Pertamina cancels Mozambique LNG offtake deal

Spanish Market: Natural gas
08/12/23

Indonesian state-owned Pertamina has cancelled its 1mn t/yr 20-year des offtake deal from the planned 13.1mn t/yr Mozambique LNG terminal, a company spokesperson confirmed to Argus today.

"There is no [penalty] because there is force majeure, so it is an agreement between both parties," Pertamina said. It signed the offtake agreement in 2019 (see tables).

The planned terminal reached financial close in 2019, but construction has been halted since April 2021, after conflict near the facility broke out. Operator TotalEnergies is eyeing a return to the project and is in negotiations with construction firms to restart works, with a view to launching commercial operations in 2028.

TotalEnergies offered no comment in response to an Argus queries to how Pertamina's cancellation could affect the project, and whether new capacity would be marketed.

Since the offtake agreements were signed, no other firm has said publicly that it has cancelled. "The Mozambique LNG contracts have not been affected," TotalEnergies chief executive Patrick Pouyanne said on 27 April.

Oil-linked offtake contract prices have risen in recent years, so if offtakers opt out and sign new agreements with other projects, they are likely to pay more. Oil-linked slopes have risen in recent years from about 10 to 13pc, BP vice-president for LNG trading Jonty Shepard said at the World LNG Summit in Athens last week.

Mozambique exports LNG through the 3.4mn t/yr Coral Sul floating liquefaction unit. Other planned projects in the country include ExxonMobil's 18.1mn t/yr Rovuma LNG terminal, and the Coral Norte 3.4mn t/yr floating liquefaction terminal.

Indonesia has considered limiting its own LNG exports to ensure sufficient gas supply for its own needs, as domestic production falls. The country exports LNG, but has no offtake agreements beyond 2027 from its 11.5mn t/yr Bontang terminal.

By Martin Senior

Mozambique LNG offtakers		mn t/yr
Offtaker	Term (yr)	Volume

Offtake deals
CNOOC	13.0	1.5
Shell	13.0	2.0
Tokyo Gas, Centrica*	20.0	2.6
BPCL	15.0	1.0
EDF	15.0	1.2
Tohoku Electric	15.0	0.3
Jera, CPC	17.0	1.6
Total		10.2
Cancelled deal
Pertamina	20.0	1.0
* Delivery to PTT

Mozambique LNG shareholders	%
Shareholder	Stake

TotalEnergies	26.5
Mitsui	20.0
ONGC Videsh	10.0
PTTEP	8.5
BRPL	10.0
Beas Rovuma Energy	10.0
ENH Rovuma	15.0

