Let down by UAE firm, Pakistan seeks two LNG cargoes

[AsifIjaz]

LNG market is expected to get interesting by late 2021 to early / mid 2022. Some limited LNG production is coming online or being repaired in Australia, Egypt has re-entered the market after a gap of months and SOCAR has started sending piped gas to EU with Italy set to receive more than 5 bcm. How the piped gas affects the EU's LNG demand in general and specifically that of Italy, Greece and Bulgaria etc in particular would be interesting.

The higher demands expected post covid followed by newer LNG and FSRU terminals coming online, Pakistan needs to secure its short term (3 - 5 years) LNG supplies the moment it sees a brief dip in the LNG rates like there was early to mid 2020. Miss the train and we will be tied to above 11-13% price rate for half a decade.

 

[AZADPAKISTAN2009]

Various countries of world have , Land Gas lines example Canada-USA have a large gas/oil line agreement
the second was recently halted

1970 Pakistan wants gas with Iran , Afghan war starts
1980 Pakistan wants gas with Iran , Iran -Iraq war starts
1990 Pakistan wants gas with Iran , Iraq war starts
2000 Pakistan wants gas with Iran , WOT starts
2010 Pakistan wants gas with Iran , War in Syria-Iraq starts
2020 Pakistan wants gas with Iran


During this time most of the world minus few Arab countries and USA are not trading with Iran rest of world is getting cheaper priced goods



Cost in bringing gas from Ship

a) You have to pay cost of the shipping company Transport
b) You have to deal with global politics of who to buy
c) You may get your delivery late
d) Various middle man companies take their cut


Benefit of Dealing with Iran

a) Dependable Large supply enters country , people stop burning trees for fuel
b) The price of steady Gas can be negotiated

 

[niaz]

A window on the near to medium term LNG market:

Quote

S&P Global Platts Analytics expects global LNG demand to grow by 2% in 2020 to around 362 million mt, despite the pandemic, and by another 3% in 2021. This is slower than the 11% market growth in 2019 and double digit percentage growth of previous years, as China-led Asian demand growth offsets a decline in Europe.

Global liquefaction capacity will grow by 14.5 million mt in 2021, compared with the export capacity growth of 27.8 million mt in 2020, with the commissioning of Corpus Christi Train 3 in the US, the restart of Egypt's Damietta Train 1, Shell's Prelude FLNG and Petronas' second FLNG, according to Platts Analytics.

"2021 is likely to feature a higher overall gas price complex than 2020, but there is also expected to be significant downward pressure on JKM compared to current levels as we exit the winter," Jeff Moore, head of Asian LNG at Platts Analytics, said.

In 2020, the Asian LNG market emerged from a mild winter with an overhang of gas inventories, but for 2021 North Asia is already reeling from multiple cold waves and gas shortages that will leave the market much tighter.

"There could be an uptick in contract signings in 2021 as end-users get a better handle on their demand profiles and supply needs in a post-COVID world, but the interesting thing to watch will be whether buyers opt to re-sign existing contracts or if we start to see uncontracted capacity for new liquefaction projects get some traction in the market," Moore said.

He said the current market volatility will also likely weigh on end-users' minds in terms of contracting, as the advantage is slowly shifting back into the sellers' courts.

In Asia, the liquefaction projects most likely to get sanctioned in 2021 are the Barossa back-fill project for Darwin LNG, and potentially new regasification projects in Australia, Vietnam, Pakistan or the Philippines, Moore said.

Meanwhile, Citigroup's base case forecast Henry Hub price is $3.30/MMBtu in 2021, TTF at $4.80/MMBtu in 2021, and JKM at $5.50/MMBtu.

It expects the TTF-Henry Hub and JKM-Henry Hub price spreads to narrow in 2021, particularly in the summer as the global LNG supply-demand balance implies a slight oversupply. This will have implications for interregional LNG arbitrage.

