Italian government backs two white elephant LNG projects in new law: Amid industry projections of declining gas demand, newly passed energy legislation has thrown a lifeline to two onshore LNG import terminals in the south of Italy that have been frozen since first being proposed in the 2000s. With a combined capacity of 20 billion cubic meters per year (bcm/y), Enel’s Porto Empedocle terminal and the Gioia Tauro terminal backed by Iren and Sorgenia are now deemed to be “strategic interventions of public utility, non-deferrable and urgent” under the new state decree. Acceleration of the two projects, which have attracted widespread public opposition in the past, could follow with state guarantees to help cover overall costs of approximately €2 billion (US$2.2 billion), though potential funding from Brussels has not been detected. “Investing in this kind of permanent gas infrastructure would be ridiculous when Italy’s gas demand is falling,” commented Elena Gerebizza from the Rome-based campaign group ReCommon. Earlier this month, the head of gas grid operator Snam said he expected the country’s total gas consumption to fall this year to 62–64 bcm from 68 bcm in 2022. A new floating terminal in the Tuscan port of Piombino was added this summer to five already operating import facilities, with a further project off the port of Ravenna planned to come online in the second half of 2024. (Reuters, Reuters, GEM.wiki, GEM.wiki) 

Methane reduction regulations appear to be failing in Mexico: The only G20 and OECD country not to have set a net zero emissions target, Mexico is also coming under fire for failing to ensure its oil and gas sector’s compliance with methane regulations introduced two years ago. According to the Mexican Methane Emissions Observatory, an initiative launched last year by three environmental groups, a mere 28% of oil and gas companies operating in the country — ranked last year as the world’s eighth biggest flarer — have so far submitted programs designed to reduce emissions. While this represents a 7% rise on last year’s figures, the Observatory said that the data was not foolproof due to a lack of transparency around compliance. Last year, President Andres Manuel Lopez Obrador, who favors the state monopoly Pemex increasing its production, said the company would invest US$2 billion to improve infrastructure to reduce flaring and methane emissions. While the specifics on how that money has been used remain unclear, Pemex managed to reduce its flaring volumes in the third quarter of this year by 20% compared to the same quarter last year. However, a fire at an offshore platform in July contributed to a 35% increase in the company’s flaring compared to the previous quarter. (Argus, Argus)

Xi has Putin over a barrel for Power of Siberia 2, say sources: Negotiations on the proposed Power of Siberia 2 (PoS2) gas pipeline are reported to be stretching a “no limits” strategic partnership between China and Russia, with President Xi Jinping now firmly holding the whip hand over his counterpart. Vladimir Putin’s hoped-for deal on the 50 bcm/y export project — cost estimates range from US$4.5–13.5 billion — again failed to materialize at last month’s Belt and Road Forum in Beijing amid Moscow’s increasing desperation to secure a destination for an estimated 100 bcm of Russian gas that has very few places to go since piped supplies to Europe largely dried up last year. “In terms of construction,” an unnamed source told the South China Morning Post, “[Beijing] wants to make sure that they have no risks and no costs. Russia is the side that foots the entire bill.” Putin and other senior officials continue to vigorously tout the Gazprom-owned and operated project, and there are claims that construction could start after the first quarter of 2024. A former senior Mongolian official went on the record to reject such a schedule, saying that fundamental issues such as pricing and taxes have yet to be hammered out. Many analysts expect Xi to increase his bargaining power by further delaying a decision while China awaits an influx of new LNG supply in the second half of the decade from Qatar, the U.S., and Russia’s Novatek. (South China Morning Post, Energist Substack) 

Greenpeace calls out “carbon neutral” LNG deals: Since the first sales of so-called “carbon neutral” LNG began in 2019, a new report from Greenpeace East Asia finds that 85% of these cargoes have been sold to buyers in Asia and involve carbon offset credits of questionable effectiveness. Focusing particularly on deals signed between Shell and Chinese buyers Petrochina and China National Offshore Oil Corporation, companies that have failed to make strong emissions reduction commitments, the group’s analysis identified the common weaknesses attached to forestry carbon offset projects around the world such as poor measurement standards and liability to double-counting. In addition, the companies’ attempts to balance out emissions through the use of 15 forest offset projects in China are undermined by the significant risk, says Greenepeace, of the projects’ planted trees burning down. As the debate over “carbon neutral” LNG hots up, an Australian carbon assets manager writing in The Nikkei backed offsets as a “simple to achieve” solution for boosting exports to Asia. Rich Gilmore, the chief executive of Carbon Growth Partners, claimed that the effectiveness of carbon credits has been proved by “credible scientific studies” but lost sight of due to recent negative media coverage. (Greenpeace, Reuters, Nikkei)

