Australia’s Santos, TotalEnergies sign LNG supply deal

: Natural gas
24/10/02

Australian independent Santos has signed a 3 ¼-year LNG supply agreement on a des basis with the Asian division of TotalEnergies, commencing in October-December 2025.

The deal involves the supply of a total of 20 cargoes or about 500,000 t/yr of LNG from across its portfolio, Santos said on 2 October.

The agreement is the firm's first LNG contract with TotalEnergies, chief executive Kevin Gallagher said, with the oil-indexed contract complementing recent deals with Japanese utility Hokkaido Gas and trading firm Glencore, balancing its short and medium term portfolio with an 80:20 split of oil-linked volumes and spot prices.

Santos plans to bring its $4.6bn Barossa field in the Timor Sea on line in July-September 2025, with the project nearing 80pc completion and the third well recently drilled. The $596mn life extension for the 3.7mn t/yr Darwin LNG is now 50pc complete, executive vice president Vince Santostefano said in the Seaaoc 2024 event in Darwin on 19 September.

TotalEnergies holds a 37.55pc stake in the 5.6mn t/yr Papua LNG in Papua New Guinea and is the operator of the complex, with ExxonMobil controlling 37.04pc, Santos holding 22.83pc and Japanese upstream company JX Nippon holding 2.58pc.

Santos expects a final investment decision to be taken in late 2025 for the Papua LNG project, which has faced postponement because of issues with its engineering, procurement and construction contracts.

By Tom Major

ANEA LNG first-half month $/mn Btu

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

24/10/04

Global bio-bunker demand to pick up, US left behind

New York, 4 October (Argus) — Tightening vessel carbon intensity indicator (CII) scores and looming 2025 FuelEU marine regulation are expected to raise biodiesel demand for bunkering, but non-competitive US prices should continue to weigh down on US bio-bunker demand. Houston B30, a blend of used cooking methyl ester (Ucome) and very low-sulphur fuel oil (VLSFO), in September averaged at $821/t, a $45/t premium to B30 sold in Amsterdam-Rotterdam-Antwerp, and a $55/t premium to B24 sold in the west Mediterranean hub of Gibraltar and Algeciras (see chart) . Houston B30 was also priced at $115/t and $61/t premium to B24 sold in Singapore and Guangzhou, China, respectively. The price premium would continue to incentivize ship owners with global, ocean-going fleets to pick Asia first for their biodiesel bunker purchases, followed by northwest Europe and western Mediterranean. US demand for biodiesel for bunkering would continue to stagnate unless the US passes a legislation allowing Renewable Identification Number (RIN) credit under the US Renewable Fuel Standard (RFS) program be used by ocean-going vessels fueling with biodiesel in US ports. The legislation could level US' price playing field. Two bipartisan bills were put forward in support of renewable fuel for ocean-going vessels, one in the US Senate this year and one in the US House of Representatives last year, but they are currently dead in the water. Conventional marine fuels are priced cheaper than biodiesel and green varieties of LNG, ammonia, methanol, and hydrogen. But tightening International Maritime Organization (IMO) and EU regulations are forcing the hand of ship operators to consider green fuels to avoid hefty penalties and having their vessels suspended from trading. Ship owners whose vessels are outfitted with LNG-burning engines, are poised to have the lowest marine fuel expense heading into 2025, as fossil LNG is currently ship owners' cheapest low-carbon fuel option. But retrofitting a vessel to burn LNG could range from $5-$35mn, depending on the size of the vessel. Biodiesel, a plug-and-play fuel that does not require a vessel retrofit, is the second cheapest low-carbon fuel option after fossil LNG. IMO's CII regulation came into force in January 2023 and requires vessels over 5,000 gt to report their carbon intensity, which is then scored from A to E. The scoring levels are lowered yearly by about 2pc, so even a vessel with no change in CII could drop from C to D in one year. If a vessel receives a D score three years in a row or E score in the previous year, the vessel owner must submit a corrective actions plan. E scoring vessels could be prohibited from entering some ports' territorial waters, but this penalty is yet to be imposed on any E vessels. In 2023, the IMO reported that 40pc of the vessels scored A or B, 27pc scored C, 19pc scored D or E and 14pc were unresponsive. The EU's FuelEU maritime regulation will require ship operators traveling in, out and within EU territorial waters to gradually reduce their greenhouse gas (GHG) intensity on a lifecycle basis, starting with a 2pc reduction in 2025, 6pc in 2030 and so on until getting to an 80pc drop, compared with 2020 base year levels. It imposes a penalty of €2,400/t ($2,629/t) of VLSFO equivalent energy for vessel fleets exceeding its GHG limits. By Stefka Wechsler Biodiesel blends* Houston less global ports $/t Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US tops expectations with 254,000 jobs in Sep

