Cheniere

Gas prices will not fall as market still tight, experts note

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LNG prices will not decline, market experts have forecast, noting the global market remains tight, new production-related investments will not be completed before 2025, while a cold winter could quickly deplete European gas reserves.

This projection was highlighted by executives representing some of the world’s biggest LNG companies at the 23rd World LNG Summit & Awards, hosted in Athens. Participating officials generally agreed that gas prices will remain relatively high this year due to a number of factors, including geopolitical instability, inflationary pressure and, most importantly, the absence of additional international production capacity.

“Natural gas reserves in Europe are high, accounting for 30 percent of demand in winter. However, if this winter season is cold, these reserves will diminish quite fast,” Anatol Feygin, executive vice president and chief commercial officer of Cheniere Energy, told the event, adding that no significant number of new LNG plants will come on stream in 2024.

Europe is not expected to encounter supply issues this winter as European countries can afford high prices and, as a result, will be able to attract significant volumes for yet another winter, unlike less affluent countries in other parts of the world.

Feygin, along with other LNG industry officials, agreed that LNG prices cannot de-escalate to pre-energy crisis levels if Russian pipeline gas remains sidelined from many markets.

 

Alexandroupoli FSRU investment decision later in ’20

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Investors behind the Alexandroupoli FSRU are expected to make final decisions on the project’s development in the final quarter of this year.

Two pending issues, the completion of a regulatory framework for the project, as well as approval by the European Commission’s Directorate-General for Competition of the project and funding via the National Strategic Reference Framework (2014-2020), are expected to be resolved by the final quarter.

Also, RAE, the Regulatory Authority for Energy, is soon expected to reach a preliminary decision exempting the FSRU from compulsory access to third parties as well as tariff adjustments every three to four years. This decision, needed for the project’s regulatory framework, is expected by late October or early November, when the European Commission’s approval is anticipated.

The Directorate-General for Competition will also need to give the green light for NSRF funding.

Once these pending issues are all resolved, investors will be able to decide on the project’s development, expected to require two years to construct. Investors envision a launch in 2023.

Yesterday’s anticipated entry of Bulgartransgaz, for a 20 percent stake, highlights the project’s regional prospects. This regional dimension will be highlighted even further if ongoing Romanian interest is materialized.  Talks that have been going on for some time were disrupted by the pandemic.

For the time being, Greek gas utility DEPA, Gaslog and Bulgartransgaz each have 20 percent stakes, while the Copelouzos group holds a 40 percent share. The entry into the project of Gastrade, as a fifth partner, remains pending.

Most crucial for the project’s prospects, a market test completed in March showed that the Alexandroupoli FSRU is sustainable. The test prompted a big response from Greek and international gas traders, who placed capacity reservation bids for a total of 2.6 billion cubic meters per year.

US interest for LNG supply via the Alexandroupoli FSRU is strong. Last year, Cheniere sold a big shipment to Greek gas utility DEPA, while a further ten American shipments have been made so far this year.

PPC expects major LNG tender turnout for 2.7 million MWh

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Gas suppliers are expected to turn up in numbers for a power utility PPC tender expiring today with offers to provide three LNG shipments needed by the utility between March and May. PPC plans to purchase a total of 2.66 million MWh through this tender.

Between nine and ten gas suppliers, including major Greek and foreign LNG players, will submit offers, PPC has been informed, according to energypress sources.

Besides leading Greek gas traders, the procedure is expected to attract companies such as Rosneft, Eni Trading, Gunvor, Glencore, Shell, Cheniere and Tellurian.

All participants were required to sign Master Sale Agreements, committing them to their offers without any revisions.

PPC wants a first LNG shipment of 900,000 MWh on March 24, a second delivery of 815,000 MWh on April 21 and a third of 950,000 MWh on May 20.

Today’s tender confirms a change of strategy by PPC, searching markets around the world, from Asia to Qatar and the USA to Russia, for low-priced LNG.

The continual drop in LNG prices promises major cost savings for a company the size of PPC, requiring 1.35 bcm per year.

