NGS’ NG/LNG SNAPSHOT – Mar 1-15, 2023
City Gas Distribution & Auto LPG
CNG buses to run on six routes in Greater Noida
Compressed natural gas (CNG) buses will soon ply on the roads of Greater Noida as Greater Noida Industrial Development Authority (GNIDA) Chief Executive Officer (CEO) Ritu Maheshwari approved the six proposed routes after a meeting with Noida Metro Rail Corporation (NMRC) Thursday.
The GNIDA said it would recover the expenses for running the CNG buses from advertising on bus shelters.
The first route is from Gautam Buddha University (GBU) to the Kulesara Hindon bridge. Buses on this route will ply via Kasna, Honda Crossing, Venice Mall, Pari Chowk, Alpha One, Jagat Farm, Surajpur Chowk, Haldoni etc.
The second route is from Pari Chowk to Pari Chowk via Alpha Commercial Belt, Ryan Golchakkar, OCP Mall, GNIDA Office, Sector-37 Rotary City etc.
The third route is Jagat Farm to Jagat Farm via LG Chowk, Sharda University, Lloyd College, Galgotia College, P3 Golchakkar, Ryan Golchakkar etc. The fourth route is Rise Chowk to Rise Chowk via Knowledge Park-5, Gaur City Mall, Hanuman Mandir Chowk etc.
The fifth route is Char Murti to Capital Athena via Gaur City One, Gaur City Mall, Ek Murti Chowk and Eco Village One.
The sixth route is from Char Murti roundabout to Char Murti Police Chowki via Gaur City Centre, Ek Murti, Techzone 7 Rotary, Eros Sampurnam, Gaur Soundaryam.
Buses operated by Uttar Pradesh State Road Transport Corporation (UPSRTC) will continue to ply on all the other routes of Greater Noida.
Dealers call for strike in Gujarat, 800 CNG pumps in state shut
2nd March 2023: Around 100 pumps that are directly run by the oil companies will continue to remain open across the state.
Dealers of Compressed Natural Gas (CNG) pumps in Gujarat have announced an indefinite strike from Friday demanding a hike in the existing dealer margin.
The Federation of Gujarat Petroleum Dealer’s Association (FGPDA), which has 800 dealer-pumps in Gujarat, is set to meet the Principal Secretary for Civil Supplies on Thursday in an attempt to find a resolution to the issue. Arvind Thakkar, FGDPA president, said that the margin revision is due since 2019.
Thakkar said, “The dealer margin was due for revision on July 1, 2019. But it is now nearly four years; and an extremely tough Covid-19 phase has also passed. We have no alternative but to go on a strike as the oil PSUs have not come to any agreement over the revision… Seven oil companies in Gujarat have monopoly in their respective areas and we have tried to talk over this issue.”
Around 100 pumps that are directly run by the oil companies will continue to remain open across the state.
The federation is demanding a revision of 50 per cent on the existing dealer margins citing that it had been agreed upon that the dealers would get an annual raise of 10 per cent in the margins from 2019.
The current dealer margin is around 18 paise per kg of CNG, according to the federation.
“We have written over 50 letters… The Ministry of Petroleum and Natural Gas did not respond to our last letter on February 22, 2023, in which we have said that we will be forced to strike…”
Close to 10 lakh auto rickshaws and a similar number of other CNG run vehicles will be forced to go off the roads if the dealer pumps indeed go on a strike. In Vadodara, operators of Vadodara Gas pump stations said that they were not joining the strike as they were not part of the dealers’ association.
Thakkar says that while Ahmedabad has 75 dealer operated pumps, followed by 28 pumps in Surat and about 18 each in Vadodara and Rajkot, Sabarmati Gas operates close to 200 pumps in Mehsana, Gandhinagar, Himmatnagar and Aravalli.
In Surat, there are around 150 CNG pumps while there are around 250 pumps in South Gujarat. President of United petrol pump dealers association, a sub branch of FGPDA, Suresh Desai said, “In Gujarat there are three distributors of CNG and they are Gujarat Gas, Adani and Gail companies. The companies are not listening to our demands. So we have unitedly decided to go on strike for indefinite period till our demands are met.”
He added, “We know that the public will face difficulties, but we have no other alternative.”
City gas distributors to gain as spot LNG prices decline
A steep drop in spot LNG rates has come as a major respite for city gas distributors in India. Spot LNG prices have fallen to about $14-15 per metric million British thermal units (mmBtu) from average of over $45 per mmBtu in the fiscal second quarter, and average of slightly above $30 per mmBtu in the third quarter.
Persistently high gas prices have continued to weigh on the earnings of city gas distributors, squeezing their margins. Although these companies raised prices, this has narrowed the gap between compressed natural gas (CNG), piped natural gas (PNG), and other fuel options such as diesel, prompting concerns about volume growth.
The near-term outlook for spot gas prices remains favourable.
Ayush Agarwal, an analyst at S&P Global Commodities Insights, expects Platts JKM (Japan Korea Marker) and WIM (West India Marker) to average below $15/mmBtu in Summer 2023 and below $20/mmBtu for 2023.
With gas prices declining, city gas distributors are poised to reap benefits, which could be further enhanced by the anticipated cap on administered pricing mechanism (APM) prices in the upcoming fiscal year. The Kirit Parikh panel has recommended a floor of $4 per mmBtu and a ceiling price of $6.5 per mmBtu for APM gas. Analysts expect benefits to accrue in FY24.
Moreover, rising gas availability in the country is further likely to help CGDs receive a higher allocation of domestic gas (APM gas) to meet CNG and domestic PNG sales.
Not surprisingly, analysts at JM Financials Institutional Securities remain bullish on the CGD sector due to steady volume growth and strengthening pricing power due to the likely reduction in APM gas price and spot LNG price.
Lower gas prices are also likely to propel demand and benefit India’s largest gas pipeline operator GAIL (India) Ltd. JM Financial remains positive on GAIL on a steady transmission volume growth story and likely hike in transmission tariff.
In addition to the lower spot prices, rising propane prices are also favourable for gas distributors.
Companies such as Gujarat Gas Ltd, which derive significant revenue from industrial gas supplies to the Morbi cluster in Gujarat, are likely to be key beneficiaries. As the prices of industrial PNG supplied by Gujarat Gas had risen, on the back of rising natural gas prices, the Morbi Cluster in Gujarat had shifted to propane usage. However, now that propane prices are rising, they may shift back to PNG supplies from Gujarat Gas.
Morbi factories have placed a demand for 6.5 mscmd (million standard cubic metre per day) of gas with Gujarat Gas for the month of March compared to an average of 2 mscmd in the previous quarter, said analysts at Antique Stock Broking.
The surge in demand is being driven by a steep increase in propane prices from ₹48 per scm (standard cubic metre) in February to ₹57 per scm in March, said analysts. Further, propane prices in April are likely to be around ₹55/scm based on the announced Saudi CP contract prices, which also are higher than the spot LNG prices currently, added analysts at Antique.
This helps provide impetus to the volume outlook for Gujarat Gas. Further, the company sources significant quantities of natural gas for supplies from the spot market. Thus, declining spot gas prices will be favourable for the margin improvement of Gujarat Gas.
