US, Australia drive sharp falls in global LNG exports
Global LNG exports fell compared with a year earlier for the third consecutive month in July, mostly as a result of sharp drops in loadings from the US and Australia.
LNG exports fell by around 8pc in July to 27.2mn t from 29.7mn t a year earlier, according to preliminary ship-tracking data, marking the sharpest year-on-year decline since global loadings first halted years of growth in May. The drop in July was equivalent to about 34 standard-sized cargoes.
US producers led exports cuts, with loadings of 1.9mn t in July down by around 1.24mn t compared with a year earlier, despite an increase in the country's liquefaction capacity to 74mn t/yr from 46mn t/yr at the beginning of July 2019. Covid-19 weighed heavily on global gas demand and delivered LNG prices to such an extent that it became uneconomical to lift US cargoes. Around 40 July-loading cargoes were heard cancelled by offtakers, which would equate to around 3mn t.
Australian shipments fell by around 1.04mn t from a year earlier to 5.79mn t in July, having already fallen to a 16-month low of 5.83mn t in June, according to the Australian Bureau of Statistics.
The decline in shipments partly reflected the shutdown of the Shell-operated 3.6mn t/yr Prelude facility, which has been off line since February. And the second train at Chevron's 15.6mn t/yr Gorgon LNG plant has been undergoing maintenance since May.
Northeast Asian buyers of Australia's oil-linked LNG supply may have exercised flexibility in their contracts to reduce receipts in recent months, as falls in oil prices in March could have provided an incentive for buyers to defer deliveries until later this year, depending on the price indexation period. China's imports of Australian LNG fell by 1.2mn t in July, despite overall Chinese LNG imports edging up last month compared with a year earlier. Similarly, Japan absorbed 510,000t less Australian LNG over the month compared with July 2019.
Some producers of Australian LNG have sold more volumes on the spot market in recent months. Independent Woodside sold 46pc of its LNG on the spot market in the second quarter, up from spot sales of 13pc in the first quarter. The primary driver for the higher spot sales included contractual flexibilities exercised by buyers, which resulted in five cargoes originally tied to contractual agreements being sold on the spot market, Woodside said. But the company does not expect buyers to seek to reduce contractual volumes in the second half of this year.
Oil-linked prices with a six-month (601) indexation period were in backwardation — prompt prices at a premium to forward values — until November on 7 August, while Argus northeast Asia (ANEA) des LNG prices were in contango — forward prices at a premium to prompt. This suggested that buyers with sufficient contractual flexibility would have an incentive to maximise deliveries of oil-linked volumes in October-December, when oil-linked prices hold their narrowest premium to corresponding ANEA prices.
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Hurricane Helene shuts in 29pc of US Gulf oil
Hurricane Helene shuts in 29pc of US Gulf oil
New York, 25 September (Argus) — Hurricane Helene, which is forecast to intensify as it heads for a late Thursday landfall in Florida, has shut in about 29pc of US Gulf of Mexico oil output. Around 511,000 b/d of US offshore oil output was off line as of 12:30pm ET, according to the Bureau of Safety and Environmental Enforcement (BSEE), while 313mn cf/d of natural gas production, or 17pc of the region's output, was also off line. Operators have so far evacuated workers from 17 offshore platforms. Helene was last about 110 miles north-northeast of Cozumel, Mexico, according to a 2pm ET advisory from the US National Hurricane Center, with maximum sustained winds of 80 mph. Helene is expected to be a major hurricane, with winds of at least 111mph, when it reaches the eastern Florida coast on Thursday evening. "A turn toward the north and north-northeast with an increase in forward speed is expected later today through Thursday, bringing the center of Helene across the eastern Gulf of Mexico and to the Florida Big Bend coast by Thursday evening," the center said. Shell restarting some production Although the hurricane will largely pass to the east of most offshore oil and gas production areas, companies have taken precautionary measures. Given a shift in the forecast track, Shell said late Tuesday that it had started to ramp up production at the Appomattox platform to normal levels, and was in the process of restoring output at the Stones facility, both off the coast of Louisiana. It paused some drilling operations. Chevron said earlier it was shutting in production at company-operated facilities in the Gulf of Mexico, and evacuating all workers. Equinor said it was shutting down the Titan oil platform. BP had earlier this week started to shut in production at its Na Kika and Thunder Horse platforms, southeast of New Orleans, and was curtailing output from its Argos and Atlantis facilities, as well as removing non-essential staff. US offshore production was disrupted earlier this month when Hurricane Francine made landfall, with up to 42pc of production was offline at one point. The offshore Gulf of Mexico accounts for around 15pc of total US crude output and 5pc of US natural gas production. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