European Commission slammed for greenlighting new money for gas in Croatia and Poland: Public finance watchdog CEE Bankwatch Network has criticized the European Commission’s endorsement of crisis recovery plans submitted by Croatia and Poland that include the earmarking of €1.2 billion (US$1.3 billion) in EU public money that will support LNG import facilities and the construction of new gas pipelines in the two countries. Described as “necessary” by the Commission to ensure security of gas supply in central and eastern Europe, two LNG projects in particular — a new floating terminal in Gdansk and expansion of the Krk terminal in the Adriatic — are facing stiff public opposition due to environmental and climate concerns. “It’s simply unacceptable that public funds are still being used to bankroll new fossil gas projects,” commented Bankwatch campaigner Gligor Radečić. “The companies set to directly benefit from these funds posted record profits from the energy crisis last year.” (CEE Bankwatch Network)

EU project list draws criticism as gas operators prevail on new hydrogen network rules: Announcing the European Commission’s latest and sixth list of Projects of Common Interest/Projects of Mutual Interest, 166 cross-border energy investments that can tap a grant pot of over €5 billion (US$5.4 billion) and benefit from accelerated EU approvals, EU energy commissioner Kadri Simson remarked: “The era of EU funding for fossil-fuel infrastructure is over.” Of 68 hydrogen transmission projects set out in the new EU list, which also includes 14 carbon capture and storage projects, a pipeline proposed by Norway’s state-owned oil and gas company Equinor to export blue hydrogen from Norway to Germany was singled out for criticism by Global Witness. The pipeline would rely on two large-scale hydrogen plants planned by Equinor and Shell, and analysis by the campaign group predicts these facilities would burn 13.7 bcm/y of gas, more than Ireland, Denmark, and Portugal’s combined annual gas consumption. Analysis from Food & Water Action Europe also raised concerns about the costs of the listed hydrogen transportation projects, all of which, the group’s research has found, have been put forward by the fossil fuel industry, and none have received an independent climate impact assessment. The new project list was unveiled just after legislators had reached agreement on new rules — the first part of the EU’s hydrogen and gas package — governing the extent to which the owners of the bloc’s existing gas network will be allowed to own and operate hydrogen pipelines in the future. While most EU member states and green groups had been calling for measures to prevent likely conflicts of interest and monopoly practices caused by gas operators maintaining a majority share of the new hydrogen market, pressure led by Germany with support from a handful of other countries resulted in a compromise agreement that will allow network operators to simultaneously own gas and hydrogen infrastructure provided they have less than 100,000 customers. (Hydrogen Insight, Global Witness, Food & Water Action Europe, EURACTIV [registration required], EURACTIV) 
 

Australia: Squadron Energy has abandoned plans to build a gas power plant linked to the Port Kimbla LNG import terminal in New South Wales amid reports that the under construction floating facility has secured no supply contracts. 

Belgium: Fluxys is testing market interest for importing “low-carbon” gases such as bioLNG and hydrogen/ammonia at its LNG import facility in the port of Zeebrugge.

Cambodia: Prime Minister Hun Manet has confirmed the cancellation of a controversial, pre-construction 700 MW coal plant, with talks under way on replacing it with an 800 MW gas-fired plant that would require the construction of the country’s first LNG import terminal. 

Czech Republic: Majority state-owned utility ČEZ has booked 2 bcm/y of replacement capacity for 15 years — with an option to extend to 25 years related to the future availability of green hydrogen — at the onshore Stade LNG import terminal, expected to be operating near Hamburg in 2027.  

Finland: The Balticconnector pipeline running between Estonia and Finland is expected to see an increase in capacity after the completion of repair work in the second half of 2024. 

Indonesia: President Joko Widodo launched the construction of a carbon capture, utilization and storage (CCUS) project in West Papua province. BP is believed to have made a US$2.6 billion investment in the country’s first carbon storage project, which is expected to start injecting in 2026. 

Mexico: Mexico Pacific has awarded the engineering, procurement, and construction contract for the 800-kilometer Sierra Madre pipeline that would deliver gas to the not-yet-sanctioned US$14 billion Saguaro Energía LNG export facility in the Gulf of California. 

