PAN OCEAN BEING LINED up to SUPPLY LNG NEWBUILD to PORTUGAL’S GALP South Korean Owner Is in Talks with Utility to Build Vessel at Samsung Heavy Industries

LNG News Weekly Date 13th NOVEMBER 2020

PAN OCEAN BEING LINED UP TO SUPPLY LNG NEWBUILD TO PORTUGAL’S GALP South Korean owner is in talks with utility to build vessel at Samsung Heavy Industries. Pan Ocean is being tipped as the preferred shipowner to scoop a •single LNG carrier newbuilding tendered for by Portuguese utility Galp Energia. Those following the business told TradeWinds that Pan Ocean is in discussions with Galp over a newbuilding at Samsung Heavy Industries in South Korea. They said Celsius Shipping and Minerva Marine had also been competing for the business but talks now appear to be moving •forward with Pan Ocean. Greek owners Capital Gas and Tsakos Energy Navigation were also mentioned as earlier contenders for the work. Observers in South Korea said Pan Ocean has been working hard to extend its LNG shipping •interests. There is market talk that the South Korean owner is in discussions with an energy major on LNG •carrier tonnage. Pan Ocean broke into the sector in 2005, taking delivery of its first vessel — the 153,000-cbm LNG Kolt (built 2008) — which is chartered on a long-term basis to domestic gas buyer Kogas.

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

The company has said it is aiming to expand its gas carrier service to the domestic and international markets. This will include “participating in more LNG transportation projects and expanding the fleet”. Pan Ocean has also said it plans to break into the LNG bunkering and small-scale vessel segments and other gas carrier services as part of these growth efforts. Galp has been working to secure an LNG carrier newbuilding for more than a year. It asked owners for initial expressions of interest in October 2019 and issued a tender for the work at the start of this year. It asked for a vessel that it can use for three voyages in the first half of 2022 before taking it on full-time for the rest of the year. However, it is unclear whether these preferred delivery options have slipped as the tender process dragged on longer than expected. Galp is understood to have been flooded with at least 20 offers from the likes of Celsius, •Minerva and Capital, which have uncommitted LNG carrier newbuildings ordered on speculation. The Covid-19 pandemic and the lockdowns across Europe has slowed progress on the business. But in August, it was reported that the utility was nearing its selected partner for a vessel. Galp needs at least one ship to transport the volumes it has signed up to buy from Venture Global LNG’s under-construction, 10.8 million tonnes per annum •Calcasieu Pass LNG facility in •Louisiana on the US Gulf coast. The utility has contracted to take 1 mtpa over a 20-year period from the plant, which is due to start operations in late 2022. source : www.tradewindsnews.com

EXMAR MOVES NEWLY OPEN TANGO FLNG TO URUGUAY Exmar has relocated its floating LNG production barge from Argentina to Uruguay. Tango FLNG, which has a capa•city of 500,000 tonnes per annum, was due to arrive under tow off Nueva Palmira on 10 November. The Belgium gas shipowner and infrastructure provider said in its third-quarter results last month that the midsize floater was being prepared for demobilisation. Officials said Exmar is “working hard on remarketing the unit”, describing its previous operations under charter to Argentina’s YPF as “flawless”. “It is the only gas monetisation solution that can be made available on a very short-term basis,” one official said. The innovative barge-based floater — the smallest of the four operable FLNG units to date worldwide — was ordered in 2012 in China. In 2018, Exmar signed a 10-year charter with YPF on the floater based on a tolling agreement relating to LNG production. Tango FLNG was shipped on a heavylift vessel to a quayside location in Bahia Blanca, near Buenos Aires, in February 2019 and began operations three months later. It produced six cargoes from natural gas piped 750 km onshore from the Vaca Muerta shale gas reserves in the Neuquen Basin. But those watching the project said there were issues with upstream investment in gas and, in the interim, Argentina’s government and YPF’s management changed. In June this year, YPF declared force majeure on its charter and services agreement for Tango FLNG, citing the effects of the Covid- 19 pandemic. Exmar said it considered the notice unlawful and started arbitration. Last month, it reached a $150m settlement with YPF over the early termination of the charter on the unit. source : www.tradewindsnews.com

