LNG NEWS WEEKLY DATE 22nd JANUARY 2021

ARC7 LNG CARRIER DAMAGED ON NSR WINTER VOYAGE

A laden Arc7 LNG carrier has sustained damage while making a pioneering winter voyage through the Arctic waters of the Northern Sea Route (NSR). TradeWinds has learned that the central azipod on the 172,600-cbm Nikolay Yevgenov (built 2019) was damaged. The reason is not yet clear, but those following the specialised ice-breaking LNG fleet said ice is a likely cause. Ships in the Arc7 fleet are each equipped with three 15MW azipods and are able to turn and navigate stern first to cut through sea ice. They are designed to be capable of breaking 2.1-metre thick ice. Observing the vessel data closely, Eikland Energy iGIS/LNG founder Kjell Eikland noted a change in the ship’s movement to the east of Wrangel Island where variable and faster-moving ice conditions can be experienced. The Teekay LNG and China LNG Shipping Holdings-owned vessel, which is on long-term charter to Yamal Trade, did not ask for assistance and continued its voyage unaided. Early this week, Kpler data showed the ship was due to arrive in Tianjin, China, on 28 January. Teekay did not reply to a request for comment on the damage to its vessel. The Nikolay Yevgenov is one of two Arc7 LNG carriers making the first January voyages along the Arctic sea route. This route has previously been closed to these vessels from December until May or July, due to ice cover and winter conditions.

[email protected] [email protected] (Sale and Purchase) (Gas projects)

Both vessels were carrying cargoes loaded at the Novatek-led Yamal LNG project. At the weekend, they emerged into the Bering Strait after taking about 11 days to navigate through the NSR without ice-breaker assistance. The Nikolay Yevgenov was following in the channel cut by the lead Arc7 vessel, Sovcomflot (SCF Group)’s 172,600-cbm Christophe de Margerie (built 2017). A third LNG carrier, the sistership Nikolay Zubov (built 2019), also took the NSR this month returning westbound to Yamal’s Sabetta terminal in ballast on Sunday. Novatek said on Monday that these January voyages are the result of “targeted work” by the company and its partners to expand the navigational season for LNG shipments from its Arctic projects along the eastern part of the NSR. Russia is aiming to open up the NSR to year-round navigation from 2024. source : www.tradewindsnews.com

PETRONAS HOMES IN ON SHIPBUILDER FOR LNG CANADA NEWBUILDINGS Malaysian state energy giant progresses talks with two yards in . Malaysian energy company Petronas has honed its list of preferred shipbuilders to two yards for an order of up to six LNG carrier newbuildings. Industry sources tracking the project said the company is in talks with China’s Hudong-Zhonghua Shipbuilding (Group) and South Korea’s Hyundai Heavy Industries. Petronas is understood to be asking for quotations on three firm LNG carriers and a similar number of optional vessels to lift its offtake volumes from the Shell-led, $40bn LNG Canada project. TradeWinds reported in September that the energy company had started making early enquiries on the berths it might need. At the time, Petronas, which is focused on international growth, was said to be looking at 2024 delivery dates, which would appear to give the company some time before it needs to place an order. But shipbuilders — who are now looking at how to fill their 2023 newbuilding delivery slots — are also juggling the currently unclear timing on Qatargas’ huge LNG newbuilding project. The Middle East producer has reserved just over 150 berth slots at South Korea’s big-three shipbuilders and China’s Hudong-Zhonghua. Petronas has a 25% stake in the 14-million-tonne-per-annum, under-construction LNG Canada in Kitimat, British Columbia. Trader Vitol has signed up with Petronas to buy 800,000 tonnes per annum on a delivered ex-ship and free on board basis from 2024, with the main volumes coming from LNG Canada.

In 2019, Petronas shipping subsidiary MISC teamed up with Japan’s NYK Line and Mitsubishi Corp to co-own two LNG carrier newbuildings for the Shell-led LNG Canada project. However, this ongoing enquiry is, at present, said to be for Petronas’ own account. But construction work on LNG Canada has suffered delays and was hit hard by the pandemic last year, with site shutdowns due to infections. In September, the project, which consists of two 7-mtpa liquefaction trains, was described as 25% complete. This month, LNG Canada and its joint venture contractor, JGC Fluor, said the project’s builders were making a staged return to construction, following a considerable workforce reduction in December. “We remain committed to delivering first cargo by the middle of this decade,” the companies said.

