Qatar poised to win the race for new LNG projects

[TomTom + 183]

According to a new Rystad report, Qatar remains the most competitive LNG player in the markets and with the production moratorium on its largest (the world's largest) gas field lifted, it looks look to get FID's for three liquefaction trains.

[Tom Kirkman + 8,860]

Qatari LNG development to extend LNG surplus into mid-2020s

Qatar’s announcement Tuesday that it will double the size of its proposed new development on the giant North Field to 4 Bcf/d and use the gas for LNG exports will throw off course multiple new LNG projects elsewhere in the world. According to the International Gas Union, there were 879 million mt/year of proposed LNG projects waiting in the wings at the start of 2017.

Qatar has said that the new project will raise its LNG capacity from 77 million mt/year to 100 million mt/year, an addition of 23 million mt/year, and that the project will take five to seven years to complete. 4 Bcf/d gas is the equivalent of 30 million mt/year of LNG, suggesting that some of the gas will be used either for domestic consumption or to support existing LNG capacity.

However, the LNG market already expects a glut of new supply and is uncertain how it will be absorbed

[Jan van Eck + 7,558]

I think you will find that the Ukraine will take all of it, in order to cut itself off permanently from Russia, and Ukraine will build (or somebody will build) either a floating or a fixed re-gasification plant in or near the Port of Odessa, with connections into the trans-Europe line up to Poland and ultimately Germany.  What remains to be seen is if Germany continues in the folly of NordStream II, locking itself in perpetually to Russia as both the supplier and the controller of much of Germany  (and with cost control passing also to Russia's GazProm).  

I also predict the competitors for gas supply to both Ukraine and Poland will be Gas from Louisiana.  There is a lot of new LNG shipping capacity set to hit the water over the next 18 months.  What is needed now is more LNG liquefaction and regasification installations.  Qatar is not going to be a price dictator, not with the others coming on stream. It will be interesting. 

[DanilKa + 443]

Qatar is a lowest cost LNG producer because they have fantastic North Field (9-5/8" production tubing, for those in a know) and unlike Australia - able to deliver LNG trains on time and on (much smaller) budget. China may take large part of the glut (LNG imports grew last  year by crazy margin) in an effort to move away from dirty local coal - provided they still have economy going (markets in tailspin; correction in banking sector has to happen). Deloitte - Qatar vs Oz.pdf

@Jan van Eck, check attached so you have better feel for cost of transportation

[Jan van Eck + 7,558]

18 minutes ago, DanilKa said:

 

, check attached so you have better feel for cost of transportation

The table seems to suggest that the actual transport cost segment is about 50 cents per MMBtu.  There are figures in there for liquefaction and regasification but those are going to be much the same wherever you are.  Meanwhile I was under the impression that Russian gas landed in Ukraine was selling at around $14.  Looks like there is a lot of room in there for all the players.  Personally I suspect that Ukraine has a deep vested interest in getting into bed with the USA, as they are going to need American help in pushing the Russians out of Donbas, and then there is that huge issue of Crimea.  Would Ukraine pay more for American gas instead of Qatari gas?  I would think so.  Geopolitics is going to play bigger roles in gas and oil, as these conflicts continue.  And that is before you get to China and the South China Sea, which is another big nut to crack. 

[DanilKa + 443]

1 hour ago, Jan van Eck said:

The table seems to suggest that the actual transport cost segment is about 50 cents per MMBtu.  There are figures in there for liquefaction and regasification but those are going to be much the same wherever you are.  Meanwhile I was under the impression that Russian gas landed in Ukraine was selling at around $14.  Looks like there is a lot of room in there for all the players.  Personally I suspect that Ukraine has a deep vested interest in getting into bed with the USA, as they are going to need American help in pushing the Russians out of Donbas, and then there is that huge issue of Crimea.  Would Ukraine pay more for American gas instead of Qatari gas?  I would think so.  Geopolitics is going to play bigger roles in gas and oil, as these conflicts continue.  And that is before you get to China and the South China Sea, which is another big nut to crack. 

Indeed, massive supply of cheap LNG may change the market dynamics. However, it would have to compete with piped Russian/Turkmenian gas which does not have to go through LNG hassles. Prices may fall. Vibrant LNG market may be forming and I'm expecting pricing there to disconnect from price of oil. Sustainability of US gas supply (shale-based mostly) and growing internal demand may put a lid on many LNG projects.

Crimea is likely gone. Russia may have to give some concessions and pay the price for it. As much as Ukraine may like to be in a bed with US, it may not like being badly screwed - Poroshenko and Co demonstrated they can find common grounds w/ Russia when it comes to business interests. Agree on China, US not have time of the day for Ukraine or Trump may use it as negotiating bargain.

[Jan van Eck + 7,558]

5 hours ago, DanilKa said:

Indeed, massive supply of cheap LNG may change the market dynamics. However, it would have to compete with piped Russian/Turkmenian gas which does not have to go through LNG hassles. Prices may fall. Vibrant LNG market may be forming and I'm expecting pricing there to disconnect from price of oil. Sustainability of US gas supply (shale-based mostly) and growing internal demand may put a lid on many LNG projects.

