UK government goes for broke in the North Sea
Electoral desperation and industry donations lie behind UK prime minister Rishi Sunak’s confirmation of 100 new licenses for firms looking to drill for oil and gas in the North Sea, writes George Monbiot in The Guardian.
How LNG took over — and is swamping — the U.S. Gulf Coast
From the southern tip of Texas to southeastern Louisiana, sacrifice zones are being created as a massive export terminal buildout exposes residents to new and dangerous sources of air pollution from flares and leaks, write Lylla Younes and Jake Bittle in Grist.
War profiteering masks oil and gas sector’s decline
Sky-high oil and gas profits have racked up over the last 12 months due to war, but the fossil fuel sector’s plummeting performance in the stock market points to its underlying long-term fragility, writes Tom Sanzillo for the Institute for Energy Economics and Financial Analysis.
U.S. climate hypocrisy has to end
The Biden administration has been quietly but openly violating its own pledge to end overseas public finance for coal, oil, and gas, writes Allie Rosenbluth in Al Jazeera.
International collaboration required for deeper cuts to gas demand
With almost a one-third share of global gas demand, Europe and the U.S. are making significant progress toward structurally reducing their consumption. This needs to be replicated in other major economies for enhanced economic, energy, and climate resilience, write Kamila Godzinska and Maria Pastukhova for E3G.
Multi-million dollar federal handouts announced to cut U.S. methane emissions: The U.S. government is making available up to US$1.5 billion for the oil and gas sector in a funding drive that aims to reduce the equivalent of 15 billion metric tons of greenhouse gas emissions between 2022 and 2055, according to federal agency officials. Up to US$350 million of the grant money, to be allocated under the Inflation Reduction Act, will go to states to help companies voluntarily identify and permanently reduce methane emissions from low-producing wells. The Environmental Protection Agency and the Department of Energy will also invite funding bids from tribal governments, companies, and communities for the deployment of technologies and implementation of best practices in the oil and gas sector. The Biden Administration has also launched a new Methane Task Force to accelerate efforts to tackle the oil and gas industry’s methane pollution. (Reuters, The White House, Earthworks)
Backers target year end opening for new African oil and gas bank: The African Energy Transition Bank, which will be dedicated to funding oil and gas projects on the continent, could be operational by the end of this year, according to the head of the African Petroleum Producers Organization (APPO). At an OPEC meeting last month in Vienna, Omar Farouk Ibrahim, APPO’s secretary general, outlined the progress being made in setting up the institution in partnership with the Africa Export Import Bank, which intends to transfer its oil and gas department to the new bank. The transition bank, set to have initial capitalization of US$5 billion, is designed to reduce dependency on foreign financiers such as the World Bank that have become increasingly reluctant to support fossil fuel investments in Africa. (Energy Intelligence, Business Insider Africa)
EU subsidies for gas projects still on the table in central and eastern Europe despite pushback: New analysis by public finance watchdog CEE Bankwatch Network shows that three out of nine central and eastern European EU member states continue to seek financial assistance from Brussels for major gas investments under the EU’s REPowerEU strategy launched last May. Although they have yet to formally submit their funding proposals, which are due by the end of this month, Bulgaria, Croatia, and Poland are seeking to tap EU public money in order to support six new gas pipeline proposals and two LNG import terminals with estimated overall costs of €1.5 billion (US$1.64 billion). At the same time, Bankwatch’s briefing identifies six countries in the region that are not angling for support for gas projects. Significantly, the REPowerEU proposals of the Czech Republic, Hungary, and Romania are now free of gas investments after initial proposals featuring pipelines and power plants met with pressure from NGOs and were ruled out for support during negotiations with the European Commission. However, the countries are expected to pursue these projects via different sources of finance. (CEE Bankwatch Network [Pdf])
Niger coup puts Trans-Saharan pipeline to Europe in greater doubt: A year on from the signing of an outline agreement between Algeria, Niger, and Nigeria to advance the 4,000-kilometer Trans-Saharan pipeline, the recent coup d’état in Niger threatens the future of the estimated US$13 billion project and the potential delivery of up to 30 billion cubic meters of gas per year to Europe. The EU has suspended financial support and cooperation on security with Niger since the overthrow of pro-Europe President Mohamed Bazoum on July 26. The coup leader, General Abdourahamane Tchiani, is widely viewed as pro-Russia and has already cut Niger’s commodity exports to France. While the mammoth pipeline project received a boost from the three-country memorandum of understanding signed last July, it has made little progress for decades. Its realization is thought to be dependent on financing from the EU, which will become an even dimmer prospect the longer the standoff between Niger’s new military rulers and the West continues. (Business New Europe, The Guardian, Reuters)