[email protected] [email protected] (Sale and Purchase) (Gas projects) 1

Aside from Qatargas’ ongoing LNG newbuilding business to support its planned North Field expansion, liquefaction project­- backed LNG newbuildings could be in short supply this year. During 2020, only one final investment decision (FID) was taken on a new LNG project, when sanctioned its single train Energia Costa Azul LNG export terminal in , . Gibson Shipbrokers said that the postponement of LNG production projects taking a FID during 2020 will mean there is a corresponding delay in demand for shipping. The broker calculated that demand for more than 255 LNG vessels might be delayed by one year or more, although it acknowledged that some potential export volumes could be undertaken with existing vessels.“Assuming these vessels are constructed in a South Korean yard, the postponement of LNG carrier ordering represents a deferral of approximately $22bn for the yards,” Gibson said. source : www.tradewindsnews.com

VENICE LNG IMPORT TERMINAL GETS GREEN LIGHT Italian regulators have given the green light to start the construction and operation of an LNG import terminal in Porto Marghera in Venice. Venice LNG, a subsidiary of the Decal Spa Group, has received the authorisation degree from the Italian Ministry of Economic Development in agreement with the Ministry of Infrastructures and Transport. With a storage capacity of 32,000 m3, the Venice LNG import terminal will be a brownfield development in the South Industrial Canal of Porto Marghera. Venice LNG called the regulatory green light a “step forward in the fuel infrastructure for road and marine transport.”Financing for the project comes from a private investment of over €100M (US$121M) by Decal Spa Group, with an additional €18.5M (US$22.3M) through the North Adriatic Sea Authority and co-financed by the European Commission under the CEF (Connecting Europe Facility) initiative through the “Gainn4SEA” and “Venice LNG Facility” projects. LNG will be transported to the Venice LNG import terminal via small- and medium-sized LNG carriers, with a maximum capacity of 30,000 m3, and will be distributed on tank trucks, ISO-tanks and LNG bunker . Venice LNG anticipates that annually, no more than 50 LNG carriers – about one per week – will call at the facility. Venice LNG president and chief executive Gian Luigi Triboldi noted the project went through a long technical-administrative path, involving many national and local authorities and stakeholders. “Now, we are ready to give our contribution to promote the use of LNG, which plays a key role in the energy transition process,” said Mr Triboldi.Venice LNG expects to handle 150,000 m3 of LNG per year in its first phase, with a maxium output of 900,000 m3. Construction is expected to take two years. source : www.rivieramm.com

JAPAN'S LNG IMPORTS UP 13% IN DEC Japan’s LNG imports in December came in at 7.72mn metric tons, up 13.4% yr/yr, according to the provisional data released by the country’s finance ministry on January 21. Month on month the rise was even bigger, at 28.5%. During the 2020 calendar year, Japan imported 74.46mn mt of LNG, down 3.7% yr/yr. Despite the decline, Japan remains the world's biggest LNG importer.source : www.naturalgasworld.com