244 new CNG buses set to hit roads in Ranchi
Ranchi: To improve the air quality index (AQI) of the city, the Ranchi Municipal Corporation (RMC) will launch a fleet of 244 new buses under the public-private partnership (PPP) mode and convert over 36 old buses to the compressed natural gas (CNG) fuel system so that residents can reduce their dependence on private vehicles for their daily commute.
A detailed project report (DPR), outlining the routes of the buses and their frequency, has been prepared through a private firm by the municipal corporation.
Of the new fleet of buses, 10% are likely to be EV (battery-operated) while the remaining would be compliant with the latest pollution control norms. To cut down emissions further, the old diesel buses would be converted to the CNG fuel system, the RMC said.
Talking to TOI, the assistant municipal commissioner of RMC, Jyoti Kumar Singh, said, “The old buses which are still operational will be converted to compressed natural gas (CNG) system. Since diesel prices have increased, this initiative will not only help us save money but will reduce air pollution as many passengers will take a bus instead of several private vehicles. In the initial phase, around 36 old buses will be converted to the CNG mode.”
According to Singh, around 50,000 passengers travel by bus in the city daily but the current number of buses is insufficient for the commuters. Currently, RMC operates 40 buses and 10 are grounded. Earlier, the RMC had roped in a private firm, Tandon Solution, to prepare the DPR for the routes.
“The city bus fleet will be expanded on the routes based on the DPR, which will have a detailed study of the routes, bus requirements and their frequency. Tandon Solution has been working on the DPR since last year and has conducted surveys to ascertain how many passengers use the buses for their daily commute,” Singh said.
According to the DPR, the new buses will play on a route every 10 minutes so that the commuters do not encounter any difficulty in getting public transport.“After the launch of the new buses, departure times will be fixed and the bus operators will be required to adhere to the schedule. Earlier, the departure times were dependent on the number of passengers on a bus.” Singh added.
The current shortage of buses is a major inconvenience for people, particularly students who travel daily and are unable to get a seat. A city bus has a capacity of 52 seats but over 70 passengers travel in a single trip. Neha Kumari, a student of Doranda College, who travels on a bus daily, said, “I have never managed to get a seat because of the crowd. The number of buses is so less. For those who travel frequently, increasing the number of buses would be quite helpful.”
Policy Matters/ Gas Pricing/ Others
Torrent Gas Pune Limited announces CNG price hike in Pune district
Pune, 3rd March 2023: Torrent Gas Pune Limited, a leading supplier of compressed natural gas (CNG) in the Pune District, has announced an increase in its CNG retail selling price.
The company has decided to raise the CNG price from the prevailing Rs. 93 per kg to Rs. 94 per kg with effect from midnight of 3rd March 2023 (00:00 hour of 4th March 2023).
The decision to hike the CNG price has been taken in view of the rising cost of natural gas and transportation. The company sources its natural gas from various fields across the country and transports it to its CNG stations through pipelines.
According to the company’s statement, the exact time and dispenser readings will be noted in the presence of the Dealer/Manager, which will be used for fortnightly billing. The change will be effective at all stations where CNG supply is by Torrent Gas Pune Limited.
The price hike is likely to impact the daily commute of CNG vehicle owners in Pune District. However, Torrent Gas Pune Limited has assured its customers that it remains committed to providing high-quality CNG at affordable prices.
Torrent Gas Pune Limited operates several CNG stations across the Pune District, providing a clean and cost-effective alternative to conventional fuels. The company has been at the forefront of promoting CNG as a sustainable fuel for transportation and has been actively expanding its network of CNG stations in the region.
The price hike is expected to generate some revenue for the company, which can be used for future expansion and development. However, the move is likely to face criticism from consumers who may find it difficult to absorb the additional cost.
As the CNG price hike comes into effect, it remains to be seen how it will impact the overall CNG market in Pune District and whether other players in the market will follow suit.
Electric Mobility/ Hydrogen/ Bio- Methane
No takers; most of 69 EV charging stations lie unused in Noida
Noida: There are 69 charging stations for electric vehicles in 54 locations of Noida, but most of them are gathering dust—neither used by commuters nor maintained for long.
Spot visits to the Sector 62 and Film City charging stations on Friday showed that the standalone docks were largely abandoned. There are dozens more like these, most of them not functioning, in sectors 32, 2 and 6, among others.
Last year, the Noida Authority installed these charging stations as part of measures to encourage commuters to take up EVs as personal vehicles.
But few in the NCR city have opted for EVs till now.
According to 2022 data by the transport department, there are around 13,000 EVs registered in Gautam Budh Nagar. Almost 70% of these are e-rickshaws, which drivers usually charge at stations facilitated by companies or through chargers already given to them. The remaining are four-wheelers.
A senior official of the Noida Authority, which is responsible for the upkeep of these charging docks, admitted that most of the charging stations set up over the past year aren’t operational.
“It will take some time to make them functional as technical details about operating the charging stations are being worked out,” the official said.
He said there was also the problem of demand.
“There are just a few thousand personal four-wheelers in Noida. These stations will prove to be beneficial when the number of EVs in the district increases,” the official added.
Further, car sellers explained that buyers who choose EVs are often given charging devices to set up near their house or in their societies. The showrooms, too, have charging apparatus at their premises.
“Companies provide chargers to buyers of electric vehicles. This generally takes 7-8 hours for full battery. We also have fast chargers outside our showroom and these take just 90 minutes. Additionally, many private companies are providing charging solutions with a mobile van service, which can be called in if someone’s battery drains out while travelling,” said Kapil Rana, a manager at a Tata showroom in Sector 6.
Others in the industry said putting up standalone charging stations isn’t viable until demand for them goes up.
“Isolated charging docks will only reap benefits when more people buy EVs. Instead, setting up fast charging stations in a cluster model like that at petrol pumps with multiple charging docks should be the focus. A similar model has been developed in Gurgaon where two EV charging stations have been set up as a pilot project,” said Abhijeet Sinha, nationalprogramme director for Ease of Doing Business and member of the working group at National Highway for Electric Vehicle (NHforEV) organisation.
With the EV sector growing rapidly across the country, the UP government had last year said it would encourage adoption of electric vehicles in the state by offering subsidies to buyers. Apart from discounted rates, the Uttar Pradesh Electric Vehicle Manufacturing and Mobility Policy 2022 also presented other incentives such as exemptions on road tax and registration fees.
Yulu and Bajaj joined hands to launch two new electric two-wheelers
Joining the burgeoning electric two-wheeler space, Bengaluru-headquartered electric mobility platform Yulu Bikes Pvt Ltd, in partnership with Bajaj Auto Ltd, on Monday, launched two new electric 2-wheelers (e2Ws) Miracle GR and DeX GR.
The third-generation electric two-wheelers are powered by Yulu’s AI-led technology stack and will be manufactured by Bajaj Auto in India. This partnership between Yulu and Chetak Technology Ltd, fully owned subsidiary of Bajaj Auto, aims to transform mobility through smart, shared, sustainable, and safe electric vehicles. Yulu claimed that with unique form-factor, ergonomic design & tech-powered utility, the Miracle GR and DeX GR are set to offer a better experience to customers along with higher operational efficiency. This, in turn, will improve Yulu’s overall financial metrics, the company stated. Both Miracle GR and DeX GR come with IOT-based dockless EV technology (meaning can be dropped off and picked up from certain locations in the service area). The scooters offer maximum speed of 25 kilometre per hour, with a maximum payload of 100 kilograms. They also feature a headlight, brake light along with a tail light.
