Rule of law on the line as Guyana seeks U.S. finance for gas expansion: As Guyana’s government seeks private sector partners to build and finance new gas infrastructure, the public sector Export-Import Bank of the United States (EXIM) has been urged to “respect the rule of law” in the Latin American country and turn down a US$646 million loan application made by the government last year to help cover the cost of the proposed US$759 million gas-fired Wales power station and associated gas liquids facility. A recent letter to EXIM president Reta Jo Lewis noted that a permit granted to a pipeline integral to the gas complex, and being built and financed by ExxonMobil, was judged to be illegal and “improper” in October last year by Guyana’s High Court. Also at issue is a contested February 2023 decision from the country’s Environmental Protection Agency to exempt the proposed 300 megawatt (MW) Wales plant from undergoing an environmental impact assessment. Guyanese lawyer Melinda Janki has challenged the exemption as being illegal due to its violation of the country’s Environmental Protection Act. While the government in Georgetown looks to cash in on the estimated 480 billion cubic meters of recoverable gas reserves that have been found at ExxonMobil’s major Stabroek block, and aside from legal controversies, renewable energy advocates in Guyana say that the gas expansion plans run contrary to the country’s 100% renewables pledge, would crowd out the development of renewables, and would be financially crippling for the economy. (Kaieteur News, BNAmericas, Institute for Energy Economics and Financial Analysis, GEM.wiki)

LNG tanker disruptions caused by Red Sea unrest are livable with for markets — for now: Heightened security threats have forced LNG suppliers to stop using the Red Sea and the Suez Canal and instead incur significantly longer and more expensive transit times by rerouting via the Cape of Good Hope in southern Africa. Two to three LNG vessels per day usually take the Red Sea passage. Qatari and Russian suppliers are the most affected by the escalation in regional tensions since Yemen’s Houthi group intensified attacks on commercial ships in the region. While 80% of Qatar’s LNG volumes supply Asia, and are so far unaffected by the disruption, Qatari prime minister Sheikh Mohammed Bin Abdulrahman Al Thani warned that retaliatory attacks carried out by the U.S. and allies on Houthi positions in Yemen “will create a high risk of further escalation and further expansion.” Qatar’s smaller exports to Europe, though, will be delayed. For now these restrictions on its second-biggest LNG supplier have not led to panic in European gas markets due to abnormally high gas inventories and weak demand from the continent’s industrial sector. (Bloomberg, Reuters, Bloomberg) 

Deindustrialization grips Europe, gas-dependency a key factor: The latest Eurostat figures on month-on-month industrial production in the EU have been described by a top trade union official as “very worrying.” Pointing to energy-intensive sectors such as the aluminum, fertilizer, and chemicals industries, European Trade Union Confederation Confederal Secretary Ludovic Voet commented: “Factories are closing and jobs are being cut in the very sectors that lifted Europe to where it is today.” With the continent’s gas and electricity prices currently falling but still two-to-three times above pre-crisis levels, Eurostat data for November last year showed EU manufacturing output at its lowest monthly level since September 2021 following a 6.3% decline compared with November 2022. Production in the EU’s most gas-intensive industrial sectors — with the exception of chemicals — was also much lower than a year earlier, mirrored by negative annual performance in Germany (gross domestic product contracted by 0.3% last year), the Netherlands, Italy, and France, four of the top gas-consuming countries. The EU’s high gas import-dependency “has widened the relative disadvantage of European producers with respect to the USA,” the European Commission said, as it warned of energy prices remaining elevated for the foreseeable future. S&P Global has also forecast European power prices remaining “high until 2025” but expects a sharp decline in electricity prices from 2026 due to a surge in renewable energy capacity. (Argus, EURACTIV [registration required], EURACTIV)

U.S. proposes first-ever fee on methane emissions from big polluters: The U.S. Environmental Protection Agency (EPA) has laid out details on how it aims to penalize emitters of the potent greenhouse gas, with companies to start paying next year for excess emissions they report in 2024. The Waste Emissions Charge, which the EPA intends to finalize and start implementing later this year, will apply to more than 2,000 oil and gas facilities across the country that report methane emissions of more than 25,000 metric tons of CO2 equivalent per year. The penalty fee starts at US$900 per metric ton of wasteful emissions in 2024, increasing to US$1,200 for 2025, and US$1,500 for 2026 and beyond. The scheme is expected to cost operators US$750 million in the first year and fees will be levied only on emissions that exceed statutorily specified levels, ranging from 0.2% of gas sent to sale from a gas facility to as little as 0.05% of gas sent through a processing plant. With the EPA’s rationale being to “incentivize industry innovation and prompt action,” the American Petroleum Institute said it would push the U.S. Congress to cancel the fee, which its vice president Dustin Meyer said was a “misguided new tax on American energy.” (Argus, Reuters) 