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19/12/24

Reliability drives New Zealand power mix: Minister

Sydney, 19 December (Argus) — New Zealand's conservative coalition government wants to ensure reliable generation, whether that is from coal, oil, gas, or geothermal resources, the country's resources minister Shane Jones told Argus this week. Jones was also clear about the need to draw a distinction between "the expectations on [a] small, open trading nation like [New Zealand] not to use coal and the major hope[s] and needs of the average New Zealander for affordable power, reliable power." "If [reliable power] comes from coal, that's the mix and the menu for the future," he added. Jones argued that existing renewable power sources cannot exclusively provide for New Zealand's energy needs. He instead suggested that his government is interested in promoting alternative power sources such as oil, gas and geothermal, through investments and policy changes. New Zealand's coal-fired power generation surged between July-September, according to the New Zealand's Ministry of Business Innovation and Employment (MBIE). Coal rose to 8pc of total generation from 3pc a year earlier, following a drop in hydroelectric power production. The country burned 363,513t of coal over those months, more than tripling its use for power generation purposes compared to the same period last year. Oil, gas Jones has taken steps to boost the country's oil sector since taking office in late 2023, following the coalition's victory over the centre-left Labour party. The minister introduced the Crown Minerals Amendment Bill in June, a piece of legislation that he described as being "aimed at increasing investor confidence in petroleum exploration and development." Jones told Argus that under the previous government, "people who may have been willing to [make] investment[s] and bring patient capital concluded that New Zealand was no longer available as a destination for oil and gas and this has resulted in a diminution in [oil] investment." The Crown Minerals Amendment Bill will overturn a 2018 ban on offshore oil exploration, which was introduced while Jones was serving in the previous Labour-led coalition government. New Zealand's oil sector increased its annual well spending from NZ$110mn ($63.2mn) in 2018 to NZ$403mn, in the years following the ban in 2018. The total number of active oil permits in the country has plunged from 56 to 37 over the same period, MBIE data show. New Zealand likely houses at least 223.5bn m³ of undiscovered, offshore gas reserves; 249mn bl of undiscovered, offshore oil reserves; and 177mn bl of undiscovered, offshore NGL reserves, mostly scattered around the North Island, according to US Geological Survey (USGS) estimates in 2022. The country's discovered, recoverable reserves are at between 38.3mn-52.7mn bl of oil; 29.4bn-39.8bn m³ of gas; and between 1.2mn–1.4mn t of LPG as of 1 January 2024, according to the MBIE. Besides restarting oil exploration, the Crown Minerals Amendment Bill also seeks to change permitting processes to drive capital into the sector. Permits are currently allocated through a competitive tender process, Jones told Argus this week. The government wants "the flexibility to use alternative processes to match investor interest in the most efficient and effective way by allowing the option of using non-tender methods." MBIE has indicated that the government may start using ‘priority in time' tenders, which allocates permits to the first eligible projects that apply for them, once the bill passes. But the Crown Minerals Amendment Bill does not specify how the government will manage non-competitive tenders. The government is also not using the Crown Minerals Amendment Bill to "specifically intervene in coal mining operations" in New Zealand, Jones said. But coal demand will fall "in the event that [the government is] able to expand the supply of indigenous gas," he noted. Geothermal The government's energy strategy also appears to involve doubling down on domestic geothermal generation, which is New Zealand's second most common source of power. Geothermal generators produced 2,363GWh of power between July-September, accounting for 20.5pc of total generation, in line with historical averages, according to MBIE data. New Zealand's government seems to be trying to push that share up. The government in early December decided to allocate up to NZ$60mn of public infrastructure funding to research for deep, geothermal energy production. The work will focus on drilling geothermal wells up to 6km deep, nearly twice the depth of standard wells. Jones told Argus that New Zealand officials are currently in Japan, discussing supercritical geothermal generation opportunities with engineers and scientists. By Avinash Govind Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Western Australia's near-term gas supply rises: Aemo

19/12/24

Western Australia's near-term gas supply rises: Aemo

Sydney, 19 December (Argus) — The short term supply outlook for Western Australia's (WA) gas market has improved, but gaps in the next decade need to be addressed, according to an Aemo annual report. The near-term gas supply is stronger than last year's outlook, with supply now forecast to exceed consumption through to 2027 on increased flows from LNG projects and declining near-term consumption, according to the 2024 Western Australia Gas Statement of Opportunities (GSOO) paper from the Australian Energy Market Operator (Aemo). Ample gas supply is expected because of increased flows from Wheatstone and Pluto LNG projects and new supply including forecast volumes from 2026 onwards from Woodside's Scarborough project and Strike's 87 TJ/d (2.3mn m³/d) West Erregulla plant . But demand is weak on the back of the shutdown of several nickel mines for maintenance in 2024 and the closure of the 2.2mn t/yr Kwinana alumina refinery announced in January. Aemo's 10-year outlook to 2035 now forecasts surplus gas until 2028, when some gas users will reopen projects. It also forecasts a less steep shortfall in the 2030s, with 2033 supply now 13pc below demand, down from the 27pc decrease in the 2023 GSOO. New gas supply will still be needed as WA plans to close its state-owned fleet of coal-fired power stations, but increasing renewable generation will shift gas usage in the power grid to a firming capacity, with gas-fired power demand tipped to increase in the early 2030s but stabilise at present levels of about 190 TJ/d by 2040. But uncertainty remains about the future of coal in the WA grid. The 416MW Bluewaters coal-fired plant, owned by Japanese firms Kansai Electric and Sumitomo, is expected to retire by 2030-31 but may be forced to close earlier because its supplier, the 2mn t/yr Griffin coal mine , cannot guarantee deliveries beyond October 2026. This will increase gas demand. The WA state government reversed a blanket ban on exporting onshore gas as LNG in September after a parliamentary inquiry into the state's domestic gas policy prompted by concerns from major gas users such as fertilizer manufacturers and metals refiners. Developers are now permitted to export 20pc of production as LNG until 2031 to boost upstream investment in the prospective Perth basin. By Tom Major WA gas supply and demand 2024-34 (TJ/d) 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Potential gas supply 1,143 1,190 1,121 1,207 1,192 1,412 1,335 1,301 1,214 1,173 1,144 Gas demand 1,119 1,069 1,082 1,154 1,354 1,342 1,357 1,378 1,371 1,343 1,336 Difference (% ± of demand) 2 11 4 5 -12 5 -2 -6 -12 -13 -14 Source: Aemo Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Strikes at Australian commodity ports to continue

