Page 8 - AfrOil Week 19 2020

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But the find is of little commercial benefit until prices recover. The company is also contend- ing with a serious outbreak of COVID-19 at an Eastern Siberian field that pumps gas to China via the Power of Siberia pipeline. It insists that flows continue as planned, but seeing as its main contractor has halted work, delays in the field’s ramp-up to full capacity look likely.
In Azerbaijan, state-owned SOCAR has reported drilling a new well at the Umid field in the Caspian Sea – a project it once described as the biggest find since the giant BP-operated Shah Deniz field. SOCAR is raising the field’s output level steadily, but an international partner is likely needed to realise its full potential.
If you’d like to read more about the key events shaping the former Soviet Union’s oil and gas sector then please click here for NewsBase’s FSU Monitor.
LNG FID delays
US LNG developer NextDecade has warned that it may delay a final investment decision (FID) on a new liquefaction terminal as a result of the collapse in energy demand globally because of COVID-19. The company said in a US regula- tory filing that the FID on Rio Grande LNG in South Texas was scheduled for this year, but that prospects for financing and developing the ter- minal depended on market conditions that were likely to worsen as a result of the pandemic.
NextDecade’s warning follows Sempra Energy delaying an FID on Port Arthur LNG and Cheniere Energy saying that it may similarly push back a planned FID on the next phase of its Corpus Christi LNG project since late April.
These moves come as news emerges of more cancellations of cargoes that were due to be loaded at US liquefaction terminals in June. By late April up to 25 US LNG cargoes for June load- ing were reported to have been cancelled, but the latest estimates suggest that it could ultimately be around 33. Buyers typically have to give 45-60
days’ notice to cancel a contracted US cargo. While LNG producers do not tend to com- ment publicly on decisions taken by their cus- tomers, suppliers are increasingly expected to come under pressure to curtail some of their output. Warnings about these looming curtail- ments have been stepped up – again – over the
past week.
Meanwhile, Malaysian shipping firm MISC
has said it expects growth of the global LNG fleet to slow as FIDs on new liquefaction capacity are pushed back.
Some projects continue to move forward, however, both on the liquefaction and the regas- ification side. On May 8, BNamericas reported that Generacion e Interconexion Ele had filed preliminary documents for a gas-to-power hub with Colombian regulators. The project would include an offshore LNG import terminal and an associated power generation complex that would comprise multiple combined-cycle power plants.
If you’d like to read more about the key events shaping the global LNG sector then please click here for NewsBase’s GLNG Monitor.
Latin American vulnerabilities
Pemex has unveiled details of its hedging pro- gramme for 2020, and its revelations indicate that the national oil company (NOC) is more vulnerable to market fluctuations than its parent entity, the Mexican government.
In its annual report, which was released on May 5, Pemex stated that its hedge had a floor of $44 per barrel. The company “contracted cover- age instruments that protect against declines in reference prices in the range of $49 per barrel to $44 per barrel,” it explained.
This fixed lower limit leaves the NOC exposed when crude markets drop below the floor, as they have done in recent months, Argus Media noted.
While LNG producers do not tend to comment publicly on decisions taken by their customers, suppliers are increasingly expected to come under pressure to curtail some of their output
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w w w . N E W S B A S E . c o m Week 19 13•May•2020