Berlin on the backfoot with hydrogen power plans as industry presses for focus on gas: Fragile German government ambitions to develop a fleet of state-subsidized hydrogen-fired power plants with up to 23,800 MW capacity to back up wind and solar energy are being seized on by influential industry associations who are now calling for the hydrogen plant plans to be ditched. The massive costs and technical complexity attached to the hydrogen plant proposals require a reevaluation, according to energy industry association BDEW, which is pushing instead for purely gas-fired power to play a much bigger role in the country’s efforts to decarbonize its power sector by 2035. German vice-chancellor Robert Habeck’s plans to hold a first tender for the new plant fleet in 2026 were seriously hampered by a ruling from Germany’s constitutional court in November that blocked the transfer of billions of euros in state funding for climate and energy transition finance. The first tendering round now looks likely to be delayed until 2028. (Hydrogen Insight, EURACTIV [registration required])
 

Azerbaijan: The Trans Adriatic Pipeline (TAP) consortium is carrying out tests to determine the extent to which the 878-kilometer TAP infrastructure can safely transport hydrogen, initially via blending with gas.

Finland: A video-link meeting between Sauli Niinistö and Xi Jinping, the presidents of Finland and China, involved “constructive dialogue between the countries regarding the Balticconnector pipeline incident,” according to an official Finnish statement. The European Commission provided Finland with €800,000 (US$870,000) in emergency funding following the damage to the gas pipeline. 

France/Spain: EU proposals to give member states the legal option to ban imports of Russian LNG are unlikely to be taken up in the short term by Paris and Madrid. 

Indonesia: Jakarta is looking to address sluggish output by offering exploration licenses in May this year for ten oil and gas blocks. 

New Zealand: The 2018 ban on offshore oil and gas exploration is under threat from the recently elected right-wing coalition government that is looking to overturn the ban this year. 

North Macedonia: Skopje is moving forward with plans to convert a coal power plant and an oil-fired plant to two gas-hydrogen power plants with combined capacity of around 1,100 MW. U.S. firm General Electric is in the running to become a strategic investor. 

Russia: Oil and gas revenues dropped by almost a quarter in 2023 to US$99 billion, according to finance ministry data, due to weaker oil prices and reduced gas sales to Europe. At the same time, oil and gas related exports to Central Asia, Afghanistan, and Mongolia increased by a third. 

Taiwan: The future of LNG will feature in post-election coalition negotiations. All of the main parliamentary parties in the world’s sixth-largest LNG importer favor an expanded role for the fuel. 

U.S.: Freezing temperatures have impacted wells and a key gas pipeline serving northwest states, causing a drop in gas supplies to their lowest level in over a year.  

Karpowership plans powership expansion to Africa, Asia, and Latin America: “In a very short time,” Zeynep Harezi, the chief commercial officer of Karpowership, told Bloomberg, “the construction process of our ships being produced in Turkish shipyards will be completed, and we will be able to offer faster solutions to countries needing electricity.” Harezi’s “faster solutions” comment jars with the Turkish company’s troubles over more than two years to break into the South African power sector, which resulted at the end of 2023 in the national authorities rescinding its promised grid access. In recent years, Karpowership has also attracted controversy in some of the eight African countries in which it currently operates by turning the lights off when cash-strapped governments have struggled to pay power bills. Expansion of the company’s fleet of floating gas-fired electricity plants from 36 to 50 ships over the next three to five years is now underway to increase installed capacity from 6,000 to 10,000 MW and allow for expansion to Asian and Latin American markets, as well as boosting Karpowership’s presence in up to a further 15 countries, including Kenya and Nigeria. Engine manufacturer MAN Energy Solutions has recently signed a new contract to supply Karpowership with 48 dual-fuel engines to be split between a number of powerships. (Bloomberg, Offshore Energy, Kenyans) 

