#Energy & #Shipping Insights from Poten & Partners - November 2023

#LNG in World Markets:?FID Nears for German LNG Terminals

German onshore LNG import terminal developers are maintaining a positive outlook and hoping to reach final investment decisions (FID), with some planning to do so before year-end.

The three onshore projects aiming for FID are Hanseatic Energy Hub’s (HEH) Stade terminal, German LNG’s (GLNG) Brunsbuttel terminal and Tree Energy Solutions’ (TES) Wilhelmshaven terminal. There are also floating storage and regasification units (FSRUs) that are either active or planned at these sites (see Table).

The terminal at Stade is expected to be the first to take FID, potentially before the end of the year. The €1 billion terminal is expected to begin operations by 2027 after Spanish energy company Enagas bought 10% of the consortium that forms HEH (see LNGWM, Sep ’23). Banks have been asked to provide funding for the terminal.

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#Tanker Opinion:?Latin Land Grab

On Sunday, December 3, Venezuelans voted in a referendum to annex Essequibo, a region of Guyana that borders Venezuela.? All the oil fields that have propelled Guyana into one of the most exciting new oil producers of the last 5 years happen to be offshore Essequibo.

President Maduro has created a new map of Venezuela, which includes the disputed area and has said that residents that live in Essequibo (which represents two-thirds of Guyana’s land area) will be granted Venezuelan nationality.? He also approved oil, gas and mining exploration licenses and encouraged state oil company PDVSA to start right away.? Not surprisingly, his counterpart in Guyana, President Irfaan Ali took a dim view of Maduro’s referendum and actions.

He called the Venezuelan moves “an imminent threat” and a desperate attempt”.? What is the background of this conflict and is there a chance that Venezuela will indeed get access to Guyana’s offshore oil fields?

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#LPG Market Outlook:?Imports Climbing for India Ahead of Elections

LPG imports for India rose to roughly 1.8 MMt in October compared to the 1.5 MMt/m on average in 2023. The rise in imports comes on the heels of sweeping policy changes made by the government in the LPG market that are forecast to drive demand for LPG higher in 2024 and 2025. LPG imports are forecast at 18.1 MMt in 2023 and will increase in 2024 to 18.6 MMt, with a further increase in 2025 to 19.8 MMt.

Currently, elections are taking place in five Indian states and the general presidential election will be held next year. In a move to secure more votes, the government released funding to connect an additional 7.5 million households below the poverty line to the LPG grid, lowered the price of the LPG cylinder and increased subsidies. Additionally, the government has eliminated the import duty on LPG.

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On-Demand Webinar | The Impact of Global Conflict and Economic Health on Future LNG Supply Projects.

The International Energy Agency (“IEA”) has stated that Global GDP growth is set to fall below 3% in 2023 and to 2.6% in 2024 – its lowest annual rate since the 2007-2008 global financial crisis, with the exception of the 2020 pandemic period. Global conflicts are also on the rise – with the Israeli-Palestinian conflict in Gaza joining the Russia-Ukraine war as a hotspot of geopolitical tension.?

Logistics of global trade have also experienced some challenges in 2023 – particularly the Panama Canal, where extensive droughts have curtailed operations and limited slot availability – impacting cross-basin LNG trade. Taking the current state of global economic health and geopolitical risks into consideration, where does this lead for future LNG supply projects??

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#LNG Market Outlook:?Sanctions Cloud the Future of Arctic Exports

Earlier this month, the US imposed additional sanctions on Russia that targeted the Arctic LNG 2 project operated by Novatek. The project will be composed of three trains, each with a capacity of 6.6 MMt. The first train was originally planned for start-up in 4Q 2023, the second train planned for 2024 and third train for 2026.

This recent round of sanctions may cause a delay in the start-up of the first train, with the sanctions targeting non-US entities planning to buy volumes from the project. If the volumes from the project were to enter the market in 2024, trading would probably take place on the spot market (which would evade sanctions) similarly to Russian crude oil exports.

Taking these factors into consideration, LNG exports from the Russian Arctic are forecast to increase from 21.6 MMt in 2023 to 25 MMt in 2024 before increasing by another 1 MMt in 2025 to 26 MM

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#LPG in World Markets: Freight Volatility Increases on New Panama Transit Reductions

VLGC freight rates have become extremely volatile in the past few months. The situation is likely to be exacerbated following the decision by the Panama Canal Authority (ACP) to further reduce the number of transits for the Neopanamax locks from November.

Despite all the measures taken so far, Gatun Lake’s water levels have continued to decline to exceptionally low levels for this time of the year, on record droughts. Moreover, current rainfall forecasts indicate the situation will not change for some time, according to ACP.

Therefore, from Nov. 3, 2023, to Nov. 7, 2023, the number of booking slots will be reduced to 25 from 31, with eight slots for the Neopanamax locks. The gradual reduction will continue in the weeks following thereafter. By Feb. 1 2024, and until further notice, the number of booking slots will be reduced to only 18 slots per day, with five allocated for Neopanamax locks, which is about half of the normal capacity.

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