LNG glut coming and may catch many by surprise: Orsted
LNG glut coming and may catch many by surprise: Orsted
London, 25 September (Argus) — There will be an oversupply of LNG on the global market in the coming years, which may contribute further to "the decade of turmoil", Danish utility Orsted senior vice-president Rune Sonne Bundgaard-Jorgensen told Argus . "The [energy] crisis is absolutely not over. To me, an energy crisis is one of uncertainty and volatility," Bundgaard-Jorgensen said on the sidelines of the Energy Trading Week conference in London. "We are going to see an LNG glut which we all in this [conference] room see is coming but the rest of the world does not necessarily. That is going to catch a lot of people by surprise," he said, adding that "surprises are never good when it comes to energy". According to Bundgaard-Jorgensen, "we are going to see an ongoing decade of turmoil. Who knows where the war in the Middle East with the latest attacks on Hezbollah and Israel is going to take us," he said. Among other concerns, he mentioned "uncertainties in the Far East, around the South China Sea". "So, though the current energy crisis of decoupling from Russian pipe gas is over, the continued crisis of where we are going to get sustainable, long-term energy from is far from over," Bundgaard-Jorgensen said. Commenting on Orsted's long-term gas plans, Bundgaard-Jorgensen stressed that Orsted is "constantly evaluating" its gas portfolio. He refused to say whether Orsted is negotiating another long-term deal with Norwegian state-controlled Equinor after their previous contract expired in April. Orsted entered an agreement with Equinor at the end of 2022, after Russian state-controlled Gazprom halted deliveries to the firm from June 2022 following Orsted's refusal to pay for its supply in roubles . "We are quite happy that we are out of our long-term contract with Gazprom," Bundgaard-Jorgensen said. "As a company we believe in decarbonisation — but I also need to believe in a resilient portfolio. So, we are constantly looking to optimise. Gas is not a strategic core of Orsted but it is a very important tool of securing our portfolio," he said. Bundgaard-Jorgensen refused to comment on whether the firm is planning to appeal a decision made by the Danish Supply Authority in July that the tariff levied by Orsted on the Tyra-Nybro pipeline to Denmark from 2011 to October 2012 was too high. The authority reduced the tariff in the period by almost 30pc to 7.20 Danish kroner/m³ from DKr10/m³. By Alexandra Vladimirova Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Helene shuts in about 16pc of US Gulf oil: Update 2
Helene shuts in about 16pc of US Gulf oil: Update 2
Adds daily spot market crude pricing information. New York, 24 September (Argus) — Tropical storm Helene, which is expected to develop into a hurricane on Wednesday before coming ashore in Florida Thursday, has shut in about 16pc of US Gulf of Mexico oil output. Around 284,000 b/d of US offshore oil output was off line as of 12:30pm ET, according to the Bureau of Safety and Environmental Enforcement (BSEE), while 208mn cf/d of natural gas production, or 11pc of the region's output, was also off line. Operators have so far evacuated workers from four offshore production platforms. Helene was last about 175 miles east-southeast of Cozumel, Mexico, according to a 2pm ET advisory from the US National Hurricane Center, with maximum sustained winds of 45 mph. The current forecast has the center of Helene entering the eastern Gulf of Mexico Wednesday morning and moving north-northeast toward a possible landfall near the Florida panhandle region late Thursday. By then it will have strengthened into a major hurricane, with winds of at least 111mph, according to forecasts. While the storm will largely pass to the east of most offshore oil and gas production areas, companies started suspended some operations on Sunday. Chevron began evacuating workers and shutting in its Blind Faith and Petronius platforms. "While we are also transporting nonessential personnel from our four other Chevron-operated Gulf of Mexico platforms, production there remains at normal levels," the company said. Shell said Monday it had shut in output from its Stones facility