[email protected] [email protected] (Sale and Purchase) (Gas projects) 2

SHELL CHARTERS SOVCOMFLOT’S X-DF PROPULSION NEWBUILD Russian shipowner Sovcomflot’s new 174,000-m3 LNG carrier SCF Timmerman has embarked upon its maiden commercial voyage under a long-term time charter agreement with Shell. The LNG carrier was underway on 18 January in the East China Sea according to AIS data from Maritime Traffic. Sovcomflot (SCF) reported the charter adds US$165M to its contract backlog. With an overall length of 299 m, beam of 46.4 m and depth of 26.5 m, the Liberia-flag vessel is named for Frans Timmerman, a 17th-century Dutch merchant who served as a shipbuilding mentor to the Russian emperor Peter the Great and played an important role in creating the Russian seaborne fleet. Built to Bureau Veritas class, SCF Timmerman is under the technical management of SCF Management Services (Dubai) Ltd. At the naming ceremony on 12 January at South Korea’s Hyundai Samho Heavy Industries, SCF president and chief executive Igor Tonkovidov noted the long-standing relationship with Shell, one of SCF’s biggest charterers. “All projects realised by the two companies over the last five years are distinguished by high levels of environmental safety and the adoption of energy-saving shipping technologies,” said Mr Tonkovidov. “By adding another vessel to our gas fleet and expanding our co-operation with Shell, we contribute to achieving our strategic goals of solidifying our position in LNG shipping and growing our portfolio of long-term, fixed income contracts, which provide SCF with stable cash flows, resistant to freight market fluctuations.” SCF Timmerman is the third vessel in a series of new-generation Atlanticmax LNG carriers ordered by SCF Group in 2018. The lead vessel of the series, SCF La Perouse, was delivered to SCF in February 2020 and is time chartered to Total. The second vessel in the series, SCF Barents, was delivered to SCF in September 2020 and is time chartered to Shell. According to SCF, the LNG carriers in the series incorporate the latest technologies in terms of safety, environmental protection and energy efficiency, with their fuel consumption substantially reduced compared to the preceding generation of vessels. Each LNG carrier is equipped with GTT’s Mark III Flex cargo containment system, WinGD’s slow-speed, Otto-cycle, dual-fuel X-DF engine, and a system that reduces nitrogen oxide emissions while the vessel sails in liquid fuel mode. Additionally, all vessels of the series are among the first globally to feature a boil-off gas partial re-liquefaction system, which significantly reduces cargo losses while on long voyages or awaiting cargo operations. source : www.rivieramm.com

ENI, VITOL OFFER LOWEST BIDS IN PAKISTANI LNG TENDER Eni and Vitol have put in the lowest bids for the supply of three LNG cargoes to Pakistan in March, state-run Pakistan LNG said in a document posted on its website on January 18. For the cargo delivery during March 9-10, Eni offered the lowest bid with a slope rate of 22.2421% of Brent oil futures. Vitol offered a slope rate of 17.8131% for a cargo that would be delivered during March 16-17, and a slope rate of 17.1917% for a cargo that would be delivered during March 22-23, Pakistan LNG said. Pakistan has two import terminals – one operated by Pakistan GasPort and one by Elengy. Both are at Port Qasim. The south Asian country recently allowed private entities to market imported gas.source : www.naturalgasworld.com

[email protected] [email protected] (Sale and Purchase) (Gas projects) 3

CUT FOR ANOTHER NOVATEK ARC7 ICE-CLASS LNG CARRIER A steel cutting ceremony has been completed at the Zvezda Shipbuilding Complex in the Russian Far East for a new Arc7 ice-class LNG to transport LNG from Novatek’s Arctic LNG 2 project. Smart LNG, a joint venture between Novatek and Sovcomflot, is the entity that ordered the new Arc7 ice-class tanker. Arctic LNG 2 and Smart LNG had previously signed charter agreements for 14 similar Arc7 LNG carriers to be built at the Zvezda Shipbuilding Complex. "The construction of the fleet of next-generation Arctic ice-class gas carriers at the Zvezda Shipbuilding Complex for Arctic LNG 2 will make it possible to localise technologies for constructing high-tonnage and high-tech vessels in Russia," said Novatek director for marine operations, shipping and logistics Evgeniy Ambrosov. “All Arc7 ice-class LNG carriers ordered by SMART LNG at Zvezda will be registered under the flag of the Russian Federation and will be fully equipped by Russian crews. To properly train the Arctic crews, it is now necessary to use the full potential of the Russian educational system, including the country’s largest maritime educational Center, Admiral Nevelskoy state maritime university in Vladivostok," Mr Ambrosov said. The new Arc7 ice-class tankers are designed to ensure year-round navigation along the Northern Sea Route, including the eastern section, and have increased icebreaking and manoeuvring characteristics as compared to existing Arctic tankers used by the Yamal LNG project, a Novatek statement said. source : www.rivieramm.com