“Going electric is a key strategic priority at Bajaj, and Yulu is an integral part of this strategy. Yulu’s deep expertise in EV technology and market knowledge coupled with Bajaj Auto’s strong, world-class R&D & manufacturing capabilities, is a powerful force that is shaping India’s future of mobility. These next-generation made-for-India vehicles with their intelligence, strong engineering underpinnings and sophisticated design aesthetics are a milestone not just for us, but for the entire electric mobility category,” said S Ravikumar, Chief Business Development Officer, Bajaj Auto Limited
Being manufactured by Bajaj, Yulu expects significant cost reductions and meaningful improvements in operating metrics and overall financials, owing to locally sourced parts and assembly, superior production quality and optimised economies of scale, it said.“We plan to deploy 1 lakh vehicles by the end of 2023, with 50K out of them being Miracle GR & DeX GR,” Amit Gupta, Co-founder & CEO, Yulu told DH. It’s not a fixed split between the Miracle GR & DeX GR. The best thing about our platform is that there is fungibility between models, so we can vary the mix basis market requirements, he added. The rental pricing of these vehicles will be very attractive just like our current vehicles, he added. The vehicles will be available for the public in the first week of March, Gupta revealed. The two scooters will operate on swappable batteries powered by Yuma Energy, a joint venture between Yulu and Magna that offers “battery-as-a-service” for electric two-wheelers. Yuma Energy has around 100 stations across Bengaluru, Mumbai, and Delhi. The company plans to expand the number of stations by up to 500 by 2024.“This launch will further solidify our position as a market leader in the shared mobility space while reinforcing our commitment to sustainably solve the problems of traffic congestion and air pollution for daily commute and last-mile deliveries,” Gupta said in a statement.
Uttar Pradesh government exempts electric vehicle buyers in state from tax, registration fees
In Uttar Pradesh, Chief Minister Yogi Adityanath-led Government has decided to exempt road tax and registration fees on purchase of Electric Vehicles (EVs) for three years from the 14th of October, 2022 in its bid to promote electric vehicles.
According to the revised notification issued by Principal Secretary L. Venkateshwarlu, as per the Uttar Pradesh Electric Vehicle Manufacturing and Mobility Policy 2022, 100 per cent tax exemption will be given on electric vehicles (EV) sold and registered in Uttar Pradesh from October 14, 2022, to October 13, 2025.
As per the statement, the government will provide the benefits for EV buyers which will be valid for five years if the purchased electric vehicles is manufactured in the State itself. On behalf of the government, orders have been given to the RTOs of all the districts to ensure compliance with the instructions with immediate effect.
As per the government, these EVs will be all automobiles that are powered by batteries, ultracapacitors, or fuel cells. These include all two-wheelers, three-wheelers, and four-wheelers, Strong Hybrid Electric Vehicle (HEV), Plug-in Hybrid Electric Vehicle (PHEV), Battery Electric Vehicle (BEV), and Fuel Cell Electric Vehicle (FCEV).
The exemption by UP Government is in addition to the subsidy provided by the Central Government on the purchase of electric vehicles. Together these reliefs provided by the Central Government and the State Government will reduce the cost of two-wheelers by 15,000 to 20,000 rupees on-road and cars by up to one lakh rupees.
The government’s decision will end the difference of the registration of EVs in Delhi and Uttar Pradesh and the rates will be the same in the state and the UT. According to the policy, a 15 per cent subsidy will also be given on the factory price of electric vehicles purchased in the State.
Natural Gas / Transnational Pipelines/ Others
Russia: Russia’s Lukoil looks to sell stake in offshore oil and gas field
Russian oil firm Lukoil is in direct talks with Indian companies to sell its 38% stake in a deepwater oil and gas field offshore Ghana, Reuters reported on Monday, quoting Russian and Ghanaian sources with knowledge of the matter.
The potential sale could unblock the suspension of the field development plan, which the operator of the Pecan field, Norway’s Aker Energy, hasn’t submitted yet.
Aker Energy holds a 50% participating interest in the Deepwater Tano Cape Three Points block in Ghana, including the Pecan development project. Lukoil owns 38%, Fueltrade has 2%, and Ghana National Petroleum Corporation holds the remaining 10%. Seven successful exploration wells and eight appraisal wells on the block have proved a significant resource base as well as offering a high upside, Aker Energy says.
However, the company has been wary of the involvement of Lukoil as a partner in the block due to the Western sanctions on Russia and has said it would wait to see the issue resolved until it files a field development plan.
Aker Energy has completed FEED and prepared a revised Plan of Development for the Deepwater Tano/Cape Three Points block, Aker said in August 2022.
Earlier this month the Q4 earnings release, Aker said that the filing of the development plant “has been delayed due to the uncertainties and risks caused by the war in Ukraine and Lukoil Overseas Ghana Tano Ltd.’s 38 percent interest in the license, as well as supply chain disruptions and inflation.” The current deadline for submitting the plan has been extended to April 2023.
Lukoil is directly talking with Indian companies about potentially selling its stake in the Pecan field development because banks do not want to get involved due to the sanctions against Russia, according to Reuters’ sources. During an Indian energy event earlier this month, Lukoil representatives and Indian firms, including ONGC Videsh, the foreign investment arm of Oil and Natural Gas Corporation (ONGC), discussed a potential deal, the sources said.
By Charles Kennedy for Oilprice.com
USA: Viridi Energy building renewable natural gas project in Wisconsin
Viridi Energy has begun construction on a landfill renewable natural gas project at the Marathon County Solid Waste Department’s landfill in Ringle, Wis.
The company says the project will convert landfill gas into RNG – more than 3 million GGE annually – that will be used for the transportation sector and other end uses.
“As the transition away from fossil fuels accelerates, our Marathon County project showcases how waste-to-energy projects can be a win-win-win. We are reducing greenhouse gas emissions at the county’s landfill, converting that landfill gas into clean RNG, and replacing the need for fossil fuel-derived natural gas in the process,” says Viridi CEO Dan Crouse. “In addition to the environmental impact, we are excited to support the local economy in Marathon County as we kick off operations in the community.” While the management team has developed more than a dozen landfill to RNG sites and has over 100 years of combined experience in the industry, this is one of the first landfill projects developed under the Viridi name, a company they launched last year with the backing of Warburg Pincus and Green Rock Energy Partners.
For Marathon County, the partnership with Viridi is its latest sustainable infrastructure venture. This project will have a direct, positive environmental impact on the surrounding community by reducing the need for on-site emissions mitigation through the conversion of naturally occurring landfill gas into clean RNG.
US: The least U.S. interstate natural gas pipeline capacity on record was added in 2022
In 2022, 897 million cubic feet per day (MMcf/d) of interstate natural gas pipeline capacity was added collectively from five projects, according to our latest State-to-State Capacity Tracker, which contains information on the capacity of natural gas pipelines that cross state and international borders. In 2022, the least interstate natural gas pipeline capacity was added since we began data collection in 1995. However, capacity was added to intrastate pipelines and to existing FERC-administered interstate pipelines as expansions that increased intrastate capacity in 2022.