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

CHENIERE ENERGY HAS EYES ON SHIPPING TO TRY TO CUT CARBON LNG producer Cheniere Energy will be looking closely at its shipping operations as it moves to lower its carbon footprint. Speaking on a third-quarter results call, president and chief executive Jack Fusco said the US company is analysing its life- •cycle greenhouse gas emissions across its value chain and evaluating the areas where it has direct and •indirect control. It will be looking upstream and downstream, and collaborating with partners to pursue actionable solutions to reduce the environmental footprint of its operations. He said efforts are at an “early stage” and named LNG shipping as one of five areas in which the company is pursuing opportunities. It is also evaluating “environmentally beneficial products and services that will complement its core business, such as LNG bunkering services for the marine fuel market”. Fusco said Cheniere has received a growing number of •questions about the role of natural gas in the energy transition. He added that natural gas remains affordable and reliable, and will play an increasingly important role in the energy mix for many years to come. The focus on decarbonisation is “here to stay”, but Fusco said Cheniere’s initial focus is on pursuing near-term solutions to lower its carbon footprint. He described the July to September period as a “challenging and rewarding quarter during an unimaginable year”. Cheniere reported a 46% rise in net losses for the quarter to $463m, up from $318m in 2019. Revenue fell 33% to $1.46bn, down from $2.17bn.source: www.tradewindsnews.com

GROUNDBREAKING CONTRACT LAYS FOUNDATION FOR CARBON-NEUTRAL LNG CARGOES Singapore’s carbon-neutral ambitions for LNG supply received a major boost following the signing of a 10-year sales and purchase agreement (SPA) between wholly owned subsidiaries of Pavilion Energy and Qatar Petroleum. Under the SPA, QP Trading LLC will supply 1.8 mta of LNG to Pavilion Energy Trading & Supply Pte Ltd starting in 2023. Each LNG cargo delivered under this agreement will be accompanied by a statement of its greenhouse gas (GHG) emissions measured from well-to-discharge port. Issued by Pavilion Energy on 31 March 2020, the tender for the SPA sought a reliable and competitive long-term supply to Singapore, and a commitment from LNG suppliers to co-develop and implement a GHG quantification and reporting methodology for LNG from well-to-discharge port. Pavilion Energy expects this methodology to become standardised as a common industry framework via a statement of GHG emissions, paving the way towards more environmentally responsible and sustainable natural gas strategies. There is no fixed way as yet of providing carbon offsets, but it could involve three approaches: nature-based such as a reforestation project, community-based such as replacing coal-fired power generation with cleaner energy, or through investing in renewable energy and using those earned carbon credits to offset carbon emissions from another project. The Pavilion Energy long-term SPA follows a recent single carbon-neutral LNG cargo supplied by Total to CNOOC. “The inaugural LNG cargo Pavilion Energy imported into Singapore for downstream supply in 2018 originated from Qatar. We are delighted to enhance our strategic relationship with Qatar Petroleum, the world’s largest LNG producer,” said Pavilion Energy chairman Tan Sri Mohd Hassan Marican. “This partnership will strengthen our core Singapore market and our role as a global energy trader”.

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

Minister of State for Energy Affairs and QP president and chief executive Saad Sherida Al- Kaabi said the long-term SPA reflects QP’s “commitment to respond to the needs of our customers, including supply security, price competitiveness and flexibility.” During the signing ceremony, Pavilion Energy chief executive Frédéric H Barnaud noted that “in the context of energy transition towards a low-carbon economy, this partnership is testament to the sustainability drive of both companies and the strong willingness of Pavilion Energy to pursue decarbonisation and offset strategies.” Pavilion Energy’s tender was one of the world’s first for carbon neutral LNG supply, and groundbreaking for advancing Singapore’s ambitions. The tender sought the supply partners’ commitment to co-develop and implement a GHG quantification and reporting methodology for LNG. The methodology, which will be developed based on internationally recognised standards, should cover emissions from the well-to-discharge terminal supply chain, and include LNG transportation. source : www.rivieramm.com