INDIA'S LNG IMPORTS RISE 1% IN DEC India’s LNG imports in December came in at 2.78bn m3 (about 2mn metric tons), up 0.9% year/year, according to the latest data published by the Indian oil and gas ministry's Petroleum Planning and Analysis Cell (PPAC). Imports were down 3.8% month on month, however. The country imported 24.75bn m3 of LNG during the April-December period, up 0.7% from a year earlier. LNG imports in December cost some $700mn, down from $800mn in the same month last year. For the April- December period, the import bill was $5.1bn, down from $7.1bn a year earlier, the data showed. Gas production in December was 2.42bn m3, down from 2.61bn m3. Cumulative output in April through December was 21.12bn m3, down from 23.82bn m3, PPAC said. Consumption in December came to 5.13bn m3, down 3% yr/yr. source : www.naturalgasworld.com

WOODSIDE EXPANDS LNG SUPPLY AGREEMENT Woodside Energy Trading Singapore Pte Ltd (Woodside) and Uniper Global Commodities SE (Uniper) have agreed to amend the binding long-term sale and purchase agreement (SPA) announced in December 2019 to increase the supply of LNG from Woodside’s global portfolio to Uniper. The quantity of Woodside LNG to be supplied under the amended SPA has doubled. Initial supply commencing in 2021 is now for a volume of up to 1 million tpy, increasing to approximately 2 million tpy from 2026. The majority of LNG supply from 2025 is conditional upon a Final Investment Decision (FID) on the development of the Scarborough gas resource off-shore Western Australia. The 13-year term of the SPA is unchanged. Woodside and Uniper have also agreed to collaborate on potential carbon-neutral LNG, including enhanced carbon accounting, and future hydrogen opportunities. Woodside CEO Peter Coleman said the expansion of the existing SPA with Uniper demonstrated further progress towards a final investment decision on the Scarborough development. “Scarborough is a globally competitive, capital efficient

[email protected] [email protected] (Sale and Purchase) (Gas projects) 4

LNG development which supports the decarbonisation ambitions of our customers. “We expect the timing to be right for FIDs on Scarborough and Pluto Train 2 in the second half of this year. “This agreement with Uniper highlights the strong market demand we are seeing for Scarborough LNG as customers consider their energy requirements from the second half of this decade. We have now secured long-term customers for over 40% of our expected Scarborough equity production. “Woodside and Uniper share a commitment to innovatively deliver a lower-carbon future. Our agreement with Uniper strengthens our common goal of supplying affordable, clean energy to customers in Asia and beyond,” he said. Uniper CEO Andreas Schierenbeck said the agreement supported Uniper’s decarbonisation plans. “With this agreement Uniper continues its path to implement its strategy of growth in Asia, trading in cleaner fuels and decarbonisation. We are also pleased to strengthen our great relationship with Woodside with the additional volume agreed for this contract,” he said. source : www.lngindustry.com

FLEX LNG RECEIVES KOREAN-BUILT LNGC Bermuda-registered Flex LNG has taken delivery of its Flex Volunteer LNG carrier (LNGC) five weeks before it is due to starts work, it said on social media on January 20. The vessel, built by South Korea's Hyundai Samho Heavy Industries yard, was due to join Flex LNG's fleet at the end of February. But Flex LNG opted to bring forward the delivery date because of strong market conditions. The company is looking to capitalise on a surge in LNG demand in recent weeks, triggered by low temperatures and a shipping shortage that have sent day-rates rocketing. Flex Volunteer has a 174,000-m3 LNG storage capacity and is the company's third LNGC to be fitted with a low-pressure slow-speed two-stroke engine. The vessel will become Flex LNG's 12th ship on the water and the second to be delivered in 2021. Flex LNG received Flex Freedom on January 1 from South Korea's Daewoo Shipbuilding & Marine Engineering. The company is expecting one more vessel this year, Flex Vigilant, in May. source : www.naturalgasworld.com

