US Begins Buying Back Oil for Strategic Petroleum Reserve
The U.S. Energy Department will begin buying back oil for the Strategic Petroleum Reserve, or SPR, the first purchase since last year’s record 180-million-barrel release from the stockpile.
The department will buy up to 3 million barrels for delivery in February, a senior official told reporters. Contracts will be awarded to energy companies by Jan. 13.
President Joe Biden announced the sale in late March 2022 to combat surging gasoline prices that boosted inflation after the February invasion of Ukraine by Russia, the world’s largest exporter of fossil fuels.
The sale shrunk levels in the SPR to about 380 million barrels, their lowest since 1984, raising concerns about energy security.
“We’ll be releasing a solicitation to purchase 3 million barrels of oil for delivery in February 2023,” the official said in late December, noting an effort to be “nimble and flexible” on buybacks.
The White House had said in October it would buy back oil for the SPR when prices at or below about $67-$72 per barrel. The average price for sales from the SPR last year was $96 per barrel, the Energy Department said.
Greece, Bulgaria, Romania, Hungary to Boost Gas Grid
Greece, Bulgaria, Romania and Hungary agreed to upgrade the interconnection and transport capacity of their gas grids, part of their long-standing efforts to diversify gas sources and boost their role in Europe’s energy supply chain.
In 2016, the four countries agreed to develop the necessary infrastructure for the realization of the so-called Vertical Gas Corridor, which will enable bidirectional gas flows from Greece to northern Europe, through Bulgaria, Romania and Hungary.
Under the memorandum of understanding signed last month on the sidelines of a LNG conference in Athens, Greece’s DESFA, Bulgaria’s Bulgartransgaz, Hungary’s FGSZ and Romania’s SNTGN Transgaz agreed to begin talks on regulatory and economic aspects of the corridor, DESFA said in a statement.
The agreement will last three years with the option to be extended by one more, it added. Others signing the agreement were ICGB, the owner of a second gas link between Greece and Bulgaria (IGB) —a key part of the Vertical Gas Corridor, which began operations this year—and Gastrade, the developer of a floating storage and regasification unit off the northern Greek port of Alexandroupolis.
Athens more than halved its imports of Russian gas in 2022, instead ramping up deliveries of LNG, mainly from the United States and Egypt, to its sole LNG facility at Revithoussa, near Athens.
Greece hopes to become a major LNG transit route for Europe and has started exporting gas to Bulgaria, which was cut off from Russian supplies last year after refusing to pay for them in rubles.
Sempra Receives US Approval to Re-Export LNG from Mexico
The U.S. Energy Department has approved permits for Sempra Energy to send U.S. natural gas via pipeline to Mexico for conversion to LNG and re-export to global markets, filings on its website showed.
The LNG will be exported from Sempra terminals Energy Costa Azul, which is being built in two phases, the first of which is expected to be completed in mid-2025—and Vista Pacifico, which has not yet begun construction.
The department allows Sempra to export an LNG equivalent of 475 Bcf/a of gas from the proposed Costa Azul facility, and 200 Bcf/a from Vista Pacifico.
Proponents of natural gas have been pressuring President Joe Biden’s administration to quickly boost export permits for the fuel after the Feb. 24 invasion of Ukraine by Russia. While the permits will do nothing this year to help Europe while it faces an energy crisis, they will add alternatives to LNG from Russia for consumers, particularly in Asia.
Sen. Ted Cruz, a Texas Republican who has been pressuring the Biden administration to approve LNG permits, had been blocking confirmation of four Biden energy department nominees. A congressional source said Cruz immediately lifted his holds on those nominees after the permits were approved.
Williams to Acquire 2,000 Miles of Pipeline from Southwest Gas
Southwest Gas Holdings said it would sell its MountainWest Pipelines to Williams Companies for $1.5 billion, including debt, as part of the natural gas utility’s plans to simplify its corporate structure.
Southwest had bought MountainWest from Dominion Energy for nearly $2 billion including debt in 2021, sparking a battle between activist investor Carl Icahn and Southwest that eventually settled with the ousting of former CEO John Hester and three board seats being awarded to Icahn-appointed directors in May 2022.
MountainWest comprises roughly 2,000 miles of interstate natural gas pipeline systems primarily located across Utah, Wyoming and Colorado, totaling approximately 8 Bcf/d of transmission capacity. Las Vegas, Nevada-based MountainWest, formerly known as Questar Pipelines, also holds 56 Bcf of total storage capacity, including the Clay Basin underground storage reservoir.
“MountainWest is complementary to our current footprint, providing us with infrastructure for natural gas deliveries across key demand markets, including into Salt Lake City,” Alan Armstrong, Williams president and CEO, said.
Southwest also reaffirmed plans to spin off its utility infrastructure services business, Centuri, as an independent company, as first announced last March.
German Pipeline Firms to ‘Make Hydrogen Happen’ in 2025
Germany’s Gascade, Ontras and Terranets agreed to convert high-pressure gas pipelines to transport low-carbon hydrogen from the Baltic Sea all the way the south of the country by 2025.
The three pipeline companies are creating a 684-mile (1,100-km) north-south hydrogen corridor as European policymakers and industry embrace hydrogen to reduce dependence on gas and meet climate goals provided it is produced using renewable energy.
The plan, dubbed “Flow – making hydrogen happen” aims to convert existing high-pressure gas pipelines with feed-in capacity of up to 20 gigawatt (GW), offering the equivalent of the power capacity of 20 nuclear plants.
Initially serving Germany, the aim is for it to be connected to the Danish island of Bornholm in 2027 and add links to Austria, the Czech Republic, Poland and France from 2030.
