Page 10 - NorthAmOil Week 39

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KOGAS agrees to buy US LNG from BP
US-SOUTH KOREA
STATE-OWNED Korea Gas (KOGAS) has struck a deal to buy 1.58mn tonnes per year (tpy) of US LNG from super-major BP. The deal cov- ers a 15-year period starting in 2025, but BP can opt to extend it for a further three years. South Korea’s Ministry of Trade, Industry and Energy estimates that if the deal is expanded to cover 18 years, it will be worth $9.61bn.
The LNG will either be delivered from Free- port LNG, which recently started production, or Calcasieu Pass, which is due to enter service in 2022.
South Korea is the third-largest importer of LNG globally and the top importer of US LNG. The country also buys more LNG from Qatar and Australia than it does from the US. KOGAS currently imports 35-40mn tpy.
Imports from the US are on the rise. Customs data show that in the first eight months of 2019 South Korea imported 4.82mn tonnes of LNG from the US, marking a 5.5% increase from 4.57mn tonnes imported during the first eight months of 2018. Imports from the US accounted for 18% of the country’s total LNG imports over
the first eight months of this year.
KOGAS has a 20-year supply deal with US
LNG exporter Cheniere Energy that started in 2017. The South Korean company currently imports 2.8mn tpy of LNG from Cheniere’s Sabine Pass terminal in Louisiana, though it is authorised to buy up to 3.5mn tpy under the deal.
The sale and purchase agreement (SPA) with BP is the first long-term contract KOGAS has signed since 2012. It comes as South Korea attempts to diversify its LNG supply sources beyond the Middle East and South-East Asia, which will lead to it buying more LNG from the US and Russia.
KOGAS is benefitting from low LNG prices, and said the price of the deal was around 70% of that for its existing contracts.
BP often secures offtake from liquefaction plants with the aim of selling that supply on to other buyers. The super-major previously signed similar end-user agreements with Japan’s Kansai Electric Power Co. (KEPCO) in 2015 and Thai- land’s PTT in 2016.™
ENERGY TRANSITION
EnCap moves into renewables investments
US
HOUSTON-BASED private equity firm EnCap Invesments has launched a new team that will invest in renewables projects. The company said the four-person team would seek to invest in solar, wind and natural gas projects enhanced by low-cost battery storage systems. EnCap cited a global shift to less carbon-intensive projects as the reason for its move into renewables.
“Fossil fuels will continue to play an essen- tial role in meeting global energy demand in the coming decades. However, renewable energy sources are poised for rapid growth. In fact, renewables are projected to be the fast- est growing source of electricity generation in North America,” said EnCap’s managing part- ner, Doug Swanson. “Similar to our move into the midstream space 10 years ago, we believe the market dynamics in renewables will present very excitinginvestmentopportunitiesforourfirm,” he added. Swanson was referring to the 2008 launch of EnCap Flatrock Midstream, a fund that invests in oil and gas pipeline and storage terminal projects.
EnCap Flatrock Midstream currently backs 16 portfolio companies with over $8.5bn in commitments, according to its website. One of the companies it backs, Can- dor Midstream, announced last week that its
SCOOP-to-North-Texas rich gas-gathering pipeline system had entered commercial service. The system will serve the South Central Okla- homa Oil Province (SCOOP), which has been affected by pipeline capacity constraints.
Candor bought the gas-gathering system in January 2019, subsequently making multiple upgrades to infrastructure and completing com- prehensive hydrostatic testing to certify its safe return to commercial service. The system has an initial operational capacity of up to 200mn cubic feet (5.7mn cubic metres) per day.
Now, EnCap hopes to expand into the renew- ables industry in a similar manner to its move into the oil and gas midstream sector. The com- pany notes on its website that the energy transi- tion has created new investment opportunities, spurred by a dramatic reduction in the cost of renewablesandbatterystorage.
Citing the US Energy Information Admin- istration (EIA), EnCap says that over the next 20 years, US electricity generation from nuclear and coal is projected to decline from 47% to 14%, while renewable sources are forecast to grow from 18% to 37%. “We believe this transi- tion toward renewables and away from coal and nuclear presents exciting opportunities for the firm,” it says.™
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w w w . N E W S B A S E . c o m Week 39 01•October•2019