Global natural gas markets were tepid Tuesday despite growing risks of Australian LNG work stoppages.
While the global natural gas community gathered in Singapore for the start of the Gastech 2023 conference, workers at Chevron Corp.’s Gorgon and Wheatstone liquefied natural gas terminals disclosed plans for walkouts. Representatives for the Offshore Alliance said workers could initiate work stoppages up to 24 hours a day starting Sept. 14.
The notice came after workers last week gave Chevron notice walk-outs for 11 hours a day from Sept. 7-13.
Looking to February
Most of the volumes potentially interrupted in ongoing labor negotiations would initially impact Asian contract holders, but the risk of increased competition has loomed over European gas prices for weeks. Prices began sliding most of last week after news that Woodside Energy Group Ltd had reached a tentative agreement with union workers on its North West Shelf terminal.
The prompt Dutch Title Transfer Facility remained muted Tuesday compared to last week, closing at around $10.83/MMBtu, from $11.27 on Friday. February contracts saw the largest change, lifting almost 30 cents day/day to 16.73.
“The concerns about the strike in Australia have been pushed into the background, as high storage levels and warm autumn weather are currently overshadowing the bullish signals,” analysts for trading firm Energi Danmark wrote in a note.
European Union (EU) natural gas storage is currently around 93%, compared to 81% during the same period last year.
Spot demand from North Asia also appeared lax, with prices hovering around $13/MMBtu.
Offshore Alliance representatives said in a post on social media the ramp-up in stoppages was in response to Chevron’s move to seek outside arbitration with Australia’s Fair Work Commission. Union members had previously volunteered to work through the planned stoppages to facilitate repairs on a gas plant at Wheatstone that feeds domestic supply to Western Australia.
North American Development
While European buyers seemed less anxious about the coming winter, the still finely balanced gas market drove another large firm in the EU to forge their first long-term supply agreement.
Switzerland’s Met Group, an integrated energy company, signed a tentative agreement with Commonwealth LNG. Under the heads-of-agreement, Commonwealth could supply Met with 1 million metric tons/year (mmty) of LNG for 20-years from its proposed terminal in Cameron, LA.
"LNG supply into Europe is a significant contributor to gas supply diversification and an important contributor to European energy security,” Met Group CEO Benjamin Lakatos said. “LNG is also becoming an important part of MET Group's strategy going forward."
Earlier in the year, Met secured long-term regasification capacity in Germany and expanded its potential import options to Finland. Last year, Met imported more than 30 TWh from LNG cargoes to Belgium, Croatia, Greece, Spain and the UK.
If the companies reach a sales and purchase agreement, deliveries from Commonwealth could start in 2027. Commonwealth targeted a final investment decision on the 9.3 mmty project for early 2024 after taking on an equity partner last month.
In Canada, BP plc disclosed it has placed all of the capacity from Pacific Energy Corp. Ltd.’s Woodfibre LNG under contract. BP inked a third sales and purchase agreement for 15 years of offtake on a free-on-board basis from the export project in British Columbia, covering a combined 1.95 mmty. The remainder of Woodfibre’s overall 2.1 mmty would be available to BP on a “flexible offtake basis,” according to the firm.
Venture Global LNG Inc. also moved to firm up manufacturing capacity with Baker Hughes Co. as it plans to expand its scope for future LNG projects. Venture Global disclosed it has signed an amended master agreement with the specialty equipment manufacturer to provide support for an additional 30 mmty in LNG projects.
The firm didn’t provide details on where additional projects could be sited, but said it is looking to “expand LNG production both in and outside of Louisiana.” Venture Global is currently operating, constructing or in the regulatory phase for projects totaling 70 mmty in Louisiana.
The firm made industry history last year with the commissioning of Calcasieu Pass, marking the fastest construction of a large-scale greenfield LNG project at 29 months from final investment decision to first LNG.
However, while it has sold 11.2 million tons of LNG in the spot market since the plant came online, Venture LNG management has said technical issues have prevented a full start-up, delaying cargoes for contract holders.