 

DEPA-Cheniere LNG supply deal negotiations reach advanced stage

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Gas utility DEPA and US energy exporter Cheniere have reached an advanced stage in negotiations for a long-term LNG supply agreement that could result in a five-year deal, according to sources.

A 150,000-cubic meter spot-market purchase made by DEPA from the Texas-based company towards the end of last year kindled the current negotiations for a longer-term agreement between the two sides, energypress sources informed.

The US has made clear its interest to establish Greece as a gateway for American LNG into Balkan markets. The US Ambassador to Greece, Geoffrey R. Pyatt, has often made reference to the prospect.

A supply agreement between DEPA and Cheniere would further diversify the Greek gas utility’s sources, currently dominated by Russian natural gas and LNG from Algeria.

DEPA has reserved a one-billion cubic meter capacity through the TAP route as of 2020, when the new gas pipeline carrying natural gas from Azerbaijan is expected to begin operating. The prospect should enable DEPA to offer domestic-market customers more competitive prices and further penetrate Balkan markets, via the IGB Greek-Bulgarian pipeline, to connect with TAP.

The ongoing DEPA-Cheniere talks have not swept Algeria’s Sonatrach out of the picture, sources stressed. DEPA’s current supply agreement with Sonatrach expires in 2020 and the two sides are already discussing a renewal.

DEPA agreements with Cheniere and Sonatrach, combined with Azerbaijani gas supply through TAP, promise to place the Greek gas utility in a more favorable position opposite Russia’s Gazprom, its main supplier.

Revythoussa LNG terminal upgrade ceremony likely on November 22

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Gas grid operator DESFA is considering November 22 as the official launch ceremony date for an additional third storage tank installed at its now-upgraded LNG terminal on Revythoussa, an islet just off Athens, with Prime Minister Alexis Tsipras in attendance.

The LNG terminal’s third tank, a 98 million-euro investment offering a 95,000 cubic meter capacity, will boost the facility’s overall capacity to 225,000 cubic meters, promising to create new gas export potential to Balkan and southeast European markets, until now entirely dependent on Russia’s Gazprom.

The project, begun in 2011 and initially scheduled for completion at the end of 2015, is pivotal for the country’s energy security concerns. Gas utility DEPA has not needed to book an additional shipment to ensure energy supply in the event of a crisis this coming winter.

The Revythoussa LNG facility’s overall upgrade, budgeted at 147 million euros, also includes an LNG gasification capacity increase to 1,400 cubic meters of LNG per hour from 1,000. Annual capacity will reach 7 billion cubic meters, of which 2 billion is expected to cater to domestic needs and the other 5 million to the Balkans.

US officials recently visited the Revythoussa facility for information concerning its ability to absorb US gas shipments. DEPA and energy firm Cheniere, America’s leading natural gas exporter, are currently engaged in talks.

First round of crucial market test for Alexandroupoli FSRU launched

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Shareholders at Greek gas company Gastrade, seeking to co-develop an FSRU project in Alexandroupoli, northeastern Greece, will need to make final investment decisions following a market test, whose first round, entailing non-binding expressions of interest, was launched yesterday.

Binding bids, for FSRU capacity reservations, will be made in the procedure’s follow-up round.

Granted PCI status by the EU, the Alexandroupoli FSRU is being widely supported, politically, at national, European and cross-Atlantic levels.

Greek gas utility DEPA and Bulgaria’s BEH are both seen as market test certainties. Plans are now at advanced stages for both to each hold 20 percent stakes in a consortium for the Alexandroupoli FSRU’s development. Final approvals for the consortium entries of both are anticipated but still pending.

The emergence of other players, for FRSU capacity reservations, will be pivotal for the project’s development prospects. Gastrade and its project partners will be hoping to see the emergence of key international players aiming to supply gas to the wider region, including US gas exporters, firms associated with the prospective Greek-Bulgarian IGB link, including Serbian, as well as traders operating in the region.

