LNG
Overview
LNG's role as a key feedstock is well established as it helps manage both input costs and carbon emissions. Heavy industrial users' drive to achieve net zero targets has added a new dimension to how and where it is being deployed. Overall, its use is expected to increase and is tipped to become the strongest-growing fossil fuel.
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Hong Kong unveils green maritime fuel action plan
Hong Kong unveils green maritime fuel action plan
Shanghai, 18 November (Argus) — The Hong Kong special administrative region government unveiled a green maritime fuel action plan on 15 November, aimed at making the region a top-tier centre for green fuel bunkering and reducing carbon emissions from the port of Hong Kong. According to the Action Plan on Green Maritime Fuel Bunkering, Hong Kong aims to curb carbon emissions in line with the International Maritime Organization (IMO), which targets 20% emissions reduction in international shipping by 2030 and a 70% reduction by 2040, compared with 2008 levels, before achieving net-zero emissions by or around 2050. The plan also targets to reduce carbon emissions from Hong Kong-registered ships by at least 11pc, compared with 2019 levels, and have 55pc of diesel-fuelled vessels in the government fleet switch to green maritime fuels by 2026. Hong Kong will target lower carbon emissions from the Kwai Tsing Container Terminals by 30pc, compared with 2021, and ensure that 7pc of its registered ships use green maritime fuels by 2030. Separately, the plan outlines that Hong Kong will have completed the development of the Code of Practice (CoP) on liquefied natural gas (LNG) and green methanol bunkering by 2025. The government will also invite industry expressions of interest by end-2025 for the conversion of a land parcel near the port in Tsing Yi South for green maritime fuel storage. Hong Kong is expected to achieve an annual sale of over 200,000t of green marine fuels by 2030, with over 60 LNG or green methanol bunkering services for ocean-going vessels a year, according to the plan. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
India cuts allocation to city gas firms again
India cuts allocation to city gas firms again
Delhi, 18 November (Argus) — The Indian government has reduced the domestic gas allocation to the city gas distribution sector by state-run distributor Gail, effective from 17 November. This is the second cut after they first slashed allocation by 20pc, or 4mn-5mn m³/d , last month. The cut for Delhi-based city gas entity Indraprastha Gas is a reduction of 20pc, for Mumbai-based Mahanagar Gas it is 18pc, and for privately owned Adani Total Gas it is 13pc, the firms' stock exchange filings stated over the weekend. The move would reduce the overall share of domestic gas allocation to city gas distributing companies to 30-37pc from 50pc last month and 70pc at the beginning of the year. City gas firms had received priority status for gas allotment over the past two years. "It is uncertain what could have re-instigated this cut, but this may translate into 6.5mn-7mn m³/d based on the different growth rates of city gas firms," Moody's affiliate ICRA senior vice-president Prashant Vashisht told Argus . City gas entities are mulling a hike in CNG rates and are heard to be in talks with the government over the policy changes. The government is yet to formally announce a statement over the cuts and is heard to be asking retailers to give a cost break-up to justify the hike, sources say. These cuts are mainly aimed at compressed natural gas (CNG) supply that has been receiving domestic gas allocation at a fixed price by the government of $6.5/mn btu under New Delhi's pricing mechanism — almost half the price that firms would pay for spot LNG. City gas firms are discussing the possibility of increasing CNG prices by Rs5-5.5/kg by the end of the year to preserve their margins. This would represent a 7pc increase compared with the average CNG price of Rs75.1/kg ($0.88/kg) against Rs94.77/litre of petrol in New Delhi. But the price hike may reduce CNG's competitiveness, hampering further development of the sector and limiting LNG demand growth. CNG vehicles have rapidly expanded their share of the Indian fleet, accounting for 14pc of all four-wheelers at present, up from 8pc three years earlier, data from the government's Vahan website show. The reduction in allocation is linked to reduced supply from conventional gas fields run by state-controlled upstream companies such as ONGC and Oil India. The sector received 27.8mn m³/d of domestic gas over April-September, including about 5mn m³/d of higher-priced supply from high-pressure, high-temperature fields, oil ministry data show. Allocation to the sector was largely unchanged during the same time last year. To bridge this shortfall, city gas firms are exploring options of sourcing gas through LNG , domestically produced high-pressure and high-temperature gas, production from ONGC's new wells, and long-term gas contracts. By Rituparna Ghosh Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Singapore bunker sales jump 19.5pc in October
Singapore bunker sales jump 19.5pc in October
