Shell CEO says local price index makes LNG Canada project attractive
KUALA LUMPUR, June 17 (Reuters) - Buyers are attracted to Shell's LNG Canada project because it uses the Canadian Alberta Energy Company (AECO) price index as a benchmark, which is lower than the Henry Hub price in the U.S., the company's chief executive said on Tuesday.
"What is particularly attractive about LNG Canada in today's world, retrospectively, is the AECO indexation," Shell (SHEL.L), opens new tab CEO Wael Sawan said at the Energy Asia conference, adding that there will be more supply of AECO gas at lower prices.
"And so that differential between AECO and Henry Hub, not to mention the proximity to Asia, all of that makes it a particularly attractive project, and it will be one of the lowest carbon projects anywhere in the world," he said.
The AECO Storage Hub price on Monday was at 96.6 Canadian cents (71.4 U.S. cents) per million British thermal units, according to data from SNL Financial. That compares with a Henry Hub futures price of $3.746 per MMBtu.
The LNG Canada project, the country's first LNG export facility, is expected to produce 14 million metric tons per annum (MTPA) for export. The plant is expected to produce first LNG this month.
LNG Canada is a joint venture of Shell (SHEL.L), opens new tab, Petronas, PetroChina (601857.SS), opens new tab, Mitsubishi Corporation (8058.T), opens new tab and Korea Gas.
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Reuters
31 minutes ago
- Reuters
Breakingviews - Beijing has more at stake in Iran besides just oil
HONG KONG, June 17 (Reuters Breakingviews) - Beijing has far more at stake in Iran besides just oil. China has not only benefited from importing heavily discounted Iranian crude, it has inched up its strategic infrastructure investments into the country since the duo signed a $400 billion pact in 2021. If the regime in Tehran is severely weakened or changes, China also will lose a key diplomatic lever in the Middle East. Despite Washington's efforts to use sanctions to curb oil exports from Iran, it has become an increasingly important supplier to China. Crude shipments to the People's Republic from Malaysia, a major trans-shipment hub, have tripled to 70 million tonnes last year from 2021, according to data from the Chinese Customs – third after Russia and Saudi Arabia. Moreover, Iran's strategic location makes it a crucial cog in President Xi Jinping's signature Belt and Road policy to enhance his country's physical and economic connectivity with the world. As of 2023, China accounted for 3% of Iran's $6 billion worth of foreign direct investments. That pales in comparison to, say, Russia's 27% contribution, but China is ramping up its support in other ways: Iran has turned to the People's Republic for "thousands of tons of ballistic-missile ingredients", for instance, to build its military prowess, the Wall Street Journal reported, opens new tab in June, citing sources. The trio also conducts regular joint naval drills together. The escalating conflict threatens to undermine Beijing's nascent ambitions in Gulf politics too. Just two years ago, Chinese diplomats hailed a 'new paradigm, opens new tab' for resolving friction in the Middle East after they brokered a deal to restore diplomatic ties between Iran and Saudi Arabia. War also throws up a fresh test of China's diplomatic ties further afield too. Iran joined the Shanghai Cooperation Organisation in 2023. However, India, a founding member, on Saturday issued a rare public rebuttal, opens new tab of the SCO's statement denouncing Israel's attacks, underscoring a potential rift between Xi and Indian Prime Minister Narendra Modi, who has fostered closer ties with Israel. The danger for China is this could be a moment that ultimately erodes its ambition to project power in the region and one that gives rise to rival infrastructure projects, such as the ambitious India-Middle East-Europe Economic Corridor, aimed at diluting Beijing's influence. For now, it appears the reshaping of the Middle East may not work in its favour.