For quite some time now, there has been talk of a US firm entering the Alexandroupoli FSRU consortium with a 20 percent stake. Cheniere has been named as a possibility but another undisclosed US contender is also believed to be in the running.

The Alexandroupoli FSRU consortium was initiated by Gastrade, a member of the Copelouzos group, before Gaslog, an international LNG carrier, also joined. At present, Gastrade holds a 40 percent stake and Gaslog holds 20 percent. DEPA and BEH are also expected to acquire respective 20 percent stakes, while any newcomer is expected to take on half of Gastrade’s current stake.

Long-term DEPA, Cheniere gas supply deal now likeliest choice

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Ongoing discussions between the Greek gas utility DEPA and US energy exporter Cheniere are now focused on the establishment of a long-term LNG supply agreement. The possibility of any spot market order, on a trial basis, has faded, if not been ruled out.

In recent times, DEPA has considered proceeding with a spot market order as an additional measure to cover peak energy demand either in the winter or summer.

A final decision by Greek authorities on American LNG orders will now most probably be shifted for some time in 2019 as the international energy market’s current volatility, fueled by the current US-China trade war, is impacting prices and the flow of trade.

Rising oil prices, influencing natural gas price levels, have also helped steer DEPA’s interest towards the establishment of a long-term gas supply deal with Cheniere, which would ensure price stability amid the overall volatility.

 

DEPA, Cheniere discussing two time slots for LNG shipments

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Gas utility DEPA and leading US energy exporter Cheniere, engaged in advanced talks for a first LNG shipment to the Greek market, have agreed on two possible time slots for orders, the first during the opening months of 2019, to cover peak winter-season demand, and the second for shipment in July or August to coincide with elevated summer-season energy demand.

The arrival of American LNG to the Greek market is also expected to test – in practice – the compatibility of American gas and local infrastructure and pave the way for long-term agreements, pundits have noted.

A decision by Beijing to impose tariffs on US energy-related exports to the Chinese market as a response to US tariffs on Chinese products is expected to prompt a redirection of considerable US gas amounts to other markets, primarily European.

DEPA and Cheniere officials are believed to be discussing both spot market and contract orders.

Upgraded LNG terminal set for launch amid US interest

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A third storage tank added to an LNG terminal at Revythoussa, an islet close to Athens, is set for its commercial launch between late October and early November, slightly behind schedule.

The new tank, which promises to increase the facility’s overall capacity to 225,000 cubic meters, almost double its previous size, is currently undergoing test runs.

The facility’s capacity upgrade represents a pivotal development for the LNG terminal, a key asset belonging to DESFA, the natural gas grid operator, whose 66 percent is being privatized. A consortium comprised of Italy’s Snam, Spain’s Enagás Internacional and Belgium’s Fluxys has emerged as the winning bidder with a 535 million-euro offer.

DESFA is already engaged in talks with Greek and foreign firms interested in utilizing the upgraded facility and reserving capacities. They include two US firms, Cheniere and Tellurian, amid initiatives being taken for American gas imports into Greece. Cheniere and Tellurian have enquired about usage fees, capacities, technical details and port capabilities.

All firms interested in utilizing the upgraded LNG terminal at Revythoussa have made clear they are eyeing both the Greek market and the wider region to the north.

 

DEPA seeking long-term supply agreement with US firm Cheniere

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A long-term LNG supply agreement of between 15 and 20 years has been the main focus of negotiations over the past few months between Greek gas utility DEPA and US energy company Cheniere, primarily active in LNG-related businesses.

DEPA’s recently appointed chief executive Dimitris Tzortzis is seeking a delivery arrangement that would enable the gas utility to not only import gas into Greece but also trade LNG in international markets, to the extent permitted by global market conditions.

Tzortzis mentioned DEPA’s ongoing talks with Cheniere at the Southeast Energy Forum in Thessaloniki last Friday without elaborating further.

The DEPA boss told the event that the two sides have already established a spot cargo LNG agreement for 2018.

