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News in Brief

04 May 2012 13:10:41 | glm

Okinawa Electric receives its first LNG cargo

Japanese utility Okinawa Electric Power Company has received its first LNG shipment ahead of the commercial start-up of its first gas-fired power plant, the company said on Wednesday.

Okinawa took a 65,000 tonne cargo on 1 May, sourced from the North West Shelf (NWS) project in Australia and delivered to its Yoshinoura terminal on the southern Japanese island, the company said in a statement.

The cargo was delivered by Osaka Gas on the LNG Dream as part of a long-term sales and purchase (SPA) agreement for 400,000 tonnes per annum (tpa), which was signed in February 2011.

Under the agreement, Osaka will initially supply LNG from its existing portfolio on an ex-ship basis (DES), including the NWS plant, where it lifts 1m tonnes per annum (mtpa).

It has also indicated that it would later use its supply from the Gorgon LNG project in western Australia once the 15mtpa plant is operational.

Osaka Gas has a 1.25% stake in the project, giving it the right to market 187,500tpa. The Japanese company also has a long-term sales agreement with project operator Chevron for a further 1.375mtpa.

The Japanese utility is expected to start operations at its 251MW No 1 unit at Yoshinoura plant in November, followed by the 251 MW No 2 unit in May 2013. (ICIS)

EU Commission warns Milford Haven terminals

The European Commission has issued a formal notice to Britain over failing to comply with EU safety rules at the South Hook and Dragon LNG terminals in Milford Haven, a commission spokesman confirmed on Monday.

The UK government has been sent a formal warning outlining the infringements made at the LNG terminal, offering a two-month deadline for reply.

"They didn't properly review the impact of LNG tankers going in and out of the port," a spokesman said.

Britain was one of five EU states threatened with legal action by the Commission for failing to notify it about the implantation of market-wide electricity and natural gas legislation last week.

The warning suggests a failure to comply with the EU's Environmental Impact Assessment Directive, which requires full public disclosure of findings.

A formal warning could eventually lead to a full lawsuit taken to the European Court of Justice if a member fails to comply fully. (ICIS)

Spain increases LNG third-party access costs

Spain has increased third-party access (TPA) tariffs at its six LNG terminals by an average of 5% in order to try to stem a structural tariff deficit in the gas market.

This is the second time the tariffs have been increased this year, following the implementation of the new annual tariffs from 1 January, which added around 4% to TPA tariffs.

The charges, announced last week in Spanish state bulletin BOE, apply for both regasification and reloading operations at the terminals.

The fixed cost of carrying out an LNG unloading at Huelva, Cartagena and Sagunto is €32,885 ($43,158) - up from €31,319 - with an additional variable cost of 0.0066 euro cents/kWh, up from 0.0063 euro cents/kWh.

The fixed unloading cost from Bilbao, Barcelona and Ferrol is now €16,442 - up from €15,659, with an additional variable cost of 0.0034 euro cents/kWh, rising from 0.0032 euro cents/kWh.

The fixed cost of carrying out a reload at any of the three Spanish LNG terminals currently offering the service - Huelva, Cartagena and Ferrol - rises to €171,153/vessel, up from €163,003, and the variable cost rises to 0.1513 euro cents/kWh from 0.1441 euro cents/kWh.

A vessel carrying 900GWh would be charged a fixed cost of €171,153 and a variable cost of €1,361,700 making €1.53m per operation. This is up from €1.46m - an increase of €73,000 per transaction. (ICIS)

Gazprom explores LNG-for-transport prospects

Gazprom Germania has teamed up with Polish autobus manufacturer Solbus to start a series of test-runs of LNG-fuelled buses across a number of Polish cities, the Gazprom subsidiary said in a statement on Wednesday.

The pilot project, scheduled to be completed by end-May, will see Gazprom Germania fuel two buses from a small mobile liquefaction unit. The buses will service several cities including Torun, Gdynia, Olsztyn, Warsaw and Katowice, Gazprom said, adding that the project is supported by the local municipal transport companies.

"This pilot project aims to demonstrate the cooperation potential in LNG for transport, a new field of activity for Gazprom," Gazprom Germania said.

Polskie LNG, the operator of the Polish LNG terminal under construction on the Baltic coast at Świnoujście, is planning to include a 177,750 tonnes per annum capacity truck loading station, at the terminal to meet growing demand from the transport sector for natural gas. (ICIS)

Montoir expansion plans still under discussion

Elengy, the operator of France's Montoir terminal off the Atlantic coast, said the non-binding phase of the open season on expansion plans at the 10 billion cubic metres (Gm³)/year terminal is still underway.

"The beginning of the binding phase will depend on the market and a date has not been decided yet," said an Elengy spokesperson.

The non-binding process was expected to close in October last year, but Elengy extended the deadline into 2012.

Three expansion scenarios are under discussion, with potential customers including an already approved fast-track option to expand capacity up to 12.5Gm³/year by 2015.

Any new LNG storage and higher send-out flexibility would require additional clearance, and could only be provided from 2017, as would a larger capacity increase to 16.5 Gm³/year. (ICIS)

US senator encourages Japan on LNG exports

An Alaskan US senator met with the Japanese prime minister on Monday and discussed US LNG exports from Alaska as a viable alternative to replacing nuclear power, according to a statement by the Alaskan congresswoman.

US senator Lisa Murkowski, a Republican, called on the Japanese leader during a state dinner in Washington DC to consider LNG exports from Alaska.

The three major North Slope gas producers - US-based ConocoPhillips, US-based ExxonMobil and UK-based BP - are mulling over a scheme to monetise the basin's estimated 35 trillion cubic feet (tcf) of proven gas reserves.

The three companies, through a deal developed by the governor, have committed to release a project timeline for the state by the third quarter of 2012.

The proposal could include a pipeline option from Prudoe Bay to a third-party liquefaction terminal in Valdez, Alaska.

"An LNG line from the North Slope could deliver long-term, stable energy supplies to Japan at a reasonable price," Murkowski said. (ICIS)

Pechora forms working group with Gazprom

Russian independent Pechora LNG has partnered with Gazprom to confirm the technical and economic parameters of its planned 2.6m tonne per annum (mtpa) liquefaction project on Russia's Barents Sea coast, a company spokesman said this week.

With Gazprom owning exclusive rights to export from Russia, the move appears to be a first step towards securing the necessary permission to export.

"Options of potential cooperation" are on the agenda, according to Pechora. Pechora added that he target start-up date is 2016-2017 but a decision to use floating LNG technology would influence that schedule.

However the necessity to meet a host of other requirements before a final investment decision (FID) impacts on the project's more immediate chances of success.

Pechora has carried talks over the past two years with potential partners such as South Korean gas incumbent KOGAS and Chinese state oil and gas producer CNOOC, although these have not concluded in any firm commitments,

Pechora LNG is owned by CH Invest and Euro North Oil - two affiliates of Russian investment firm Alltech which themselves own the rights to explore and produce the feedgas to the project from the Kumzhinskoye and Korovinskoye fields in the Nenets Autonomous District.

Proved and probable estimates of the field reserves amount to 110.9bn cubic metres (3.92 trillion cubic feet). (ICIS)

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