Mozambique: The foreign ministers of Japan and Mozambique reaffirmed their countries’ cooperation on resuming development of the frozen Mozambique LNG project, in which the Japanese trading house Mitsui has a 20% stake. 

Netherlands: Dutch analysts are predicting that the manifesto plans of the Party for Freedom, which won the most parliamentary seats in the recent national election, to step up oil and gas production in the North Sea are unlikely to survive ongoing coalition negotiations. 

South Africa: Karpowership has been granted an environmental authorization by the Department of Forestry, Fisheries and the Environment for its 320 MW gas-to-power ship project in Saldanha Bay. Last month’s approval for the Turkish company’s 450 MW Richards Bay project is being appealed by environmental and social justice organizations represented by the Centre for Environmental Rights, which says that by law the environmental authorization is suspended until the appeal is finalized.  

Spain: Surging wind and hydro generation over the last two months has resulted in weak gas-fired generation and unusually high stocks of LNG in storage. 

Embattled Gazprom courts controversy in South Africa: Reeling from the effects of gas pipeline exports to EU customers reduced to approximately 20 bcm for the first nine months of this year as compared to 146 bcm for the whole of 2021, Gazprom has announced that it will have to cut investment spending on energy projects and infrastructure in 2024 by around 20% to 1.57 trillion rubles (US$17.8 billion). The company has also been hit badly by steep tax rises imposed by the Kremlin in order to help fund the war in Ukraine, although the Russian parliament has just backed the introduction of proposed measures that would provide Gazprom with greater revenue stability from domestic gas sales to bankroll capital-intensive projects. A surprise boon to the Moscow gas complex appears, however, to be taking shape in South Africa where state-owned Petroleum Oil and Gas Corporation of South Africa (PetroSA) is lining up to partner with a local subsidiary of Gazprombank for a US$200 million restart of a gas-to-liquids refinery in Mossel Bay. In a controversial tendering process, Gazprom’s banking subsidiary — Russia’s third-largest bank and the subject of partial sanctioning by the U.S. — has been prioritized over 19 other companies by the South African government for a project that it hopes can jumpstart the gas industry and revive the fortunes of PetroSA. A project decision is pending, amid sanctions-related concerns for South Africa of taking Russian investment money and gas. (Barrons, Upstream [Paywall], AmaBhungane)

New Petrobras strategy boosts CAPEX and hydrocarbons expansion: A newly unveiled strategic plan from Brazil’s state-owned Petrobras, which foresees capital expenditure rising by 31% in the 2024–2028 period to US$102 billion, will be heavily reliant on value generation from oil and gas investments financing what the company describes as “the just transition.” While US$73 billion will be devoted to exploration and production activities, US$11.5 billion has been earmarked for decarbonization projects such as wind, solar, CCUS, and hydrogen. The company plans to drill around 50 wells in regions where it has secured exploration rights and the new strategy also contains the ambition to boost domestic gas supply with investments of roughly US$7 billion over the next five years. The realization by 2029 of three significant pipelines — Route 3, Raia, and Sergipe Águas Profundas — are integral to the investment plan. (Offshore Energy)

Santos again delays final investment decision on controversial unconventional gas project: At an investor day briefing, a spokesperson for the Australian gas producer commented: “Ongoing approvals uncertainty means that the target FID-ready date for Narrabri has moved out by one year to 2025. Years of moratoriums, inquiries and regulatory delays have prevented development.” The A$3.6 billion (US$2.5 billion) Narrabri coal-seam gas project in northwest New South Wales, which would involve the drilling of 850 wells across 95,000 hectares of agricultural land and a state forest in New South Wales, has received approval from both the state and federal governments despite overwhelming opposition from the local community, including Gomeroi traditional owners and farmers. The latest blow for the company’s plans is thought to be linked to a decision by the federal government, announced the day before the FID update, that it will reconsider assessment of the Hunter Gas Pipeline under national environmental laws. In 2009, Canberra opted not to assess the pipeline, which has been approved to connect a gas hub in Queensland to the Narrabri project, but a request for a rethink submitted last year by the Lock the Gate Alliance and community groups has forced the issue. Santos has also signed an agreement with the UAE’s Abu Dhabi National Oil Company to explore the potential for providing CCUS services to heavy-emission sectors throughout the Asia-Pacific region. (Upstream [Paywall], Offshore)