KNUTSEN LNG NEWBUILD ORDER BOOSTS SAGGING SOUTH KOREAN SHIPBUILDER Norway’s Knutsen OAS Shipping has ordered two LNG carriers, each with a capacity of 174,000 m3, from Korea Shipbuilding & Offshore Engineering (KSOE), the shipbuilding arm of Hyundai Heavy Industries (HHI). The contract, which contains options for two additional vessels, is valued at about US$379M. While HHI did not specify the European shipowner that ordered the tonnage, BRL Newbuilding Weekly said the order was placed by Norway’s Knutsen OAS Shipping. BRL reported that the LNG carriers had been secured under a long-term charter with Poland. With an overall length of 299 m, beam of 46.4 m and depth of 26.5 m, the LNG carriers will be built with air lubrication systems to increase operational efficiency, reduce fuel consumption and lower greenhouse gas emissions. Propulsion for each of the vessels will be supplied by a single low-pressure, dual-fuel Otto-cycle WinGD 5X72DF main engine, rated at 21,623 kW. Deliveries of these newbuilds will start in H2 2022. A sluggish shipbuilding market has weighed heavily on South Korean shipbuilders. In its Q2 2020 results, KSOE reported a KRW0.7Bn (US$624,000) loss, following a KRW44Bn (US$3.9M) profit in Q1 2020. Operating profit in Q2 2019 was KRW59Bn (US$5.3M). Global shipbuilding orders have reached historic lows, hit by the one-two punch of a volatile oil price market and the Covid-19 pandemic. As of 31 October, South Korean shipbuilders had secured orders for 107 vessels of all types, well below the orders for 175 newbuilds this same time in 2019. Covid-19-related delays have slowed the merger of HHI and Daewoo Shipbuilding & Marine Engineering, while impacting the financial health of a large swath of smaller South Korean shipbuilders. Medium-sized South Korean shipbuilders Hanjin Heavy Industries, STX Offshore & Shipbuilding and Dae Sun Shipbuilding and Engineering are all on the sales block, reported Business Korea. A sale of STX offshore is expected to be announced shortly, while bids are being reviewed for Hanjin Heavy Industries. source : www.rivieramm.com

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

MOL CHARTERS THREE ICE-BREAKING LNG CARRIERS Mitsui OSK Lines’ (MOL) president and chief executive Junichiro Ikeda announced charter agreements for three icebreaking LNG carriers with Arctic LNG 2, the LNG production-related project of Novatek, Russia’s second largest natural gas provider The three 300-m long, 172,500-m3 capacity vessels will mainly transport LNG from an LNG loading terminal on the Gydan Peninsula in the Russian Arctic to the floating LNG storage units (FSUs) to be installed at the transhipment terminal in the Kamchatka peninsula (eastbound) and the city of Murmansk (westbound) via the Northern Sea Route. When going ahead and astern, the vessels have a maximum icebreaking capacity of 2.1-m level ice. MOL’s icebreaking LNG carriers for the Yamal project can only sail eastbound in the Northern Sea Route in summer and autumn when the ice is thin. In contrast, the new hull form is optimised for icebreaking and the propulsion output has been upgraded to provide greater icebreaking capabilities when both going ahead and astern enabling the vessels to sail the route year-round. Suppliers hope to enable more efficient year-round transportation of LNG from the Russian Arctic to areas of demand, including those in Asia by combining these icebreaking vessels with conventional LNG carriers that transport LNG from the FSUs to their final destinations. According to MOL, the eastbound transportation route will reduce the distance of the voyage by approximately 65% compared to the westbound route via the Suez Canal for Asian destinations, which will also make significant cuts to vessel emissions. The company said it will continue to “actively pursue the diversification of LNG transportation” to help meet customers’ energy demands and contribute to the further development of the Northern Sea Route. MOL has been engaged in transporting LNG using three icebreaking LNG carriers on the Northern Sea Route since March 2018 for the Yamal LNG project in Russia. The three vessels will be built by Daewoo Shipbuilding & Marine Engineering and are scheduled for delivery in 2023. source : www.rivieramm.com