ConocoPhillips, QatarEnergy to Start LNG Supplies to Germany
Germany is set to receive new flows of Qatari LNG from 2026 after QatarEnergy and ConocoPhillips signed two sales and purchase agreements for its export covering at least a 15-year period.
The deal, the first of its kind to Europe from Qatar’s North Field expansion project, will provide Germany with 2 mtpa, arriving from Ras Laffan in Qatar to Germany’s northern LNG terminal of Brunsbuettel, QatarEnergy’s chief executive said.
A ConocoPhillips subsidiary will purchase the agreed quantities to be delivered to the German receiving terminal, which is currently under development.
Germany is Europe’s biggest importer of Russian gas and would need around 40 million tonnes of LNG to replace the 50 Bcm of pipeline gas it used to get from Moscow. Its gas consumption in 2021 was about 88 Bcm.
Cost of Germany’s LNG Terminals to More Than Double
The purchase and maintenance of floating LNG terminals to help Germany secure energy supplies and diversify away from Russian gas, will cost more than $3.10 billion (3 billion euros) more than planned, the economy ministry said.
Overall, the costs are estimated at about $6.95 (6.56 billion euros), the ministry said. That compares with $3.11 (2.94 billion euros) estimated in the country’s 2022 budget. The parliamentary budget committee has already approved the additional money required for the terminals.
The ministry said the floating terminals were essential for Europe’s biggest economy to compensate for a collapse in deliveries of Russian gas. In November, Germany finished construction of its first floating terminal for LNG at the North Sea port of Wilhelmshaven.
TAL OKS Pipeline Upgrade to Help Czechs Ditch Russian Crude
Owners of the Transalpine Pipeline (TAL) shipping crude from the Mediterranean to central Europe approved a plan to upgrade the link, which is key for the Czech Republic to wean itself off Russian oil, the Czech Finance Ministry said.
The Czechs, who need about 7-8 mtpa of oil, take Russian oil through the Druzhba pipeline as well as other blends through TAL, which leads from Italy to Germany and hooks up to the IKL pipeline from Germany to the Czech Republic.
But limited TAL capacity means that the country cannot replace Druzhba supplies completely for now. The Czech Republic is one of three countries that negotiated an exception from the looming EU embargo on Russian crude.
The TAL+ project will increase the speed of the oil flow in the pipeline, allowing the Czech capacity allocation to increase by 4 mtpa, the ministry said.
Putin Discussed Turkish ‘Gas Hub’ with Erdogan, Kremlin Says
Russian President Vladimir Putin discussed the idea of creating a Turkish “gas hub” with Turkish President Tayyip Erdogan during a phone call in November, the Kremlin said.
Putin first proposed creating a gas base in Turkey in October to redirect supplies from the damaged Nord Stream pipelines and export them on to the European market, an idea that Erdogan has supported.
The Kremlin said the two sides also discussed the agreed extension of the Black Sea grain deal, an agreement that Turkey helped broker to ensure the safe passage of grain exports from blockaded Ukrainian ports.
“Vladimir Putin and Recep Tayyip Erdogan emphasized the importance of a comprehensive and complete implementation of this ‘package’ agreement,” the Kremlin said.
Savannah Energy Acquires 672-Mile Chad-Cameroon Pipeline
Exxon Mobil has closed on the $407 million sale of its operations in Central Africa’s Chad and Cameroon to London-listed firm Savannah Energy Plc.
The deal will see the British firm will take over Exxon’s 40% indirect interest in the Chad-Cameroon export transportation system – a 672-mile (1,081-km) pipeline and floating storage and offloading facility offshore Cameroon. Savannah has operations in Nigeria and Niger.
Savannah acquired Exxon’s 40% stake in the Doba oil project, which comprises seven producing oilfields with a combined output of 28,000 bpd, it said in a corporate filing. The fields were producing 33,700 bpd when negotiations were disclosed last year. Exxon’s stake was previously estimated to be worth $360 million.
Local energy companies in Africa have been buying mature fields from oil producers shifting to more lucrative projects elsewhere. TotalEnergies SE exited Angola in 2022. Chevron Corp., Shell Plc and Exxon have retreated from Nigeria.
Loan Helps Secure Gas Supply for Germany’s SEFE
Commodities trading firm Trafigura said it has entered a $3 billion four-year loan to supply gas to German gas trader Sefe, formerly known as Gazprom Germania, and help Europe’s largest economy secure volumes long-term.
The deal comes as Germany is struggling to replace Russian gas volumes, formerly its biggest source but supply of which was fully stopped in August, with alternatives.
The loan is jointly arranged and underwritten by Deutsche Bank and another international bank. Over 25 banks participated in the syndication. It is partly secured by a guarantee under the Untied Financial Loan program of the German government acting through the German Export Credit Agency Euler Hermes AG, a division of Allianz.
Trafigura said it would mainly use existing quantities from its global gas and LNG portfolio to cover supplies to Sefe.
Delfin Gets More Time to Build US GOM LNG Export Plant
U.S. energy regulators have extended until September 2023 the amount of time Delfin LNG has to put the onshore part of its proposed Gulf of Mexico floating export project into service.
The U.S. Federal Energy Regulatory Commission (FERC) said in its order that Delfin sought the extension in July for the facility under development off the Louisiana coast.
Delfin is one of several North American LNG export developers that delayed construction in recent years in part because coronavirus demand destruction made customers unwilling to sign long-term deals needed to finance the multibillion-dollar facilities.
There are about a dozen companies hoping to make final investment decisions (FIDs) over the next year to build their plants in the United States, Canada or Mexico. Many of those projects, like Delfin, have been delayed for years.
FERC first authorized Delfin in 2017 to put its project into service by September 2019. Since then, FERC has granted several one-year extensions to complete the project. P&GJ