Singapore, 14 November (Argus) — Bunker fuel demand at the port of Singapore rose by 19.5pc on the month to 4.8mn t in October, supported by stronger enquiries from shipowners. It takes total bunker consumption at the port to 45.3mn t in the first 10 months of the year, putting Singapore on course to break last year's record high sales of 51.8mn t. The latest statistics release from the Maritime and Port Authority of Singapore (MPA) show consumption of both conventional and alternative marine fuels rose strongly last month as more ships refuelled in Singapore. Bio-bunkers and B24 demand hit a new record monthly high of 116,200t, taking the total for January-October to 586,500t. Consumption has already exceeded last year's 518,000t, driven by shipping emissions compliance requirements set by the EU and IMO. Demand for B24 is expected to steadily rise in the coming months ahead of the implementation of the FuelEU regulations from January 2025. Demand for LNG as a marine fuel at the port of Singapore increased by 37pc from September to 50,600t in October, which was also a new record high for monthly consumption. "In general, we are seeing bigger enquiries in the last month or so," said a London-based trader. Sales of very low sulphur fuel oil (VLSFO) in Singapore rose by 11.8pc from September to 2.5mn t last month, while high-sulphur fuel oil (HSFO) consumption jumped by 11pc to 1.8mn t. By Mahua Chakravarty Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Trump’s win yields mixed picture for LNG market
Trump’s win yields mixed picture for LNG market
London, 13 November (Argus) — Global gas and LNG market participants await clarity on president-elect Donald Trump's course of action once he takes office in January, as the net impact of some of its stated policies remains difficult to gauge. Price movements in recent days show little evidence of a market reaction to the outcome of the election. Prompt and near-curve LNG prices for delivery to Europe and Asia have risen, mostly tracking the increase in European hub prices. But the change in euro-denominated hub prices appears largely unrelated to the jump in the value of the US dollar that followed Trump's win. The dollar index, which measures the dollar against a basket of six other currencies, has rallied since Trump's victory became apparent, reaching a two-year high on 13 November. The US currency was worth over €0.95 on Wednesday, up from €0.91 on polling day. This might have contributed to stronger European hub prices, albeit only slightly. Exchange rates aside, the election result was never likely to have a serious short-term impact on the LNG market. The halt to Russian gas flows through Ukraine at the end of this year, when transit and interconnection agreements between Moscow and Kyiv expire, is the variable with the most disruptive potential for European gas markets that are much more reliant on LNG since Russia launched its full-scale invasion. But a shift in US policy would not be able to exert influence on any negotiations — which remain hypothetical at present — aimed at extending gas flows through Ukraine, given that Trump is only due to take office in late January. But Trump's policies might from next year affect the LNG market. US LNG producers have expressed mixed feelings about the consequences of a second Trump administration, with a dividing line emerging between firms that already export LNG and those that want to build new export facilities. Forward gas prices at the Dutch TTF hub also appear to show a mixed picture, with contracts for delivery next year and in 2026 rising broadly in line with the near curve, while prices for delivery in the following two years have held broadly stable. Operators of existing liquefaction facilities were wary of Trump's enthusiastic endorsement of protectionist policies, which they fear could trigger another trade war with China. The president-elect has pledged to impose a 20pc tariff on all imports — except those from China, which will instead be subject to 60pc. The possibility of Beijing following suit with retaliatory tariffs on US LNG— as in 2018-19, during Trump's first term — concerns many market participants. Trump's trade war with China in 2018-19 was widely seen as detrimental to development of the industry, as it hampered trade between the largest incremental producer and consumer. But the nature of most US LNG contracts — predominantly based on free-on-board delivery — reduced the short-term impact. While physical deliveries to China did vanish in 2019, no US LNG exporter reported cancellations that year, with cargoes simply resold elsewhere or swapped with LNG from other countries. The re-emergence of similar trade disputes from next year could force another reconfiguration of trade flows, possibly facilitated by the fact Europe is now a much larger LNG importer than in 2018-19, when it was heavily dependent on Russian pipeline gas. Physical deliveries of US LNG to China fell sharply in 2022 and have still been at less than half their 2021 peak this year (see chart). But while higher than six years ago, Europe's LNG demand has not pushed beyond 2022's record, and the amount of US LNG in Chinese portfolios is also much larger. On the other hand, developers of new US liquefaction facilities have pinned their hopes on Trump's pledge to reverse the Biden's administration licensing pause, which froze projects and in some cases lost them contracts. But speeding up project approvals could result in a much more amply supplied market later in the decade, when a swathe of new facilities are already due on line (see chart) Industry figures have suggested the [LNG market could be oversupplied as early as 2028](https://direct.argusmedia.com/newsandanalysis/article/2493845. The greatest uncertainties are related to how Trump deals with the conflict in Ukraine. He has boasted he would end the war on his first day in office — overly optimistic at best. But even if his administration could bring about a swift end to the conflict, a full normalisation of relations between Russia and Ukraine is difficult to imagine. Nevertheless, a relaxation of US sanctions — including those targeting Russia's existing 19.8mn t/yr Arctic LNG 2 terminal — could be an initial bargaining chip and might result in an immediate increase in supply. By Antonio Peciccia US liquefaction capacity mn t/yr US LNG deliveries to China mn t Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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