FSU CONVERSION ADVANCES MYANMAR LNG-TO-POWER PROJECT Singapore-based ship manager Synergy Group reported the delivery of the floating storage unit (FSU) CNTIC VPower Energy, following its conversion at Sembawang Marine’s Admiralty Yard in Singapore. Synergy oversaw the complex conversion for owner CNTIC VPower, a joint venture of VPower Group and China National Technical Import & Export Corp. CNTIC VPower Energy was converted from LNGT Powership Anatolia, acquired from Karmol, the joint venture of Karpower and Mitsui OSK Lines. The vessel was originally built in 1992 as Northwest Seaeagle. With a capacity of 126,000 m3, the FSU will be deployed to Myanmar for an LNG-to-power project. It will be moored permanently to receive and store LNG imports for delivery on demand to an onshore regasification plant which will supply power to local consumers. Synergy will manage, maintain and operate the FSU on an ongoing basis. Synergy Group chief executive and founder Captain Rajesh Unni said the conversion demonstrated that Synergy was a “single-source technical solution provider of LNG-to-power services.” Added Captain Unni “A lot of our top quality owners already employ Synergy to manage their newbuilding orders in South Korea, Japan and China and we are currently overseeing more than 30 newbuilding vessel projects. This successful conversion shows once again that we are fully equipped to take on the most complex conversions.”

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

The project had to overcome workplace and travel restrictions due to Covid-19. Synergy administered the FSU conversion on a one-stop-shop basis, identifying the LNG carrier candidate for conversion and selecting a suitable shipyard. Synergy also managed the design, engineering, procurement and yard oversight process ahead of the FSU delivery and deployment. More than 100 tonnes of steel renewal and the cumulative addition of over 1,500 m of cryogenic pipes were used in the conversion. The FSU is designed to offload LNG to the regasification plant at rates of up to 350 m3 per hour during peak demand. The flow rate can be adjusted to as little as 150 m3 per hour during non-peak periods. Synergy newbuilding department general manager Subodh Borse noted the design includes the addition of four feed pumps in each of the cargo tanks which allows them to hold boil-off gas for longer durations. The addition of emergency release couplings and quick release hooks ensures vessels depart the terminal quickly. “We increased the tank pressure up to 0.7 bars and the design allows the FSU to simultaneously feed LNG to the regasification plant while also offloading LNG to another smaller vessel,” said Mr Borse. source : www.rivieramm.com

LNG ON THE RISE IN ROTTERDAM Nine LNG bunkering vessels now operate in the Dutch port. LNG is being used more and more in the port of Rotterdam, the port authority said on November 12, with nine LNG bunkering vessels now operating in the area. The Gas Agility bunkering vessel of France's Total began refuelling the Jacques Saade containership, owned by French cargo shipper CMA CGM, on the morning of November 12 with 18,000 m3 of LNG, the port said. The operation took 16 hours to complete. Gas Agility is the largest LNG bunkering vessel in the world, and was launched at the Hudong-Zhonghua shipyard in China in October last year. "Like CMA CGM, we support the transition from heavy fuel oil to LNG as a transport fuel for shipping," the port said, noting LNG was the cleanest fuel that is both scalable and affordable for vessels of such size. The port aspires to become a key hub for import, export, storage and bunkering of LNG, it said. Total has a ten-year deal to provide CMA CGM with 300,000 metric tons/year of LNG bunkering fuel. Jacques Saade was delivered to CMA CGM in September 2020 and is the first of nine large-sized LNG containerships ordered by the shipowner in 2017 from China State Shupbuilding Corp. source : www.naturalgasworld.com

POSCO STARTS UP KOREAN LNG IMPORT TERMINAL Posco Energy, a unit of steel major Posco, has begun operating South Korea’s first privately-owned LNG import terminal, it said on November 11 in a statement. Gwangyang LNG terminal is located in Gwangyangin in the South Jeolla province. The company acquired a licence to operate the terminal from the ministry of trade, industry and energy in September. The 1.8mn metric tons/year capacity terminal has five LNG storage tanks, with a combined capacity of 730,000 kilolitres. The company said it plans to add a sixth in the near future. Posco expects the terminal to serve the large neighbouring LNG markets of Japan and China as well. At present, state-run Kogas dominates the LNG import market in South Korea, controlling five regasification terminals. source : www.naturalgasworld.com