DEPA intends to renegotiate existing agreements with gas suppliers Sonatrach, Botas and Gazprom and also assume a trading role in the natural gas market, DEPA officials have commented when asked if the Greek market has capacity for further gas amounts.

At present, DEPA is supplied an annual natural gas amount of 2.2 billion cubic meters by Gazprom. This deal expires in 2026. Sonatrach supplies between 0.55 and one billion cubic meters in a deal ending 2021, when an arrangement with Turkey’s Botas for 0.75 billion cubic meters, annually, also expires.

In 2020, the Trans Adriatic Pipeline (TAP) is expected to bring a further one billion cubic meters of Azeri natural gas into the Greek market.

Tellurian promises to undercut competition on LNG prices

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American LNG companies, including Shell, ExxonMobil, Tellurian and Cheniere presented their plans for the European market at a recent industry event in Budapest, during which Tellurian promised to undercut competition on LNG prices.

Tellurian and Cheniere are likely to take part in an international tender announced by DEPA, the Public Gas Corporation, for LNG shipments to the Greek market between 2018 and 2020.

LNG demand has increased by 12 percent over the past year, according to Tellurian deputy chief Charif Souki, who noted that lower price levels over the past two years had a good side as they helped the sector’s development.

Souki explained that, besides development of an LNG production terminal in Louisiana, a project expected to commence next year, Tellurian is striving to capitalize on lower production costs to offer more competitive LNG prices.

Houston-based Tellurian recently reached a deal to buy gassy Haynesville Shale acreage near its planned natural gas export facility in Louisiana. The company plans to develop a pipeline link from the Haynesville field to the export facility and eliminate transportation costs.

According to Souki, this development will enable Tellurian to offer LNG at a price level 3 dollars lower than the Cheniere rate.

Just weeks ago, Tellurian was identified as a previously unnamed US firm interested in entering a consortium to develop a floating LNG terminal (FSRU) in Alexandroupoli, northeastern Greece.

Last IGB market test, FSRU plan for Alexandroupoli imminent

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The prospective IGB (Greek-Bulgarian Interconnector) project’s third and final market test, entailing the submission of binding bids by gas traders for the allocation of pipeline capacity, appears to be nearing.

The IGB project is directly linked to a plan for the development of a floating LNG termimal in Alexandroupoli, northeastern Greece, as one project would benefit the other.

Bulgaria’s new energy minister Nikolay Pavlov is believed to be maneuvering to make up for lost time as a result of the recent early elections held in Bulgaria. The third-round market test was originally scheduled to take place in March.

In addition, a required FEED (front-end enginnering and design) study concerning the Alexandroupoli LNG terminal is expected to be completed by the summer. This means that Gastrade, the enterprise behind the project, is expected to reach a final investment decision by the end of 2017.

GasLog, a venture headed by shipping magnate Peter Livanos, holds a 20 percent stake in Gastrade. GasLog has transported numerous LNG shipments for US firm Cheniere, interested in exporting gas to Europe via the prospective Alexandroupoli facility.

The Greek city’s floating storage regasification unit (FSRU), supported by the European Commission as an EU project of common interest, which would ensure EU funding, is planned to be developed as a 170,000 cubic-meters facility situated 17.6 kilometers southwest of the Alexandroupoli port.

Returning to the IGB project, a first market test was staged in April, 2016 but was deemed invalid. A second test held last November prompted offers covering 50 percent of the pipeline’s planned capacity, or 1.4 to 1.5 bcm, from DEPA, the Public Gas Corporation, Bulgargaz and Italy’s Edison. All three are involved in the project’s development.

 

 

DEPA to head to LNG spot markets, eyeing Cheniere supply deal

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DEPA, the Public Gas Corporation, is preparing to return to the spot markets to place an LNG order after a five-year absence, a long period for an enterprise of its size.

Company officials are expected to soon begin preparations with the aim of placing spot-market  LNG orders as soon as possible. This is likely to occur in the summer. The exact timing, of course, will be determined by DEPA’s gas needs. Although natural gas demand in the Greek market has slowed down amid the ongoing recession, an increasing amount of the energy source is being used for electricity production.