Reuters
41 minutes ago
- Reuters
Israel-Iran war already takes toll on oil and gas sector
LONDON, June 17 (Reuters) - Critical energy infrastructure in Israel and Iran has not escaped unscathed from the first few days of the countries' escalated conflict. Worst-case scenarios have yet to be realized, but the war is already having a notable impact on energy production and exports in both countries. Benchmark Brent crude oil prices jumped 7% to over $74 a barrel on Friday after Israel launched an unprecedented wave of airstrikes on Iran, prompting Tehran to fire hundreds of ballistic missiles at Israel. Some energy facilities have been hit in both countries since then, leading to significant disruptions to production. However, prices receded slightly on Monday, as it appeared that both sides were not immediately targeting the most sensitive energy infrastructure and supply routes, and following a report that Iran was seeking ceasefire mediation. Investor focus remains squarely on the Strait of Hormuz, a narrow and vital waterway between Iran and Oman in the Mideast Gulf through which between 18 and 19 million barrels per day of crude oil and fuels flow, nearly a fifth of the world's consumption. Another 85 million tons of liquefied natural gas from Qatar and the United Arab Emirates were also sent through the strait last year, equivalent to around 20% of global demand. Disrupting maritime activity through the strait would thus severely impact oil and gas markets, pushing prices much higher, possibly into three-digit territory. This doomsday scenario has not yet played out, but disruption to both Iran's and Israel's energy industries has been meaningful nonetheless. Perhaps most notably, Iran's oil exports appear to have essentially ground to a halt in recent days. Total Iranian crude and condensate oil exports this week are currently forecast to reach 102,000 bpd, compared with a weekly average of 1.7 million so far this year, according to analytics firm Kpler. Critically, exports from Kharg Island from which Iran exports over 90% of its oil, appear to have completely halted since Friday. No tankers were anchored at Kharg Island as of Monday, according to LSEG satellite ship tracking data. However, Iran has roughly 27.5 million barrels stored in tankers outside the Gulf, according to Kpler data, which would enable it to sell oil for a few weeks. Iran has produced an average of 3.4 million bpd of crude oil and another 1.3 million bpd of condensate so far in 2025, according to the U.S. Energy Information Administration, with China appearing to be the main buyer. Israel has also directly targeted some Iranian energy infrastructure. Iran on Saturday partially suspended, opens new tab gas production at the South Pars gas field in the Mideast Gulf, in what was probably Israel's first strike on the country's oil and gas sector. South Pars, which is shared with Qatar, is the world's biggest gas field. It produces around 610 million cubic meters of natural gas per day, accounting for around 80% of Iran's total gas output, opens new tab. The portion controlled by Qatar, referred to as the North Field, provides the natural gas for the Gulf state's enormous LNG industry. The field also produces around 700,000 barrels of per day of condensate, a light oil that is used as feedstock to produce fuels and petrochemicals. The Persian Gulf Star condensate refinery, which became Iran's largest refinery when it came online in 2017, can process 420,000 bpd of condensates from South Pars. While the extent of the damage to the South Pars field is unknown, any serious issues could meaningfully impact condensate production. In addition, Israel has targeted the Shahr refinery outside Tehran as well as a number of fuel depots around the capital city. Again, the full impact of these strikes on production is unknown. The conflict has also already had a significant effect on Israel's energy industry. Israel on Friday shut down two of its three offshore natural gas fields, the Chevron-operated Leviathan field, opens new tab and Energean's Karish field, reducing Israel's supply by nearly two thirds. While the country's Tamar field continues to operate, Israel will have to turn to coal and fuel oil as a substitute for the gas in its power plants. These supply outages have had a meaningful impact on Israel's gas exports. Leviathan produced 11.33 billion cubic meters (bcm) in 2024, most of which is exported to neighbouring Egypt and Jordan. Israeli gas accounts for about 15-20% of Egypt's consumption, data from the Joint Organisations Data Initiative (JODI) shows. The disruption of Israel's gas supply led Egyptian fertilizer producers to halt operations on Friday. Finally, the ORL oil refinery in Haifa, one of Israel's two refineries, said on Monday it had shut down all its facilities after a power station used to produce steam and electricity was significantly damaged in an Iranian missile strike. It remains to be seen how long the two sides will continue to exchange blows. If a ceasefire is quickly reached, the ultimate impact on energy markets could be relatively limited. But given how much this conflict has escalated in only a few days, the worst-case scenarios cannot be fully discounted. Enjoying this column? Check out Reuters Open Interest (ROI), opens new tab, opens new tab, your essential new source for global financial commentary. ROI delivers thought-provoking, data-driven analysis. Markets are moving faster than ever. ROI, opens new tab, opens new tab can help you keep up. Follow ROI on LinkedIn, opens new tab, opens new tab and X., opens new tab