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

PETRONET NOT TO INVEST IN LIQUEFACTION PROJECTS India’s Petronet LNG has no plans to invest in LNG liquefaction projects as the global market is awash with LNG, the company said on November 12 during an analyst conference. It further stated that there has been no progress on finalising a preliminary deal it signed last year to invest $2.5bn in US developer Tellurian's Driftwood LNG project in Louisiana. Petronet said that return on investment at liquefaction projects was not very attractive, given the glut in global LNG supply. This indicates that the company's memorandum of understanding (MoU) with Tellurian will not result in any concrete deal. Under the MoU, signed in September 2019, Petronet was to take a 18% stake in Driftwood and purchase 5mn metric tons/year of its output. As for its proposed floating LNG import terminal in Sri Lanka, Petronet said final approvals were pending and no development work was expected before March next year. Petronet and its Japanese partners plan to invest $300mn in the project. The Sri Lanka government will have a 15% stake in the proposed joint venture through Sri Lanka Gas Terminal, while Petronet LNG will have 47.5% and Sojitz Corp and Mitsubishi, the remaining 37.5%. Petronet said it also wanted to build a new LNG import terminal on India’s east coast and also expand the capacity of its 17.5mn mt/yr Dahej terminal on the west coast. Furthermore, the company is in the final stage of evaluating bids for turnkey contracts for designing, building and commissioning LNG filling stations in India, it said, having opened a tender in March. Petronet has already signed an MoU with Gujarat Gas to establish five stations in the state of Gujarat. The company expects long-haul transport to consume 1mn mt/yr of LNG over the next three years, ramping up to 8-9mn mt/yr within a decade. Earlier this year, the Indian downstream regulator Petroleum Natural Gas Regulatory Board said that any entity could set up an LNG filling station in any geographical area, clearing up some regulatory issues. source : www.naturalgasworld.com

RUSSIA'S NOVAK SETS OUT ENERGY PRIORITIES Alexander Novak, having just stepped down as Russia's long-serving energy minister, has set out what he views as priorities for the country's energy sector. The Russian government said on November 10 that Novak had been appointed as one of the county's 10 deputy prime ministers. The reasons for the move, part of a broader government reshuffle, are unclear. However, Novak will continue to oversee energy policy in his new position and will remain Russia's representative in Opec+ talks. Novak sees the development of hard-to-recover oil reserves in Western Siberia, LNG, petrochemicals and hydrogen, as well as the monetisation of Eastern Siberian gas and gasification, as Russia's key priorities in energy, he told reporters on November 9 according to Interfax. They will also be his main focuses over the next five years as deputy PM. Russia has the potential to produce 120-140mn metric tons/yr of LNG by 2035, Novak said, giving the country a 20% share of the global market. He also wants to expand the use of LNG and compressed natural gas as a transport fuel, to lower costs and reduce emissions. The government has already introduced a number of demand- and supply-side subsidies to support the sector. Novak also called for Russia to pick up the pace of gasification. While western Russia is well-gasified, many households in Siberia and the Far East rely on LPG canisters for their heating. Power plants, except for regions with gas production, use alternative fuels such as coal, hydro and nuclear energy. The government's target is to bring gas to 83% of the population by 2030, compared with just above 70% at present. The programme will cost some rubles 1.9 trillion ($25bn) over the next decade, which is a

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

sum that state-owned Gazprom cannot bear alone without causing "a drop in federal revenues," Novatek wrote in the energy ministry's magazine on November 9. Gazprom pays half of its profit to the government and other shareholders in the form of dividends. In related news, Gazprom said on November 11 it had reached an agreement with authorities in the southern Astrakhan region on a 2021-2025 programme for gas supply and gasification. The company expects to invest some rubles 18.6bn in the region over the period, which is 3.3 times more than it spent in 2016-2020. Gazprom's work in the region will include building 363 km of inter-settlement pipelines and 302 km of branch lines with gas distribution stations, while the government will construct 604 km of inter-settlement pipelines. Astrakhan is already well-gasified, with 92% of the population having access to gas. The two sides also agreed to work together to develop a gas-based petrochemical complex to produce plastics. The complex will run on ethane from the Astrakhan gas processing plant. source : www.naturalgasworld.com