Interstate capacity additions were low in 2022 for two primary reasons:
More growth in intrastate capacity (which are not captured in our interstate data)
Less overall capital expenditures by oil and natural gas companies
In prior years, interstate pipeline capacity was added from looping and compressor station projects that were designed to accommodate growing Appalachia production. These types of projects were the most common for developing new interstate pipelines, but all of the planned projects are mostly completed. Since 2017, about 70% of the growth in natural gas production has come from the Permian and Haynesville regions, located near liquefied natural gas (LNG) export terminals along the Gulf Coast. In Texas and Louisiana, intrastate projects, rather than interstate projects, have increased takeaway capacity and connected natural gas production to LNG export terminals.
Building large-scale, commercial natural gas pipelines that cross state boundaries involves a number of contractual, engineering, regulatory, and financial requirements. These requirements may involve more coordination and can take longer to complete compared with intrastate pipeline projects.
In 2022, five projects increased interstate capacity to transport natural gas. The projects focused primarily on upgrading compressor stations, with only one project adding a relatively small amount of new pipe:
Columbia Gulf Transmission’s Louisiana XPress Project increased its capacity from Mississippi to Louisiana by 493 MMcf/d and from Tennessee to Mississippi by 50 MMcf/d by adding or upgrading compressor stations to increase the deliverability of natural gas from the Appalachian Basin.
Florida Gas Transmission’s Mobile County Project increased its capacity west-to-east from Mississippi to Mobile County, Alabama, by 175 MMcf/d by modifying the CS10 compressor station in Perry County, Mississippi.
Florida Gas Transmission’s Southwest Alabama Project increased capacity from Mississippi to Escambia County, Alabama, by 100 MMcf/d by upgrading a compressor station.
ANR Pipeline Company’s Wisconsin Access Project increased capacity from Illinois to Wisconsin by 51 MMcf/d by upgrading several meter and filtering stations on the ANR Pipeline, alleviating constraints in parts of northern and central Wisconsin.
Gulfstream Natural Gas’s Gulfstream Phase VI Expansion Project increased capacity by 28 MMcf/d between Alabama and Tampa Electric Company’s Big Bend Power Plant in Florida by installing about four miles of pipe and a booster compressor station.
Norway: Norway replaces Russia as Europe’s first gas supplier
(MENAFN– AzerNews) Norway has replaced Russia as the biggest gas supplier of Europe, said the EU Commissioner Kadri Simson, as she was addressing a committee meeting and a press conference in the European Parliament.
“Since September 2022, Russian gas is about 8 percent of all pipeline gas imported in the EU. Pipeline gas imports from Russia amounted 61 bcm last year. The first gas supplier to Europe is no longer Russia. It is Norway,” she said.
Simson pointed out that the doubts about Europe’s inability to import enough liquified natural gas (LNG) to replace Russian gas also faded away. Europe opened three new terminals in less than one year, while 5 more are planned to be launched by late 2023 with total capacity of 50 billion cubic meters.
She noted that Europe imported a total of 135 billion cubic meters of LNG, with 56.4 billion cubic meters accounting for the US alone. As such, Europe’s LNG imports rose by 34 billion cubic meters year-on-year.
“The increase of gas supplies from other sources than Russia was almost 10 percent higher than the estimated in the March REPowerEU Communication. Overall, the EU phased out Russian gas by two-thirds. We backed up this diversification effort with new tools,” added Simson.
Global LNG Development
UK: BP and partners to use gravity-based structure for GTA LNG project
British energy major BP and its partners have finalised the development concept for Phase 2 of the Greater Tortue Ahmeyim (GTA) liquefied natural gas (LNG) project.
The partners will evaluate a gravity-based structure (GBS) as the basis for the GTA Phase 2 expansion project (GTA2).
The government of Mauritania and Senegal conferred the status of ‘National Project of Strategic Importance’ to the GTA project in July 2021.
The BP-operated project will have a total capacity of up to three million tons per annum.
BP’s partners in the project include Petrosen, Société Mauritanienne des Hydrocarbures (SMH), and Kosmos Energy.
The GBS platform consists of a large concrete or steel structure that is placed on the ocean floor. The structure serves as a base for the LNG processing facilities, which can include gas turbines, compressors, heat exchangers, and storage tanks.
The concept plan will also incorporate and build upon the GTA infrastructure by including new wells and subsea apparatus.
To reduce operational emissions, the partners will look into liquefying LNG using electricity.
BP and its partners have started working with contractors to take the project closer to the pre-FEED stage.
BP executive vice-president for operations and production Gordon Birrell said: “We aim to build on our strong collaboration with our partners, and the Governments of Mauritania and Senegal, to further develop a long-term, successful energy hub in West Africa.
“GTA continues to underpin our strategy to develop the most resilient hydrocarbons to help provide energy security today.”
GTA is situated 120km offshore in a water depth of 2850 metres.
Currently under development, Phase 1 of the project will deliver gas to a floating production storage and offloading (FPSO) vessel nearly 40km offshore.
The gas will be processed and liquids will be separated at the FPSO unit, before being exported to floating LNG facilities 10km offshore.
It is being estimated that Phase 1 of the project will produce approximately 2.3 million tons of LNG per annum once it commences operations.
Germany: Hapag, Shell sign multi-year LNG supply agreement
Shell Western LNG B.V (Shell) and Hapag-Lloyd announced the signing of a multi-year agreement for the supply of liquefied natural gas (LNG) to Hapag’s ultra large dual-fuel container vessels of 23,500+ TEUs. “Bunkering for these twelve new vessels is expected to commence during the second half of 2023 and
LNG will be supplied in the Port of Rotterdam,” says a release from Hapag. The modern ships will be deployed on Europe-Far East routes and call at major ports including Rotterdam, Hamburg, Singapore, and Shanghai, the release added.
Using LNG enables Hapag-Lloyd to immediately reduce the CO2 intensity of these vessels by up to 23 percent compared to conventional fuels. “Additionally, the use of LNG supports the almost complete reduction of particle emissions. This is another important step for Hapag-Lloyd to reduce emissions and decarbonise its fleet in line with its goal of becoming net zero carbon by 2045.” In addition to the LNG supply agreement, Shell and Hapag have entered into a strategic collaboration agreement intended to accelerate the further decarbonisation of alternative marine fuels. “Initial focus will be given to developing the potential of additional low carbon fuels solutions including liquefied biomethane and the hydrogen-based fuel liquefied e-methane. Liquefied biomethane as a marine fuel has the potential to reduce greenhouse gas emissions by between 65 percent and 100 percent.”
Tahir Faruqui, General Manager, Head of Downstream LNG, Shell says: “We are delighted to have partnered with Hapag-Lloyd on this important initiative. Shipping decarbonisation must accelerate, and as the lowest-carbon fuel available at scale today, LNG is a key part of the transition to lower-carbon marine fuels. As we look to the future, we are committed to working with leading shipping companies like Hapag-Lloyd to establish credible pathways to net zero.”
