Gas Matters Today | news roundup | w/c 11 July 2022

Europe

EU – A number of carbon capture, green fuels and hydrogen projects were selected for grants in the second large-scale round under the EU’s EUR 38 billion (USD 38.06 billion) Innovation Fund last week. Grants totalling EUR 1.8 billion will be distributed to 17 clean technology projects which compares to EUR 1.1 billion granted to 15 projects in the first round in April.

Germany – The Canadian government has said it will allow Siemens to return a repaired turbine – which has been stranded in Montreal due to sanctions against Russia – for the Nord Stream 1 (NS1) pipeline to Germany. The permit granted by Ottawa is a first step in getting the back to Russia, with Siemens now reportedly requiring further approvals in order to deliver the kit back to Russia. While Canada has cleared the turbine to leave the North American nation, Berlin remains doubtful over future NS1 flows.

Klaus-Dieter Maubach, CEO of Uniper, Germany’s largest importer of Russian gas, has warned that the company may be forced to withdraw gas from storage owing to reduced supplies from Russia. The CEO also warned that the company will likely pass on higher procurement costs to customers and that curtailment of supplies cannot be ruled out.

Deutsche ReGas has joined the race to import first LNG into Germany, with the privately-held firm having penned a term sheet with TotalEnergies for a floating storage regasification unit (FSRU). The German firm’s project is the sixth LNG terminal proposed in the country, and is in line with Berlin’s push to phase out Russian gas imports.

Uniper has reportedly begun to withdraw gas from its storage tanks in order to fulfil customer obligations as the company is currently not receiving Russian gas via Nord Stream 1 (NS1). The move was expected, but exemplifies the financial vulnerability of Western companies dependent on Russian gas imports as bailout talks between Finnish and German officials over Uniper's future continue.

Spain – Spanish TSO Enagas has outlined a 2022-2030 investment plan that it says could foster up to EUR 4.76 billion (USD 4.78 billion) in infrastructure investments including new gas pipelines with Italy, France and Portugal. Many of the projects would be ‘hydrogen ready’ but are at early stages of development and would not come online before the end of the decade, according to the plan.

Spanish energy companies are evaluating the impact of a EUR 2 billion (USD 2.01 billion) tax on profits announced by Spanish PM Pedro Sánchez, the leader of the country's left wing coalition government. The ‘windfall tax’ follows a number of recent government interventions in a bid to curb power and gas prices for end-users, however stakeholders say the measures bring uncertainty and threaten investor confidence in the Spanish energy sector.

Estonia – Estonia’s gas supplier Eesti Gaas has secured “one of the biggest ever” purchases of LNG for the Baltic nation after penning a spot deal with Equinor. The volumes, set for delivery into Lithuania’s Klaipeda LNG terminal, will ensure Estonia’s gas supply in the upcoming heating season, according to Eesti Gaas, with Estonia’s main gas supplier awaiting the completion of the Paldiski LNG terminal, construction of which will reportedly be finished in November 2022.

Netherlands – The European Commission has approved a Dutch national subsidy scheme that will allow up to EUR 406.4 million (USD 410.7 million) in support for storage injections at the TAQA–operated Bergermeer facility. The Dutch support scheme is designed to help Netherlands meet the 80% storage obligation by the beginning of November, which is now a requirement under EU law.

Hungary – Hungary has declared an energy emergency and adopted a seven-point action plan to combat gas shortages which includes a ban on exports of energy carriers and an order on the foreign minister to purchase additional volumes of gas. Meanwhile, the European Commission says it has not received notification of Hungary’s planned measures which is an obligation under the EU’s Security of Supply Regulation adopted in 2017.

Australasia

Australia – LNG exports from Shell’s Prelude FLNG facility off the coast of Western Australia have once again ground to a halt amid fresh industrial action, with the latest strikes set to last until 21 July. A Shell spokesperson told Gas Matters Today that the production at the 3.6 mtpa Prelude FLNG facility has been temporarily suspended due to work bans currently in force under Protected Industrial Action (PIA), with the strikes prohibiting LNG exports.

Papua New Guinea – Singapore-headquartered energy solutions company Twenty20 Energy has announced that it has been selected by Papua New Guinea’s government to rollout its proprietary floating LNG-to-power concept in 12 locations across the country. The projects will have a combined capacity of 283 MW and support the state electrification goal of 70% by 2030.

North America

US – Norwegian oil and gas giant Equinor is set to enter the US power market after agreeing to acquire Virginia-based battery storage developer East Point Energy. The purchase compliments Equinor’s wind projects off the US east coast – where East Point Energy’s pipeline of battery projects are focused.

New Fortress Energy (NFE) has advanced plans for its second floating liquefaction unit after granting Fluor full notice to proceed (FNTP) with the engineering, procurement and fabrication management of the Fast LNG 2 project. The FNTP notice comes months after NFE awarded Fluor an engineering contract for its first Fast LNG project, with the US gas-to-power player eyeing the rollout of three floating LNG plants by Q1’24.

Delfin Midstream has got its proposed floating liquefaction project off the US Gulf Coast back on track after Vitol penned a binding sale and purchase agreement (SPA) and agreed to invest in the company. The SPA marks the first for Delfin, with the firm suggesting it is on track to take a final investment decision (FID) on its maiden US LNG project later this year.

US LNG developer Tellurian has snapped up producing gas assets in the Haynesville shale play from privately held EnSight IV Energy Partners to help feed its proposed Driftwood LNG plant. Following the close of the acquisition, Tellurian expects its gas production to hit 350 MMcf/d in 2023 – a figure still someway off the 1.5 Bcf/d needed to feed the first phase of its Driftwood LNG project.

ConocoPhillips, one of the pioneers of LNG exports from the US, is set to return to US LNG sector after agreeing a provisional deal to acquire a 30% stake in Sempra’s proposed Port Arthur LNG plant in Texas. Under the terms of the deal, Conoco has also agreed to offtake ~5 mtpa plant, with the deal providing an outlet for Conoco’s budding shale gas production.

Mexico – Mexican judges have temporarily suspended a government order that would have obliged market participants to purchase gas exclusively from national oil and gas company Pemex and state-owned utility Comisión Federal de Electricidad (CFE) under certain conditions. The court order may be seen as a positive signal for market liberalisation, however the case is not yet resolved and it has brought further uncertainty over future developments of the Mexican gas market.

Shell has secured its first volumes of LNG from Mexico after penning a long-term sales and purchase agreement with Mexico Pacific Limited (MPL). The SPA means MPL is one step closer to taking a final investment decision on its planned Puerto Libertad liquefaction plant in Sonora.

UK

UK North Sea-focused E&P firm Serica Energy has rejected a second takeover offer by smaller rival Kistos – which last week entered the UK Continental Shelf (UKCS) after wrapping up a deal with TotalEnergies for entry into several blocks, including a 20% interest in the Greater Laggan Area.