April 2018, Vol.245, No.4

In the News

World News

French Utility Signs Long-Term Agreement for Mozambique LNG 

Électricité de France (EDF) signed a 15-year agreement for LNG supply from Mozambique Area 1, which will be the southern African nation’s first onshore LNG development.  The sale and purchase agreement (SPA) with jointly owned sales entity Mozambique LNG1 Company Pte. Ltd. calls for the supply of 1.2 mtpa to Paris-based EDF.

The Anadarko-operated Mozambique LNG project is planned to initially consist of two LNG trains with total nameplate capacity of 12.88 mtpa to support the development of the Golfinho/Atum fields located entirely within Offshore Area 1. 

“EDF is one of the world’s largest electric utilities, and reaching this SPA continues to validate Mozambique LNG’s position as a competitive long-term LNG supplier and as one of the world’s leading greenfield projects,” said Mitch Ingram, Anadarko’s executive vice president for International & Deepwater Operations and Project Management. “We anticipate the future development of Mozambique LNG will open new opportunities for the country and serve as a growth platform for its ongoing development.”

Anadarko operates Offshore Area 1 with a 26.5% working interest. Venture partners include Mitsui E&P, with 20% interest in the venture; Mozambique’s National Hydrocarbon Company (ENH), 15%; ONGC Videsh, 10%; Beas Rovuma Energy, 10%; BPRL Ventures, 10%; and Thailand’s PTTEP with 8.5%.

Fluor Starts Front-End Work on Thailand’s First FSRU

Fluor said it has started front-end engineering and design work for Electricity Generating Authority of Thailand’s (EGAT) planned floating storage regasification unit (FSRU) and associated facilities in the upper Gulf of Thailand. 

Located 20 kilometers off the coast of Thailand, the FSRU will enable LNG to be received from cargo ships and transferred as natural gas to pipelines and power plants. Fluor’s scope includes the FSRU, marine berth and jetty, and onshore and offshore pipeline connections. The front-end engineering and design is expected to be completed by midyear, Fluor said. 

EGAT is the country’s largest power producer. In order to meet the country’s increasing electricity demand, Thailand is planning to import 5 mtpa of LNG to fuel its generation plants by year 2024. 

Mexico Annual Oil Output Falls Below 2 Million Barrels a Day

Mexico’s annual crude oil and gas output has fallen below 2 million barrels per day for the first time since comparable yearly records were kept starting in 1990.

State-owned oil company Petroleos Mexicanos reported average daily output for 2017 was about 52,000 barrels short of the 2 million mark.

Production has fallen steadily after peaking at almost 3.4 million barrels of oil equivalent per day between 2003 and 2005 as Pemex struggles to find new reserves to replace aging, shallow water fields.

Figures dipped below the 2 million barrel mark on a monthly basis starting in July.

The company was unable to provide data from before 1990, when crude output ran at about 2.5 MMbpd.

Cheniere Announces LNG Agreements with CNPC

Cheniere Energy announced that its subsidiaries have entered into two LNG sale and purchase agreements with China National Petroleum Corporation (CNPC).

Under the agreements with Cheniere’s Corpus Christi Liquefaction and Cheniere Marketing International, CNPC’s PetroChina International subsidiary will purchase approximately 1.2 mtpa of LNG, with a portion of the supply beginning in 2018 and the balance beginning in 2023. The term of each agreement continues through 2043. The purchase price for LNG will be indexed to the Henry Hub price plus a fixed component. 

“We are pleased to announce these LNG contracts with China National Petroleum Corporation, an important global energy player in one of the largest and fastest growing LNG markets worldwide,” said Jack Fusco, Cheniere president and CEO. “These long-term SPAs build upon the memorandum of understanding we signed in November, and we look forward to a successful long-term partnership with CNPC. We expect these agreements to support the development of Corpus Christi Train 3, and we are now focused on completing the remaining necessary steps to reach a final investment decision later this year.” 

Legal Opinion Rejects EU Regulation of Nord Stream 2

A European Union (EU) legal opinion has rejected a European Commission proposal to regulate Russia’s planned Nord Stream 2 gas pipeline to Germany, dealing a blow to the EU executive’s efforts to stall the project.

The 760-mile Nord Stream 2 would deliver 55 Bcm of gas per year directly to Germany – doubling capacity of Russia’s Baltic Sea pipelines. Last year, the Commission proposed making all import pipelines subject to rules that require they not be owned directly by gas suppliers, apply non-discriminatory tariffs and make capacity available to third parties.  However, the legal service of the Council of the European Union wrote in its legal opinion that applying EU rules to offshore pipelines may violate U.N. law.

According to the opinion, the commission’s proposal “lacks any reasoning on the regulatory power of the Union over offshore pipelines” crossing an EU nation’s exclusive economic zone (EEZ). 

The Nord Stream 2 is being financed  by German energy groups Uniper and Wintershall, Anglo-Dutch group Shell, Austria’s OMV and France’s Engie.

New Guinea LNG Project Delayed by Earthquake

ExxonMobil said production was shut down for about two months at the Papua New Guinea LNG project following a 7.5-magnitude earthquake.

“While the gas conditioning plant was safely shut in, there has been some damage to various pieces of equipment and foundation supports that will need to be inspected and repaired,” ExxonMobil said. “Initial visual inspections of the major processing equipment indicate that they may not have been significantly impacted.” 

ExxonMobil is the operator and largest shareholder of the project that includes a 700-km (435-mile) gas pipeline that connects gas reserves in PNG’s jungle Southern Highlands to a coastal liquefaction plant. Oil Search Ltd and Santos are also project partners.  

Oil Search said the Agogo production facility and the Moran field were the most affected by the quake, and major repairs will be required before production can restart. The timeframe to restart production through Agogo is still being reviewed.  

Uzbekistan May Resume Exploration in Afghanistan

Uzbekistan is considering a resumption of oil and gas exploration in Afghanistan, Russia’s RIA Novosti news agency reported, following talks between representatives of the two countries.

The meetings reportedly included discussion of accelerated development of strategic infrastructure projects, including railroad and power transmission lines.  The reports followed earlier word that the Uzbekneftegaz national holding company may participate in construction of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline. P&GJ

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