Cameron LNG restart uncertainty underpins price gains

Spanish Market: Natural gas
08/09/20

Expectations in the market for when the currently shuttered 15mn t/yr Sempra-operated Cameron LNG facility in Hackberry, Louisiana in the US is likely to restart operations range from the end of this month to the end of October, with the uncertainty helping to underpin rising Asian spot prices.

But there has been no official guidance from the project, which is still seeking to "minimise impacts on... timeline for the re-start of Cameron LNG operations".

"We have begun the process of safely mobilising work crews and are in close contact with Entergy Louisiana, the waterworks district that serves Hackberry, and the Lake Charles Pilots regarding their restoration timelines, how we can assist their efforts, and how to minimise impacts on our timeline for the re-start of Cameron LNG operations," a spokesman at the facility said.

She did not comment on when the plant would resume operations or for how long loadings would be delayed as the firm does not comment on commercial arrangements with customers. She added that the preliminary assessment is that the Cameron LNG site is in "relatively good condition", subject to the firm's ongoing detailed examination of all the operational and safety systems and considering the extensive damage to the surrounding area.

Term offtakers at and co-owners in the Cameron facility include Mitsubishi, Mitsui and Total. These firms have supply agreements with Asian buyers including Taiwan's CPC, India's IOC, Japan's Jera, Kansai Electric, Tokyo Gas, Toho Gas and Tohoku Electric.

Feed gas flows to Cameron were still at zero on Friday. The US was closed for a public holiday on Monday.

Cameron's shutdown has added to combination of factors including uncertainty over production and shutdown schedule at Australia's 15.6mn t/yr Gorgon LNG facility and strength in European gas prices that have sent Asian spot prices higher over the past month. The front half-month ANEA price, the Argus assessment for spot LNG deliveries, has risen by around 71.5pc to $4.52/mn Btu onn7 September from $2.635/mn Btu on 3 August.

A few market participants including an offtaker at the facility expect that Cameron could restart within the end of this month.

"Originally it seemed like the restart timing would be mid-September but due to electricity problems this is extended," a trader with an offtaker said. "We believe (the restart will be) within this month or shorter. Sempra is eager for a restart and the state government has to restart the energy business as it is an essential service."

But others suggest that significant damage to power infrastructure across western Louisiana make a two-month timeline more likely, as a restart hinges on some amount of dredging work around the terminal and the reinstallation of power lines.

Entergy, western Louisiana's main power utility, said on 2 September that the hurricane had caused "catastrophic damages", which require "almost a complete rebuild of our transmission and distribution system that serves Calcasieu and Cameron parishes".

It said at the time that it had no specific estimate for restoring the higher-capacity lines needed to support industrial operations. Emergency services, hospitals, water departments and other essential services remained the priority, followed by powering up the areas that would supply the most customers at a time.

The Calcasieu waterway, which leads to the Cameron facility, is currently restricted to vessels with a draught of below 34-36 ft (10.3-11 metres). This means that most unladen LNG vessels would be able to access the waterway, given the typical draught of an unladen LNG tanker is around 9.5m.

But the draught would need to be higher to accommodate vessels, once laden. The US Coast Guard revised the access restrictions on Monday, following its notice on 1 September, which restricted access to Calcasieu waterway to vessels with a draught below 30 ft during daylight hours.

A few offtakers have already made arrangements, including buying spot cargoes, to replace cargoes lost as a result of the facility being off line since 26 August, a day before Hurricane Laura made landfall and battered the Louisiana-Texas coastline. Cargo cancellations at Cameron, the 5.75mn t/yr Cove Point and the 4mn t/yr Elba Island facilities were expected to total 5-6 in August, 1-4 in September and up to two cargoes in October.

Two of the plant's offtakers were actively seeking spot cargoes and had participated in supply tenders last week, which market participants suggested was likely to replace cargoes lost as a result of the delayed loadings with Cameron offline.

But there could still be more short-covering in store.

India's IOC issued two tenders on Monday to buy a total of two cargoes for delivery in late September and early October to the 5mn t/yr Ennore terminal in Chennai and the 17.5mn t/yr Dahej LNG import terminal in Gujarat, likely to replace a missed loading on 23-27 August at Cameron. IOC has a 700,000 t/yr fob supply agreement with Japan's Mitsubishi.

A Japanese utility that receives Cameron LNG cargoes issued a tender on Monday to buy an end-October cargo. The tender closes today. It is unclear if the cargo sought is to replace a lost loading from Cameron.

