Three Related Stories - Glencore muscles in on energy majors' LNG turf - Morgan Stanley LNG traders leave for Glencore - Free Market LNG: the Next "Endless Bid?"

First - Glencore muscles in on energy majors' LNG turf

 Trading house pushes into market dominated by energy majors


By Oleg Vukmanovic and Henning Gloystein
LONDON, June 6 (Reuters) - Commodities trading giant Glencore Xstrata's entry into high-margin liquefied natural gas (LNG) trading could mark a turning point for a market long constrained by the grip of major oil companies on long-term supplies.
Glencore has lured a four-person team of LNG traders in London and Singapore from Morgan Stanley, which is reducing its commodity trading.
Dealers said the move could trigger a second wave of new entrants keen to exploit price differences between U.S., European and Asian gas markets.
LNG is among the fastest growing commodity markets as increasing volumes of super-cooled gas are shipped from the Qatar, Nigeria, Indonesia and other countries.
Most LNG trade operates on static long-term agreements controlled by the major oil companies and a few producer countries.
But trading houses such as Glencore and arch rival Vitol are betting that the advent of U.S. LNG exports from 2015 spurred by a boom in shale gas will create space for new entrants.
"What has stifled trading is that nobody could get anything much to trade," the former head of LNG at a major European energy company said.
"The introduction of U.S. volumes linked to (benchmark U.S. gas price) Henry Hub changes everything. The upside is huge and the entry cost is just some salaries," he said. "It's time for the trading houses to give it a push again."
"LNG will continue to be the fastest growing sector of the international energy business for many years," Vitol says on its corporate website.
The trading houses also hope to exploit spot trading opportunities to Asia at a time when European gas trading desks are struggling from low prices and demand in economically depressed Europe.
The U.S. shale gas boom and near record low prices at $4 per million British thermal units (mmBtu) has led companies to build LNG export terminals, boosting the supply of cheap uncommitted volumes, which traders can sell to Asia for as much as $20/mmBtu.
That spread, or arbitrage, as well new supplies from the U.S. and Australia later this decade, should boost spot trading liquidity, and potentially iron out price differences between geographic regions.
Cargoes of LNG can change hands for as much as $50 million each and cash is gushing in to industry leaders such as Shell , Total and BG Group. Their overall trading profits are increasingly supported by LNG trade.
Commodities trading houses such as Glencore, Vitol and Gunvor have made efforts to challenge that dominance.
"Glencore is the type of company that others will follow ...so hopefully it is a sign of people coming back into the market," an executive with a top LNG shipping company said.
Morgan Stanley's LNG trading desk was seen as a big strength of its commodities trading division.
Yet many banks are downsizing their commodities desks because of toughening regulations on proprietary trading, where the banks trade on their own behalf instead of for clients seeking to hedge energy price risk.
Three of Morgan Stanley's LNG traders are based in London and one is based in Singapore, three sources with knowledge of the move said. Information on the timing of the moves was not immediately available.
Morgan Stanley and Glencore declined to comment.
"The LNG guys were the star performers of the European power and gas desk and management tried hard to keep them on board," one trader said. "It will be difficult to replace these guys."
The traders joining Glencore are Maggie Jia, Rajiv Panicker, Lou Montilla and Luis Lesmes, other dealers said.
While trading activity on the spot LNG market is rising, barriers remain as the sector is still dominated by long-term deals between buyers, such as European and Asian utilities, and sellers such as Qatar, the world's top LNG exporter.
New players need access to specially-designed LNG tankers, to the LNG source and in some instances to terminals.
For a financial player, Morgan Stanley has been particularly active trading LNG, especially in sales to Argentina and Spain. Vitol won a Argentina contract last year.

Second - Morgan Stanley LNG traders leave for Glencor

(Reuters) - Morgan Stanley's four-person team of liquefied natural gas traders in London and Singapore are leaving the bank to join commodities giant Glencore Xstrata, industry sources said on Thursday.
Three of the traders are based in London and one is based in Singapore, three sources with knowledge of the move said.
Morgan Stanley and Glencore declined to comment.
It is rare for banks to have active LNG trading desks and Morgan Stanley's team was seen as a big strength of its commodities trading division.
Morgan Stanley has been particularly active trading LNG into Argentina and Spain in recent years.
Morgan Stanley CEO James Gorman hinted in October at a possible sale of the bank's multibillion-dollar oil trading arm that handles energy and some metals trading.
He said Morgan Stanley had an obligation to explore "different structures" for those units because of new U.S. regulations limiting their activities.
Glencore, one of the world's biggest commodity traders, is trading gas and has been looking to expand its LNG business.
  
Third - Free Market LNG: the Next “Endless Bid?”

By. Keith Schaefer
Editor, Oil and Gas Investments Bulletin
 
Liquefied Natural Gas (LNG) prices have long been linked to the price of oil—with gas priced at roughly 13% or 1/8th the price of Brent, with the details determined in confidential contract negotiations.

Asian consumers are tired of this linkage, especially since it has meant prices that are four times higher in Asia than in North America.

In fact Japan spent US$75.4 billion on LNG last year, paying an average price of US$16.60 per million BTU—while gas prices in the United States averaged just US$2.75.

No Japanese politician, economist, or grocer thinks that makes sense. So Asia is trying to lower prices for Liquefied Natural Gas (LNG) as fast as they can.

It’s a fact that de-linking LNG prices from oil to Henry Hub makes a BIG difference for Asian buyers. For example Cheniere agreed to sell 1.6 to 1.8 mtpa to Korean Gas for US$3 per MMBTU plus a 15% premium to Henry Hub prices.