OZ LNG EXPORTS UP IN OCTOBER Australian LNG export volumes in October came to 6.7mn metric tons, up from 6.2mn mt in September and 6.6mn mt in October 2019, energy consultancy EnergyQuest said in a report published on November 12. Australian projects delivered 31 cargoes to China in October, after delivering 35 in September and 30 in October 2019. 37 deliveries were made to Japan in October, less than the 39 delivered in September but up on the 35 delivered in October 2019. Australia delivered 14 cargoes to Korea in October, up from 12 a year earlier. EnergyQuest estimates that Australian LNG export revenues increased in October to A$2.72bn, from A$1.86bn in September but fell 33% from the level in October 2019. It estimates Western Australia earned A$1.55bn in export revenues, Queensland some A$0.69bn and Darwin some A$0.48bn. “Revenues are now showing signs of the start of the bounce back in oil price which was at its lowest point for the year in June. The increase in revenue is a result of the slightly higher lagged oil price and increased export volumes. Oil prices have been on the rise since July which should lead into higher revenues over the next few months,” EnergyQuest said. EnergyQuest estimates Australia exported 64.5mn mt of LNG in the first ten months of the year, slightly up on the 63.9mn exported over the same period in 2019. Australia exported 77.5mn mt of LNG in total in 2019. EnergyQuest expects 2020 exports to be close to the same level, despite the impact of the pandemic, plant interruptions and delays at the Shell-operated Prelude terminal. source : www.naturalgasworld.com

PAKISTAN SEEKS SIX LNG CARGOES IN JAN State-owned Pakistan LNG (PLL) has invited bids for the supply of six 140,000-m3 LNG cargoes during January, according to tender documents issued by the company on November 10. According to the tender documents, PLL is seeking LNG cargoes for delivery during January 8-11, January 12-14, January 15-18, January 20-21, January 26-27 and January 29-February 1. The deadline for bids is December 10, PLL said. The cargoes will be delivered on ex-ship basis to the floating terminal operated by Pakistan GasPort at Port Qasim near Karachi “or such other LNG terminal within Pakistan as may be advised by PLL”. Pakistan has two import terminals – one operated by Pakistan GasPort and one by Elengy. Both are at Port Qasim. source : www.naturalgasworld.com

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

ADNOC INKS LNG DEALS WITH VITOL, TOTAL Adnoc has signed LNG supply agreements with global commodities trader Vitol and France's Total, the UAE state company said on November 11 in a statement. Adnoc LNG, a unit of Adnoc, has struck a six-year supply agreement with Vitol for the sale of 1.8mn metric tons/year of LNG post-2022. It also reached a two-year deal with Total for 0.75mn mt/yr of LNG in 2021 and 2022. “We are pleased to partner with both Vitol and Total on these major deals as they will create reliable, long- term benefits for our company and shareholders. Through collaboration and by adopting a partnership approach, we are driving new growth opportunities for Adnoc and are maximising the value of our nation’s resources,” Fatema Al Nuaimi, CEO of Adnoc LNG, said. Al Nuaimi said LNG supported the transition to clean energy, especially in many Asian markets where switching to gas from dirtier fuels like coal will result in significant environmental gains. source : www.naturalgasworld.com

PETRONAS LAUNCHES LNG BUNKERING Malaysia's Petronas announced on November 11 it had launched LNG bunkering at Pasir Gudang in Johor state, in partnership with the Netherlands' Titan LNG. Petronas' first LNG bunkering vessel (LBV) Avenir Advantage refuelled the Siem Aristotle vessel. Avenir Advantage has a 7,500-m3 storage capacity. "With the LBV and the strategic location of our regasification facilities in Pengerang, Johor, and Sungai Udang, Malacca, we’ve strengthened Malaysia’s position as an LNG bunkering hub that provides reliable and cost-competitive cleaner energy solutions," Petronas CEO of gas and new energy, Adnan Zainal Abidin, said in a statement. "Our LBV can also operate as an LNG carrier for delivery to small gas demand centres inaccessible by large conventional LNG vessels." Another emerging hub for LNG bunkering in the Asia-Pacific area is Singapore, where port authorities recently invited bids for two extra LNG bunkering licences. source: www.naturalgasworld.com

GERMAN LNG TERMINAL 'CONFIDENT OF SUCCESS' The Dutch-German-backed German LNG Terminal "continues to believe that the global LNG market and the German energy market offer enough potential for two LNG terminals in Germany," it told NGW in an email November 10. NGW had asked it whether it was hopeful, given Uniper's failure to tie in adequate demand for capacity for its own planned terminal. German LNG Terminal is in the final negotiations on binding booking agreements with its customers. In addition, German LNG Terminal has received a draft exemption decision from the German regulatory networks authority (BNA). "This represents a further important step and a decisive milestone on the way to a positive investment decision," it said. "After constructive discussions with BNA, German LNG Terminal has received the draft exemption decision," it said. This however still needs approval from the German anti-trust agency and the European Commission, It says the terminal "will be exempted from tariff- and network access regulation on a long term basis and applies to the total annual throughput capacity of 8bn m³/yr. This is in line with the application of German LNG Terminal and provides a stable regulatory regime to its customers.

