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Sempra gets test cargo for Gulf terminal Signs deal with Qatar to bring as many as 50 LNG cargoes to its Gulf port, while Mexican terminal expects Tangguh shipments soon Allen Baker For Petroleum News
Sempra LNG is on a run of good news, with its $900 million terminal on the Gulf of Mexico about ready for commercial operations, a contract with Qatar for deliveries to that terminal, and the startup of the BP-led Tangguh LNG plant that will supply gas to Sempra’s West Coast port later this quarter.
Sempra received its first test cargo at the just-completed Cameron LNG terminal near Lake Charles, La., and expects to begin commercial operations at the port later in July. The first tanker unloaded the equivalent of about 3 billion cubic feet of natural gas on June 21, and a second test cargo was expected shortly, said Art Larson of San Diego-based Sempra Energy, the parent company for Sempra LNG. Both test cargoes are from the big LNG operation in Trinidad.
Sempra has a contract with Italy’s Eni for 40 percent of the capacity at the Cameron LNG terminal in Louisiana, and just signed a deal with Qatar’s state-owned RasGas Co. Ltd. for up to 50 cargoes, at about 3 billion cubic feet each, with deliveries possibly starting in August.
The flexible agreement runs through the end of 2010, though it doesn’t guarantee how much, if any, Qatar LNG will actually arrive. Larson said the terms of the deal were proprietary.
Chevron also signed a recent deal with RasGas for deliveries through the Cheniere-operated terminal at nearby Sabine Pass, La.
Lots of Qatar LNG Qatar has plenty of LNG to place in the market as part of its aggressive plans to produce and sell the LNG equivalent of 10 billion cubic feet of natural gas per day by 2012. This year, the Persian Gulf nation with the world’s third-largest gas reserves is expected to ship the equivalent of around 6 bcf a day.
That’s up 50 percent from last year’s total, as three new liquefaction plants being built in a consortium with ExxonMobil come on line. Those added volumes are going into a market where demand has slowed considerably with the world’s economic slowdown. But Qatar’s other state-controlled gas company, QatarGas, opened up a new market in Eastern Europe with a 20-year contract to supply Poland with 48 bcf of gas as LNG annually.
While Qatar is far from most markets, it also has the flexibility to serve the Pacific and Atlantic basins with roughly the same transport costs. And with its low production costs, Qatar can afford to send cargoes to the low-priced U.S. market when other options aren’t available. The huge gas storage capacity in the United States means it can take LNG cargoes when other countries don’t need the fuel, as Sempra LNG’s President Darcel Hulse predicted last winter, when many analysts were suggesting the LNG market would remain tight.
“The issue really isn’t just price,” Hulse told Petroleum News in a Dec. 2 interview. “It’s supply versus demand globally. If we’re in an oversupply situation, some of those cargoes will flow to the United States.”
Tangguh starts up Supplies to the Pacific market got a boost in July with the first cargoes heading out of the BP-led Tangguh LNG complex in West Papua, Indonesia. South Korea will likely get the first tanker, since China’s terminal in Fujian province isn’t ready yet.
Some of that fuel will also be coming to the Sempra LNG terminal in Mexico later this quarter, according to Larson of Sempra. The Ensenada port has basically been in standby mode, but it has a contract for Tangguh LNG for half its capacity of a billion cubic feet of gas daily. But the Tangguh contract says up to half of that LNG can be diverted to other markets, which are likely to provide a better price — unless a global LNG glut reduces the market price still further.
Meanwhile, the huge Chevron-led Gorgon project off Australia is nearing an investment decision on a project whose costs are now estimated at an eye-popping $40 billion. And Woodside’s $10 billion Pluto project should be close to completion by the end of this year.
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