Rajuncajun27 - Great work reporting on the ground in LC! MB -...

Rajuncajun27 - Great work reporting on the ground in LC! MB - Keep looking at the positives... the time has come to let the sunshine in!

The next LNG investment cycle may be primed for liftoff!

Royal Dutch Shell (40% ownership) and its partners, Petronas (25%), CNPC (15%), Mitsubishi (15%), Korea Gas (5%) have made a final investment decision for the 26mt, USD $42.5 billion liquefied natural gas terminal in western Canada.  Wonderful for the industry... the sanctioning could mark a potential turning point in the LNG market, signalling the industry's appetite to invest has returned. Its also a promising and bullish case for new large scale greenfield projects... Magnolia being a measly minnow in comparison has a huge advantage because we can fill the trains quicker, plant the shovel the next day and guarantee a timeline for first gas by 2023/2024!

While LNG Canada hasn't signed any major offtake agreements yet, each of the five partners already produce gas in Canada and will take LNG cargoes in proportion with their ownership stake in the projects, which they can earmark for short-term, long-term or spot contracts as they see fit - Andy Calitz, chief executive officer of LNG Canada, said in an interview earlier this month.

" We think 2019 could be the biggest year of LNG FIDs ever ", Nicholas Browne, an analyst with Wood Mackenzie, said by email. LNG Canada is the first FID for a greenfield, onshore project since the sanction of Corpus Christi in May 2015.

The decision may be the start of a wave of investments for major gas export projects after a supply glut and oil price collapse forced the three-year hiatus. Booming demand growth means that 11 projects, including LNG Canada, are likely to receive FID by the end of 2019, according to BNEF.


On the tariff saga...

A 10% tariff on US liquefied natural gas is not steep enough to make shipping cargoes to China unprofitable, but it adds an obstacle for the second generation of American terminals. US Gulf Coast LNG is still going to turn out cheaper even with an additional premium to pay when in comparison to the current spot price & in future (between 2023-25) when the market tightens! Our hurdle to sign off-take with the country is not financial, purely political!

A few different views to back up my sentiment;

" With the 10% tariff implementation, we are probably not going to see a cessation of US LNG exports to China," said Madeline Jowdy, senior director of global gas and LNG analytics at S&P Global Platts, at an energy industry conference. " But there will be a price to be paid."

Sending US cargoes to China could still be profitable, said Ronald Ripple, a professor of energy business and finance at The University of Tulsa. " Even with a 10% reduction off of the market price in Asia, they get a greater netback for that than if they ... went to Europe," Ripple said in an interview at the conference. " They'll still take it to Asia. They'll still take it to China."

An appointee in the Trump administration, the Interior Department's Assistant Secretary for Land and Minerals Management Joseph Balash, described the tariffs as a temporary negotiation tactic. He expected gas production on the public lands under his purview would still make its way to the global export market.
" There are some headwinds -- there are some issues associated with trade right now that we view as a negotiation," Balash said during the Wednesday panel. " Our expectation is that we will overcome these current additional costs in the marketplace because of the tariff fight that's going on between our nation and China in particular. We view that as temporary."


Just to highlight how fierce the competition would be to sign up customers; the following portfolio traders have the following supply available at their disposal;

- Total/Engie 13mt
- Shell 11.7mt
- BP 7.4mt
- Endessa 3.15mt
- Fenosa 1.35mt

In 2017, 77mt (approximately 1100 cargoes) was sold on the spot market, no glut! The top 10 countries who exported spare supply on spot or short term contracts (4yrs or less) were;

Qatar 15mt
Nigeria 10.2mt
Australia 10.1mt
USA 8mt
Malaysia 4.9mt
Trinidad & Tobago 4.3mt
Indonesia 4.2mt
Algeria 3mt
Angola 2.9mt
Russia 2.7mt
Norway 2.1mt

* Note - 12.7mt from Qatar will be taken away from the spot market when long term BTA contracts kick in by 2019. Same deal with Australia, 10.1mt will disappear when Ichthys & Prelude start up cargoes eventually come to a halt when long-term BTAs are formerly triggered. PNG will be 1mt less, Oman 1mt also. So by 2020/21 available LNG supply will be cut down to just 52mt without taking into account SPAs to be signed between now and then. Say only 5mt in SPAs gets signed per year through 2025 with currently online & under construction terminals, thats 35mt - so far in 2018 10.4mt has been signed! You better believe it, a shortage is inevitable!! And adding a cherry on top… supply from countries like Trinidad & Tobago, Angola is very unreliable/ vulnerable due to plant shut downs & feed gas shortages, the latter being completely nonoperational in 16/17’.

Of the worldwide nations that purchased LNG on the spot from 2017 to 2015 in descending order, Top 10 were;

Japan - 12.2mt, 15mt, 20mt
South Korea - 8.9mt, 4.9mt, 6mt
India - 8.7mt, 9.9mt, 9mt
China - 8.2mt, 5.3mt, 3.6mt
Egypt - 6.1mt (who will no longer import in 2019), 7.5mt, 2.6mt
Taiwan - 5.4mt, 4.5mt, 3.3mt
Mexico - 4.2mt, 3.9mt, .5mt
Spain - 4mt, 3.1mt, 1.1mt
Argentina - 3.3mt, 3.4mt, 4mt
Turkey - 2.9mt, 1.5mt, 1.7mt


Peace. JK.