Jan Christensen, Senior Director, Global Fuel Purchasing, Hapag-Lloyd adds: “We are pleased to share the execution of this long-term supply agreement. Hapag-Lloyd has finalised a contract with Shell which secures flexible LNG supply at competitive terms. Furthermore, we are excited about our agreement with Shell to explore further decarbonisation opportunities as it allows both businesses to drive impactful change in the industry. Collaborations like this are crucial in helping us deliver our sustainability strategy while also improving emissions in maritime shipping. Ultimately, this enables our customers to decrease their carbon footprint as well.” The announcement supports Shell and Hapag-Lloyd’s long-standing collaboration, which, over the past years, included the LNG bunkering of the Brussels Express, the world’s first large container ship converted to gas propulsion, the release added.
Bahrain explores constructing LNG export facility
Bahrain aims to slash domestic natural gas consumption under a plan to decarbonize its economy and is exploring ways to export the fuel to international markets, the chairman of the kingdom’s energy company said.
The Gulf Arab state plans to build solar farms to power its homes and industries, replacing the gas now used, Nasser bin Hamad Al Khalifa, chairman of Bahrain’s energy investment and development arm Nogaholding, told Reuters on Tuesday.
“We have ambitious plans to add solar as a source of energy into our grid instead of just wasting our gas,” Khalifa said. Some of the solar farms will reside in neighbouring Saudi Arabia and the United Arab Emirates.
The plan comes as Europe is hunting for new fuel supplies and major gas discoveries in the Mediterranean have led to proposals for new offshore LNG and gas pipelines to Europe.
Bahrain produces around 2 billion cubic feet per day of gas which is used to generate electricity and power its refinery and industry. It also produces around 190,000 barrels per day of oil at an onshore and offshore field, according to Nogaholding.
In 2018, it discovered the Khaleej al-Bahrain field, its largest oil and gas find since 1932, which is estimated to contain at least 80 billion barrels of shale oil.
It is also exploring deep gas formations and will carry out a 3-D seismic survey later this year, he said.
The kingdom is studying the possibility of constructing a floating liquefied natural gas (LNG) facility to export gas in order to capture strong international demand, Khalifa said.
“Floating LNG is difficult to get right now because demand is so high, but my team are approaching a solution for that. It is a world of opportunity for us to explore with partners,” he said.
Bahrain has set targets to reduce its carbon emissions by 30% by 2035 and down to net zero by 2060 and will publish a new energy transition plan in the coming months.
Bahrain is also investing $7 billion to expand its Bapco refinery to 400,000 bpd from 267,000 bpd, Khalifa said.
New Guinea: Papua LNG JV launches fully-integrated feed
Santos on March 7 announced that Papua LNG joint venture has launched fully-integrated front-end engineering and design (FEED) for the Papua LNG project in Papua New Guinea.
Papua LNG is expected to have a liquefaction capacity of up to 6mn metric tons/year of LNG with the first production expected by the end of 2027 or early 2028.
Following pre-FEED studies, the Papua LNG partners have selected a concept using four electric LNG trains (e-trains) with a combined capacity of 4mn mt/yr to be developed within the existing PNG LNG project site. Papua LNG has also secured access to up to 2mn mt/yr of existing liquefaction capacity from PNG LNG.
Santos said that integrating the Papua LNG midstream development within PNG LNG maximises the value of both projects and delivers increased capital efficiency by reducing upfront capital expenditure and maximising integration synergies. PNG LNG will receive an access fee, pro-rata opex sharing and ongoing processing toll revenue that compensates PNG LNG for making the capacity available.
Selecting e-trains and re-injection of reservoir CO2 will reduce the carbon intensity of the project, the company said.
Santos CEO Kevin Gallagher said Papua LNG FEED entry was consistent with the company’s strategy to backfill and sustain its core natural gas assets.
“The concept selected for Papua LNG maximises value through midstream integration with PNG LNG to deliver increased capital efficiency and lower operating costs, consistent with our disciplined operating model,” Gallagher said.
The selected concept for Papua LNG is expected to have a lower capital expenditure outcome than the previous concept. Costs will be refined during the FEED phase and the project participants intend to explore project finance opportunities for a portion of the project cost, Santos said.
Santos holds a 22.8% interest in Papua LNG along with joint venture partners TotalEnergies (40.1% and operator) and ExxonMobil (37.1%). The state of Papua New Guinea may exercise a back-in right for up to a 22.5% interest at the final investment decision, which is planned for the end of 2023 or early 2024. Should Papua New Guinea exercise its full back-in right, Santos’ interest in the project would reduce to 17.7%.
Santos also has a 42.5% interest in PNG LNG and in September last year announced a conditional agreement to sell a 5% interest in PNG LNG to Kumul Petroleum Holdings for an asset value of $1.4bn. Completion is subject to customary conditions including necessary regulatory approvals and Kumul securing financing. Santos became the largest shareholder in PNG LNG with its takeover of Oil Search.
Greece’s first FSRU initiates in Singapore
DNV issued a statement on the progress of Alexandroupolis Floating Storage Regasification Unit (FSRU). According to the Classification Society, the work to develop Greece’s first FSRU commenced recently at the Keppel shipyard in Singapore with the conversion of GasLog’s Gaslog Chelsea, recently renamed as Alexandroupoli.
Following conversion, the FSRU Alexandroupoli will serve as an offshore storage and regasification facility and will be part of the Alexandroupolis Independent Natural Gas System (INGS). The 155,000-cbm LNG carrier, recently reflagged to the Greek flag, is the first FSRU conversion under the Greek Flag for operation in the Aegean Sea.
The project’s owner, Gastrade, is a consortium of key players in the wider region’s energy market: Mrs. Elmina Copelouzou, GasLog, DEPA Commercial, the Public Gas Company of Greece, DESFA, the Hellenic Natural Gas Transmission System Operator, and Bulgartransgaz, the natural gas transmission and storage system operator.
“We worked patiently and diligently to reach this stage and we are extremely proud to soon offer the first ever FSRU in Greek waters. Through GasLog’s renowned high standards of safety and reliability, the FSRU Alexandroupolis will offer energy diversification and security to the wider region and establish GasLog as an integrated provider of natural gas solutions. We are thankful to DNV for their support and partner-mindset throughout the project.”
…said Kostas Karathanos, GasLog’s Chief Operating Officer.
The FSRU Alexandroupolis is designed to add a new gateway for natural gas in the Greek and wider Balkan region, improving the region’s energy mix and diversifying energy sources to enhance energy security. It is expected to have a regasification capacity of around 8 billion cubic meters annually.
The existing LNGC is currently in DNV class. As an offshore-classed FSRU, the vessel will have the following notations: OI Ship-shaped LNG Storage Installation, Field (Alexandroupolis), REGAS(ES), POSMOOR, UWILD, BIS, TMON, Clean, NAUT(OC), NAUTICUS(Newbuilding), ASP(MRU).
The vessel is expected to be delivered at the end of 2023 and will be connected to the National Natural Gas Transmission System (NNGΤS) of Greece via a 28km long pipeline.
Germany: Avenir collaborate with Vitol for LNG ship-to-truck loading operations in Germany
A small-scale LNG firm named Avenir LNG has successfully carried out Germany’s first-ever direct LNG unloading mission into trucks from a transport vessel.