and curtailed production from the Appomattox platform, both off the coast of Louisiana. The company was also relocating non-essential workers from its assets in the Mars corridor, and suspending some drilling operations. Equinor said it was shutting down the Titan oil platform as a precaution. BP had started to shut in production at its Na Kika and Thunder Horse platforms, southeast of New Orleans, and was curtailing output from its Argos and Atlantis facilities, as well as removing non-essential staff. Offshore spot prices rise slightly The Na Kika platform is connected by pipeline to the Shell-operated Delta pipeline system, which carries Heavy Louisiana Sweet (HLS) crude to shore. During trading on Tuesday, October HLS rose by 20¢/bl relative to the light sweet crude benchmark in Cushing, Oklahoma, to an 80¢/bl discount. The October US pipeline trade month ends Wednesday. The Thunder Horse platform production is marketed as part of a sour crude stream by the same name that is priced at the Louisiana Offshore Oil Pipeline's (LOOP) facility in Clovelly, Louisiana, where it has dedicated underground cavern storage, as does Mars. On Tuesday, Thunder Horse traded at a 50¢/bl discount to the Cushing benchmark, after wide discussion circled a 40¢/bl discount in the prior session. Medium sour secondary benchmark Mars tightened its gap to the Cushing basis by 30¢/bl to a volume-weighted average discount of roughly $1.55/bl. Crude production from the 140,000 b/d capacity Argos platform feeds into the Cameron Highway Oil Pipeline System (CHOPS), which carries Southern Green Canyon (SGC) crude to the Texas Gulf coast. Argos platform serves the Mad Dog 2 field development that came online last year. Atlantis production also feeds into SGC. No SGC transactions were reported on Tuesday. It was offered as low as $1/bl under the Cushing benchmark, lower than trade at a 50¢/bl discount in the prior session. US offshore production was disrupted earlier this month when Hurricane Francine made landfall as a category 1 storm. Up to 42pc of production was offline at one point. The offshore Gulf of Mexico accounts for around 15pc of total US crude output and 5pc of US natural gas production. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Helene shuts in about 16pc of US Gulf oil: Update
Helene shuts in about 16pc of US Gulf oil: Update
Adds BSEE production shut in data, updated storm info. New York, 24 September (Argus) — Tropical storm Helene, which is expected to develop into a hurricane on Wednesday before coming ashore in Florida Thursday, has shut in about 16pc of US Gulf of Mexico oil output. Around 284,000 b/d of US offshore oil output was off line as of 12:30pm ET, according to the Bureau of Safety and Environmental Enforcement (BSEE), while 208mn cf/d of natural gas production, or 11pc of the region's output, was also off line. Operators have so far evacuated workers from four offshore production platforms. Helene was last about 175 miles east-southeast of Cozumel, Mexico, according to a 2pm ET advisory from the US National Hurricane Center, with maximum sustained winds of 45 mph. The current forecast has the center of Helene entering the eastern Gulf of Mexico Wednesday morning and moving north-northeast toward a possible landfall near the Florida panhandle region late Thursday. By then it will have strengthened into a major hurricane, with winds of at least 111mph, according to forecasts. While the storm will largely pass to the east of most offshore oil and gas production areas, companies started suspended some operations on Sunday. BP said Monday it had started to shut in production at its Na Kika and Thunder Horse platforms, southeast of New Orleans, and was curtailing output from its Argos and Atlantis facilities, as well as removing non-essential staff. Chevron began evacuating workers and shutting in its Blind Faith and Petronius platforms. "While we are also transporting nonessential personnel from our four other Chevron-operated Gulf of Mexico platforms, production there remains at normal levels," the company said. Shell said Monday it had shut in output from its Stones facility and curtailed production from the Appomattox platform, both off the coast of Louisiana. The company was also relocating non-essential workers from its assets in the Mars corridor, and suspending some drilling operations. Equinor said it was shutting down the Titan oil platform as a precaution. US offshore production was disrupted earlier this month when Hurricane Francine came ashore near Morgan City, Louisiana, as a category 1 storm. Up to 42pc of production was offline at one point. The offshore Gulf of Mexico accounts for around 15pc of total US crude output and 5pc of US natural gas production. 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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