NOVATEK LNG TANKERS MAKE JANUARY VOYAGES EAST

Despite the present freezing temperatures in European Russia, Novatek has been delivering LNG cargoes to Asia in the depths of winter and without ice-breaker support using the northern sea route (NSR), it reported January 18. The Arc7 ice-class Arctic LNG tanker Christophe de Margerie completed an independent passage eastwards January 16, having reached the Bering Strait in 11 days with an average safe speed of 9.6 knots, or a little under half the maximum. The tanker, named after the previous CEO of Novatek's LNG partner Total, was subsequently followed by the similarly-sized Nikolay Yevgenov, which is completing its own passage along the NSR. Despite the slow speed, the total time of cargo delivery by this route is 40% shorter than the traditional route through the Suez Canal, said Novatek. Simultaneously, another Arc7 ice-class LNG tanker Nikolay Zubov was making the return trip from Asia after offloading its LNG cargo and entered the westbound ice route along the NSR January 6. All three voyages took place in average ice conditions, two months after the end of the traditional navigation season in the eastern part of the Arctic, which usually ends in November. Novatek said it had been working with its partners to expand the navigational season for LNG shipments. Not using ice-breakers is a further cost and environmental benefit."Expanding the navigational period along the NSR by almost half the distance and time of LNG transport to the

[email protected] [email protected] (Sale and Purchase) (Gas projects) 5

of the Asia-Pacific region compared with the traditional route through the Suez Canal allows us to reduce our carbon footprint and decrease carbon emissions by 7,000 metric tons per round trip," said CEO Leonid Mikhelson."The government of the Russian Federation is taking all the necessary measures to create a safe and competitive transport infrastructure in the Russian Arctic, ensuring year-round navigation along the NSR, including in the eastern part of the NSR. For example, our new fleet of ice-class LNG carriers, which will be built at the Zvezda Shipyard in Russia, are designed with better ice-breaking characteristics."Arc7 winterised tankers have stronger hulls and can turn around and sail in reverse, using their sterns to break up ice up to a certain thickness. source : www.naturalgasworld.com

JAPANESE DECEMBER SPOT LNG PRICES JUMP The average price of spot LNG imports into Japan contracted in December was $8.6/mn Btu, up 34.3% year/year, the country's trade ministry (Meti) said on January 13. The price was up 26.5% month/month although since then trades have been reported in the high $20s/mn Btu. Meti prices are delivered ex ship (DES) in Japan or are converted into a DES equivalent and are simple averages, excluding LNG sold on Henry Hub or the Japan Korea Marker, a spot assessment published daily by SP Global. Meti also reported that the arrival-based spot LNG price was $6.8/mn Btu, up 1.5% yr/yr and 4.6% m/m, Meti said.The ministry gathers prices from end-consumers of spot LNG and in order to avoid double-counting, it excludes companies that mediate transactions such as trading companies. source : www.naturalgasworld.com

QP TARGETS 25% CUT IN LNG EMISSIONS Petroleum (QP) is targeting a 25% reduction in the emissions intensity of its LNG facilities by 2030 as part of its new sustainability strategy, the state-owned company said on January 13. The world's leading LNG exporter also aims to bring down emissions at its upstream facilities by at least 15% and cut flaring intensity by over 75% by the end of this decade. The baseline for these reductions is 2013. QP is also striving to eliminate routine flaring by 2030 and limit fugitive methane emissions along the gas value chain by setting a methane intensity target of 0.2% across all facilities by 2025. CEO Saad Sherida Al-Kaabi said the strategy represented a "bold commitment with clear goals and milestones that ensure we embed sustainability considerations into the way we plan and manage our entire business and operations." It will "shape our actions and the way we operate over the next decade," he said. The three pillars of the strategy are climate mitigation, operational responsibility and social and economic development, QP said. Al-Kaabi said in December that QP was aiming to capture and store some 7mn mt/yr of CO2 from its LNG facilities by 2027. The company meanwhile plans to expand its LNG production capacity from 77mn metric tons/year to 126mn mt/yr over the next decade. QP is also including environmental considerations in some of its supply contracts. In November last year it signed a 10-year deal to supply 1.8mn mt/yr of LNG to Singapore's Pavilion Energy that included criteria aimed at reducing greenhouse gas emissions. source : www.naturalgasworld.com