This operation reportedly was held on 22 and 23 February at the Port of Mukran, where the UK-based company’s LNG transport vessel named the Avenir Ascension reportedly unloaded LNG into the transport trucks provided by a global energy trader named the Vitol.
Then, the trucks also transported chilled fuel onward to the Europe-based truck fueling station network. The latter is operated and owned by Vitol’s subsidiary, ViGo Bioenergy GmbH.
The vessel was berthed for three days, with LNG unloading operations executed during this time. Avenir LNG mentioned that necessary preparations for the test operation were executed within weeks rather than the extended development phase required for larger and more permanent infrastructure like onshore terminals or the FSRUs.
Per the Avenir LNG, the mission had been prepared as a pilot assignment to demonstrate the viability of gearing up an energy supply chain for decentralized areas without needing large-scale terminal infrastructure and LNG unloading.
Last year, Avenir LNG, via its unit titled Avenir Marine, took part in the first-ever LNG and BioLNG delivery at Germany’s Port of Lübeck.
Coming to recent activities, the firm also carried out its first LNG ship-to-ship (STS) bunkering activity for the RoPax ferry Peter Pan with Germany-based ferry operator and owner dubbed the TT-Line.
On 19 December last year, the vessel also received LNG from one of Avenir’s small-scale bunker vessels named the Avenir Advantage at the Pengerang Anchorage in Malaysia.
China: Venture Global and China Gas sign long-term LNG agreements
Venture Global LNG and China Gas Holdings Ltd (China Gas), a leading natural gas operator in China, have announced that the wholly-owned subsidiary, China Gas Hongda Energy Trading Co., Ltd (China Gas Hongda) and Venture Global LNG, have signed two 20-year LNG Sales and Purchase Agreements (SPA).
Under the deals, China Gas will buy 1 million tpy of LNG on a free on board (FOB) basis from Plaquemines LNG, and another 1 milion tpy from the CP2 LNG export facility, both in Louisiana, US.
Mr. Liu Minghui, Chairman and President of China Gas Holdings Co. Ltd., said: “As a major participant in China’s energy market, we are committed to providing reliable and low-carbon LNG to Chinese customers. These two SPAs increase additional volume for our LNG portfolio and strengthen China Gas’ supply ability. We look forward to working with Venture Global over the coming years to help further reduce greenhouse gas emissions.”
Mike Sabel, Chief Executive Officer of Venture Global LNG, said: “Venture Global is pleased to welcome China Gas as a customer both at Plaquemines and CP2. Through relentless execution and innovation, our company will continue to bring much-needed new capacity to the global LNG market, supporting energy security and environmental progress both in Asia and Europe. Importantly, low-cost LNG supplied to the region will accelerate fuel switching and lower carbon emissions, contributing meaningfully to China and the world’s existing climate targets.”
France ‘Stepping Up’ role as top entry point for European LNG
To help Europe replace gas supplies cut by Russia, France’s liquified natural gas (LNG) imports nearly doubled last year, as the country delivered four times as much pipeline gas to neighboring European countries compared to 2021.
“France is stepping up its role as a point of entry and transit country for supplying Europe with gas,” French transmission system operator GRTgaz recently said in a 2022-2023 gas forecast.
“The increase in French LNG imports was massive last year, France surpassed Spain as the largest LNG importer in Europe, and quite a lot of the gas went to other European countries,” said Rystad Energy analyst Fabian Ronningen.
France increased LNG imports to 25.14 million tons (Mt) in 2022, up from 14.04 Mt the prior year, according to Kpler. The country has few fossil fuel resources and is dependent on pipeline and LNG imports.
Last year’s top LNG exporter to France was the United States, which exported a total of 11.25 Mt. Kpler data shows Cheniere Energy Inc. accounted for over half of that, with 3.95 Mt exported to France from Sabine Pass LNG in Louisiana and another 2.66 Mt from the Corpus Christi export terminal in Texas.
GRTgaz said the high levels of imports continued as 2023 got underway. The transmission system operator said volumes unloaded between November and mid-January were 41% above the previous record set during that time.
The short and medium-term outlook for LNG imports in France looks similar to levels in 2022. “The volumes for 2022 will likely be replicated in 2023, and possibly even surpassed, and could easily be the case in 2024,” Ronnigen told NGI.
“Even if Europe gets more regas facilities online in more countries and locations, the existing capacity has to run at very high utilization factors as this will be the first year without any large volumes of Russian gas.” The continent has been scrambling to get more import capacity installed, particularly its largest gas buyer Germany, which relied heavily on Russian pipeline gas as there were no LNG import terminals there before the Ukraine war.
To help fill the void left by Russia, France has reached a number of pipeline delivery milestones since October, according to GRTgaz. France started gas imports from Spain; delivered exports to Germany for the first time; pipeline gas flow between France and Belgium was reversed, and France dramatically increased exports to Switzerland.
France also increased LNG imports last year to better meet domestic energy demand amid power shortages caused by widespread nuclear outages. The country’s prolific nuclear output fell to a 30-year low amid corrosion issues at its plants, prolonged stretches of maintenance and labor disputes.
Nuclear energy provides about 70% of the country’s electricity, with renewables at 20% and fossil fuels around 9%. A record 26 of the country’s 56 nuclear reactors were offline in 2022, due to inspection and repairs after corrosion was found in reactor pipes, according to state-owned utility Électricité de France.
“Using the preliminary data reported from the transmission system operators, gas was the energy source that increased the most in absolute volume last year in France, with a close to 10 TWh (31% year-on-year) increase in generation,” Ronningen said.
Due to the large fall of nuclear and also hydropower output, Ronningen said natural gas was the only domestic source with relatively large upside potential for ramping up. “France therefore had to import massive amounts of electricity last year, becoming the second largest power importer in Europe, when it was the largest exporter just one year earlier.”
“Nuclear power is expected to fall in the longer term, and coal will be phased out, but gas will continue to have an important role to fill in the French energy mix, but mainly as a balance and in our view never at the scale of Spain, UK and Italy,” he added.
As demand for gas remains high, France plans to expand its regasification capacity. In a non-binding call of interest last month for the country’s first Floating Storage and Regasification Unit at the port of Le Havre, customers looked to secure up to 12 billion cubic meters (Bcm) of capacity with only 2.5 Bcm available, according to TotalEnergies SE, which is developing the project.
“Demand expressed during the market test significantly exceeded available capacity,” the company said. “This success illustrates the market’s appetite for additional LNG regasification capacity to meet French demand as well as the need to strengthen the security of gas supply.”
Greece: Conversion work begins for Greece’s first FSRU
Work recently began for the conversion of LNG carriers to become Greece’s first floating storage and regasification unit (FSRU) to be located in the eastern Mediterranean and supply Greece and the surrounding region. This project has been under development for six years and is expected to begin operation by the end of 2023.
The vessel that will be used in the LNG import operation is a 2010-built ship that originally operated as the STX Frontier and in 2013 became the Gaslog Chelsea. The vessel was officially renamed Alexandroupolis as of February first. She is 86,353 dwt with a capacity of 153,600 cbm. She is now registered in Greece.