24/10/04

US tops expectations with 254,000 jobs in Sep

Houston, 4 October (Argus) — The US added more jobs than expected in September and the unemployment rate ticked down, signs the labor market is strengthening heading into the US presidential election. US nonfarm payrolls rose by 254,000 workers last month, and the jobless rate fell to 4.1pc, the Labor Department reported Friday. Gains in August were revised up by 17,000 to 159,000 and those in July were revised up by 55,000 to 144,000. September's job gains were much higher than the 140,000 estimated by economists in a Trading Economics survey. Job gains blew past expectations in the same month the Federal Reserve began cutting interest rates for the first time since 2020, citing concerns that a weakening labor market might pull down the overall economy. Odds of a quarter point rate cut at the next Fed meeting in November rose to 91pc today from about 68pc Thursday, according to fed funds futures markets, while odds of a half-point cut fell to 9pc. The Fed last month penciled in 50 basis points of cuts in the remainder of this year. Job gains were higher than the average monthly gains of 203,000 over the prior 12 months, the Labor Department reported. Employment continued to move higher in food services and drinking establishments, health care, government, social assistance and construction. The labor market was little affected by Hurricane Francine, which made landfall in Louisiana on 11 September, during the reference periods for the surveys that contribute to the report. Gains in restaurants and drinking places rose by 69,000 jobs, much higher than the average 14,000 added over the prior 12 months. Health care added 45,000 jobs, below the monthly average of 57,000. Government added 31,000 compared with monthly averages of 45,000. Social assistance added 27,000. Construction added 25,000, near the monthly average. Manufacturing lost 7,000 jobs, most of them in the auto industry. The unemployment rate fell from 4.2pc in August, still higher than the five-decade low of 3.4pc posted in early 2023. Average hourly earnings rose by 4pc in the 12 months through September, up from 3.8pc through August. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Thailand's gas production key to future LNG imports

24/10/02

Thailand's gas production key to future LNG imports

Singapore, 2 October (Argus) — Thailand's state-controlled upstream firm PTTEP has bet on increasing gas production at the country's largest and oldest Erawan field as the key to reduce Thailand's reliance on LNG imports. This comes as international prices of the super-chilled fuel continue to be rocked by volatility. But casting the spotlight on Erawan could result in the company neglecting to focus on the declining production at other gas fields in Thailand, as well as on similarly vulnerable pipeline gas supplies from Myanmar. Aside from Erawan, Thailand has a group of smaller gas fields, with Bongkot, Bongkot Tai, Pailin and Arthit among the ones with larger production volumes. The eight other gas fields, namely Tan Tawan, Phu Horm, Sirikit, Lanta, Nam Phong, Jasmin, Yoong Thong and the Malaysia-Thailand Joint Development Area, produce much smaller volumes. It is noteworthy that gas production from the smaller gas fields has been on a steady decline since January 2023, and has consistently been below 1mn t every month. Production at Erawan has also been declining over most of 2022-23, but has since ramped up to hit PTTEP's target to achieve 800mn ft³/d (8.2bn m³/yr) of gas production at Erawan by April. Gas production at the Bongkot gas field has similarly showed a promising jump, from well below 400,000 t/month in March 2023 to at least 500,000 t/month since October 2023. But overall domestic gas production in Thailand has held mostly steady, in part because of efforts to ramp up production at Erawan. This has effectively offset lower production at smaller gas fields since 2023. Domestic gas production between January-July averaged around 2.14mn t/month, higher from the monthly average of 1.995mn t in 2023 and the monthly average of 2.072mn t in 2022. Myanmar's largest gas field, the offshore Yadana project, supplies around half of Myanmar's commercial capital Yangon's power needs. The field produces around 6bn m³/yr of gas, of which 70pc is exported to Thailand, where it is sold to state-controlled PTT, and 30pc goes to state-owned Myanmar Oil and Gas (Moge) for domestic use. But Moge has fallen under military control since a February 2021 military coup. This resulted in the US adding another layer of economic restrictions against Moge, which prohibits US-affiliated companies from providing financial services to the company. This could make it increasingly difficult for Thailand to purchase pipeline gas from Myanmar in the future as pipeline gas from the country may eventually reduce or even cease. But given that Myanmar pipeline supplies are marginal to begin with, a complete cessation of pipeline gas imports should be easily resolved through importing additional LNG to make up for the shortfall, traders in Thailand said. LNG imports into Thailand totalled 8.13mn t in 2022, before significantly increasing to 11.32mn t in 2023, according to customs data. Imports into the country so far over January-August stand at 8.2mn t, well on track to potentially surpass 2023 import volumes. By Rou Urn Lee and Naomi Ong Thailand's domestic gas production % Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US factory activity contracts for 6th month: ISM