Here's some context to that: On April 30, 13% of Brent would equal $13.47/mcf. On the same day the Cheniere deal would have Korean Gas paying ~$7.51/mcf. That’s a big difference! Cheniere has signed similar Henry Hub-indexed deals with three other buyers.

But Asia doesn’t just want lower prices in individual deals. No, Asian buyers want the market to determine how much LNG is worth –they are convinced the market will push LNG prices down fast with waves of new supply on the horizon.

They may or may not be right on this one.

Futures contracts are the way markets determine how much a commodity is worth. For LNG such a system would also improve the credibility of pricing information and act as a valuable hedging tool.
Japan is pushing for a futures market for LNG—and the potential Canadian supply could be the first to get priced this way.

It’s not just talk. In March Japan’s Ministry of Economy, Trade, and Industry (METI) announced plans to launch the first LNG futures contract at the Tokyo Commodity Exchange in two stages starting in 2014.

Related article: Will Washington Allow US Companies to Export Natural Gas?

The first step would be a cash-settled contract, with settlements based on the spot price on the last session of the month. These cash-settled futures could be sold up to one year forward and would be based in US dollars and metric tonnes.

When I heard this, I called Dan Dicker in New York, former floor trader and author of Oil’s Endless Bid—the best book I ever read about the financialization of commodity prices and what it means for retail consumers (it means higher prices and more money out of our pockets).

My overall question was—would a futures market lower prices? Or would the financialization of LNG do what it did for oil: create endless bids and higher prices? The short answer on both was no.

“Creating a futures market won’t help create a cheaper pricing mechanism,” he told me. “Yes, it’s going to be less related to Brent and more to nat gas—but more to local/Asian nat gas, where prices are high—not North American natural gas. If I was trading physical, that’s how I would expect the new market to react.”

Dicker is the kind of trader who would play in a LNG futures market – and he thinks Asian prices would stay high.

The problem is that a commodity market needs a full complement of players. Producers, wanting high prices, are already long in an emerging futures market. To counter, LNG buyers are naturally on the short side. Then traders enter the scene, playing the difference and speculating on the actual supply-demand situation.

Dicker says it took years for this financialization of natural gas to take hold in the US and it was the investment banks who added enough outside players to make that happen.

To find out what Dan Dicker is investing in now – start a 30 day free trial to Oil & Energy Insider – click here to find out more.

Japan may want free market LNG, but to financialize LNG it will need a bigger playing field.

Japan's utilities are huge buyers of LNG.  But what Japan doesn’t have is a natural market of sellers – they don’t have a large homogeneous group of providers, like the United States has with its oil producers.

So the question is: Could financialization of LNG give rise to an endless bid cycle?

Related article: Recent Events in the Battle to Export US LNG

Might Japan be putting the cart before the horse?

Not only are the players lacking, but Japan’s proposal has some gaping holes. For one, the futures LNG market it imagines would be for true physical delivery— buyers would actually want to take possession of LNG.

In the US, the futures almost never become physical – which is the case with most futures markets. So they – Henry Hub and Japan’s LNG proposal – are very different markets. And there’s little in the way of a blueprint for Japan’s version.

That doesn’t mean we don’t need a better pricing mechanism for LNG. The growing spot market desperately wants one.

The spot LNG market is growing, and fast. Spot trades grew from 10% of global LNG trade in 2003 to 25% in 2011, and volumes continue to climb.

There’s a good reason the spot market is hopping – buyers and sellers want more options. A natural disaster here, a hurricane there – LNG needs can change quickly and so supply flexibility is an increasingly important concept in the LNG world.

For a spot market to hop, however, requires a recognized and reputable spot price…such as a futures market.

It’s a chicken-or-egg scenario, for sure.

While Japan’s futures market could start next year, it will still take years for global LNG prices to break free from oil indexes and secretive long-term contracts. The next wave of LNG supply to come online will be in Australia, in 2015—and they have sold their gas in long-term contracts at oil-indexed prices.
But the system will change, eventually, because LNG is outgrowing its pricing and trade systems. Such is the cost of success.

It will be very interesting to see how it all pans out – and how LNG proposals in Canada react.



The Posts  can be found at:
http://www.reuters.com/article/2013/06/06/morgan-lng-idUSL5N0EI10A20130606

http://www.reuters.com/article/2013/06/06/morgan-lng-idUSL5N0EI0QD20130606

http://www.businessinsider.com/free-market-lng-the-next-endless-bid-2013-6

GAIL, Shipping Corporation join hands for LNG Shipping - The Economic Times

Posted - June 6, 2013 -   The Economic Times

NEW DELHI: State-owned gas utility GAIL India LtdBSE -1.18 % today signed an agreement with national flag carrier Shipping Corp of India (SCI) for transporting liquid gas (LNG) from US.

SCI will help GAIL charter ships to move 5.8 million tons a year of liquefied natural gas (LNG) that the state-run gas firm has contracted from Sabine Pass and Cove Point terminals in US.

The MoU was signed in the presence of GAIL Chairman and Managing Director B C Tripathi and SCI Chairman & Managing Director B K Mandal, a press statement issued by GAIL said.


"The cooperation would include SCI assisting GAIL in the charter hiring of LNG ships and GAIL assigning step-in right to SCI in the ownership of LNG ships," it said.

GAIL has signed a 20-year contract to buy 3.5 million tons a year of LNG from Cheniere Energy Partners' Sabine Pass Terminal in Louisiana, USA for a period of 20 years.

The company has also booked an additional 2.3 million tons capacity at Dominion's Cove Point LNG liquefaction terminal project located at Lusby in the state of Maryland.

"As the agreements are on FOB basis, GAIL is required to make its own arrangements for transportation of LNG from these terminals. The transportation of LNG is expected to begin from mid-2017," the statement said.

