed project is supposed to begin next week. The beneficiary of grants and loans totalling €331 million (US$356 million) from the European Bank for Reconstruction and Development, the European Investment Bank, and the EU’s Connecting Europe Facility Funds, the project has been dogged by negative speculation has dogged for several years over an alleged “no-bid” tendering process for the construction contract awarded to a Chinese consortium as well as inflated project costs. The Cypriot government has pledged to have the terminal completed — well behind the original schedule — by the middle of this year. Last week, people familiar with the project were reported as saying that this timeline was now impossible, with even a 2024 start-up date in doubt, as the project infrastructure — both on land and at sea — is basically “non-existent.” (Cyprus Mail, Philenews, Philenews [Greek])
Momentum on the rise for gas cooker bans in Europe and the U.S.: A new study by a group of European health groups has found that gas cookers/stoves release “as many pollutants as second-hand smoke” and that cooking on gas without ventilation causes indoor nitrogen dioxide levels to regularly exceed WHO air quality guidelines and EU pollution standards. The findings echo an end-of-year study that showed that gas stoves are responsible for 12.7% of childhood asthma cases in the U.S. Speculation is mounting, alongside storms of outrage from America’s conservative right, that based on this evidence the Biden administration may move on some form of a country-wide gas stove ban or restrictions via the U.S. Consumer Product Safety Commission. (Euronews, Oilprice.com)
EastMed’s prospects thought to be sinking due to LNG alternative: After years of delay and uncertainty, recently reported comments from a senior gas executive suggest that the East Mediterranean pipeline to transport gas to Europe is at high risk of being canceled. EastMed’s promoters, Italy’s Edison and Depa of Greece, have been expected to target gas from Israel’s Leviathan field in order to realize the US$6 billion mega project. However, speaking to Upstream, Yossi Abu, chief executive of Leviathan partner NewMed Energy, said that all the field’s partners were now “fully aligned” to develop a floating LNG facility that “looks much more attractive than the East Med pipeline” in terms of costs and fewer technical challenges. Should this decision be formalized, Edison and Depa’s prospects for tapping alternative gas sources are thought to be thin, if not off limits, due to rising gas demand elsewhere in the region. (Upstream)
Blue hydrogen to feature in Germany-Norway green partnership: As part of a newly agreed “green” strategic partnership between Germany and Norway, the countries’ respective energy companies RWE and Equinor have announced that they will build new “hydrogen-ready” gas power plants as well as a large-scale pipeline to send the low-emissions fuel to Germany from Norway. Under the agreement, peaker plants with 3,000 megawatts (MW) of capacity are to be operational in Germany by 2030 and will initially run on gas supplied by Equinor, with the feedstock subsequently shifting to low-carbon blue hydrogen and then, ultimately, to zero-emissions green hydrogen. Pending the results of a feasibility study expected in spring this year, the estimated €3 billion (US$3 billion) pipeline will run from gas fields in the Norwegian Sea to Germany’s Frisia region where it will hook up with a yet-to-be-constructed hydrogen pipeline network. (Deutsche Welle, Euractiv, Upstream)
“Policymakers on both sides of the Atlantic must make clear the role of gas in the green transformation as a critical transition fuel for coal-, oil-, and peat-dependent regions in Europe, North America and the developing world,”
said the Atlantic Council, a Washington-based think tank, in a December 2022 briefing paper.
Australia: As part of a general crackdown by the Australian Securities and Investments Commission on greenwashing, aspiring fracker and gas exporter Black Mountain Energy has been fined A$40,000 by the corporate regulator over its claims to be developing a net-zero emissions gas project.
Azerbaijan: Revenues from oil and gas exports totalled US$33.6 billion in the first 11 months of 2022, according to Azerbaijan’s State Customs Committee, more than double the figure for the same period in 2021.
Canada: After several years of delay, construction on the 2.1 million tonnes per annum (mtpa) Woodfibre LNG export terminal in British Columbia is expected to begin this year, with first cargoes estimated for 2027.
China: President Xi Jinping has called for enhanced energy cooperation with Turkmenistan, China’s biggest supplier of piped gas.
Germany: With backing from Berlin, the national grid regulator is aiming to boost gas power plant capacity by up to 21,000 MW above the currently installed capacity of 27,500 MW.
Lithuania: Klaipedos Nafta, operator of the country’s only LNG import terminal, has launched an initial non-binding open season with a view to more than doubling the floating terminal’s capacity by 2026.
Qatar: Chevron Phillips Chemical and QatarEnergy have signed a US$6 billion deal to build a gas-to-plastics plant that would commence operations in 2026.
Republic of Congo: Italy’s Eni has signed a contract to deploy and install a second floating LNG unit with 2.4 mtpa liquefaction capacity at the offshore Marine XII block.
U.S.: A proposal from Kinder Morgan for a 32-mile pipeline to carry fracked gas through three counties in middle Tennessee threatens the area’s rich biodiversity and residents’ drinking water.
U.S.: The ongoing outage since June at the Freeport LNG terminal, which accounts for 20% of U.S. LNG exports, is tipped to be further extended into February at least, say sources.