24/10/01

US factory activity contracts for 6th month: ISM

Houston, 1 October (Argus) — US manufacturing activity remained in contraction in September for a sixth consecutive month, as a measure of prices shrank for the first time this year and new orders and production weakened, but at diminishing rates. The manufacturing purchasing managers index (PMI) registered 47.2 in September, matching August's reading, the Institute for Supply Management (ISM) said today. The PMI reading, below the 50 threshold signaling contraction, marked a 22nd month of contraction out of the last 23 months. Manufacturing accounts for about 10pc of the US economy, and the largest part of the economy — services — has expanded in six of the last eight months through August this year. ISM's services PMI report will be released Wednesday. "Demand remains subdued, as companies showed an unwillingness to invest in capital and inventory due to federal monetary policy … and election uncertainty," ISM said. "Production execution stabilized in September. Suppliers continue to have capacity, with lead times improving and shortages reappearing." The Federal Reserve on 18 September cut its target lending rate by a half point, its first cut since 2020, and signaled another 150 basis points of cuts were likely through 2025, as it has succeeded in bringing inflation close to its 2pc target. A key employment report on Friday will factor into the Fed's thinking, with little more than a month to go before the 5 November presidential election. The new orders index rose to 46.1 in September from 44.6 in August, reflecting a diminishing rate of contraction. Production rose to 49.8, still contracting but approaching expansion territory, from 44.8 the prior month. Employment fell to 43.9 in September from 46 the prior month, reflecting a more rapidly weakening labor market. New export orders fell to 45.3 in September, showing deepening contraction, from 48.6, and imports fell to 48.3 from 49.6. Prices fell to 48.3 from 54. Inventories fell to 43.9, returning to pre-August low levels, from 50.3, while customers' inventory levels rose by 1.6 points to 50 in September, suggesting a "demand level that is neutral to negative for future new orders and production," ISM said. The prices index registered 48.3, down from 54 the prior month, indicating raw material prices fell last month after eight straight months of increases. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Hungary-Slovakia gas capacity to rise by 33pc

24/10/01

Hungary-Slovakia gas capacity to rise by 33pc

London, 1 October (Argus) — Gas transmission capacity from Hungary towards Slovakia at the Velke Zlievce/Balassagyarmat border point will increase by one-third from tomorrow until the end of March 2025. Capacity towards Slovakia will rise to 101.8 GWh/d from 76.3 GWh/d at present, but only on a "pilot basis" until the end of March 2025, Hungarian grid operator FGSZ and its Slovak counterpart Eustream announced this morning. The additional capacity will be offered in daily auctions today for tomorrow's gas day, and will be offered in all further capacity auctions according to the auction calendar. Hungarian exit flows towards Slovakia averaged 71 GWh/d in September, utilising 93pc of the full technical capacity at Velke Zlievce/Balassagyarmat. Price incentives have driven those brisk outflows, with the Hungarian prompt holding below corresponding prices in all nearby markets above it for all of last month, except for 16 September ( see graph ). FGSZ also recently prolonged higher exit capacity towards Ukraine on a pilot basis until the end of this year . By Brendan A'Hearn HU day-ahead vs regional hubs €/MWh Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more