Tripathi said LNG has become important business vertical of GAIL and the experience of SCI in the shipping business will bring huge synergetic advantage for both the companies.

"We expect that this partnership will enable faster development of in-house fleet operations capabilities for the company," he said.

Mandal said with several LNG import projects being conceived in the country, LNG is seen as a key growth area for SCI. "SCI is planning to develop separate vertical within the company to manage LNG shipping."

Post to be found:
http://economictimes.indiatimes.com/news/news-by-industry/energy/oil-gas/gail-shipping-corporation-join-hands-for-lng-shipping/articleshow/20463563.cms

Nigeria LNG to buy 6 ships from Samsung, Hyundai - Malaya Business News Online - Philippine Business News | Online News Philippine

Posted - June 6, 2013 -  Written by REUTERS

LAGOS - Nigeria Liquefied Natural Gas Company will sign agreements this week with South Korea’s Samsung Heavy Industries and Hyundai to acquire six LNG carrier ships, two sources close to the deal said on Thursday.
France’s BNP Paribas and Nigeria’s GT Bank are brokering a $1.6 billion loan to help fund acquisition of the vessels and expect to sign the financing documents next week, a banking source said.
“The agreement to buy the ships should be signed before today or tomorrow,” one source told Reuters, adding that NLNG executives had travelled to South Korea for the signing.
The banking source said the loan would be medium-to-long term, with the deal expected to be sealed by the end of March.
Samsung and Hyundai could not be reached immediately for comment.
A spokeswoman for BNP Paribas said it does not normally comment on transactions with clients
NLNG, which is majority owned jointly by Nigeria’s state oil company NNPC and Royal Dutch Shell, said last year it would seek international loans to expand the operations of its shipping subsidiary Bonny Gas Transport Limited, which currently has 24 LNG ships.
NLNG was set up more than two decades ago to harness Nigeria’s natural gas resources and produce liquefied natural gas and natural gas liquids for export.
It has long-term supply contracts with buyers in Italy, Spain, Turkey, Portugal and France and also sells on the spot market.
NLNG has a capacity to produce 22 million tons of liquefied gas a year. It obtains its gas supply from the upstream oil companies and liquefies it for export.

Post to be found at:
http://www.malaya.com.ph/index.php/160-news-flash/32903-nigeria-lng-to-buy-6-ships-from-samsung-hyundai

LNG exports on horizon - Herald Opinions

Posted - June 4, 2013 - 5:20pm By The Chronicle Herald

There’s a race on between British Columbia and Nova Scotia to export liquefied natural gas to energy-hungry Europe and development-hungry India and China.
For Europe and India, Nova Scotia has the edge: location, location, location. Providing Egypt’s Suez Canal is open for business, Halifax is more than 30 per cent closer than Kitimat, B.C., to the west coast of India, home to several LNG regasification terminals.
And the distance from Halifax to the LNG terminal in Rotterdam, the Netherlands, is less than half as far from Vancouver to Rotterdam via the Panama Canal.
Our North Atlantic location gives us an advantage over eastern U.S. ports as well. Halifax is about a full day closer to Rotterdam than New York City.


Pieridae Energy president and CEO Alfred Sorensen. (RYAN TAPLIN / Staff)

The details of distance could do much to explain why Pieridae Energy Canada Ltd. signed a deal last week with German energy company E.ON Global Commodities SE to export more than $35 billion in natural gas over 20 years from a plant proposed for Goldboro, Guysborough County.
Europe is looking for secure supplies and alternatives to Russia’s OAO Gazprom, which has been in a supply-disrupting price dispute with Ukraine.
Pieridae and partner Contact Exploration Ltd. of Calgary are negotiating with Canadian and U.S. natural gas producers to secure supply for the export facility, which would employ about 3,500 construction workers and about 200 employees once the plant and terminal are up and running.
Those are encouraging figures for Guysborough County, particularly hard hit by the outmigration of workers. Statistics Canada says the county’s population dropped by almost 12 per cent from 2006 until 2011.
Last month, Indian firm H-Energy of Mumbai announced it had an option to buy land for an LNG plant and export terminal on the Strait of Canso. Repsol’s Canaport LNG import facility in Saint John, N.B., could also be converted into an export facility.
Experts say the key to getting the first LNG export terminal in the Maritimes off the ground is securing supply.
Phil Knoll of Corridor Resources in Halifax says the Canaport facility, with storage and docking facilities in place, has an edge.
“But it comes down to who can put together the supply portfolio that will allow them to justify going ahead with the actual commitment to build,” he said last month.
Supply shouldn’t be a problem for any of the projects. Gas imports to the Maritimes from the Marcellus and Utica shale gas fields in the eastern United States could expand with Portland Natural Gas Transmission System’s plan to increase its New England pipeline capacity into this region. Gas from Nova Scotia’s offshore and New Brunswick’s gas fields is also available, with the possibility of gas production in Nova Scotia after a moratorium on hydraulic fracturing ends in mid-2014.
When it comes to nailing down supply, Pieridae may be ahead with its deal with partner Contact Exploration to tap Contact’s shale gas potential in New Brunswick.
And if Pieridae can make its Goldboro plant a reality, that will be excellent news for Guysborough County and for the province.

