COSCO transfers CLNG stake to bypass US sanctions

Market: Natural gas
24/10/19

Chinese shipping firm COSCO Dalian has transferred a 50pc stake in China LNG Shipping (CLNG) to its parent company, in a move that exempts 12 LNG carriers from US sanctions.

COSCO Dalian, which has been under US Treasury Department sanctions since last month, transferred its 50pc stake in CLNG to its parent company COSCO Shipping Energy Transportation, the parent firm said.

The transfer means that the 12 LNG vessels owned by CLNG will no longer be under sanctions. The US Treasury last month imposed sanctions on COSCO Dalian and any subsidiaries in which the firm held a stake of at least 50pc. The firm held 50pc equity in CLNG, with the rest held by other COSCO entities which are not under sanctions.

The exemption of these vessels from US sanctions may ease demand for spot charters in the LNG freight market. Spot charter rates in the Asia-Pacific basin rose earlier this month, possibly also reflecting the additional demand for spot charters as firms sought replacement vessels for some of CLNG's 12 LNG carriers.

Six of these are Arc7 ice-class vessels, under a joint venture with Bermuda-based Teekay Partners, and are provided to the Novatek-operated 16.5mn t/yr Yamal LNG project. Novatek reported on 22 October that this venture — named TC LNG Shipping — was no longer considered a blocked person by the US Treasury, likely as a result of this equity transfer.

The remaining six, conventional LNG carriers owned by CLNG operate in the Pacific basin, transporting LNG to Chinese import terminals.

Vessels operated by JVs in which CLNG holds 50pc or more
Vessel	Capacity m³	Type	JV partners

Eduard Toll	172,600	Arc7	Teekay
Rudolf Samoylovich	172,600	Arc7	Teekay
Vladimir Voronin	172,600	Arc7	Teekay
Nikolay Yevgenov	172,600	Arc7	Teekay
Georgiy Ushakov	172,600	Arc7	Teekay
Yakov Gakkel	172,600	Arc7	Teekay
Dapeng Sun	147,000	Conventional	CNOOC, Upper-Horn, Penghai Ship
Dapeng Moon	147,000	Conventional	CNOOC, Upper-Horn, Penghai Ship
Dapeng Star	147,000	Conventional	CNOOC, Upper-Horn, Penghai Ship
Min Rong	147,000	Conventional	CNOOC, Fujian Energy
Min Lu	147,000	Conventional	CNOOC, Fujian Energy
Shen Hai	147,000	Conventional	CNOOC, Shenergy
Cosco Shipping Energy Transportation
Yakov Gakkel not operational until later this year

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12/11/24

Finnish, Baltic gas demand falls on year in October

London, 12 November (Argus) — Aggregate Finnish and Baltic gas consumption dropped by nearly 24pc on the year in October, but still reached a six-month high as the heating season began. Combined demand in Finland, Estonia, Latvia and Lithuania last month rose to 3.19TWh from 2.61TWh in September , in line with the typical seasonal progression, but was well below the 4.18TWh consumed a year earlier and the average of roughly 5.2TWh in 2018-21 ( see consumption graph, data and download ). Demand in all four individual countries was lower on the year, with the biggest drop in Lithuania, where consumption fell by more than 600GWh. In October 2023, the region's biggest consumer Achema had briefly resumed full production at both of its ammonia production units at Jonava , boosting Lithuanian demand that month. Despite the year-on-year drop, this was the fifth consecutive month-on-month increase after demand hit a near two-year low in May. Cumulative demand in the first 10 months of the year totalled 35TWh, well up from 30.3TWh a year earlier. That said, strong demand in the first quarter when the region experienced a prolonged cold snap supported a slightly skewed figure. If only considering April-October, demand of 18.5TWh was slightly below last year's 18.9TWh and well under the 30TWh average in 2018-21. This may indicate a more structural decline in the region's gas demand, particularly with power-sector demand falling as higher nuclear and renewables output cuts into the room left available for gas in the generation stack. Gas-fired power generation in the four countries totalled 186GWh last month, Fraunhofer ISE data show. This was well below 307GWh in October 2023, and the second lowest for any October since at least 2018 ( see gas-fired power graph ). Gas-fired output was lower on the year in all four countries, with roughly 40GWh drops in Lithuania, Finland and Latvia. Onshore wind production in Finland, by far the region's largest overall power producer, jumped by more than 1TWh on the year, more than offsetting lower nuclear and hydro output. This allowed Finland to net export around 150GWh of power, having net imported nearly 300GWh in October 2023, according to Fraunhofer data. Prices on the regional GET Baltic exchange averaged €41.74/MWh in October, up by 3pc on the month but 18pc down on the year. The price on the exchange "increasingly correlates with" the TTF, a correlation that will likely strengthen as GET Baltic trading migrates to the larger EEX platform next year , chief executive Giedre Kurme said. This transition will "create opportunities for competition, more liquid trading and price convergence", and "we are already seeing increased interest from international participants in the Baltic-Finland region", Kurme said. Firms traded 708GWh on the exchange in October, the most for any month since February, and all transactions were on the daily market. The joint Latvian-Estonian market accounted for 43pc of total trades, followed by Lithuania at 31pc and Finland at 26pc, GET Baltic said. Maintenance continues to limit Finnish LNG sendout Extensive maintenance on the Balticconnector pipeline this month, which makes all southbound capacity from Finland towards Estonia unavailable, continues to limit sendout from Finland's Inkoo LNG terminal. After maintenance on the 14-27 October gas days took exit capacity towards Estonia fully off line, this capacity is again unavailable because of further maintenance on 4-17 November. Without southward pipeline capacity, sendout from Inkoo must fall to levels that only the domestic market can absorb. Inkoo received the 145,000m³ Arctic Princess just before the maintenance started on 3 November, and the next scheduled delivery is not until 28 November ( see LNG data and download ). Sendout is likely to remain low even after the end of maintenance so as not to fully deplete stocks before the next arrival. Sendout from Inkoo averaged 23 GWh/d on 4-11 November. In contrast, sendout from Lithuania's Klaipeda terminal has jumped to 104 GWh/d this month, helping to plug the Baltic supply gap left by no southward inflows from Finland. Sendout from Klaipeda has been higher this month than the 85 GWh/d in October and 80 GWh/d on 1-11 October last year. Klaipeda has already received two cargoes this month, on 4 and 12 November, and will receive a further two on 21 and 29 November, the terminal's schedule shows. This suggests that sendout is likely to remain brisk for the rest of this month, helping to meet higher regional demand as the weather turns colder and limits the need for strong withdrawals from storage early in the winter season. By Brendan A'Hearn FinBalt gas consumption by country GWh Gas-fired power generation by country GWh Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Cop: UK sets ambitious 2035 climate target

