Here is what is going on in the natural gas industry around the world:
Chevron Corp. (CVX), the second-largest U.S. energy company, won support from Lithuanian President Dalia Grybauskaite for shale-gas exploration plans that some of the country’s residents and lawmakers oppose.
Lithuania needs to find out to how far its shale-gas reserves can go as an alternative to Russian natural gas, spokeswoman Daiva Ulbinaite quoted the president as saying today after a meeting with Jay Johnson, Chevron’s head of Eurasia,Europe and Middle East exploration and production, in the capital, Vilnius.
East European countries, including Poland and Ukraine, are turning to shale gas in their efforts to lower energy costs and their dependence on Russian supplies. Chevron in October bought 50 percent of a Lithuanian oil and gas recovery company and in January submitted the only bid in a tender for shale-gas exploration rights in the Baltic nation. Some landowners and lawmakers have urged the government to halt the tender on concern that the exploration process could contaminate ground water.
“We expect to be able to engage with the local communities” and assuage their concerns, Chevron’s Johnson told reporters at the president’s office. “We’re very pleased with the chance to help create Lithuania’s energy future.”
Lithuania, which wants to reduce it’s total dependence onRussia’s Gazprom OAO (GAZP) for natural gas supplies, probably has about 180 billion cubic meters of recoverable shale gas, KPMG said in a report in May. That’s the equivalent of 60 years of gas consumption in the country, at current usage.
The federal cabinet has approved $1.5 billion, 785 km gas pipeline to deliver 750 million cubic feet of natural gas per day from Iran’s South Pars gas field. Intriguingly, in the 1950s, Major Malik Aftab Ahmed Khan, S.J. of the Pakistan Army Corps of Engineers (PA4117) was the first one to conceive the idea of bringing Iranian gas to Pakistani consumers. For the record, we have been at it for the past 6 decades, without much success.
Fast forward to 2013. There are two major hurdles — financing and technology. Who would finance the pipeline? There are two money centres: western banks or Chinese lenders. Where would the technology come from? Once again, there are two technology centres for such projects: western companies and Russia.
Currently, Iran is under at least three layers of sanctions that include four rounds of United Nations sanctions, the European Union sanctions and bilateral sanctions by the U.S., Canada, Australia, Switzerland and Japan. To be certain, no western financial institution will come even close to financing the project.
On October 8, 2008, President Bush signed the United States-India Nuclear Cooperation Approval and Non-proliferation Enhancement Act and subsequently India pulled out of the Iran gas pipeline project.
On December 23, 2011, National Bank of Pakistan (NBP), fearing that its foreign branches will be shut down, refused to finance the local component of the pipeline project. At the same time, Oil and Gas Development Company Limited (OGDCL), fearing that its foreign investors may pull out, also refused to participate in the project.
Tokyo Electric Power Co (Tepco), Japan’s largest consumer of liquefied natural gas, plans to procure 800,000 tons of LNG a year from the United States through Mitsubishi Corp and Mitsui & Co from about 2017, the Nikkeireported.
Mitsubishi and Mitsui are in negotiations with Cameron LNG, an affiliate of U.S. power and gas concern Sempra Energy , to outsource liquefaction operations for North American shale gas, the business daily said.
Each trading house will target 4 million tons a year in U.S. LNG exports to Japan and elsewhere from a Cameron LNG terminal in Louisiana and allot 400,000 tons to Tepco, the Nikkei said.
The firms are working out the details of the proposed arrangement and will sign a basic agreement soon. Tepco might consider investing more than 20 billion yen ($216 million) to build dedicated tanks for the LNG, the daily reported.
Tepco, which procured 24.09 million tons in fiscal 2011, unveiled plans last year to eventually buy up to 10 million tons of LNG a year from North America and elsewhere as a way of tamping down expenses, the Nikkei said.
The company plans to diversify LNG procurement by turning to Canada, South America and other regions, the daily reported.
Vancouver-based Methanex Corp. is doubling-down on North America’s shale gas boom with plans to move a methanol plant from Chile to Louisiana to take advantage of this continent’s abundant supply and low cost of natural gas.
Methanex will begin moving equipment from a plant in Chile to Louisiana’s Gulf Coast in late spring and has signed a 10-year agreement with Chesapeake Energy Corp. to supply natural gas to the plant. Gas is a feedstock in the production of methanol, which is used in plastics, petrochemicals and transportation.
Methanex CEO John Floren said he expects to move a second Chilean plant to Louisiana in coming years, although a final decision has not been made.
“If I had to make the decision today, I’d go forward with it but I don’t have to make that decision,” Mr. Floren said on a conference call with analysts Thursday. Asked what might prevent the move, he said: “It would have to be some major event that I can’t even imagine at the moment.”
Methanex, which has plants in six countries, is one of a growing number of petrochemical companies locating manufacturing facilities in North American to take advantage of the booming supplies and low cost of natural gas, which sells for one-third the price it fetches in Asia.