Post to be found at:
http://thechronicleherald.ca/editorials/1133693-editorial-lng-exports-on-horizon

LNG Tech on tap at Europort 2013 - MarineLink.com

Posted - June 4, 2013 - Maritime Reporter & Engineering News - MarineLink.com

Emissions regulations from 2015 onwards are driving shipowners to a crossroads on fuel selection. Ahead of Europort 2013, Rotterdam, Dutch interests are making significant waves in tangible investments in LNG as a fuel option.
While there is not consensus on the potential of liquefied natural gas (LNG) as a marine fuel, the concept is gaining traction rapidly as using LNG reduces nitrogen oxide (NOx) and carbon dioxide (CO2) emissions from ships, as well as allowing operators to meet restrictions set in Sulfur Emission Control Areas (SECAs) today, which tighten from 2015 onwards. With the clock ticking, the coming legislation and the potential for LNG fuel as a viable choice will be a key focus at Europort 2013 Rotterdam November 5-8, 2013. The LNG option offers an alternative to low-sulfur marine gas oil (MGO), which is already favored by some owners for use within Sulfur Emission Control Areas (SECAs). Its attractions offer even more promise beyond 2015, particularly if not enough distillate is available to meet market requirements and alternative scrubbing technologies to continue burning heavy fuel oil remain insufficiently mature. However, there are significant obstacles to overcome, including developing the necessary bunkering infrastructure to support LNG as an alternative to heavy fuel oil and distillates and completion of regulations on shipboard storage of LNG.
Encouraged by government backing and in line with the hub status of Dutch terminals along the Northern port range, companies based in the Netherlands are stepping up to promote LNG as a marine fuel, including the presentation of their  progress at the Europort Advanced Technology Conferences.

The Port of Rotterdam predicts becoming a LNG bunkering hub by 2030

For the Port of Rotterdam itself, LNG as a fuel has already been earmarked as a strategic growth opportunity. The Port, which predicts becoming a LNG bunkering hub by 2030, recently announced a new partnership with Port of Gothenburg looking to promote the fueling option. The aim of the memorandum of understanding is for the ports to work together to have LNG bunkering facilities in place in both locations by 2015. The deal is likely to be the first of a number of joint initiatives with other ports involving Port of Rotterdam, with a view to creating an end-to end-network of LNG bunker opportunities.
Maurits Prinssen, Project Manager at the Department of Port Planning & Development/ Shipping of Port of Rotterdam, said, “Commitment at the European level is needed for this and the partnership with the Port of Gothenburg will be a very important strategic alliance. We believe that Europort 2013 will offer the ideal networking opportunity for key industry players to exchange knowledge and experience as the industry faces a turning point on fuelling.”
Port of Rotterdam is also working with the leading terminal operator ECT and has made land available for an LNG filling station between the Gate LNG import terminal and the Euromax container terminal. Shareholders in the Gate, Vopak, are understood to want to build a smaller outbound terminal on an adjacent site so that LNG imported to Gate can be supplied as fuel for ships, as well as for land-based uses. This concept involves developing a breakbulk LNG facility that will feed satellite LNG terminals in northern Europe and rely on a bunker barge that could deliver LNG to inland waterway, short sea and deepsea vessels calling at the port of Rotterdam.
One company leading the line in terms of firm commitments to LNG as a fuel has been Deen Shipping, which has been operating the inland waterway barge Argonon for almost a year. The first barge of its type in the world capable of running on both LNG and diesel, the 110m long, 6,060 dwt tanker has been designed to burn an 80/20 mix of LNG and diesel.
“The first 12 months of running this barge have been an extremely positive experience, and this has convinced us that LNG is the fuel of the future for inland shipping,” said Gerard Deen, owner. “Operating the Argonon has demonstrated that LNG as a fuel is very clean, cost efficient and reliable compared with marine gas oil.”
Argonon has two standard Caterpillar 3512 engines that use 20% diesel to ignite the gas mixture. These engines have been modified by Pon Power so that the combustion air is enriched with natural gas. Argonon also has two gas turbines to power the electrical system.
Deen Shipping recently joined forces with the Linde group to establish what will be the first LNG bunker station in the port of Rotterdam. Deen said: “We have found a suitable site and hope to be up and running in 2014. I want to convince others that LNG is the way to go for inland shipping and so it is only right that I put my money where my mouth is and invest in LNG fuel infrastructure.”
Deen Shipping has four more barges in its fleet and is already working with engine manufacturers to evaluate retrofitting them with dual fuel engines using LNG and diesel.
Dutch experience is also at work in its shipbuilding sector where the Peters Shipyard in Kampen recently confirmed receipt of an order for two new LNG-powered tanker barges from Interstream Barging (see illustration middle, below), which will be chartered by Shell Shipping. The 110m long vessels will operate along the Rhine as far south as Switzerland, with the first due delivery to Shell in spring 2013.
Dr. Grahaeme Henderson, Shell Vice President, Shipping, said, “Shell sees real growth opportunities for LNG as a fuel in coastal and inland shipping in Europe. LNG can help shipping operators meet strict emissions standards, such as those that are due to apply on the Rhine.”
The new LNG-propelled inland tankers will carry enough LNG as fuel to sail from Rotterdam to Basel and back without refuelling. Dubbed ‘Greenstream’ barges, they will feature four 400-horsepower SGI-16 CGM Scania engines from one of Europort’s exhibitors Sandfirden Technics, driving HCM 434F generators.
Lex van der Loo, Sandfirden Technics’ Managing Director, is also one of the members of the advisory board of Europort, and he believes that Europort 2013 will offer an ideal opportunity to those interested in developing LNG as a fuel to see how aspiration is being turned into reality. van der Loo said that LNG has the potential to make a “profound change” within the shipping industry, especially as long as the LNG fuel price remains as it is today.
 “I believe that there is significant potential for gas-electric propulsion, particularly when it comes to inland vessels, ferries and feeders,” he said. “While many topics will be addressed at Europort 2013, perhaps LNG as fuel is top of the agenda, given the timing and location of the event.”