The Gas Graph
(Last year’s rapid shift away from Russian piped imports means that LNG now makes up 35% of the EU’s gas supply, up from 20% last year, according to data from Bruegel.)
Asia’s first LNG import decline in years may spell trouble for industry ambitions: In the first annual drop since 2015, demand for LNG in key Asian markets declined 7% overall in 2022. According to a research note from the Institute for Energy Economics and Financial Analysis (IEEFA), this decrease was chiefly driven by average spot market prices in the region hitting levels that were more than double those seen in 2021. Among the casualties from last year’s hugely elevated LNG prices were a string of private and state-owned utilities that incurred losses running to tens of billions of dollars. If prices remain volatile, believes IEEFA, then the region’s importers may increasingly choose to minimize LNG consumption, which would be a serious dent in the LNG industry’s long-held expectation that Asia is its key long-term growth market. (IEEFA)
ADNOC announces major decarbonization drive alongside gas expansion moves: Abu Dhabi National Oil Company has announced a US$15 billion investment plan aimed at realizing its “net zero by 2050 ambition” while at the same time taking steps to develop its gas business further, including LNG expansion plans aimed at international markets. The company’s decarbonization drive will include renewable energy and energy efficiency investment projects to be announced throughout 2023, alongside a primary emphasis on developing hydrogen and carbon capture and storage. Meanwhile, a newly formed gas unit, ADNOC Gas, is seen as essential for “unlocking the full value of the UAE’s vast natural gas resources,” according to industry minister and ADNOC group CEO Sultan Ahmed Al Jaber. The new unit will be involved in LNG expansion plans that are rumored to be targeting opportunities in Africa. (Upstream, Energy Voice)
Chevron planning to prolong Australian operations beyond 2056: U.S. congressional committee hearings into fossil fuel industry disinformation have revealed that Chevron intends to extract gas from its Gorgon project on Barrow Island, off the coast of Western Australia, beyond 2056. The information was found in subpoenaed internal company documents and was included as evidence by the committee as an example of how the industry is “doubling down on long-term fossil fuel investments” while publicly claiming that gas is “merely a ‘bridge fuel’ ” to cleaner energy. (The Saturday Paper, Members of the U.S. House Committee on Oversight and Reform)
Sovereign wealth funds continue to favor renewables over oil and gas: The world’s sovereign wealth funds (SWFs) continued their shift away from hydrocarbons and towards renewables in 2022, according to a report from Global SWF, with Middle Eastern and Singaporean investors leading the way. Overall, SWFs plowed US$18.7 billion into renewables last year compared to US$6.7 billion in oil and gas investments. As recently as 2020, the balance was US$8.3 billion and US$14.5 billion, respectively. The expectation is for this trend to continue in the short to medium term, said Global SWF’s Daniel Brett, with North America and, particularly, Western Europe the most favored destinations due to an uptick in investment opportunities being presented. “The problem is now demand for materials in wind turbines and utility-scale batteries. That cost is going up considerably,” commented Brett. (Energy Voice)
LNG trading performance back on course for Shell: Ahead of its full-year company results on February 2, Shell said it was confident of strong fourth quarter LNG trading results in 2022 to compensate for lower than forecast production caused by a plant outage at its Prelude terminal in Australia. The world’s top LNG trader recorded a loss of nearly US$1 billion within its LNG trading division in the third quarter after its traders were caught out by a rally in European gas prices. The company also disclosed that as it aims to focus its oil and gas operations in nine basins around the world, efforts to sell its Norwegian oil and gas fields last year to Harbour Energy had ultimately broken down due to gas price volatility and long-term uncertainty. (Reuters, Reuters)
Elevated Norwegian production set to continue through 2026: Norway's gas production is set to remain flat in 2023 after an 8% rise in output last year to 122 billion cubic meters (bcm). According to forecasts set out in the annual report of the Norwegian Petroleum Directorate (NPD), production will then hit a new peak of 122.5 billion cubic meters in 2025. The NPD calculates that these levels will be able to be maintained until at least 2026 as a result of US$30 billion in new offshore field investments, comprising 13 new field-development plans, put forward last year. (S&P Global, Bloomberg)
“There’s still some quite big heads in the sand. But they will die. They cannot survive. Their Kodak moment is nigh,”
said Nigel Topping, the UK’s COP26 business adviser, on the future of fossil fuel companies.
LNG Terminals in South Korea: Another Plan for Stranded Assets, Plan 1.5, December 2022. [Pdf]
This 7-page briefing analyzes the pre-feasibility studies produced by state-run power companies for a new wave of LNG terminals and finds that the business case for them is undermined by a combination of factors, including overestimated future LNG demand and underestimated costs.
The Climate Impact of Our Insatiable Plastic Addiction, Bloomberg Green, December 30, 2022.
This installment in the “Big Plastic” series provides a visual guide to plastic production’s explosive growth trajectory, with a focus on its epicenter in the U.S.
Gas Export Spotlight: Operational Problems at Cameron LNG and Calcasieu Pass, Louisiana Bucket Brigade, January 10, 2023. [Pdf]
This 15-page report provides documentation and testimony pointing to a wide range of toxic pollutants being emitted at two export terminals in southwest Louisiana where further terminal buildout plans are threatening to turn the region into “an industrial wasteland”.