By Camille Klass

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21/11/24

Cost of government support for fossil fuels still high

London, 21 November (Argus) — The cost of government measures to support the consumption and production of fossil fuels dropped by almost a third last year as energy prices declined from record highs in 2022, according to a new report published today by the OECD. But the level of fiscal support remained higher than the historical average despite government pledges to reduce carbon emissions. In an analysis of 82 economies, data from the OECD and the IEA found that government support for fossil fuels fell to an estimated $1.1 trillion in 2023 from $1.6 trillion a year earlier. Although energy prices were lower last year than in 2022, countries maintained various fiscal measures to both stimulate fossil fuel production and reduce the burden of high energy costs for consumers, the OECD said. The measures are in the form of direct payments by governments to individual recipients, tax concessions and price support. The latter includes "direct price regulation, pricing formulas, border controls or taxes, and domestic purchase or supply mandates", the OECD said. These government interventions come at a large financial cost and increase carbon emissions, undermining the net-zero transition, the report said. Of the estimated $1.1 trillion of support, direct transfers and tax concessions accounted for $514.1bn, up from $503.7bn in 2022. Transfers amounted to $269.8bn, making them more costly than tax concessions of $244.3bn. Some 90pc of the transfers were to support consumption by households and companies, the rest was to support producers. The residential sector benefited from a 22pc increase from a year earlier, and support to manufacturers and industry increased by 14pc. But the majority of fuel consumption measures are untargeted, and support largely does not land where it is needed, the OECD said. The "under-pricing" of fossil fuels amounted to $616.4bn last year, around half of the 2022 level, the report said. "Benchmark prices (based on energy supply costs) eased, particularly for natural gas, thereby decreasing the difference between the subsidised end-user prices and the benchmark prices," it said. In terms of individual fossil fuels, the fiscal cost of support for coal fell the most, to $27.7bn in 2023 from $43.5bn a year earlier. The cost of support for natural gas has grown steadily in recent years, amounting to $343bn last year compared with $144bn in 2018. The upward trend is explained by its characterisation as a transition fuel and the disruption of Russian pipeline supplies to Europe, the report said. By Alejandro Moreano and Tim van Gardingen Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Investment funds’ net long on Ice TTF reaches new high

21/11/24

Investment funds’ net long on Ice TTF reaches new high

London, 21 November (Argus) — Investment funds' net long TTF position on the Intercontinental Exchange (Ice) jumped to a new all-time high earlier this month, outstripping the previous record in late August. The latest weekly data from Ice show investment funds' net long TTF position shot up to a new record at just under 273TWh by 15 November, topping the previous all-time high of roughly 268TWh in the week ending 30 August , revised data show. After peaking in August, the position dropped to 192TWh on 20 September, and held broadly stable before jumping 33.6TWh in the week ending 25 October . TTF prices rose in the following two weeks, but funds trimmed their net long position to around 226TWh on 8 November ( see graph ). But in the most recent week of data from Ice, investment funds' net long position shot up to just under 273TWh by 15 November, a new record high. Over the same period of 8-15 November, The Argus TTF front-month contract rose by more than 9pc, and there were similarly large moves for the first-quarter 2025 and summer 2025 contracts. The calendar 2025 price was also up by 8pc ( see table ). Significant price volatility in recent trading sessions has also prompted Ice to increase margin rates by around 20pc on all contracts out to September 2025 , with smaller increases further down the curve. Austrian incumbent OMV announced this week Russia's Gazprom would halt its contractual supply from 16 November , prompting sizeable day-on-day price moves across Europe and possibly encouraging investment funds to go longer and capitalise on the volatility. But central European flows have changed only slightly since then, with roughly the same amount of Russian gas entering the region. Higher TTF prices have also caused LNG diversions from Asia to Europe in recent days, which reached double digits on 19 November . Such a large net long position suggests investment funds may still expect a tight European gas balance this winter. Record-low freight rates have brought the cost of shipping US LNG to Asia closer to the cost of the shorter US-Europe route, meaning European prices have to rise sufficiently high enough to offset this and close the inter-basin arbitrage again in order to attract uncommitted cargoes. Cold weather has also prompted EU firms to draw down storage stocks heavily so far this month . Aggregate EU withdrawals averaged just under 3 TWh/d on 1-15 November, four times the 756 GWh/d average for that period in 2018-22 and sharply contrasting the 965 GWh/d of net injections across the bloc on 1-15 November 2023. Unlike investment funds, the two other major categories of Ice market participant — commercial undertakings and investment/credit firms — boosted their net short positions by a combined 53TWh, leaving the latter with nearly 200TWh in net shorts, the highest since mid-September. Despite significant storage withdrawals, commercial undertakings ‘risk reduct' contracts — generally used for hedging — in the week to 15 November jumped by just under 30TWh to nearly 211TWh, the highest since 24 December 2021. Some of that increase may have been driven by a need to hedge the LNG cargoes diverted to Europe in recent weeks as European hub prices rose. A 9TWh increase in the net long position of commercial undertakings' other contracts slightly moderated the overall net short increase. The gross short and long positions of commercial undertakings totalled 1.95PWh, nearly twice as large as the investments funds' 646TWh and investment/credit firms' 421TWh combined. By Brendan A'Hearn Argus TTF prices 8-15 Nov €/MWh Dec-24 1Q25 Sum 25 Win 25 Cal 25 8-Nov 42.08 42.31 40.81 38.41 40.65 15-Nov 46.02 46.12 44.12 41.00 43.98 % change 9.4 9.0 8.1 6.7 8.2 Argus Net positions on ICE TTF TWh Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop: Talks in Baku torn between mitigation and finance