Post to be found at:
http://www.marinelink.com/news/europort-tech-tap355258.aspx

Israeli, European investors eye Cyprus LNG terminal-project head - Reuters.com

Posted - BRUSSELS, June 4 | Tue Jun 4, 2013 7:53am EDT - Reuters.com

Israeli and European investors have displayed an interest in financing a liquefied natural gas terminal on Cyprus, the head of Cyprus's national hydrocarbons company said on Tuesday.
Cyprus plans to build a $6 billion LNG terminal on its southern coast to process natural gas from offshore fields now under development. Authorities hope the prospect of gas finds can spur growth on the recession-hit island which recently required an EU and IMF bailout.
"We have 3 serious financial options to look into. This makes us confident that we can start the construction of the Vasiliko LNG plant in 2016," said Charles Ellinas, head of the island's national hydrocarbons company, CNHC.
Ellinas, in Brussels for a conference, told Reuters that in addition to European and Israeli investors, investors from the "Far East" had expressed an interest in acquiring LNG in return for an investment in the plant. A third financing option for the terminal was project finance with energy companies licensed to search for gas, he said.
"We will hold serious discussions with investors early next year," Ellinas said.
U.S. energy company Noble is due to start an appraisal drilling imminently to verify a 2011 discovery of 5-8 trillion cubic feet of gas. The Ensco 5006 rig was moved into position south-east of Cyprus earlier this week.
Two other companies, France's Total and Italy's ENI plan drillings off Cyprus by 2015.


Post to be found at:
http://www.reuters.com/article/2013/06/04/cyprus-natgas-financing-idUSL5N0EG1XP20130604

Keep the LNG export permits coming - The Hill Blog

Posted - By Jason Bordoff - 06/04/13 11:00 AM ET - The Hill's Congress Blog

It would have been hard to imagine just a few years ago that we’d need to debate whether to export our energy. But the North American energy landscape is changing rapidly, and companies have now requested nearly 20 permits from the federal government to export natural gas. Despite opposition from some on Capitol Hill, environmentalists and petrochemical firms, the Obama administration seems to have decided in favor of exports, announcing recently that it was approving a second permit to export overseas, nearly two years after approving the first, and signaling more may be coming. They made the right call, and should continue to approve natural gas exports on both economic and geopolitical grounds.

An independent study commissioned by the Department of Energy found that liquefied natural gas (LNG) exports would boost U.S. economic growth and average household income (although there are winners and losers). Exports would spur higher natural-gas production, supporting jobs in the industry, in the construction of export terminals and in the supply chain — like a new steel mill that opened in Ohio. Exports will also improve the U.S. balance of payments.

Moreover, because exports to neighboring countries are automatically approved (since we have Free Trade Agreements with them), a decision by the administration to deny applications to export to non-FTA countries may just lead to increased exports to Canada, and then more exports of Canadian gas — still increasing prices in the integrated North American market.

The geopolitical arguments for allowing gas exports are even stronger. Encouraging increased global trade in gas fosters more competition, driving down prices that historically have been linked to the price of oil overseas. This has already started to happen in Europe. Lower natural-gas prices can encourage substitution of gas for coal and oil, which is good for the environment and global oil prices. Increased competition also weakens the geopolitical influence of Russia, which has traditionally been a monopoly gas supplier to Europe. National Security Adviser Tom Donilon echoed these benefits of a more global gas market recently at Columbia University.

Allowing gas exports reinforces U.S. efforts to oppose other trade restrictions, such as China’s limitation on the export of rare earth minerals. How can we fight those trade barriers if we throw up ones of our own? Exports also benefit key allies like Japan, which is desperately seeking new fuel sources after the Fukushima nuclear disaster.

Opponents of exports have argued that increasing demand for natural gas through exports will drive up prices in the U.S., harming consumers and manufacturing. But most economic studies find that any increase in natural-gas prices due to exports would be relatively small, at most 10 percent. (Prices are up 100 percent in the last year, a result of colder weather and idled production due to low prices.) The net economic benefits of gas exports outweigh any harm, as the Department of Energy reaffirmed.

Environmentalists are also concerned that exports will increase “fracking.” But shale gas production is poised to rise sharply whether we export or not, so we are going to need to make sure water and air are protected in any case.

In total, the projects still awaiting approval would export around one-third of U.S. production, a volume that would cause gas prices to spike. But nowhere close to this volume of export capacity will ultimately be financed and built. The administration has said it will decide on applications in the order received. It should move quickly, so that the market can decide which projects are most viable, rather than advantage those that got in line first.

Even better, the administration should continue working to secure an FTA with the European Union and the Trans-Pacific Partnership (which Japan recently joined), which would automatically allow exports to most of the largest LNG markets.

The boom in North American oil production means that natural gas is just the beginning. The U.S. will surpass Saudi Arabia in total liquid fuel production this year. But producers will increasingly look to export this oil, even as we remain a net importer, because our refineries are set up to take different types of crude than we are producing. That means the administration may soon need to consider whether to loosen restrictions on oil exports as well.

The president has a goal of doubling exports, recognizing the broad economic consensus that free trade leads to faster economic growth. Energy should be no different. Increasing global energy market integration will benefit both the U.S. economy and our national security.
Bordoff, a professor and director of the Center on Global Energy Policy at Columbia University, previously served as senior director and special assistant to President Obama for energy and climate change on the staff of the National Security Council.