[email protected] [email protected] (Sale and Purchase) (Gas projects) 6

SHELL EYES ROLE IN PHILIPPINE LNG PROJECT Shell has filed a notice to proceed (NTP) with the Philippine energy department to supply a floating storage re-gasification unit (FSRU) for the Philippines LNG import project, local media reported on January 12.Energy assistant secretary Leonido Pulido III said during the senate committee energy hearing that two other companies—AG&P and Vires Energy—also filed NTPs with the department, Manila Standard reported. Pulido noted that two other companies—First Gen Corp. and Excelerate Energy— were in an advanced stage of developing LNG projects.Fgen LNG, a unit of First Gen, has selected three preferred bidders for the next stage of a tender for the charter of an FSRU for its floating LNG import terminal in the Philippines. After an initial evaluation, the company has selected BW Gas, Dynagas and Hoegh LNG, First Gen said last month. source : www.naturalgasworld.com

ROBUST US LNG EXPORT ACTIVITY MODERATES TEMPORARILY AMID GULF COAST FOG Fog continued to limit activity at US LNG export facilities in Texas and Louisiana Jan. 22. The weather conditions were expected to persist for a short period, according to notices to shippers. Feedgas deliveries to US LNG export facilities have been robust in recent months amid a huge rally in the S&P Global Platts JKM spot price, from an all-time low of $1.825/MMBtu April 28, 2020 to an all-time high of $32.50/MMBtu Jan. 13. JKM spot prices have declined considerably since the prompt delivery period recently rolled to March, indicating that the winter supply crunch has begun to taper. Spot LNG prices still remain heavily backwardated to the derivatives, suggesting late-winter storage restocking is still twice as expensive as last winter and could diminish buying activity over the coming months. JKM for March was assessed at $8.875/MMBtu Jan. 22.

In Texas, the channel serving Cheniere Energy's Corpus Christi Liquefaction terminal closed late Jan. 21 due to fog, according to a notice to shippers. Along the channel serving Cheniere's Sabine Pass terminal in Louisiana, pilot service was suspended late Jan. 21, according to a separate shipper notice. The Sabine notice advised that there was a high probability of fog through Jan. 23 and a moderate chance of fog through Jan. 27. While gas deliveries to Corpus Christi Liquefaction were stable Jan. 22 compared with a week earlier, they were down more than 800 MMcf/d at Sabine Pass compared with a week earlier, Platts Analytics data show. A Cheniere spokesman cited the fog. Flows to Freeport LNG, south of Houston, totaled about 818 MMcf/d Jan. 12, less than half of what deliveries were a week earlier. A spokeswoman for Freeport LNG said the flow variability at the terminal reflects its scheduled lifting program and not any other factor. One tanker was moored at Sabine Pass Jan. 22, while three unladen tankers were positioned in the Gulf of Mexico not far from the US coast, cFlow, Platts trade flow software, showed . No tankers were at the Corpus Christi terminal Jan. 22. One has recently departed, and another was positioned in the Gulf of Mexico not far from the channel that serves the terminal. One tanker was moored at Freeport LNG Jan. 22, while another was positioned outside the channel that serves the terminal, cFlow showed. Source : www.sgpglobal.com

[email protected] [email protected] (Sale and Purchase) (Gas projects) 7

PANAMA CANAL CONSTRAINTS PERSIST FOR LNG TANKERS ARRIVING WITHOUT A RESERVATION LNG tankers passing through the Panama Canal without a reservation faced average wait times of more than a week Jan. 22, continuing the constraints that began in earnest in October. The passageway is the shortest tanker route from the US Gulf Coast to Asia, the world's biggest import market for LNG. Panama Canal Authority officials originally blamed fog, higher-than- average arrivals and additional safety procedures to prevent further spread of the coronavirus. More recently, they cited the combination of global economic recovery and peak LNG season. The ongoing constraints come at a time when US LNG export activity remains strong. LNG vessels that arrive with reservations transit the Canal promptly. For those without reservations, the average wait time as of Jan. 22 was 11 days for vessels headed northbound to the Atlantic and 10 days for vessels headed southbound to the Pacific, the Panama Canal Authority said in an email responding to questions. That compares with average wait times during the same week a month earlier of four days for LNG vessels headed northbound and 13 days for vessels headed southbound.