Although DEPA intends to head to the spot markets in search of the best possible deals, company sources are not concealing the fact that the US firm Cheniere will be favored. Primarily active in LNG-related businesses, Cheniere is preparing to enter the Greek market through LNG supply and possible investment involvement in the prospective floating LNS station in Alexandroupoli, northeast Greece.

Cheniere led the way as the US’s first exporter of US shale gas, hailing from the country’s gigantic shale gas deposits. The US began exporting shale gas last year, including to Europe and major gas traders in the UK, Spain, Italy, as well as Baltic countries such as Lithuania.

DEPA’s anticipated initial spot market order through Cheniere will not entail any long-term commitments. The establishment of a long-term contract between the two sides cannot be ruled out, but Greece’s market conditions, including commitments to other suppliers, will need to be taken into account. Price levels will also be a determining factor.

Historically, natural gas supplied through pipelines has proven to be the most competitively priced option. Current conditions have made natural gas even more competitive, especially Russian gas, according to market officials. US officials contend this can be altered through competitive LNG offers.

Whatever the outcome in the longer term, DEPA’s interest to head to the spot markets for LNG is yet another sign of the corporation’s heightening level of activity whose aim is to make the most of opportunities offered.

Effort made to coordinate IGB, Alexandroupoli LNG station

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Officials at Greece’s Environment and Energy Ministry are working on a plan that aims to synchronize the development of the Greek-Bulgarian IGB natural gas interconnector and the floating LNG station in Alexandroupoli, northeastern Greece, believing one will benefit the other.

The effort is being made as Bulgarian energy minister Temenuzhka Petkova prepares to make an official visit to Athens to take part in a meeting to focus on the floating LNG station in Alexandroupoli. Officials representing all enterprises interested in the project – the US energy company Cheniere, DEPA, the Public Gas Corporation, Bulgargaz, the Bulgarian state-run gas company, and Gastrade, a member of the Copelouzos corporate group – will all take part in the Athens meeting.

The Bulgarian government appears to have decided it wants to take part in the LNG station’s development.

Should the Alexandroupoli LNG station’s development proceed, a consortium of five partners will reportedly be established for its construction, each holding 20 percent stakes. Cheniere, a second unnamed US firm, which has demanded to remain anonymous for the time being as it is listed, DEPA, Gastrade, and Bulgargaz are believed to be the five firms involved in the plan.

According to sources, the Former Yougoslav Republic of Macedonia (Fyrom) recently also expressed an interest in the LNG station’s development.

As for the IGB interconnector, it has become clear to both Greek and Bulgarian officials that its feasibility depends on the extent to which the infrastructure project’s capacity can be covered. This  detail will soon be determined in the market test’s next stage, when gas traders will be invited to submit their binding offers reserving capacities. It has also become clear that a floating LNG terminal in Alexandroupoli will be meaningless without a co-existing IGB interconnector.

Meeting the required level of capacity to be reserved by natural gas traders for the IGB project will also need to be followed up by actual demand from customers who will purchase these amounts. If this does not occur, the project will not be sustainable.

The IGB market test’s first stage, completed on April 8 and held to establish an estimate of the total capacity required by traders, produced offers amounting to over four billion cubic meters per year, well over the 1.7 billion cubic meters needed to make the project sustainable.

Half of the capacity amount declared was made by Gastrade (2 billion cubic meters). Interest was also expressed by Bulgaraz – it has signed a deal to import one billion cubic meters of natural gas from the Shah Deniz II deposit as of 2020 – DEPA (200 million cubic meters), Italy’s Edison (a similar amount), Socar (roughly 250 million cubic meters), and the UK’s Noble Clean Fuels, which trades natural gas and is focused on the Ukranian market, which it supplies via Slovakia.

An agreement in Athens at the upcoming meeting for the Alexandroupoli LNG station promises to propel the IGB interconnector’s development. In this case, the capacites indicated in the market test’s first stage are likely to be repeated as binding offers in the second stage.