Post to be found at:
http://thehill.com/blogs/congress-blog/energy-a-environment/302791-keep-the-lng-export-permits-coming

Angola LNG starts production, exports in June-Total - Reuters

Posted - June 4, 2013 -OSLO - Reuters


Angola's long-delayed liquefied natural gas (LNG) plant has finally started production and the first cargo is due to be exported later this month, a senior Total executive said.
"We have LNG flowing into the tanks at our Angola LNG plant, and we expect the first cargo in June," Philippe Sauquet, CEO of Total Gas and Power told Reuters on the sidelines of a gas conference in Oslo.
The plant, beset by 18-month delays caused by technical failures, suffered a setback in April after a fire occurred at the plant just hours before production was due to begin.
The first shipment from the project has already been sold and is expected to be delivered by state-run Sonangol to either Brazil or Portugal, according to one trade source.
The Sonangol Sambizanga, which is due to make the delivery, is currently moored at Angola's LNG production facility in Soyo.
"Angola will produce the first and probably a second cargo before a shutdown for routine inspection," another trade source said.
"Official start is due to be early to mid-August," he added.
US oil major Chevron operates the project with a 36.4 percent shareholding, while Sonangol has a 22.8 percent stake. Other Angola LNG stakeholders include Total, BP and ENI with 13.6 percent each.



Post to be found at:
http://www.reuters.com/article/2013/06/04/angola-lng-idUSL5N0EG33J20130604

LNG 'Pea Pod' Carrier Order for MHI - Marine Link

Posted - June 4, 2013 - Press Release -  Marine Link com

Mitsubishi Heavy Industries to build a 7th pea-pod superstructure shape "Sayaendo" LNG carrier for a "K" Line/INPEX subsidiary joint venture.
Sayaendo series ships feature a unique structure that integrates the LNG tank cover with the ship hull, resulting in significantly improved fuel consumption and maintainability. The order was placed with MHI by Ocean Breeze LNG Transport, Ltd. (OBLT), a joint venture between Kawasaki Kisen Kaisha, Ltd. ("K" Line) and a subsidiary of INPEX.

The ship is scheduled to be delivered to OBLT at the end of 2016. This order is the seventh that MHI has received for a Sayaendo series ship, and follows closely on the heels of another such order that was received last month.

The new LNG carrier will measure 288.0m in length overall (LOA), 48.94m in width, and 11.55m in draft. The 138,000 gross tonnage (75,000 deadweight tonnage) ship will be capable of carrying up to 153,000 m3 of LNG (cargo tank total volume: 155,300m3) in four Moss-type tanks at a service speed of 19.5 knots per hour. The ship will be built at the MHI Nagasaki Shipyard and Machinery Works.



 

"Sayaendo" LNG carrier: Photo credit MHI 

To protect its four Moss spherical tanks, the Sayaendo features a peapod-shaped continuous cover integrated with the ship's hull in lieu of conventional hemispherical covers. This innovative configuration enables reductions in size and weight while maintaining the ship's overall structural rigidity. The continuous cover over the tanks also improves aerodynamics by substantially reducing air resistance that acts as a drag on ship propulsion. For its main power plant the Sayaendo adopts MHI's "Ultra Steam Turbine Plant" (UST), a new turbine that provides higher thermal efficiency through effective use of thermal energy by reheating steam. Through downsizing, weight reduction and hull line improvement, Sayaendo ships achieve a substantial 20% reduction in fuel consumption compared to conventional ships.



With a conventional cover configuration, pipes, wires and catwalks atop the tanks are supported by complex structures. By covering the tanks with an integrated cover and making those supporting structures unnecessary, the new design also improves maintainability. In addition, CO2 emissions are reduced as a result of decreased fuel consumption, and response to environmental issues is further enhanced with installation of a ballast water treatment system, which addresses impact on the marine ecosystem.

Post to be found at:
http://www.marinelink.com/news/carrier-order-pod355234.aspx

E.ON signs up for Goldboro LNG volumes - upstream

Posted - June 3, 2013 -Bill Lehane  - upstream

Germany’s E.ON has signed a long-term deal for liquefied natural gas supplies from Pieridae Energy’s proposed Goldboro LNG export terminal in eastern Canada.
Pieridae Energy chief executive Afred Sorensen said the deal provided the “economic security needed” to complete the first train of the terminal, adding the sales agreement was based on European market prices.
E.ON’s global commodities arm has agreed to purchase around 5 million tonnes per annum for 20 years from the Nova Scotia development.
The LNG volumes are destined for a number of locations in western Europe, the companies said on signing the deal in Berlin.
Newcomer Pieridae Energy is at the environmental assessment stage of its LNG project,which is to include an LNG plant, facilities for storage and export, and a marine jetty for loading.
The company aims to reach a final investment decision on the project in 2015.
Pieridae Energy is partnered in the development by Calgary’s Contact Exploration, which is managing the retention of onshore natural gas reserves and production to supply the Goldboro facility.
The two companies said they were “in advanced discussions with North American natural gas exploration and production and pipeline companies” on gaining natural gas feedstock and transportation services for the facility.
Upon completion, the Goldboro LNG terminal will be equipped to export up to 10 million tonnes per annum of natural gas, with on-site storage capacity of 690,000 cubic metres of LNG.
The terminal is targeted to start commercial operations in early 2020, transporting natural gas to Goldboro, Nova Scotia, primarily via existing pipeline systems, and exported by ship to international markets.