19/12/24

Strikes at Australian commodity ports to continue

Sydney, 19 December (Argus) — Workers at major commodity ports across Australia will strike next week, in response to stalling negotiations with port operators. Queensland In northern Queensland, unions representing almost 200 workers have notified the Gladstone Ports (GPC) that they plan to launch work stoppages at the LNG and coal hub next week, a source told Argus. The strike actions follow an earlier day-long work stoppage involving over 100 workers at the port that began earlier this week. The dispute between GPC and its workers is centred around wage and rostering proposals. GPC and unions representing its workers have not scheduled any further bargaining meetings, multiple sources have told Argus . Gladstone's ship queue has exceeded 30 ships multiple times since work stoppages began on 17 December. This compared with a queue of 48 ships in December 2023, after Cyclone Jasper forced three other north Queensland ports to turn vessels away for four days. To the south of Gladstone, 100 workers at the Qube-operated Port of Brisbane will also stop working between 23-27 December, according to maritime logistics firm GAC. The stoppage announcement follows a day-long strike at multiple Qube ports , which began on 16 December. Before the strike began, a Qube representative warned that strikes at its ports would "inevitably [cause] disruption to supply chains for key commodities like fertiliser, grain, and steel." The Port of Brisbane is a major oil and meat port. New South Wales Along Australia's eastern coast, workers at Qube's major coal, grain, and fertiliser port in Port Kembla are planning to strike for a longer period of time than their colleagues in other parts of the country. GAC has reported that workers will launch 13 rolling work stoppages at the port between 20 December and 3 January. There are 141 members of the Construction, Forestry and Maritime Employees Union (CFMEU) participated in a strike authorisation vote at the site in early September, and have been engaged in industrial actions since then. Port Kembla also faced a day-long work stoppage earlier this week. Northern Territory Union members in Darwin are planning to not work for 1½ day beginning on 23 December. Like the Port of Brisbane, Darwin tends to handle livestock and oil products. But only 37 workers were eligible to participate in a successful mid-September union ballot authorising work stoppages at the port. By Avinash Govind Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US Fed cuts rate, signals 2025 half point cut: Update

18/12/24

US Fed cuts rate, signals 2025 half point cut: Update

Adds Powell comments, projections. Houston, 18 December (Argus) — The US Federal Reserve cut its target interest rate by 25 basis points today, its third cut of the year, and signaled it was likely to slow its pace of rate cuts by half next year from prior projections to maintain progress in bringing down inflation. "We are looking for further progress on inflation as well as continued strength in the labor market," Fed chair Jerome Powell told reporters. "As long as the economy and labor market are solid, we can be cautious as we consider further cuts." The Fed's Federal Open Market Committee (FOMC) lowered the federal funds rate to 4.25-4.50pc from the prior range of 4.5-4.75pc. This followed a quarter point reduction in November and a half-point cut made in mid-September, the first cut since 2020. The Fed penciled in 50 basis points worth of cuts for 2025, down from 100 basis points projected in the September median economic projections of Fed board members and Fed bank presidents. Projections show Personal Consumption Expenditure (PCE) inflation ending 2025 at 2.5pc, higher than the 2.1pc projected in September. PCE inflation is seen ending 2024 at 2.4pc, slightly up from 2.3pc projected in September. Headline consumer prices topped out above 9pc in mid-2022. The unemployment rate is projected to end 2025 at 4.3pc, slightly lower than the 4.4pc projected in September. GDP is projected to slow to an annual 2.1pc growth at the end of next year, slightly up from the 2pc projected in September. Unemployment is expected to end 2024 at 4.2pc and GDP growth at 2.5pc. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US Fed cuts rate, signals half point cut next year

18/12/24

US Fed cuts rate, signals half point cut next year

Houston, 18 December (Argus) — The US Federal Reserve cut its target interest rate by 25 basis points today, its third cut of the year, and signaled only a half percentage point of rate cuts next year to avoid any resurgence of inflation. The Fed's Federal Open Market Committee (FOMC) lowered the federal funds rate to 4.25-4.50pc from the prior range of 4.5-4.75pc. This followed a quarter point reduction in November and a half-point cut made in mid-September, the first cut since 2020. The Fed penciled in 50 basis points worth of cuts for 2025, down from 100 basis points projected in the September median economic projections of Fed board members and Fed bank presidents. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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