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

This is another important step in the development of the first German LNG terminal and a critical milestone on the way to a positive investment decision." In conclusion, it said: "We are delighted with the commercial aspects of our terminal project. As already announced, we have already agreed several heads of agreements. The negotiations about binding contracts have advanced well. Further discussions with potential customers of the terminal are being progressed." It did not comment on specific companies who have been linked in capacity talks in the past. Swiss Axpo had earlier expressed interest in booking capacity including 1mn mtyr from Goldboro on Canada's east coast. But Axpo has since appointed a new head of trading and a new CEO. Uniper told NGW November 6 that it was considering other options, including a smaller terminal and a terminal geared towards hydrogen. US major ExxonMobil had been interested earlier in a significant capacity booking there and Uniper did not rule out the possibility that a deal would be done. source : www.naturalgasworld.com

GAZPROM SEEKS HIGHER GAS PRICE FROM POLAND Russia's Gazprom has requested an increase in the price it charges Poland's PGNiG for its gas, the latter said on November 9, according to Russia's Interfax news agency. The pair's long-term contract allows either party to request a revision in price terms every three years if they are not in line with market conditions. PGNiG requested a price renegotiation earlier this month. PGNiG and Gazprom's so-called Yamal contract came into force in 1996 and covers 10bn m3/year of gas. The take-or-pay clause in the contract requires PGNiG to pay for at least 8.7bn m3 of gas annually. The contract is due to expire at the end of 2022 and PGNiG has insisted it will not renew it, replacing Russian volumes with LNG and piped gas from Norway. The pair have locked horns over prices just months after Gazprom agreed to pay PGNiG $1.5bn for previously overpricing supplies, following a ruling by a Swedish arbitration court. source : www.naturalgasworld.com

LNG PRICES RISE BUT FUNDAMENTALS WEAK The current price support is not expected to last into the spring, with fundamentals suggesting an over-supplied LNG market and low prices for the next two or three years outside the peak winter period. The anticipated low prices and plentiful supply are encouraging policy makers and LNG importers to move ahead with major gas-fired projects, which should boost demand growth over coming years.Towards the end of October, Asian LNG spot prices reached their highest in more than 20 months on robust buying ahead of a colder-than-expected winter. The average LNG price for December delivery into northeast Asia was about $7.50/mn Btu on October 30 – up $1.70/mn Btu in two weeks (see chart). Prices were boosted by strong buying from Japan, China, South Korea and Taiwan, along with multiple supply outages. However, looking ahead, an anticipated full recovery in US output by December (once the hurricane season is finally over) is expected to increase cargo flows to Asia and help cap price gains for deliveries early next year.

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

Asian spot LNG prices recover from record lows Until recently, the Covid-19 had hit gas and LNG demand growth in most regions, putting downward pressure on prices through the spring and summer and hitting record lows in all three key markets – the US, Europe and northeast Asia. Gas demand in Europe fell 12bn m3 or 4% in the first nine months of the year, although there was a 6% rise in European LNG imports – owing to a rebound from weak demand in early 2019 when prices were much firmer relative to pipeline supplies. The firm LNG imports squeezed Russian supply to Europe, with Gazprom seeing its pipeline sales fall by 9% to end-September, according to the IEA on October 12. Speaking at a recent conference, Gazprom Export’s CEO, Elena Burmistrova, blamed US LNG exporters for unbalancing the market, saying that Gazprom had acted “responsibly and self-confidently” by taking a hit to its sales rather than flooding the market. But by September, the positive trend in European LNG imports had reversed. The drop was due to multiple global supply outages, including in the US and at Australia’s Gorgon, Norway’s Hammerfest and Shell’s Prelude plants; along with demand recovery and higher prices in Asia and a lack of significant floating storage, according to one trader. In addition, competing pipeline supplies into Europe – which are largely oil linked with a three to six-month lag – saw prices decline in September, making them relatively more attractive to buyers. The lower LNG imports have led to a slight drop in European storage levels over recent weeks, leaving them below 2019 levels at the end of October, although still above average.