Japan’s nuclear revival expected to accelerate LNG import decline: A string of nuclear energy facility restarts are being tipped — alongside warm weather, energy conservation, and renewable energy development — to bring about a 10% drop in Japanese LNG demand this year. LNG imports surged to a peak in 2014 following the Fukushima disaster in 2011 that led to the shutdown of all 54 of the country’s nuclear reactors. One-third of Japan’s 33 remaining commercially available reactors are now back online following the restart of Kansai Electric’s number 1 reactor at Takahama last week. The facility’s 826 megawatt (MW) number 2 reactor is scheduled to restart in September. Data from Japan’s Ministry of Finance show that LNG imports in the first six months of the year have already fallen 13% from a year earlier. A further 3,000 MW of nuclear capacity at three mothballed reactors could be back online within the next year if regulatory approval is granted. (Reuters)
Supreme Court clears the way for Mountain Valley Pipeline completion: Following a July 27 ruling from the U.S. Supreme Court to allow the resumption of construction on the embattled Mountain Valley Pipeline, Equitrans Midstream — the project promoters — said they were now confident of completing the US$6.6 billion pipeline by the end of this year. Set to run from West Virginia to Virginia, the project will be at least five years behind schedule and will cost almost double the original estimate of US$3.5 billion. The company had said just prior to the Supreme Court verdict that it expected the pipeline to come online sometime in the first half of next year. The project’s critics continue to point out that it violated 46 state water quality standards and 139 construction permits in two years. (Reuters, S&P Global)
Australia: Following the release of nontoxic stench gas at Woodside Energy’s Perth headquarters in June by the Disrupt Burrup Hub protest group, the oil and gas company is escalating legal action by threatening to sue two of the group’s activists for alleged financial loss.
Italy: Alleging damages for defamation, Eni has filed a Strategic Lawsuit Against Public Participation (SLAPP) against Greenpeace Italy and ReCommon after the groups brought a lawsuit in May against the oil and gas major for past and potential future damages resulting from its contribution to climate change.
Mozambique: Italian energy services group Saipem is conducting negotiations with TotalEnergies on additional costs for the restart of the Mozambique LNG project; a timeline for the restart remains unclear.
Pakistan: Pakistan LNG Limited has decided not to procure LNG cargoes for early next year from Trafigura due to the high prices offered by the commodities trader.
South Africa: The Department of Forestry, Fisheries and the Environment has ignored appeals from environmental groups and allowed Karpowership to apply for environmental approval of two of its three previously proposed gas-to-power ships.
Trinidad and Tobago: Following a safety incident, Woodside Energy has shuttered oil and gas production at one of its offshore platforms.
U.S.: The Edison Electric Institute, the top U.S. utility lobby group, is lining up to reject some of the Environmental Protection Agency’s proposed rules for reducing emissions at power plants, specifically the deployment of carbon capture and storage at existing gas plant facilities.
ECAs and banks mull US$10 billion Papua LNG project: The TotalEnergies-led consortium has reportedly been sounding out potential export credit agency and commercial bank financiers for the 5.6 million tonnes per year (mtpa) Papua LNG export terminal, according to IJGlobal. Sources familiar with the project told the project finance website that a US$3–5 billion debt package was being discussed, with French bank Crédit Agricole identified as the project’s financial advisor. The names of other institutions involved in the discussions were not disclosed, though the sources suggested that climate risk concerns among financiers could prove to be a hurdle for securing project finance. Alongside TotalEnergies, ExxonMobil and Santos are also major shareholders in Papua LNG and would be expected to directly contribute to project costs. The project has been undergoing front-end engineering studies since March this year, and a final investment decision is expected this year or early next year. Separately, TotalEnergies has said it plans to invest US$100 million in its Argentinian operations in order to cut methane emissions by 80% from their 2020 levels. (IJGlobal [Paywall], Business News Americas)
European energy companies gunning for U.S. exporter over alleged contract breaches: BP and Shell have joined the list of European energy companies seeking redress against U.S. exporter Venture Global LNG over its failure to supply contracted cargoes from the Calcasieu Pass export facility in Louisiana where LNG production started up in January last year. Like BP and Shell, Italian utility Edison is taking arbitration action against Venture Global. Spain’s Repsol and Portugal’s Galp Energia are considering their options, having been similarly affected by the U.S. company’s decision not to honor low-price contracted supply agreements and instead sell hundreds of pre-commercial cargoes on the spot market at a massive mark-up. Venture Global has argued that phase one commissioning of Calcasieu Pass has been prolonged — for over a year — due to the need for extensive repairs to the terminal’s power supply facility and that, therefore, contracted cargoes will not be possible until early next year. According to Mehdi Touil, LNG operations specialist at Canada-based consultancy Solaris, “This is an unprecedented move from this new U.S. developer … They are risking taking a reputational hit and eventually heavy penalties.” (Reuters, Gas Outlook)