21/11/24

Cop: Talks in Baku torn between mitigation and finance

Edinburgh, 21 November (Argus) — Developing and developed nations remain at loggerheads on what progress on climate finance and mitigation — actions to cut greenhouse gas emissions — should look like at the UN Cop 29 climate summit. But Cop 30 host Brazil has reminded parties that they need to stick to the brief, which is finance for developing countries. Concluding a plenary where parties, developed and developing, listed grievances, environment minister Marina Silva recognised "the excellent progress achieved" on mitigation at Cop 28. She listed paragraphs of the Cop 28 deal, including the energy package and its historic call to transition away from fossil fuels in energy systems. "We are on the right track," she said, talking about mitigation, but "our greatest obligation at this moment is to make progress with regard to financing". "This is the core of financing that will pave our collective path in ambition and implementation at Cop 30," Silva said, adding that $1.3 trillion for developing countries should be "the guiding star of this Cop". Parties are negotiating a new collective quantified goal (NCQG) — a new climate finance target — building on the $100bn/yr that developed countries agreed to deliver to developing countries over 2020-25. But developed countries insist that a precise number for a goal can only be produced if there is progress on mitigation and financing structure for the NCQG. "Otherwise you have a shopping basket but you don't know what's in there," EU energy commissioner Wopke Hoekstra said. Some developing nations said they need the "headline number first". Some developing countries, including Latin American and African nations as well as island states, have also complained about the lack of mitigation ambition. Cop is facing one of the "weakest mitigation texts we have ever seen," Panama said. But they also indicated that financial support was missing to implement action. Developed countries at Cop 29 seek the implementation of the energy pledges made last year. "What we had on our agenda was not just to restate the [Cop 28] consensus but actually to enhance and to operationalise that," but the text goes in the opposite direction, Hoekstra said, talking about the latest draft on finance. Whether hints that Brazil has mitigation in focus for next year's summit will be enough to assuage concerns from developed countries at Cop 29 on fossil fuel ambitions remains to be seen. The communique of the G20, which the country hosted, does not explicitly mention the goal to transition away from fossil fuels either. The developed countries' mitigation stance grew firmer after talks on a work programme dedicated to mitigation, the obvious channel for fossil fuel language, was rescued from the brink of collapse last week. Discussions have stalled, but another text — the UAE dialogue which is meant to track progress on the outcomes of Cop 28 — still has options referring to fossil fuels. But in these negotiations too, divisions remain. "The UAE dialogue contains some positive optional language on deep, rapid and sustained emissions reductions and the [Cop 28] energy package, climate think-tank E3G said. But Saudi Arabia has made clear that this was unacceptable, while India, which worked to water down a coal deal at Cop 26, is pushing back on the 1.5°C temperature limit of the Paris Agreement. Negotiators are starting to run out of time. Draft after draft, the divide fails to be breached with no agreement on an amount for the finance deal. "We cannot talk about a lower or higher number because there is no number," noted Colombia's environment minister Susana Muhamad. The next iteration should have numbers based on the Cop 29 presidency's "view of possible landing zones". The fact that the draft text on finance has no bridging proposal is a concern, non-profit WRI director of international climate action David Waskow said. Finance was always meant to be the centrepiece of Cop 29. Parties have not formally discussed the goal in 15 years, and have been trying to prepare for a new deal through technical meetings for the past two years. But the discussion needs to end in Baku. By Caroline Varin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop: EU, four countries commit to 1.5°C climate plans