Crimea is likely gone. Russia may have to give some concessions and pay the price for it. As much as Ukraine may like to be in a bed with US, it may not like being badly screwed - Poroshenko and Co demonstrated they can find common grounds w/ Russia when it comes to business interests. Agree on China, US not have time of the day for Ukraine or Trump may use it as negotiating bargain.

It certainly would look like Crimea is gone and not coming back any time soon.  That, however, does not mean that the Ukrainian people want to have anything to do with Putin and Russia.  There is a segment in Ukraine that would like to dismantle all ties to Russia, including removing bridge spans NE of Kharkiv at the Border, to prevent Russia from sending trains through Ukraine, also the road crossings, simply physically cut them by digging them up with a deep trench, and concrete walls.  Those people have had quite enough of "slavic brotherhood."  Will it happen with Poroshenko?  Probably not.  But nationalism is very much on the rise in Ukraine, and Poroshenko will likely be replaced. The people do not want to send their money to Russia, and they don't care if they pay more for US or Qatari gas, it is not Russian gas. 

Meanwhile, Putin cannot walk out of Crimea the way Gorbachev left Afghanistan.  There is that famous picture of General Gromov being the last man walking across the bridge on their Border behind his column of BTR-80 8-wheeled armored personnel carriers.  That is and was far too painful a moment for someone like Putin to have to live through in Crimea, so he will (irrationally) continue to hold on, and the US and NATO will continue to keep Russia and prominent Russians under heavy sanctions.  There is one window:  it would appear that the Russian FSB has a "sex tape" ofThe  Donald in bed with some prostitutes in Prague, somebody secretly filmed him, an episode so upsetting to Melania that she does not sleep in the same bedroom in the White House.  Te FSB is using that as a bargaining chip in their dealings with the USA, and I suspect that the tape is real and the threat to release it is real.  So in effect that prevents Donald from having Ukraine join NATO and also from the US supporting a military blockade of Crimea.  But, once Donald is out of office, the next man will take a different approach. 

And once again, politics is inexorably intertwined with oil and gas production and sales. 

[NickW + 2,714]

12 hours ago, Jan van Eck said:

I think you will find that the Ukraine will take all of it, in order to cut itself off permanently from Russia, and Ukraine will build (or somebody will build) either a floating or a fixed re-gasification plant in or near the Port of Odessa, with connections into the trans-Europe line up to Poland and ultimately Germany.  What remains to be seen is if Germany continues in the folly of NordStream II, locking itself in perpetually to Russia as both the supplier and the controller of much of Germany  (and with cost control passing also to Russia's GazProm).  

I also predict the competitors for gas supply to both Ukraine and Poland will be Gas from Louisiana.  There is a lot of new LNG shipping capacity set to hit the water over the next 18 months.  What is needed now is more LNG liquefaction and regasification installations.  Qatar is not going to be a price dictator, not with the others coming on stream. It will be interesting. 

Unless the rules have changed there might be a slight problem in that LNG Tankers have very restricted passage through the Bosphorus - Turkey calling the shots and they are quite pally with Russia now. 

[Jan van Eck + 7,558]

15 minutes ago, NickW said:

Unless the rules have changed there might be a slight problem in that LNG Tankers have very restricted passage through the Bosphorus - Turkey calling the shots and they are quite pally with Russia now. 

That is interesting, Nick.  I had not heard that LNG tankers were restricted as to the Bosphorus.  I do know that there is this Naval Treaty that forbids aircraft carriers and battleships of over 15,000 tons from passing at all, and there is some other rule that only one warship of one naval power may be in the Bosphorus at a time  (so Russia perpetually keeps some warship in the passage to prevent anyone else from going through), but did not hear that there was an expansion to commercial neutral carriers.  Yet the Bosphorus passage is controlled by that Treaty, not Turkey itself, as it is an international waterway.  All that flows from the defeat of Turkey in WWI.  (How that was altered by WWII is unclear to me). 

[NickW + 2,714]

1 hour ago, Jan van Eck said:

That is interesting, Nick.  I had not heard that LNG tankers were restricted as to the Bosphorus.  I do know that there is this Naval Treaty that forbids aircraft carriers and battleships of over 15,000 tons from passing at all, and there is some other rule that only one warship of one naval power may be in the Bosphorus at a time  (so Russia perpetually keeps some warship in the passage to prevent anyone else from going through), but did not hear that there was an expansion to commercial neutral carriers.  Yet the Bosphorus passage is controlled by that Treaty, not Turkey itself, as it is an international waterway.  All that flows from the defeat of Turkey in WWI.  (How that was altered by WWII is unclear to me). 

I know its under a treaty but clearly they have some level of control - not unreasonably given the fact it passes through one of their major cities. 

https://en.interfax.com.ua/news/economic/430531.html

http://tass.com/economy/784061

https://www.reuters.com/article/ukraine-turkey-lng-idUSL5N0B65Y320130206?feedType=RSS&feedName=rbssEnergyNews

http://www.bosphorusstrait.com/the-bosporus-strait/passage-restrictions/