Unquote.

https://www.spglobal.com/platts/en/...iner-lng-shipping-all-time-highs-2021-freight

P.S. For those unfamiliar with the LNG market; TFF is the Dutch Title Transfer Facility (Pricing reference point for Europe) & JKM is the Japan Korea Marker, relevant to the Far Eastern markets. These are used similar to the Henry Hub delivery point for the US Gas Future Contract.

 

[Communism]

If you are not going to do the obvious thing of having a cng pipeline from Iran, then are you looking at a cng pipeline from saudi/oman/uae?

LNG is always inferior to CNG in cost, as you are paying exorbitant amounts to cryogenically liquify the CNG into LNG.

LNG is a sucker's game, as one can tell when one compares the spot CNG prices in the U.S. with LNG prices in Asia.

Natural gas also has zero carbon benefit compared to Ultra Super Critical Coal at ~44% efficiency compared to natural gas turbine and natural gas peaker turbine at ~40% efficiency.

The only benefit of natural gas over coal is in less smog, lower price (but only for pipelined cng), and when using combined cycle natural gas turbines at ~60% efficiency (which cannot be used as peakers due to the combined cycle nature of the gas turbines, aka you cannot use them for peakers to combine with solar or wind efficiently).

Add to that the fact that the smog benefit only makes sense in rich countries if one calculates by 10 million USD per statistical American life in lifetime GDP.

People in poor countries are worth significantly less, so makes far less sense to calculate the benefit for reduction of smog at the same rate as in the U.S.

 

[farok84]

If you are not going to do the obvious thing of having a cng pipeline from Iran, then are you looking at a cng pipeline from saudi/oman/uae?

Hi,
Turkmenistan's pipeline has much better prospects. It also provides Pakistan with added benefits, in long term, over Iranian option.
Pakistan should offer Turkmenistan incentives to build an Lng export terminal at Karachi and connect TAP (or TAP-I?) with Pak Stream, and help them export their gas (Lng) to markets yet unexplored for Turkmen gas. This will be mutually beneficial for both Pakistan and Turkmenistan, and will help bringing in more investments into Pakistan from Oil/ Gas rich CAS.

 

[Communism]

Hi,
Turkmenistan's pipeline has much better prospects. It also provides Pakistan with added benefits, in long term, over Iranian option.
Pakistan should offer Turkmenistan incentives to build an Lng export terminal at Karachi and connect TAP (or TAP-I?) with Pak Stream, and help them export their gas (Lng) to markets yet unexplored for Turkmen gas. This will be mutually beneficial for both Pakistan and Turkmenistan, and will help bringing in more investments into Pakistan from Oil/ Gas rich CAS.

The incentives sound good, but you are leaving out the transit fees and being held hostage by the taliban when they want free gas like Ukraine does to Russia.

A direct route like Russia to Germany (Nord Stream II) should always be the best option in reality.

 

[farok84]

The incentives sound good, but you are leaving out the transit fees and being held hostage by the taliban when they want free gas like Ukraine does to Russia.

A direct route like Russia to Germany (Nord Stream II) should always be the best option in reality.

Hi,

Transit fees will help Afghans, actually will likely be the only thing sustaining Afghan economy - Afghans can be accused of everything bad in multiverse, but being a bad business man is not one of them. It will be foolish of them to jeopardize their future economic prospects tied to this project.

Those transit fees are the actual reason for my insistence on Pak offering Turkmen an Lng Export hub. India finally opting out of TAPI (whenever this happens), will leave Pakistan (for its share of 42% or 13.86 bcm/year) to fully bear the brunt of not only transit fees paid to Afghanistan ($0.45/mmbtu or $250m/year) but also for the tariff within Pakistan (from Afghan border to Multan or Kasur). Pakistan needs to find another way of subsidizing for not only its own needs but also for the financial losses incurred to Afghanistan, and Turkmenistan, with India's exit.

Offering Turkmenistan with means to export its gas to number of starving markets (Bangladesh, Thailand, Philippines, Vietnam, Japan, Korea, Taiwan, Singapore, China and whole of Europe via term or spot lng supply) will not only effectively mitigate those issues but will also help Pakistan bringing down tariffs of Pak Stream and it's excess capacity issues.