Daily Digest: March 25th, 2020

Tokyo Gas Mulls LNG Trading Business

Japanese utility Tokyo Gas plans to establish a new entity to boost LNG trading activity and make it a mainstay for the company, it said in its 2020-22 medium-term management plan.

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The Big Picture:

• Tokyo Gas, one of the biggest buyers of LNG, plans to collaborate with other companies to pursue transaction opportunities.

• “Co-operation with Centrica, RWE and other business partners will provide flexibility with respect to procurement and sales contracts and expand LNG swap transactions that utilise ships, LNG terminals, thermal power plants and other assets,” it said.

LBM/LSM Can Serve as Low-Cost Marine Fuels: Study

LNG bunkering association SEA/LNG published a study on how liquefied biomethane (LBM) and liquefied synthetic methane (LSM) can serve as low-cost and readily available marine fuels while helping to decarbonise the shipping industry.

The Big Picture:

• There is enough sustainable biomass supply to produce the biomethane necessary for the shipping industry's needs, especially as power and industry sectors reduce their use of methane as part of a move away from fossil fuels, the report stated.

• Current renewable energy generation is insufficient to produce enough LSM to power a significant share of the global shipping fleet, it continued.

Petronet Issues FM Notice to Qatargas: Press

Petronet LNG, India's biggest LNG importer, has issued a force majeure notice to Qatargas seeking to delay loading of LNG cargoes under long-term deals as India announced a 21-day lockdown to combat the spread of Covid-19, Reuters reported citing two sources familiar with the matter.

The Big Picture:

• Qatar is India’s biggest supplier of LNG. In 1999, Petronet LNG signed a long-term deal to import 7.5mn metric tons/year of LNG from RasGas (merged with Qatargas in January 2018).

• In January, India’s imports grew by 25% yr/yr and in February they spiked by a whopping 68% yr/yr. The decision by Petronet LNG is expected to impact imports in March and April.

Equinor Makes 20-30% Cuts to 2020 Spending

Norway's Equinor has followed other European majors in making 20-30% cuts to spending, in order to boost cash flow during what could be a prolonged downturn.

The Big Picture:

• Earlier this week Equinor also suspended its buyback scheme, and it has set up a new crisis-response department to try and mitigate Covid-19's impact on its business and consider its longer-term implications.

• The company suffered a difficult fourth quarter, swinging to a $230mn net loss from a $3.37bn profit a year earlier, as revenues fell steeply because of weaker prices.

Novatek, Nauticor Team up for Baltic LNG Supply

Russia's Novatek has signed a letter of intent (LoI) with German LNG bunkerer Nauticor to co-operate in developing LNG supply infrastructure in the Baltic Sea area, the latter said in a statement.

The Big Picture:

• The pair aim to develop the LNG bunkering market through the use of refuelling vessels and trucks. The main focus will be on developing infrastructure along Germany's Baltic Sea coast.

• Nauticor, which is being bought by Finnish state utility Gasum, is already a customer of Novatek's Vysotsk LNG terminal. Gasum operates the LNG regasification terminal at Tornio (pictured).

Dutch Eneco Sale Completes

Japan's Mitsubish Corp (MC) and Chubu have now acquired all the shares of Dutch utility Eneco through their special purpose vehicle Diamond Chubu Europe, paying €4.1 ($4.8)bn in total, they said.

The Big Picture:

• Both companies have LNG trading businesses which will now be able to add value through the retail network: Chubu owns half of energy trader Jera, which has a tolling agreement with US Freeport LNG; while Mitsubishi is an offtaker and investor in LNG Canada.

• Another part of the business empire is gas turbine manufacturing, and its customers include Jera.

Japan's Inpex to Review Investment Plans

Japan’s Inpex Corporation is looking to optimise operations, review investment plans and cut costs amid sliding oil prices and the Covid-19 outbreak, it said in a statement.

The Big Picture:

• Inpex operates oil and gas projects in Japan, the Americas, Asia, Australia, the Middle East and north Africa. It operates the Ichthys LNG export project offshore northern Australia.

• The company is also preparing to start front-end engineering design work at the Abadi LNG project in Indonesia.

Canadian Woodfibre LNG Faces Delay: Press

Canada’s Woodfibre LNG project, a 2.1mn mt/yr liquefaction and export project on the shores of Howe Sound north of Vancouver, is reportedly facing a one-year delay due, in part, to the global Covid-19 pandemic and financial difficulties with its preferred EPC partner.

The Big Picture:

• A final investment decision (FID) was expected earlier this year, with construction to start this summer. But now, the report from the local Squamish Chief newspaper said, construction won’t start until the summer of 2021.

Eni Offers Summer Capacity for Algerian Gas

The Eni-operated Trans Tunisian Pipeline Company (TTPC) is offering uncommitted Q2 and Q3 2020 capacity to shippers on a first come, first served basis, it said.

The Big Picture:

• Bids may be made on the Prisma capacity booking platform and the gas will originate in Algeria and be delivered to Italy.

Sinopec Oilfield Service Hikes 2020 Capex

Sinopec Oilfield Service Corp, a unit of state-run Sinopec, will hike capital expenditure in 2020 by 18.4% yr/yr as it plans to advance key projects, it said March 24 in a stock exchange filing.

The Big Picture:

• Sinopec Oilfield Service Corp’s decision to hike spending is in contract with the trend among most companies who are opting for radical cuts in response to the decline in oil prices and Covid-19 outbreak.