Daily Digest: March 6th, 2020

BERKSHIRE HATHAWAY EXITS $7BN CANADIAN LNG PROJECT: PRESS

Warren Buffett's Berkshire Hathaway group has dropped plans to invest C$4bn ($3bn) in the C$9bn development of an LNG terminal at the port of Saguenay in Quebec, Canada, local press reported on March 5.

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The Big Picture:

• A spokesperson for the project's developer GNL Quebec said a major investor had walked away after months of talks because of protests against energy investments in Canada and the "general political context" in the country. Sources told the newspaper that this investor was Berkshire.

• In addition to the national problems of hydrocarbon development projects, now is not an encouraging time for major new LNG export capacity.

OZ EAST COAST LNG EXPORTS TO CHINA TAKE A HIT IN FEB

LNG exports from projects located on the Australian east coast to China were hit in February by the outbreak of coronavirus (Covid-19), data published by Gladstone Ports Corporation indicate.

The Big Picture:

• There are three LNG export projects on Australia's east coast: ConocoPhillips-Origin Energy Australia Pacific LNG (APLNG), Shell’s Queensland Curtis LNG and the Santos-led Gladstone LNG.

• There was widespread expectation that Chinese consumption would take a hit because of the Covid-19 outbreak.

• Despite a sharp fall in exports to China, overall exports, however, rose close to 3% yr/yr to 1.79mn mt thanks to a spike in shipments to Malaysia. Other major importers last month were South Korea and Japan. 

MERITAGE LAUNCHES NEW GAS PLANT IN WYOMING

Denver-based Meritage Midstream Services has more than doubled its gas processing capacity in Wyoming's Powder River basin to over 380mn ft3/day, after launching a cryogenic processing plant, it reported on March 4.

The Big Picture:

• Besides its processing capacity, Meritage controls 2,575 km of gas gathering pipelines, 193 km of natural gas liquids (NGL) pipeline and 168,000 horsepower of compression capacity.

• It expects to increase volumes handled by 30% in 2020.

EGYPT-FOCUSED PHAROS EYES SHELL ASSETS

Pharos Energy is eyeing Shell's upstream operations in the Western Desert of Egypt, the London-listed producer said.

The Big Picture:

• Shell's Western Desert business includes stakes in 19 producing oil and gas development leases along with four exploration permits, in the Badr El Din & Obaiyed area.

• Reuters reported last month that Pharos had bid for Shell's assets. Offers also came from US producer Apache, which also has production in Egypt; and Egyptian firms Apex International Energy and Cheiron.

EXXONMOBIL ON TRACK WITH GROWTH PLANS: UPDATE

ExxonMobil is pushing ahead with its long-term growth plans, investing throughput the price cycle to capture future gains, its CEO Darren Woods told investors on March 5.

The Big Picture:

• Massive investments in oil and gas are needed to meet the world's growing energy needs, ExxonMobil said, while also stressing it supported efforts to combat emissions.

• Unlike some of its rivals, such as BP, Spain's Repsol and Norway's Equinor, ExxonMobil is yet to set out a set of targets for reducing its emissions. Woods justified the company's lack of targets, saying it was approaching the issue of climate change "on a global scale."

• The goal for ExxonMobil is to "solve the problem for society as a whole and not try to get into a beauty match, a beauty competition around who's sheet looks like what," he said.

OZ EAST COAST GAS OUTPUT UP 5.5% IN 2019

Australian east coast gas production in 2019 reached a record 1,914.2 petajoules (PJ) (51.11bn m3), up 5.5% yr/yr, despite plummeting prices, energy consultancy EnergyQuest said in its March 2020 quarterly report.

The Big Picture:

• The simple average of short-term east coast gas prices was A$7.49/GJ in Q4, down by 25.9% from an average A$10.11/GJ in Q4 2018.

• Export prices linked to crude oil were also trending downwards from 2018 onwards, according to an Australian government report late December.

• Australian LNG exports reached a record 77.3mn metric tons in 2019, sealing Australia’s claim as the world’s largest LNG producer