Post to be found at:
http://www.upstreamonline.com/live/article1328758.ece

LPG Shipping Market Seen Facing Looming Atlantic Vessel Shortage - Hellenic Shipping News Worldwide

Posted - June 4, 2013 -   Hellenic Shipping News Worldwide - (Bloomberg)

The liquefied petroleum gas shipping market faces a looming vessel shortage in the Atlantic Ocean, according to Clarkson Plc (CKN), the world’s largest shipbroker.
“The situation is becoming potentially dramatic in the Atlantic and the real issue is whether charterers have fully grasped this,” London-based Clarkson’s research unit said in a May 31 report. “Looking at the anticipated requirements out of West Africa and Houston through June and July, unless ships are ballasted from Asia, we could very soon see a real shortage.”
Ballasting refers to sailing without cargo, often to get to regions where rates are higher. Costs for transporting the fuel or petrochemical feedstock advanced 67 percent to $67.88 a metric ton this year, according to data from the Baltic Exchange in London. Demand is rising amid record U.S. exports.
Source: Bloomberg

Post to be found at:
http://www.hellenicshippingnews.com/News.aspx?ElementId=e6247b59-cc8e-47bd-a368-0ecd7507e8ec&utm_source=newsletter&utm_medium=email&utm_campaign=daily

Alaska LNG project partners plan summer field work - Alaska Dispatch

Posted - June 1, 2013 - Bill White - Alaska Dispatch

Sponsors of a proposed large-volume Alaska natural gas export project plan to conduct field work this summer to fill in gaps in their environmental and geological knowledge about the pipeline route, the project manager said May 30.
Workers plan to survey 37 streams, 17 lakes and 20 fisheries sites, said Steve Butt, an Exxon Mobil executive assigned to lead the effort to define the project, a joint effort of Exxon Mobil Corp., BP, ConocoPhillips and TransCanada. Teams also will cut trenches into the soil, studying ground conditions.
In addition, the field work will explore historical and cultural resources along 6,500 acres of the proposed pipeline route. They also plan to meet with nearby residents to gather traditional knowledge of the area and understand how locals use the land for subsistence hunting, fishing and food gathering, Butt told a joint meeting of the Alaska Senate and House resources committees in Anchorage.
The field work will focus on the northern half of a possible 800-mile pipeline route from Alaska North Slope oil and gas fields to a liquefied natural gas plant on the Southcentral Alaska coast, Butt said. The work will entail hiring 150 people, he said. The companies already have more than 300 employees and contractors working on different aspects of the project, including design.
The four companies are considering a $45 billion to $65 billion project, covering a gas treatment plant on the North Slope, pipeline, compressor stations, liquefaction plant and marine terminal.
"We're confident the project can work from a technical standpoint," Butt said. But a decision to build what he called a megaproject is at least three to four years away.
"If it was simple, it would already be done," Butt said.
Over the past 40 years, a variety of companies have proposed building an Alaska gas pipeline to bring the North Slope's 34 trillion cubic feet of proved gas reserves to North American or export markets. Butt's team has used some this earlier work to define what information gaps exist and where this summer's field work should occur, he said.

The four companies have dubbed their project the Alaska South Central LNG Project, or SCLNG. Besides a pipeline that would carry 3 billion to 3.5 billion cubic feet a day of gas — most for export but with off-takes for in-state use — the concept involves building one of the world's largest liquefaction plants at one of four sites under consideration along Alaska's coast. The companies have not disclosed the four sites.
The plant would superchill gas to minus 260 to compress the vaporous gas into a liquid that is more cost-effective to ship to Asian markets.
The plant's three production trains would have a capacity to make 15 million to 18 million metric tons of LNG annually, the equivalent of 2.2 billion to 2.5 billion cubic feet a day. Butt's team estimates a peak work force of 9,000 to 15,000 jobs during the five to six years of construction.
The project has completed the "concept selection" phase. The next step would take the project to pre-front-end engineering and design, or pre-FEED. The companies have been spending about $3 million a month since they came together on the LNG export project design effort in spring 2012.

Post to be found at:
http://www.alaskadispatch.com/article/20130601/alaska-lng-project-partners-plan-summer-field-work

Car Bomb Kills 9 at LNG Military Checkpoint in Yemen - CRI English com

Posted -  June 2, 2013 22:21:03     Xinhua       Web Editor: Xing Yihang   CRI English com

A suicide car bomb went off at a military checkpoint near Yemen's Liquefied Natural Gas (LNG) plant in Balhaf port in the southeastern province of Shabwa on Sunday, killing at least nine soldiers, officials told Xinhua.
A security official at the LNG plant in Balhaf told Xinhua by phone that the suicide bomber exploded his car at the gate of the LNG facility, killing nine soldiers.
The attack took place on a coastal road leading to the LNG plant, the official said on condition of anonymity, adding that " the car bombing was followed by a short period of shooting by attackers of the al-Qaida militants on another vehicle."
He said that al-Qaida attackers on another car, who opened fire at the soldiers after the car bomb went off, managed to flee the scene.
"The explosion rocked the whole Balhaf port. However, there was no damage at the LNG plant except the gate and security facilities of the plant," he added.
An official at the interior ministry in capital Sanaa also told Xinhua earlier that the suicide car bombing left at least "five soldiers dead and several others injured."
Both officials declined to provide further details, and officials of the LNG headquarters in Sanaa refused to comment.
Yemen LNG's largest export plant at Balhaf opened in 2009 and is led by French oil company Total.
The facility terminal has two production trains with a capacity of 6.7 million tonnes per year. The terminal's export pipelines have been frequently attacked since the eruption of protests against former President Ali Abdullah Saleh in 2011.
Gas and oil products account for over 90 percent of Yemen's exports.
The Yemeni government has been waging crackdown on the al-Qaida hideouts in Shabwa and neighboring provinces of Abyan and Hadramout since 2011.