Challenges to Petro’s just transition vision in Colombia: Addressing this year’s World Economic Forum, Colombian president Gustavo Petro spoke of the climate crisis as the “mother of all problems” and called for a shake-up in the global financial system to radically ramp up support for climate action. Petro has made waves by introducing a ban on fossil fuel exploration, joining the Beyond Oil and Gas Alliance, and — at COP28 — making Colombia the largest fossil fuel producer so far to endorse the Fossil Fuel Non-Proliferation Treaty, which seeks a date for the suspension of fossil fuel exploitation. The moves are not going down well domestically with industry, where the national oil and gas company Ecopetrol and foreign investors are on maneuvers and drilling plans are progressing. Ecopetrol is set to spend approximately US$2.5 billion this year on energy transition strategies that include gas drilling at home and abroad, including in Venezuela, and the buildout of necessary infrastructure. Development of the ultra-deepwater Gorgon discovery with partner Shell is just one big-ticket Ecopetrol project tipped to advance this year. Expansion of Colombia’s LNG import capacity is also being sought by other companies that are pushing forward two new projects. (BNAmericas, Energy Voice)

Huge spike in Russian LNG deliveries to Greece last year, Polish and Dutch terminals remain heavily reliant on U.S. exports: After record deliveries in 2022, Greece’s only operating LNG regasification terminal at Revithoussa saw overall import volumes slump by 27% last year, though Russian imports at the islet facility jumped by over 300%. With a new floating storage and regasification unit due online at Alexandroupolis in the next few months and four further floating import projects still proposed, data from the Greek gas grid and LNG terminal operator DESFA showed that total national gas imports fell by 21% in 2023 alongside a drop in total gas demand — combining domestic consumption and exports — of 21%. In Poland, the nation’s only operating terminal at Swinoujscie recorded LNG imports of 4.66 million tonnes in 2023, an almost 6% annual rise, chiefly via long-term and spot purchases from U.S. suppliers. At the soon to expand, 12 billion cubic meters per year capacity Dutch Gate terminal in the port of Rotterdam, a record number of vessels for unloading and loading were handled, with shipments received from U.S. terminals up roughly 15% from 2022. (LNG Prime, LNG Prime, LNG Prime) 

Total confirms force majeure on Arctic LNG 2 project: Following comments last month from Russian government sources that foreign shareholders had suspended their participation in the Novatek-led export plant, TotalEnergies confirmed that it has initiated force majeure. In doing so, the French company said it was not planning to take any shipments from Arctic LNG 2 in 2024 due to U.S. sanctions. With initial production underway in the Gydan Peninsula, industry sources have suggested that the project’s first shipment of LNG is expected at the end of this month, though the volumes involved are likely to be “very minimal.” One source said that the cargo could be destined for China or South Korea. (Reuters, Reuters)

Analysis shows 2023 was a hot year for U.S. LNG financing: Commercial lending and bond issues for LNG in 2023 were largely confined to U.S. projects, according to analysis from Poten & Partners. Describing it as a record year for externally generated funding, the shipping and commodities consultancy recorded a total of US$54 billion in transactions, driven by major project finance deals for new U.S. export terminals: NextDecade’s Rio Grande LNG Phase 1, Sempra’s Port Arthur Phase 1, and Venture Global’s Plaquemines Phase 2. These three deals involved over US$40 billion in financing, according to Wood Mackenzie data. Bond issues, mostly used to refinance bank debt for operating projects, hit a new high of US$12.6 billion in the U.S., while funding from external equity stakes also rose sharply to roughly US$9 billion. Poten’s analysis does not disclose funding entities, but it is thought — in line with LNG financing trends identified by NGOs since the signing of the Paris Agreement in 2015 — that North American, Japanese, and European commercial banks continued to provide the bulk of the financing to the sector in 2023. Chinese lenders, which have historically been minor LNG funders, are reported to be in the frame to support two major LNG projects in Papua New Guinea as Chinese banks are thought to be less concerned about fossil fuel expansion and environmental, social, and governance issues. (Poten & Partners, Wood Mackenzie, Banking on Climate Chaos 2023 [Pdf], Reuters)

Navigating Decisions: The risks to Mozambique from liquified natural gas export projects, International Institute for Sustainable Development, December 13, 2023. (Pdf) 

This 25-page report warns that Mozambique’s LNG export plans, backed by the EU, are storing up a range of negative social, environmental, and economic impacts that are set to jeopardize government revenues and the country’s sovereignty.  

U.S. LNG Exports: Risky, Dirty, and Bad for U.S. Consumers, Institute for Energy Economics and Financial Analysis, January 11, 2024. (Pdf) 

This fact sheet concisely lays out the false promises as well as the domestic and overseas risks attached to the buildout of additional U.S. LNG export capacity.