Page 10 - FSUOGM Week 49 2019

FSUOGM PIPELINES & TRANSPORT FSUOGM
Exxon launches surveys for Far Eastern LNG project
RUSSIA
Rosneft has long coveted the LNG exporting status of Novatek and Gazprom.
EXXONMOBIL plans to undertake a series of marine engineering surveys in preparation for the Far Eastern LNG project.
Exxon is developing Far Eastern LNG with its Sakhalin-1 partners Russia’s Rosneft, Japan’s Sodeco and India’s ONGC Videsh Ltd (OVL). The project has been in the works for years but only started gaining traction in 2018. In that year Rosneft reported that it had entered the front-end engineering design (FEED) stage – a pre-requisite for a final investment decision (FID) to be reached. In September, Rosneft head Igor Sechin said the Sakhalin-1 shareholders had taken a decision to develop it, without clarifying whether this constituted a formal FID.
Exxon intends to carry out the surveys between this month and March 2020. They will take place in Chikhachev Bay and the adjacent Tartar Strait.
The terminal itself will be built at De-Kastri, on the coast of mainland Russia’s Khabarovsk region. It will produce up to 6.2mn tonnes per year (tpy) of LNG, from gas at the Arkutun-Dagi,
Chayvo and Odoptu oilfields off the east coast of Sakhalin Island. In a recent presentation, Rus- sia’s energy ministry said the project would cost $4.2bn to develop and would be ready to operate in 2027.
Much of the gas in the Sakhalin-1 fields is cur- rently unutilised, but some of it is supplied to con- sumers in the Khabarovsk region. For some time there were concerns whether Sakhalin-1 had a sufficiently large gas resource to justify develop- ment of an LNG terminal. Doubts also linger over Rosneft’s capability and the risk that US sanctions could be extended to include LNG projects.
Rosneft has long coveted the LNG exporting status of its domestic rivals Novatek and Gaz- prom. But the company is yet to bring a project into development successfully. Earlier it had a plan to construct a 2.6mn tpy terminal on the shore of the Pechora Sea, but the project was qui- etly shelved last year after authorities denied it an export licence. It had become clear that Rosneft did not have access to enough gas in the area to underpin the venture. ™
INVESTMENT
EU’s Marguerite Fund sheds stake in Latvian gas grid
LATVIA
Conexus’ shareholders are required to exit under unbundling rules.
JAPANESE conglomerate Marubeni has struck deal to buy a 29% stake in Latvia’s gas transmis- sion and storage operator Conexus Baltic Grid from the Luxembourg-based Marguerite Fund.
The Marubeni-backed MM Capital Infra- structure Fund 1 was selected as a buyer follow- ing a tender, Marguerite said in a statement on December 5. The sale is subject to regulatory approvals in Latvia.
Marguerite acquired an interest in Latvian gas utility Latvijas Gaze (LG) in January 2016, but the company’s transmission activities were spun off later that year to create Conexus. The unbundling was required under the EU’s Third Energy Package – legislation aimed at liberalis- ing bloc energy markets.
LG’s shareholders – which also include Rus- sia’s state-owned gas supplier Gazprom and Germany’s Uniper Ruhrgas – are required to divest from Conexus under the unbundling rules. Gazprom originally had until the end of 2017 to dipose of its stake but missed this
deadline, blaming the delay on a lack of buyer interest.
Gazprom has been given extra time by Lat- vian regulators, and now has until the start of 2020 to dispose of its 34.1% stake. The company announced on December 4 it would hold a new auction for the share, inviting bids at a starting price of €79mn ($88mn). Offers will be accepted until December 26.
Conexus’ prize asset is the Incukalns gas stor- age facility, capable of housing up to 2.3bn cubic metres of gas. The facility stocks up on gas during summer and then acts as a reserve during winter. Latvia has mooted plans to expand its capacity to 2.8 bcm in the coming years.
MM Capital Infrastructure Fund 1 is man- aged by Marubeni in partnership with Japanese bank Mizuho and its subsidiary Asset Manage- ment One. Marguerite is an EU-backed energy and infrastructure fund. Their respective finan- cial advisors in the sale were Macquarie Capital and Ernst and Young. ™
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w w w . N E W S B A S E . c o m Week 49 11•December•2019