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

Tighter LNG supports European prices The steady rise in LNG prices and lower imports has helped push UK day-ahead gas prices up since the summer, trading above 40 p/th ($6.15/mn Btu) at the end of the third week of October for the first time since November 2019. At the Dutch TTF, prices were also up, to over €15/MW by late October. Both benchmarks had slumped to historic lows in the summer as a result of lockdowns and overflowing storage. The stronger short-term prices have helped support longer term values, but a likely rise in LNG imports into next year – once the Asian winter demand peak is past and current outages in the US and elsewhere are resolved – could reverse this. Demand could also weaken with tougher Covid-19 restrictions across Europe, although strong residential consumption should partly offset this. However, US gas prices are firmer now thanks to tighter supply and recovering exports, and this could provide some support for international spot prices into next year as the pandemic impact eases: “[US prices] will be heading to over $3/mn Btu next year, and that’s causing prices to rise in Europe and Asia,” BP’s CEO, Bernard Looney, said in mid-October – although a weak LNG market by summer 2021, could mean commercial shut-ins for US volumes if domestic prices remain firm. The current firmer spot market may also mean some oil-linked term prices become cheaper than spot, which may limit demand for spot cargoes. For example, Taiwan paid an average of $4.93/mn Btu for LNG in September, up 20 cents on August’s 16-year low. But it paid just $4.01/mn Btu for Qatari term purchases. These low prices have already seen Taiwan boost volumes under Qatari term deals this year by 10% to 4.04mn t (up to end-September). However, any expansion of term volumes may end up limiting the number of cargoes sellers have to offer on the spot market, resulting in a neutral overall impact on spot prices.

Buoyant outlook for demand The bearish medium-term outlook for LNG prices along with increasing concern over climate change is giving buyers confidence to invest. In China, for example, the move towards carbon neutrality by 2060 is likely to significantly increase LNG imports, especially in the medium term, as the country begins to close coal plants – China has already informed Australia that it will not be buying any more coal. LNG cargoes can even be sold on a low-carbon or zero-carbon basis, with the seller using carbon offsets or renewable energy credits to offset the carbon emissions from consumption of the cargo. In most cases, these represent only a fraction of the total energy cost of the cargo and these types of deals can therefore be an attractive option for many end buyers. Higher LNG demand could also come from South Korea and Taiwan as some nuclear units are closed, and from southeast Asia, where demand is being driven by declining domestic gas production, as well as policy moves in favour of gas. Domestic output is also falling in parts of the Middle East and India, where there is a switch away from fuel oil – rather than coal – towards gas in the power sector. India is also seeing growth driven by an aggressive expansion of its city gas distribution networks, accompanied by pro-gas policies designed to boost demand in the transport sector (CNG) and residential sector. In Europe, Poland has announced plans to accelerate its phase out of coal in favour of gas, and both Poland and Germany – where nuclear shutdowns are driving up demand for gas – are moving ahead with development and expansion of LNG import terminals.

[email protected] [email protected] (Sale and Purchase) (Gas projects) 11

Altogether, according to consultants Wood Mackenzie, global regasification capacity under construction is expected to hit a 10- year high at 144mn mt this year, which should allow for more demand growth in the market. Over a third of this will be in China, with gains also in India, Brazil, Croatia and Kuwait, among others. On the supply side new projects are being delayed, with global LNG supply growing at just 1% or 4mn mt/year to date, mostly in the US. However, longer term confidence in the market means there are few cancellations. While most demand growth is in Asia, a large amount of the future supply growth (except Qatar) is in regions that are remote from Asia. North America and Arctic Russia will all contribute heavily to new supply, alongside Mozambique. This is likely to boost the trade flow between the Atlantic, where there is likely to be more of a net oversupply, and the Pacific, where there will be a growing deficit. Beyond summer 2021, supply growth slows down, which could see markets tighter than expected if all the new demand materialises as anticipated. Source : www.naturalgasworld.com

[email protected] [email protected] (Sale and Purchase) (Gas projects) 12

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) 13