Australian regulator orders Shell to fix safety risks at floating LNG terminal: Australia’s offshore regulator has issued Shell with a Notice of Improvement for its floating Prelude LNG facility offshore of Western Australia after workers were exposed to benzene, toluene, ethylbenzene, and xylene when working on a tank in December last year. Following an occupational health and safety (OHS) inspection, the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) said that workers had been exposed to a fire or explosion risk during the incident and that Shell Australia has “contravened a provision of a listed OHS law.” Prelude has been dogged by a series of safety incidents since 2019 that have seen the project temporarily closed down on several occasions, including after a fire incident in December 2021. NOPSEMA’s inspectors have given the company until the middle of this month to ensure that Prelude is compliant with Shell’s own safety requirements. Until it sees evidence of the requisite measures being put in place, the regulator contends that “Shell is likely to contravene again.” (Upstream, GEM.wiki)
New analyses reemphasize Wall Street’s devastating impacts: Separate, newly published fossil fuel financial analyses have thrown more light on how the world’s top commercial banks continue to drive the climate crisis through capital markets activities and lending for the most aggressive oil and gas developer companies. A briefing from the Sierra Club drills down on the more opaque bonds and equity underwriting of the six largest U.S. banks and shows that between 2016 and 2022 they underwrote US$266 billion in new bond and equity issuances for 30 of the world’s top fossil fuel expansion companies. This represents over 60% of their overall support in the time period for major polluters such as ExxonMobil, BP, and Saudi Aramco. North American NGO STAND.earth has identified JP Morgan and Citibank as the top two financiers of oil and gas production and infrastructure in the Amazon basin over the past 15 years. The Wall Street banks were responsible for US$3.8 billion in loans and bonds for hydrocarbon development in the increasingly fragile rainforest, out of US$20 billion overall extended by a total of 160 banks in the period since 2009. (Sierra Club [Pdf], Sierra Club, Bloomberg)
The Tellurian project puzzle continues, key financing pieces still missing: After a more than four-year fruitless struggle to raise project financing for its proposed US$13.6 billion Driftwood export terminal in Louisiana, U.S. LNG company Tellurian has completed its latest unconventional financial maneuver. It has agreed to a sale and leaseback deal worth US$1 billion with an affiliate of New York-based asset management firm Blue Owl Capital for 800 acres of land at the Driftwood site. Tellurian will lease the land for 40 years in return for the cash injection, which observers say give it a temporary lifeline with commitments from project backers still missing and competitor terminals moving forward. Tellurian’s charismatic chairman Charif Souki was typically upbeat about the latest deal, saying it would “allow us to continue to put the pieces of the puzzle together.” Commenting on the “deeply troubled project,” Clark Williams-Derry of the Institute of Energy Economics and Financial Analysis said, “It gives them a little bit of runway before they run out of cash, but they still haven’t secured either the equity commitments or the buyers to finance the project.” (Houston Chronicle, LNG Prime)
Exxon aiming to double its LNG portfolio by 2030: Alongside the U.S. Permian Basin, Guyana, and Brazil, LNG is a priority investment area for ExxonMobil this decade, according to a senior executive who set out the company’s plans to be handling 40 mtpa of LNG by 2030, up from 22 mtpa currently. Exxon is currently involved in the development of major LNG projects in Mozambique, Papua New Guinea, and Qatar, as well as the Golden Pass terminal in Texas, due online next year. European and Asian buyers are the key targets for Exxon, said Andrew Barry, vice president in charge of the company’s LNG marketing. Opportunities in China and Japan particularly are expected to open up. “There are a number of long-term contracts that are ending over the next few years in Japan,” said Barry. “We have a good amount of supply coming on and we’re talking to many of the Japanese buyers about opportunities.” (OilPrice, Nikkei)
LNG Edge: Q2 2023 Trade Flow Report, Independent Commodity Intelligence Services, July 24, 2023. (Pdf)
This 16-page report provides a breakdown of global LNG trade flows (exports and imports) and shows year-on-year increases from April to June 2023 amidst a more benign, relatively steady price environment.
Q&A: Understanding Vietnam’s emergence as the world’s newest LNG importer, Center on Global Energy policy, Columbia University, July 27, 2023.
This online primer assesses the heavy lifting required to achieve the ambitious LNG component within Vietnam’s latest Power Development Plan published in May this year.