 

 

Second US firm also eyeing Alexandroupoli LNG station

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A second US firm, in addition to the energy company Cheniere, is believed to be interested in joining a consortium for the development and operation of a floating LNG terminal in Alexandroupoli, northeastern Greece, sources have informed.

The US firm, which has requested to remain anonymous – an agreement on this has been signed with its potential partners – as it is a listed firm, would become the fifth member of an envisaged consortium in which members will each hold 20 percent stakes.

DEPA, Greece’s Public Gas Corporation, Cheniere, a Houston-based company specializing in natural gas-related businesses, Gastrade, a Copelouzos corporate group company, and Bulgargaz are the other four prospective partners.

The sources added that Cheniere’s interest to supply natural gas to the southeast European market with Greece as its operating base, expressed late last year, remains strong.

The prospective Alexandroupoli project plan, for which Gastrade was granted a license in 2011, entails developing an LNG storage facility with a 170,000 cubic meter capacity and infrastructure to supply the Greek gas network with 17 million cubic meters of natural gas per day. Investors also want to supply US LNG to the entire Balkan region through the Greek-Bulgarian IGB Interconnector.

If the plan proceeds, DEPA will have gained a new natural gas source, besides Russia, Algeria and Turkey. Russia’s Gazprom, which covers roughly 65 percent of DEPA’s needs, holds a contract with the Greek gas corporation that expires in 2026. DEPA’s contracts with Algeria and Turkey expire in 2021. By utilizing the IGB project, DEPA will also be able to increase its commercial activity in the Balkans.

Over the past few months, Jean Abiteboul, president of Cheniere Marketing Ltd, and George Kokotis, senior manager in portfolio management at the UK branch of Cheniere Supply & Marketing Inc., have held a number of meetings with Greek energy minister Panos Skourletis to discuss the Alexandroupoli plan.

London event to focus on US LNG in new energy price environment

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The Research Center for Energy Management (RCEM) at ESCP Europe Business School will host a discussion on the topic “US LNG in the new energy price environment” at ESCP’s London campus on February 4 (6.30pm).

The event’s speakers, Tarek Souki, Vice President of Business Development and Finance at Cheniere Energy Inc, and George Kokkotis, Senior Portfolio Manager at Cheniere, will share key insights on the latest developments on the topic.

Cheniere Energy Inc is a Houston-based energy company primarily engaged in LNG-related businesses.

Admission to the event is free of charge, but places are limited and will be allocated on a first-come, first-serve basis. The discussion will be followed by a drinks reception.

Cheniere officials in Athens for IGB, LNG project meetings

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A team of highly-ranked executives of US energy company Cheniere, primarily active in LNG-related businesses, is in Athens for a series of talks with officials at the energy ministry, the Copelouzos corporate group, and DEPA, the Public Gas Corporation, seeking gas supply deals for the Greek market, as well as Bulgaria, through the prospective Greek-Bulgarian IGB interconnector.

Cheniere is believed to have received offers for a role in the local gas market and inclusion in a consortium to construct a floating LNG terminal in Alexandroupoli, northeastern Greece, a project undertaken by Gastrade, a member of the Copelouzos corporate group. Both Gastrade and DEPA have approached Cheniere for its participation in this project’s development, according to sources.

Cheniere has yet to respond to the Alexandroupooli project request but the arrival of company officials in Athens for today’s meetings signifies that a definite interest exists. No details concerning any prospective partnerships are known at this stage.

The American company is also expected to examine the prospect of utilizing the IGB pipeline if an appropriate gas demand level is determined in the Bulgarian market. A finalized investment plan for the IGB project was signed between Greek and Bulgarian officials in Sofia last week.

Interestingly, Cheniere yesterday replaced its chief executive and co-founder, Charif Souki. The change comes at a time when the US company is preparing to export LNG beyond the US market for the first time.

According to a Bloomberg report, the change was prompted by activist investor Carl Icahn’s increased stake in Cheniere over the past four months, which has provided him with two seats on the company board.