As of Jan. 21, three non-booked LNG vessels were waiting for transit, along with four booked LNG vessels that arrived early and were expected to transit on their reserved date, the Canal Authority said. "Wait times continue to change on a daily basis," the Canal Authority said. Robust spot prices for LNG deliveries to Asia have incentivized a pickup in US exports, which have been bolstered by an increase in new export capacity. However, the persistent extended wait times for vessels without reservations at the Panama Canal have also forced many US LNG cargoes to sail eastward, avoiding the Canal altogether and adding a considerable cost to the overall voyage, S&P Global Platts Analytics data showed. Source : www.sgpglobal.com

[email protected] [email protected] (Sale and Purchase) (Gas projects) 8

USING FLNGS TO ‘FAST-TRACK’ THE MONETISATION OF GAS RESOURCES Easier to finance and more flexible than traditional onshore liquefaction infrastructure, FLNG technology can ‘fast-track’ the monetisation of gas resources. One of the key advantages of utilising floating LNG (FLNG) technology over permanent shoreside infrastructure to produce LNG for export is its ability to ‘fast-track’ a project, quickly monetising associated gas resources. Speaking at Riviera Maritime Media’s LNG Ship/Shore Interface Conference in November, Exmar managing director for infrastructure Jonathan Raes emphasised that point, noting that deployment of an FLNG solution could take as little as six months, from customer contract to commercial acceptance, if all the right conditions are in place. While a newbuild FLNG solution could be available in slightly more than three years, Mr Raes said using an existing FLNG vessel, such as its - based Tango FLNG, that is commercially available could result in rapid commercial development. “This could be deployed in a timeframe of less than six months, if the gas specification, and the relative mooring infrastructure – a jetty – is already in place,” he said. Another advantage of FLNG technology is that it mitigates risk because it is built by a skilled workforce in a shipyard or fabrication facility. By contrast he pointed out: “A greenfield development can imply a certain risk, as we have seen with liquefaction projects around the world.” Mr Raes said FLNG technology is ideally tailored around smaller, so-called ‘stranded’ gas reserves. “You don’t need to necessarily have these mega-gas reserves to monetise the facility. You can really unlock the smaller gas pockets.” The technology also lends itself as a transitional solution he said: “You don’t need to have necessarily a term of 20 years to unlock the gas.” In his presentation, Mr Raes made note of the key technical and economic factors when considering the development and commercial viability of a new liquefaction project. One of the most important of these is the availability of cost competitive gas, he said. “Due to its limited footprint and redeployment possibilities, Exmar’s FLNG vessel can unlock smaller gas; this allows investors to monetise cheap gas from stranded fields and associated gas (flaring). A second consideration involves the composition of the . All natural gas is not created equal. While the largest component of natural gas is methane, other components include heavier liquids that are commonly referred to as natural gas liquids (NGLs). NGLs include ethane, propane, butanes, and natural gasoline (condensate). These heavier hydrocarbon liquids are removed from the natural gas stream. Gas processing, either pre-treatment or dehydration, adds cost and complexity to the project. Mr Raes said if the gas composition is not properly balanced it could have an impact on the viability of an FLNG project. A third consideration is the availability of infrastructure. This starts with location; an FLNG project should be cited close to an existing natural gas pipeline infrastructure, he said. He cautioned that a developer should “avoid having to build hundreds of kilometres of new pipelines – which adds additional cost to the project, jeopardising its potential viability.” Mooring infrastructure and suitable metocean conditions – wind, wave and climate – must also be factored into a project. He noted the need to build a breakwater, for example, or a new jetty or special mooring solution, could drive up the cost of development significantly.