The vessel was moved in early February to the Keppel shipyard in Singapore where the conversion work began. It will be equipped with a subsea and onshore gas transmission system giving it an LNG transfer rate of 10,000 cubic meters per hour. The conversion project is being overseen by DNV as the class society. According to Martin Cartwright, Business Director – Gas Carriers & FSRUs, DNV Maritime, this project is the record ninth FSRU conversion project that the classification society has conducted serving as another demonstration of the growing demand for FSRU projects.
“GasLog believed in the FSRU Alexandroupolis endeavor from the very beginning, and at a time when energy security in Europe was taken for granted,” said Kostas Karathanos GasLog’s COO. “We worked patiently and diligently to reach this stage and we are extremely proud to soon offer the first ever FSRU in Greek waters.”
The project was first proposed in 2017 to be located approximately 10 miles from Alexandroupolis, in Eastern Greece in the Aegean Sea. Once in place, the project will be connected by an approximately 17-mile pipeline to the National Natural Gas Transmission System of Greece. The existing transmission system also has interconnects to Bulgaria and the Trans-Adriatic systems.
According to GasLog, which developed the project and is the owner of the FSRU, the Alexandroupolis is designed to add a new gateway for natural gas in the Greek and wider Balkan region, improving the region’s energy mix and diversifying energy sources to enhance energy security. It is expected to have a regasification capacity of around 8 billion cubic meters annually.
The demand for FSRU arrangements had been developing before the war in Ukraine which further accelerated the demand. Neighboring Croatia launched its FSRU operation in 2021 while Albania and Cyprus are adding regasification and storage capabilities. Most of the attention, however, has been on Northern Europe where Germany, The Netherlands, Finland, and Estonia all moved to develop LNG import capabilities.
Germany energy company announced that its Wilhelmshaven LNG using an FSRU on charter from Höegh commenced regular operations yesterday, March 1, after the final acceptance of the audit by local officials. Uniper notes that the facility was built in record time and became the first German LNG import terminal to start operations on December 21, 2022, initially in trial operation and commercial operations as of mid-January. Around six percent of Germany’s gas demand can be met via the terminal, which is one of five the German government committed to developing along with a sixth that was developed privately by Deutsche Gas in Eastern Germany.
The growth in FSRU operations is also contributing to strong demand both for new builds and conversion projects at shipyards.
Global LNG: Asian spot LNG prices hit 19-month low on tepid demand
LONDON: Asian spot liquefied natural gas (LNG) prices continued their downtrend this week, hitting the lowest level since July 2021, due to tepid demand which is expected to last until the end of March.
The average LNG price for April delivery into northeast Asia was $14.50 per million British thermal units (mmBtu), industry sources estimated, down $0.50, or 2.3%, from the previous week, industry sources estimated.
Prices have fallen more than 48% year-to-date and around 79% from the August 2022 peak at $70.50/mmBtu.
“Recent prices have encouraged South Asian buyers. However it appears sub-$15 still isn’t quite enough for the Chinese,” said Toby Copson, global head of trading at Trident LNG.
“While market weakness is still evident, it’s likely going to take a prolonged period of lows to entice the state-owned enterprises and tier 2 and 3s (players) back. I don’t think we’ve seen the trigger price yet to make the domestic arbitrage profitable,” he added.
Leo Kabouche, LNG market analyst at research consultancy Energy Aspects said that an upside to LNG prices is currently limited due to North Asian buyers’ absence from spot market, combined with high gas inventories in Europe and the partial restart of U.S. Freeport LNG facility following an eight month-outage caused by a fire.
Kabouche said that heating degree days – a measure used to estimate heating demand – were 15% down on an annual basis across China, Japan and South Korea, with the first two weeks of March are also forecast to be around 16% milder than normal.
In Europe, gas prices have touched levels not seen since August 2021 and LNG cargoes continue to head to the continent with economics still favouring Atlantic deliveries over the Far East, according to said Tobias Davis, head of LNG Asia at brokerage Tullett Prebon.
“A lower demand profile led by warm weather, strong wind power generation and healthy storage continues to help containing prices and forecasts of post winter storage levels of 55% are allaying any market stress,” Davis said.
He also said that the April JKM/TTF basin spread- which measures the economics for delivering LNG to Asia versus Europe- has strengthened from $-1.00/mmBtu at end of February to -$0.35/mmBtu in early March, a welcome reversal but still not beneficial numbers for any cargo flows back to Asia.
JKM is the LNG benchmark price assessment for spot physical cargoes in Asia.
S&P Global Commodity Insights assessed its daily north-west Europe LNG Marker (NWM) price benchmark for cargoes delivered in March on ex-ship (DES) basis at $12.814/mmBtu on March 2, a discount of $1.712/mmBtu to the April gas price at the Dutch gas TTF hub, according to Ciaran Roe, global director of LNG.
Spark Commodities assessed the Northwest Europe LNG price at $13.098/mmBtu, a discount of $1.460/mmBtu to the April TTF gas prices.
LNG spot freight rates were steady this week, with Atlantic at $59,250/day on Friday and Pacific rates at $81,000/day, according to Eleni Balomenou, analyst at Spark Commodities.
German government plans extensive LNG infrastructure build-up to ensure security of European supply
With a significant “safety buffer” of new liquefied natural gas (LNG) import capacity, the German government aims to ensure that the country and neighbouring states will receive sufficient supply of natural gas in the coming years, says a report from the economy ministry.
Russia’s war against Ukraine had shown that unilateral dependencies in energy were dangerous and the supply structure must become more “robust”, said economy minister Robert Habeck. According to the report, an overcapacity was necessary to prepare for failures due to accidents, sabotage or other external events, and to supply EU neighbours. Critics say that LNG plans are oversized especially in light of the country’s goal to become climate neutral in about 20 years, which means fossil gas consumption has to fall significantly.
Germany’s government sees a need for significant overcapacity of imports of liquefied natural gas (LNG) to ensure the region’s supply in case of accidents or sabotage to some of its infrastructure such as pipelines from Norway, says a report by the economy ministry. The government says that Russia’s war against Ukraine has “changed the parameters of energy security structure” and in the future German energy infrastructure has to be more robust and resilient with European solidarity in mind.
“Russia’s attack on Ukraine has made us realise how dangerous unilateral dependencies are and that they cost us,” said economy minister Robert Habeck. “We would be fools not to learn from this.” Thus, the government aimed to make Germany “more robust”, for example through renewables expansion and efficiency, but also with the help of the LNG import infrastructure.
“Just as other European countries supply Germany with their infrastructure, Germany must also be able to supply its neighbours,” said the report, which had been requested by the budget committee of the Bundestag (parliament). The government said it assumes additional supply needs from the Czech Republic, Slovakia and Austria as well as Ukraine and Moldova.
The German government does not even address the questions raised about the climate impact of the LNG projects. Instead, it justifies its fossil fuel plans with all kinds of hypothetical horrifying scenarios.
Sascha Müller-Kranner, head of environmental NGO DUH
With several floating import terminals and three fixed onshore ports, Germany could have a “safety buffer” of about 30 billion cubic metres (bcm) per year LNG import capacity from 2027, says the report.
“The view of the German government is that a safety buffer of this size is necessary to continue to guarantee supply security with regard to the possible loss of import capacities due to accidents, sabotage or other external events,” writes the economy ministry. It explains that this buffer should be understood as a hedge against the loss of Norwegian imports – Germany’s most important supplier since Russian deliveries were halted – and also to secure the supply for neighbouring European countries.