Post to be found at:
http://english.cri.cn/6966/2013/06/02/2724s768138.htm

LNG rivals hit gas sharing deal - The AGE - Business Day

Posted - June 1, 2013 - Philip Wen -Journalist, BusinessDay - The AGE


For all its complaints that overlapping government regulatory approvals are contributing to delays and cost blowouts, it is with no hint of irony that the oil and gas industry is now owning up to unnecessary duplication of its own making.
Rod Duke, Santos' vice-president GLNG, noted that the ramp-up of three liquefied natural gas (LNG) mega-projects, all on Curtis Island in Queensland, meant each project had its own jetties, pipelines across to the mainland and other extensive infrastructure.
With the projects coming under scrutiny for cost blowouts, Mr Duke said the operators of the projects were now building gas pipelines to connect the three plants together with a view to entering into gas-sharing agreements to ensure supply contracts would be met.
''All three parties will be able to swap gas, or buy and sell … in order to run our plants as efficiently as possible,'' he said.

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The pipelines will be ready by the end of the year, Mr Duke said, ahead of Santos' first gas production at Gladstone in 2015.
Santos operates the GLNG project, Origin Energy the APLNG and QGC the QCLNG venture. The three projects amount to a total investment of more than $60 billion.
On a site tour of GLNG, Mr Duke told reporters the market had moved on from the intense competitive phase where companies were ''fighting for [their] place in the queue'' to gain access to the gas acreage.
The gas-sharing agreement is another sign of pragmatism and collaboration between the rivals in a tough cost environment, where overruns on the mega-projects on both the east and west coasts have become the norm, and have resulted in the industry urging governments to streamline its regulatory processes and deal with soaring labour costs.
Pressure is on Santos to rein in costs after it revealed a 15 per cent blowout, to $US18.5 billion, in June last year. Mr Duke said a sure-fire way to remain on top of costs was to ensure there were no delays to construction. Santos' project was ''smack-bang on target'' in line with the schedule agreed with contractor Bechtel.
Yet the sheer complexity and scale of the construction meant there was little scope for error.
But if it can avoid further cost blowouts, the project could prove a company-maker, and the huge amounts of LNG produced at Gladstone will be a key contributor to the dramatic shift in the world's energy supply mix, particularly as Asia's energy demands spike just as its desire to wean off coal-fired power rises.

Post to be found at:
http://www.theage.com.au/business/lng-rivals-hit-gas-sharing-deal-20130531-2nhcw.html

Gladstone LNG rivals agree to share pipeline - The Australian /with the Wall Street Journal

Posted - June 01, 2013 12:00AM - MATT CHAMBERS -  The Australia




GLADSTONE'S three big coal-seam gas export projects are set to link their gas pipelines in a move that could spur third party gas sales to the Gladstone LNG project led by Santos.
The $18.5 billion GLNG project is close to formally closing a deal to link its pipeline with that of the BG Group-led Queensland Curtis LNG plant, while BG is also in talks to do the same with the Australia Pacific LNG plant run by Origin Energy and ConocoPhillips.

Post to be found at:
http://www.theaustralian.com.au/business/mining-energy/gladstone-lng-rivals-agree-to-share-pipeline/story-e6frg9df-1226654819531

NASSCO Wins Order for LNG-Ready Jones Act Product Tankers - gCaptain

Posted - May 31, 2013 - By gCaptain Staff - gCaptain

San Diego-based shipyard, General Dynamics NASSCO signed a contract today with an affiliate of American Petroleum Tankers (APT) for the design and construction of four 50,000 deadweight ton LNG-conversion-ready product carriers with a 330,000 barrel cargo capacity.

The contract includes options to build four additional ships.
Fred Harris, President of General Dynamics NASSCO, commented in an emailed statement:

“By continuing to bring the most economical and environmentally sound technology to Jones Act operators, these ECO tankers show our continued commitment to be one of the most innovative shipyards in America. I am pleased to renew our partnership with APT on this exciting new program. Along with TOTE, this is the second return customer we have welcomed back to NASSCO within the past six months, which speaks to the high-quality workmanship of our skilled workforce.”

Image credit: NASSCO

APT was formed in 2006 to construct and operate product tankers in the domestic petroleum trades and is majority owned by Blackstone, a a global investment and advisory firm.  Their 5 ships are technically managed and operated by Crowley.
The following was released by General Dynamics NASSCO today:

Construction of the first tanker is scheduled to begin in the third quarter of 2014, with deliveries scheduled to begin in the fourth quarter of 2015, continuing through 2016. The four-ship APT contract will add up to approximately 800 jobs at NASSCO during construction and more than 165 seagoing union jobs during the operation of the vessels.

The 610-foot-long tankers are a new “ECO” design that offers improved fuel efficiency and incorporates the latest environmental protection features, including a Ballast Water Treatment System. All of the ECO-class tankers will be constructed at the NASSCO shipyard in San Diego. This contract builds upon the strong relationship NASSCO and APT developed during the construction of five State-class product carriers from 2007 to 2010.

The ships will be designed by DSEC, a subsidiary of Daewoo Shipbuilding & Marine Engineering (DSME) of Busan, South Korea. DSEC’s ECO design achieves improved fuel efficiency through several features, including a G-series MAN ME slow-speed main engine and an optimized hull form. The tankers will have dual-fuel-capable auxiliary engines and the ability to accommodate future installation of an LNG fuel-gas system. The ECO-class tankers represent the continuation of NASSCO’s successful partnership with DSEC, which was a partner on the five APT State-class product tankers and currently is contributing to two LNG-powered containerships for TOTE Shipholdings, Inc.

Rob Kurz, CEO of APT, said, “This investment demonstrates our continued commitment to building and operating ships for the U.S. Jones Act trade. We are proud to bring new U.S.-built tonnage into the market at this exciting time, helping our country achieve its long-standing strategic objective of energy independence.” 

Post to be found at:
http://gcaptain.com/nassco-wins-order-lng-ready-jones/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Gcaptain+%28gCaptain.com%29