21/11/24

Cop: EU, four countries commit to 1.5°C climate plans

Baku, 21 November (Argus) — The EU, Canada, Mexico, Norway and Switzerland have committed to submit new national climate plans setting out "steep emission cuts", that are consistent with the global 1.5°C temperature increase limit sought by the Paris Agreement. The EU and four countries made the pledge at the UN Cop 29 climate summit in Baku, Azerbaijan today, and called on other nations to follow suit — particularly major economies. Countries are due to submit new climate plans — known as nationally determined contributions (NDCs) — covering 2035 goals to the UN climate body the UNFCCC by early next year. The EU, Canada, Mexico, Norway and Switzerland have not yet submitted their plans, but they will be aligned with a 1.5°C pathway, EU climate commissioner Wopke Hoekstra said today. The Paris climate agreement seeks to limit the global rise in temperature to "well below" 2°C and preferably to 1.5°C. Canada's NDC is being considered by the country's cabinet and will be submitted by the 10 February deadline, Canadian ambassador for climate change Catherine Stewart said today. Switzerland's new NDC will also be submitted by the deadline, the country's representative confirmed. Pamana's special representative for climate change Juan Carlos Monterrey Gomez also joined the press conference today. Panama, which is designated as carbon negative, submitted an updated NDC in June. It is planning to submit a nature pledge, Monterrey Gomez said. "It is time to streamline processes to get to real action", he added. The UK also backed the pledge. The UK announced an ambitious emissions reduction target last week. The UAE — which hosted Cop 28 last year — released a new NDC just ahead of Cop 29, while Brazil, host of next year's Cop 30, released its new NDC on 13 November during the summit. Thailand yesterday at Cop 29 communicated a new emissions reduction target . Indonesia last week said that it intends to submit its updated NDC ahead of the February deadline, with a plan placing a ceiling on emissions and covering all greenhouse gases as well as including the oil and gas sector. Colombia also indicated that its new climate plan will seek to address fossil fuels, but it will submit its NDC by June next year . By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

LNG diversions to Europe reach double digits

19/11/24

LNG diversions to Europe reach double digits

London, 19 November (Argus) — At least 11 LNG carriers have likely diverted to Europe from Asia and Egypt over the past week, as European delivered prices now offer higher returns than Asian delivered prices, and operational issues delay deliveries in Egypt. Of the 11 cargoes, seven have diverted away from sailing for Asia round the Cape of Good Hope towards Europe, and four have diverted from Egypt, judging by shiptracking data from Vortexa (see table) . This does not include the 173,400m Myrina , which was idling in the mid-Atlantic today. One carrier — 174,000m³ Aristos I — had already passed the Cape of Good Hope, before turning back towards the Atlantic basin. Assuming all carriers are holding full cargoes, this totals around 860,000t, or 13.2TWh of LNG. Northwest European delivered prices rose above corresponding northeast Asian prices last week , prompting diversions from Asia to Europe. The inter-basin arbitrage was already closed, although firms with surplus shipping capacity that they viewed as a sunk cost because of long open vessel lists were still willing to send Atlantic basin cargoes to Asia as the opportunity cost of the longer journey time was limited to the cargo loss through higher boil-off during the voyage. But Europe's discount to Asia has narrowed, and even inverted late last week, with the spread between the two markets less than the boil-off cost difference between US deliveries to Europe and to Asia, incentivising diversions to Europe. The extra boil-off losses amount to around 39¢/mn Btu when shipping a cargo from Sabine Pass to Incheon via the Cape of Good Hope instead of Rotterdam, assuming a northeast Asian delivered price of $14.05/mn Btu, a sailing speed of 17 knots and a 160,000m³ cargo with a 0.1pc daily boil-off rate. The Argus Northeast Asia (ANEA) January delivered price closed at a 49¢/mn Btu premium to the northwest European December des price on 7 November, enough to incentivise deliveries to northeast Asia instead of Europe for firms with sunk shipping capacity as the spread was wider than boil-off losses. But the ANEA January price on 14 November fell to a discount to prompt northwest European des prices, incentivising diversions to Europe. And four carriers have diverted away from Egypt, where delays to a tight delivery schedule have been created by operational issues at the country's 6mn t/yr Ain Sukhna terminal, according to market participants. One of the terminal's two regasification trains has been experiencing operational difficulties, halving the terminal's regasification capacity, they said. The country last imported a cargo on 16 November — nine days after the previous delivery. The terminal's Hoegh Galleon floating storage and regasification unit has a peak regasification rate of 750mn ft³/d (7.7bn m³/yr), equivalent to about 16,500 t/d, meaning that it could regasify a 72,000t standard-sized cargo in 4-5 days when operating at full capacity. By Martin Senior Diversions to Europe m³ Carrier Capacity Diversion date Approx diversion location Diversions from Asia BW Lesmes 174,000 13-Nov West Africa Gaslog Windsor 180,000 14-Nov West Africa Vivirt City LNG 174,000 15-Nov West Africa LNGShips Empress 174,000 18-Nov Carribean Diamond Gas Crystal 174,000 14-Nov Carribean Flex Vigilant 174,000 14-Nov Carribean Aristos I 174,000 18-Nov Madagascar Diversions from Egypt British Listener 173,000 13-Nov Mediterranean LNG Harmony 174,000 14-Nov Mid-Atlantic Axios II 174,000 14-Nov Mid-Atlantic Pacific Success 174,000 16-Nov South of Suez — Vortexa, Argus Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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