Related Articles
Forward article link
Share PDF with colleagues

Angola LNG hunts for new customers amid US shale boom

Angola LNG is forming a marketing division to target customers beyond the US, Sonangol project director Artur Pereira told the World LNG summit in Rome today

Kwok W Wan, ROME: Angola LNG, built to supply what was then a thirsty US market, will produce its first cargo in the first quarter of next year. But with the boom in shale-gas production, the US not only produces all the gas it needs – the country utilised just 8.5% of its LNG import capacity last year – but a supply glut has also depressed prices, leading to plans for exports, forcing Angola to look elsewhere for customers.

Gas prices in North America are around $4/million British thermal units (Btu), while spot prices in Europe are around $10/million Btu and LNG prices in Asia have reached as high as $18/million Btu this year

The west African country is likely to supply Atlantic basin customers, such as Europe and South America, as alternatives to the US, but, if prices remain high, it could also follow Nigeria’s lead and offer cargoes to Asian customers.

A new world

“When we reached a final investment decision, the US was our base market. But today, we face a new world,” Pereira told delegates. “There are no commitments to the US market. Today, we’re in a global world and not a US-based world.”

He said the 5.2 million tonnes a year (t/y) LNG plant – which would produce around 74 cargoes a year at capacity – is expected to cost $9.9 billion. The project has seven tankers lined up to carry the LNG, with five vessels already delivered and two expected by January.

Pereira said Angola LNG’s existing partners will all take a stake in the new marketing company, to be based in London. Sonangol, Angola’s national oil company, will hold a 50% stake, with Chevron taking 23.6% and Eni, BP, and Total each with 8.8%.

Production ramps up

“The LNG sales will be a mixture, as you’d expect, of short- and long-term volumes and we will start definitely with short-term,” Pereira said. He added that short-term deals would give Angola LNG a chance to monitor how the terminal’s production ramps up. “The exact percentage [balance between long- and short-term volumes] is yet to be determined.”

Another possibility could be for the project partners, which are already large players in the LNG business, such as Total and BP, to take the cargoes from Angola LNG and absorb them into their global portfolios.

The start-up of Angola LNG would relieve some tightness in the LNG market, with demand jumping after the Japanese earthquake in March. Angola LNG is one of only two projects expected to start up in the next few years that may reduce the squeeze on supply. The other project is Woodside’s delayed Pluto LNG project, in Australia.

Also in this section
China targets Singapore bunkering
14 January 2020
Chinese tax reform will trigger a gradual shift in the bunker fuel market away from Asia’s dominant hub
IMO 2020 promises widespread disruption
14 January 2020
Large-scale changes in refinery operations will be just one of the major changes the new regulations will bring to the energy landscape
Electricity production is on a sustained charge
13 January 2020
Renewable cost reductions and increasing storage availability will fuel exponential electricity growth