12/11/24

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12/11/24

Cop: UK sets ambitious 2035 climate target

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Cop: Azerbaijan president criticises ‘petrostate’ label

12/11/24

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12/11/24

Cop: Azerbaijan president criticises ‘petrostate’ label

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Cop: UN chief reiterates economic force of transition

12/11/24

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12/11/24

Cop: UN chief reiterates economic force of transition

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Record Permian volumes lift US oil majors

11/11/24

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11/11/24

Record Permian volumes lift US oil majors

New York, 11 November (Argus) — ExxonMobil and Chevron are pumping record volumes from the prolific Permian shale basin, spurred on by efficiency gains that have helped drive US oil production to a record high, just as Opec+ gears up to release barrels into the market. ExxonMobil posted Permian output in excess of 1.4mn b/d of oil equivalent (boe/d) in the third quarter, bolstered by the closure of its $60bn acquisition of Pioneer Natural Resources in May. Meanwhile, Chevron's production from the top-performing US shale basin set a new company high of 950,000 boe/d, surpassing expectations and putting it firmly on track to reach a goal of 1mn boe/d next year. Robust results from the Permian, which straddles west Texas and southeast New Mexico, have also been reported by other operators, with leading US upstream independent ConocoPhillips lifting its full-year production outlook after achieving record results from the Lower 48 in the latest quarter. In fact, soaring output from the Permian helped to push overall US production up by 1.5pc to a record 13.4mn b/d in August, according to the Energy Information Administration. ExxonMobil, which will release a new development plan for the Permian at an analyst event next month, already envisages greater savings from the Pioneer acquisition than the original $2bn/yr that was outlined when the deal was announced. The top US major is integrating Pioneer's water infrastructure network to serve the combined assets at a lower cost. It is also taking advantage of a remote logistics operations centre it inherited through the deal. "We just achieved an all-time Pioneer record for drilling performance in terms of lateral feet drilled per day," chief executive Darren Woods says. A stellar performance from Colorado assets acquired through last year's takeover of PDC Energy also lifted Chevron, as did recent US Gulf of Mexico start-ups. ExxonMobil was the only major, apart from Shell, able to cut net debt in the third quarter. That suggests its $20bn annual share buyback plan is sustainable in the current climate without needing to resort to asset sales, HSBC noted. The Permian's outperformance, driven by productivity gains that are helping to bring down costs, bodes well for the US majors at a time of macroeconomic uncertainty, and concerns over an oversupplied market putting oil prices under pressure. While both ExxonMobil and Chevron have ramped up investor returns, analysts say Chevron's share buyback programme could be more vulnerable unless crude prices rebound. But Chevron's Permian spending is set to peak this year, with free cash flow becoming "more of the driver" in 2025 as output reaches a plateau, according to chief executive Mike Wirth. Chevron set a goal of trimming costs by $2bn-3bn by the end of 2026. And ExxonMobil says its $15bn cost savings target by 2027 remains on course, and could even be exceeded. Less stress over Hess Growing oil production abroad is set to enhance the US majors' record output at home. Although ExxonMobil's output from Guyana slipped in the third quarter because of work to complete a gas-to-energy project, it has since recovered."Execution is undoubtedly strong, allowing Exxon to maximise value from its assets," HSBC's head of European oil and gas research, Kim Fustier, says. Chevron's closely watched expansion programme in Kazakhstan remains on track to start operations in the first half of 2025. This should help to offset some gloom over Chevron stock caused by the delay to its $53bn purchase of US independent Hess. A dispute with ExxonMobil over rights of first refusal to an offshore discovery in Guyana will be settled by international arbitration next May. "Uncertainty over the Hess deal will continue to hover in the background for some time, but Chevron is doing well on the elements it can control," Fustier says. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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