Natural Gas Daily: December 10th, 2020

BRENT SURPASSES $50 FOR FIRST TIME SINCE MARCH

Brent has surpassed $50/barrel for the first time since March, amid further progress on the coronavirus (Covid-19) vaccination front.

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• This is despite the Opec+ agreeing earlier this month to bring back 500,000 b/day of oil supply in January, against expectations that the group would maintain current cuts for longer.

• Higher oil prices could mean more associated gas supply coming back on stream at oilfields where production was reduced during this year's downturn. They will also feed into gas prices further down the line, because of oil indexation in some gas supply contracts.

LNG SUPPLIES AT RISK FROM RENEWABLES: WOODMAC

Wood Mackenzie in a report published on December 9 said that over three-quarters of new LNG supplies were at risk under the Paris Agreement's 2-degree scenario. Gas demand would come under pressure from increased investments in renewables and energy storage in the power sector, as well as efficiency improvements and adoption of new technologies in non-power sectors.  

• Low-cost LNG suppliers Russia and Qatar are expected to be front-runners to fill the modest supply gap, while low Henry Hub prices would also mean competitive US LNG projects, WoodMac said.

• But as Qatar and Russia pursue monetisation of their low-cost resource base, and LNG demand starts declining post 2035, the strategic rationale for others to invest becomes questionable.  

AUSTRALIA COULD SEE US$11BN IN 2021 FIDS: WOODMAC

Australia could see at least US$11bn of gas projects reaching the final investment decision (FID) next year, Wood Mackenzie said.

• With LNG backfill as the focus, these projects include three upstream FIDs on Mitsui’s Waitsia, Santos’ Barossa and Woodside’s Scarborough projects , as well as on the AIE Port Kembla LNG import terminal which will supply the east coast market.

RUSSIAN LNG EXPORTS SLUMP 70% IN OCT

Russia's LNG exports plummeted 70% in October compared with the previous month to 2mn m3, the country's federal customs service reported.

• Revenues from the sale of this gas were down 85% month on month at $67.2mn.

• Russia's two main LNG plants are Yamal LNG, a 17mn metric ton/year facility operated by Novatek, and the 11mn mt/yr Sakhalin-2 terminal led by Gazprom.

NEPTUNE UNVEILS DUTCH CCS PLAN

Neptune Energy announced it would undertake a feasibility study on developing a large-scale offshore carbon, capture and storage (CCS) project in the Dutch North Sea, estimating it could store as much as 120-150mn metric tons of CO2.

• CCS is increasingly seen as the solution to decarbonising areas of industry that would otherwise be difficult to abate. The Netherlands has other CCS projects in the pipeline, namely the Porthos and Athos schemes, which aim to store CO2 off the shore from Rotterdam and IJmuiden. 

TOTAL TAKES STAKE IN MEXICO'S COSTA AZUL PROJECT

Total has taken a 16.6% interest in the Energia Costa Azul (ECA) export project, the French major said, less than a month after US operator Sempra Energy took a final investment decision on the plant's construction.

• Sempra LNG and another Sempra subsidiary IEnova have each retained 41.7% shares in the project.

• Sempra announced a series of integrated transactions last week that would combine Sempra LNG and IEnova under a new business platform, Sempra Infrastructure Partners, once it obtains regulatory approvals and satisfies other conditions.