BP’s field exit suggests long-term challenges for Senegal’s expansion plans: Senegal’s minister of oil and energy has told the national parliament that BP gave up its stake in the Yakaar-Teranga gas field earlier this month because the company had wanted to export gas from the 25 trillion cubic feet prospect. The Senegalese government says that it is instead seeking to use the gas to fire domestic power plants, although the country’s domestic market is known to be small. Moreover, the field is linked to a proposed and sizable 10 mtpa LNG export hub, and there is speculation that the ongoing difficulties at the country’s Greater Tortue Ahmeyim floating LNG export project convinced BP not to repeat the experience with another major investment. The U.S.company Kosmos Energy increased its stake in Yakaar-Teranga to 90% from 30% following BP’s decision. An analyst told Inside Gas that Kosmos would be unable to develop the field on its own, and that finding a partner to take on a majority stake and operator role would be challenging. (Bloomberg, GEM.wiki, Upstream) 

New emissions data show Burrup Hub is Australia’s top climate threat project: Woodside Energy’s major gas expansion plans on Western Australia’s Burrup Hub could result in the release of 6.1 billion tonnes of greenhouse gas emissions over a proposed 50-year lifetime, according to estimates provided by Sunrise, Climate Analytics, and Greenpeace, who calculate that this equates to 13 times Australia’s annual emissions. The analysis confirms campaigners’ fears that it would be the most polluting development ever seen in the country, with impacts felt internationally as most of the emissions would be released when the gas was sold and burned overseas. Woodside’s plans are vast and also pose threats to biodiversity and World Heritage-listed marine parks. Extraction at six untapped gas fields, including the Scarborough and Browse fields, and the drilling of 84 wells is proposed. A 50-year extension of Woodside’s North West Shelf LNG terminal is also on the table and requires federal government approval after receiving backing last year from the Western Australian Environmental Protection Authority. Meg O’Neill, Woodside’s CEO, has also announced that the company and partners Timor GAP and Japan’s Osaka Gas have received approval from Timor-Leste to start work on a concept study aimed at expanding the Greater Sunrise gas fields. (Greenpeace, The Guardian, LNG Prime)

Budget cuts are increasingly making European universities a target for fossil funders: A joint freedom of information-based investigation by Investigate Europe and openDemocracy has uncovered the growing influence of fossil fuel companies on Europe’s universities through both funding and industry presence on the institutions’ decision-making bodies. Since 2016, companies including BP, Equinor, and TotalEnergies have plowed at least €260 million (US$284 million) into research, tuition fees, sponsorships, and grants at some of the leading higher education establishments in continental Europe and the UK. Cuts in state funding are making the sector more open to fossil fuel funding, which is financing a range of topics including carbon capture, geothermal and low carbon energy, and battery technology. While universities’ approaches and policies differ widely, Imperial College London — the top recipient of funding by some distance — introduced stricter guidelines for research partnerships in 2020 and no longer accepts funding “that is directed at propagating the existing extraction business,” according to a spokesperson. Focused on UK institutions, the investigation by openDemocracy found that companies have been given “horrifying” influence over degree courses. (Investigate Europe, openDemocracy)

Hydrogen production projects interactive map, International Energy Agency, November 17, 2023. 

This online tool provides project-level data on low-emissions hydrogen production worldwide and shows that for those projects currently either operational or post-FID, blue hydrogen accounts for almost half of all hydrogen production by 20230. 

The Technical Assistance Paradox: How World Bank and ADB advisory services are “assisting” dependency on fossil gas, Recourse et al, November 28, 2023. [Pdf]

This 25-page report exposes how the allocation of small-scale technical assistance financing from the two multilateral development banks is having an outsized influence on shaping gas-friendly energy policies in Asian countries. 

Assessing National Oil Companies’ transition plans: an essential tool for banks, investors and regulators, World Benchmarking Alliance et al, November 28, 2023. [Pdf]

This 33-page assessment of 99 leading oil and gas companies describes the worsening climate performance of NOCs and how governments and financial actors can act to hold these companies accountable to their transition plans.

South Korea’s LNG Overbuild, Institute for Energy Economics and Financial Analysis, November 29, 2023. [Pdf, press release here]

This 29-page report warns that state and private sector plans to realize eleven new LNG import terminals by 2031 presents a high risk of overinvestment amid very low utilization rates at South Korea’s existing terminals.