While the government emphasises that – despite the safety buffer – “all efforts are and must be directed at reducing fossil fuel consumption for climate action reasons,” critics say LNG plans go beyond what is needed for supply security and threaten climate targets.
Sascha Müller-Kranner, head of environmental NGO DUH criticised LNG plans as “oversized” and unnecessary for supply security. “The German government does not even address the questions raised about the climate impact of the LNG projects. Instead, it justifies its fossil fuel plans with all kinds of hypothetical horrifying scenarios,” he said in a press release. DUH called on economy minister Habeck to “bring the plans in line with climate targets” and warns of a “fossil lock-in”.
The government says in the report that it does not see a lock-in effect for higher CO2 emissions with the build-up of LNG infrastructure, and that it will ensure that the fixed onshore terminals will be able to import green hydrogen and its derivatives in the future.
The war in Ukraine has pushed efforts to diversify Germany’s gas supply away from Russian deliveries to the top of the government’s agenda. As part of these efforts, the government is going full steam ahead on the build-up of the country’s own import infrastructure for liquefied natural gas (LNG). It is investing in permanent land-based import terminals, while leasing floating units in the short term – the first of which was inaugurated in December 2022. Germany has a well-developed natural gas pipeline grid and is connected to terminals in neighbouring countries, but until recently did not have its own port to receive LNG directly.
Key question: How fast will gas demand decline?
The role of gas during Germany’s energy transition has been a contentious issue for years. The German government has seen natural gas as a bridging fuel that can replace dirtier coal to bring down CO2 emissions quickly, and serve as an energy source when there is too little wind or sun. However, it is still a climate-damaging fossil fuel and will have to be phased out eventually to help Germany become climate neutral by 2045. As the country is exiting nuclear power next month and only has a small share of hydro and geothermal energy, its future bet is on green hydrogen – made from renewable electricity – to complement wind and solar power.
However, Russia’s war against Ukraine and the energy crisis have put the government’s plans for fossil gas into question – which suddenly is no longer cheap and in abundance. With the halt of Russian deliveries, Germany saw unprecedented cuts in gas demand in 2022 and raced to build up its own import infrastructure for LNG in record time to be able to supply its industry, as well as households for heating. Chancellor Olaf Scholz has said he wants the country to use this “new Germany-speed” for the expansion of renewable energy. The government has emphasised time and again that Putin’s war has proven to be an accelerator for the transition away from damaging fuels like natural gas and towards climate neutrality.
However, gas still has a role to play. Energy industry association BDEW head Kerstin Andreae said last year that the natural gas bridge had not collapsed. “It may have become shorter, and we may have to cross it faster,” she said at the time. Consultancy McKinsey has said that fossil gas will be a crucial part of Germany’s power and energy supply for at least another ten years, because the expansion of renewable energy and the electricity grid are lagging behind.
In today’s report, the economy ministry used a scenario which assumed a relatively high future gas demand from a project on long term scenarios for Germany to become climate-neutral by 2045 it had previously commissioned. It argued that this was necessary to calculate the safety buffer. However, actual demand must go down faster to keep in line with climate targets, says NGO DUH.
It is difficult to predict future demand, but even in the most conservative scenario, the International Energy Agency (IEA) projects a significant decline in the EU’s gas demand in its World Energy Outlook 2022.
The projections for future gas demand in Germany will hugely impact plans to build out some and dismantle other gas infrastructure projects in the coming years, not just for LNG imports. While there are plans for new and refitted hydrogen pipeline networks, experts say that the country will no longer need the entirety of its existing huge transmission and distribution gas grid. State secretary Patrick Graichen – former head of energy transition think tank Agora Energiewende – has reportedly told local utilities to start planning the process of dismantling their infrastructure. Gas grid operators are currently working on plans to develop the transmission grid by 2032, so government estimates for gas consumption like from today’s report could also have implications for those plans.
Government plans significantly oversized?
Journalist Malte Kreutzfeldt highlighted in a series of messages on Twitter that the economy ministry report was calculated with more than just one safety buffer. The ministry used the most conservative scenario regarding future gas demand and calculateed with a relatively high volume of 74.1 bcm in 2030 (82 bcm in 2022 and 99 bcm in 2021); it adds another ten percent to the projected demand as a “risk premium”; it assumes gas demand in neighbouring countries remains unchanged despite climate targets; it underestimates the capacity of several of the floating terminals; and it assumes the floating terminals are used much less than the charter periods, thus explaining the need for fixed onshore ports.
Greater diversification through additional floating terminals can further reduce the risks to sufficient supply, said Jakob Wachsmuth, researcher at Fraunhofer Institute for Systems and Innovation Research (ISI). However, there should be early exit perspectives because gas demand is expected to decline in the coming years due to climate protection efforts, he added. “As a result, the construction of fixed terminals, which will only be available later and may be operated for longer, should be severely limited.”
Others follow the government’s arguments. When planning LNG infrastructure, the government had to keep in mind “Germany’s role as a natural gas hub in Europe,” said Dieter Franke, head of energy resources at the Federal Institute for Geosciences and Natural Resources (BGR). “A considerable share of the gas imported by Germany has been passed on to neighbouring European countries in recent years,” said Franke. “Landlocked countries – such as the Czech Republic or Austria – cannot import LNG themselves and are dependent on European solidarity in the event of limited pipeline supply.”
Technological Development for Cleaner and Greener Environment Hydrogen & Bio-Methane
Methanex conducts first net-zero, biomethanol-powered voyage
Methanex and MOL have carried out the world’s first net-zero voyage powered by methanol, the two companies announced Monday.
Methanex co-owns Waterfront Shipping, which has a fleet of dual-fuel tankers that can run on Methanex’s methanol product. On this voyage, the MOL-owned, Waterfront-operated tanker Cajun Sun ran on a mix of biologically-derived biomethanol – which has net-negative carbon emissions – with conventional natural gas-based methanol. The mixture was calibrated to produce a net-zero greenhouse gas footprint on a lifecycle basis. Cajun Sun crossed the Atlantic on an 18-day voyage on this fuel.
Methanex emphasized that the groundbreaking voyage was an example of how shipowners can use methanol to rapidly attain net-zero operations. Biomethanol and green methanol are also the zero-carbon fuels of choice for Maersk Group, which has taken the lead on decarbonization in deep-sea shipping.
“We’re proud to bring the marine industry a tangible solution to transition towards net-zero emissions through our blended methanol product using bio-methanol produced from renewable natural gas at our facility in Geismar, U.S.,” said Mark Allard, Methanex’s SVP for low carbon solutions. “As the world’s largest methanol producer, we are establishing a network of relationships with leading renewable natural gas suppliers and assessing other pathways, including carbon capture and storage and e-methanol, to provide solutions for the marine industry and other customers.”
MOL, which holds a 40 percent stake in Waterfront Shipping and owns Cajun Sun, is also experimenting with biologically-sourced methane as a substitute for natural gas. Working with a Japanese gas company, Air Water, MOL will test out the use of a liquefied bio-methane fuel in an LNG dual-fuel vessel in coastwise trade. The biogas will be sourced from cattle farmers and will have about 90 percent of the energy content of conventional LNG.