[email protected] [email protected] (Sale and Purchase) (Gas projects) 9

FLNG vessel experience Selecting the right FLNG technology is critical, noted Mr Raes. He said past projects had reached production costs more than US$2,000 per tonne of LNG produce because of significant cost overruns. With its barge-based Tango FLNG vessel, Exmar was able to achieve production costs of US$500 per tonne when it was deployed to Argentina in 2019, making it very cost competitive, he said. Using feed gas from Argentina’s Vaca Muerta shale gas field, Tango FLNG operated for a year and a half in the country, producing LNG cargoes for export. With a length overall of 144 m, beam of 32 m, draught of 5.4 m and a storage capacity of 16,100 m3, Tango FLNG can produce approximately 0.5 mta of LNG. The first FLNG vessel in the Americas and the first barge-based unit of its kind, Tango FLNG made use of space-efficient Black & Veatch Prico single- mixed refrigerant technology. Mr Raes said it was deployed in Argentina, Tango FLNG produced LNG which would gradually load cargo via ship-to-ship transfer to a conventional LNG carrier moored alongside. The LNG carrier would gradually be filled up over a 35-day period. Once filled, the cargo would be sold on the international market. The Tango FLNG vessel is fully self-sufficient, with its own diesel-electric power generation, said Mr Raes: “Basically, you need the gas connection pipeline, gas hose unloading arm and you are ready to liquefy – depending, of course, on the gas specification.” He continued: “In Argentina, we had our first meeting with the customer in August 2018. Three months later, we signed a long-term contract. About six months later, we had produced the first LNG, and the facility was commercially accepted in early June 2019. Since then, we produced five cargo successfully from shale gas, which was sold into the international energy markets.” Originally, Tango FLNG was expected to operate for 10 years in Argentina, producing LNG under a long-term charter agreement between Exmar and YPF. The Argentina oil and gas company estimated it would produce annual revenues of US$200M from LNG exports.This never materialised because of the energy demand destruction caused by the coronavirus pandemic. This led YPF in June 2020 to declare force majeure on the charter. In October 2020, it reached a settlement to pay US$150M to Exmar for the cancelled contract. While it was in operation, Tango FLNG “performed fully above our expectations,” said Mr Raes. “FLNG has a very strong value proposition. We can now deploy this facility and unlock new gas reserves around the world on a very fast-track basis,” he said. “When it comes to newbuild FLNG solutions, the first LNG can be achieved slightly longer than three years, with a very cost competitive solution.“In the meantime, the technologies are fully proven [and] mature. We will continuously integrate the learning curve from existing projects into new developments. It is important to consider when implementing FLNG technology that the project needs to be competitive with cyclical LNG markets” he concluded. source : www.rivieramm.com

DISCLAIMER: The news, opinions, reports, updates and data or views contained on the Reports page may not represent the opinions or views of CYGNUS ENERGY, ITS OWNERS, ITS employees or its agents or affiliates. CYGNUS ENERGY makes no representation, warranty or guarantee as to the accuracy or completeness of the information contained in any News, Research, Analysis or Opinion provided by this service. the information has been taken and credited and cited to the sources as per the citation given in the report/newsletter herein. Under no circumstances will CYGNUS

ENERGY, its owners, employees, gents or affiliates be held liable by any person or entity or institution or company for decisions made or actions taken by any person or entity that relies upon the information provided here. While every care has been taken to ensure that the information in this publication is accurate, CYGNUS ENERGY, can accept no responsibility for any errors or omissions or any consequences arising therefrom. Figures are based on latest available information, which is subject to subsequent revision and correction. The views expressed are those of CYGNUS ENERGY and do not necessarily reflect the views of any other associated company. NEWS AND SOURCE: LNGWORLDNEWS, LNG INDUSTRY, THE HINDU BUSINESS, ARGUS MEDIA, PETROWATCH, REUTERS, IGU LNG REPORT 2018, TRADEWINDS, MONEYCONTROL CYGNUS ENERGY Gas & OIL 118 Connaught Rd W, Sai Ying Pun, Hong Kong [email protected] (SALE N PURCHASE) [email protected] (GAS PROJECTS)

[email protected] [email protected] (Sale and Purchase) (Gas projects) 10