The Herald Scotland
an hour ago
- The Herald Scotland
Alexander Dennis: FM warned a year ago over firm 'reconsidering'
The First Minister was also told they had already been 'forced' to offshore certain manufacturing functions to China. The Labour MP for Falkirk, Euan Stainbank, said it was 'absolutely astonishing that John Swinney' had been informed of the risk to hundreds of Scottish jobs and 'done absolutely nothing to avert this'. Notes seen by The Herald show the First Minister intervened after learning of potential redundancies at the firm, suggesting 'further capital support' and advising Scottish Enterprise to 'exhaust all options to support the business'. Scottish Government records show ADL has received £58 million in public 'subsidy' for green vehicles since 2020 under two schemes aimed at transitioning Scotland to green buses. Some £30m in job grants for research and development over 10 years came from the Scottish Government's economic development agency, Scottish Enterprise. A delivered Alexander Dennis bus (Image: Pic supplied) Despite this, ADL said there was not enough support from government and issued a stern warning about its future in Scotland in August last year. READ MORE by Martin Williams "We are regretfully left with the impression through recent developments that the Scottish Government has little regard for domestic bus manufacturing jobs in Scotland and we have no choice but to reconsider our entire investment in the Scottish operations of Alexander Dennis," the Canada-based executive told the First Minister. "In fact, in an attempt to enhance our price competitiveness we have already been forced to offshore certain fabrication functions to China. "I would appreciate an urgent face-to-face meeting with you and key members of your Government to further discuss this critical situation." The First Minister and Deputy First Minister set out the economic case for Scottish independence in 2013 at the Alexander Dennis Falkirk plant. (Image: NQ) He said that in Canada and the United States, governments and transit agencies are 'incredibly proud' of their domestic manufacturers and support them accordingly. "Alexander Dennis operates in a market that had left them with the impression that governments do not seem to care about domestic economic importance," he added. "Indeed, this seems to fly in the face of Scotland's flagship policy plans for a Just Transition, which aims to deliver a fairer, greener future for all, delivered in partnership with those impacted by the transition to net zero. "Alexander Dennis is a key manufacturer in Scotland assisting in delivering a Just Transition through the manufacturing of zero-emission buses with their workforce. "Alexander Dennis should be considered a business of strategic economic importance to Scotland." ADL expressed frustration in May 2023 over the Scottish Government's Zero Emissions Bus Challenge Fund (ScotZEB). A Scottish Government memo to the Deputy First Minister, Kate Forbes, revealed a series of letters from ADL and NFI raising concerns about the outcome of the fund. While a Scottish Government memo said ADL received orders for 363 zero-emission buses – more than any other manufacturer – a separate briefing stated ADL was awarded only 17%, or 44 buses, from phase two. A meeting was set up between the First Minister and Mr Soubry in August last year over levels of support rooted in Scottish Government schemes launched in 2020 to accelerate zero and low emission bus manufacture and 'help drive a green recovery out of the Covid pandemic', worth £155.8m to date. The relationship between Alexander Dennis and the SNP goes back to 2013, when then First Minister Alex Salmond and then Deputy First Minister Nicola Sturgeon used its Falkirk base to launch the economic case for Scottish independence. He said while ADL received 17% of the orders under ScotZEB2, no other UK manufacturer benefitted — despite all being part of the Scottish Bus Decarbonisation Taskforce. He expected 83% of the 252 buses ordered under ScotZEB2 to go to manufacturers based in either China or Egypt. He said there was a 'further disappointing revelation' in the final round of ScotZEB — that the winning bid would leverage £3.20 of private sector investment for every £1 from the Scottish Government for 252 vehicles. Mr Soubry said 'this was surprising to read' as the unsuccessful Alexander Dennis-led Phoenix consortium bid planned to deliver up to £3.94 of private investment per £1 of ScotZEB2 funding for a volume of 300 zero-emission buses. "With recent decisions by UK bus operators to acquire largely imported buses with no domestic economic, technology or labour requirements or benefits, we feel we have no choice but to now begin preparations to put a number of people within our team at risk of redundancy, which could decimate the communities we operate in and have important historic ties with," he said. (Image: Alexander Dennis) Mr Stainbank said the letter to the First Minister was a damning indictment of the SNP's failure to act. "It is absolutely astonishing that John Swinney was informed of the real risk to Alexander Dennis's Scottish operations close to a year ago," he said. "He appears in the interim to have done absolutely nothing to avert this. "This is a monumental failure of SNP industrial policy. Greater Manchester bought more than five times as many buses from Alexander Dennis than the SNP did - operating under the exact same legal framework. John Swinney should be embarrassed by that." A month after Mr Soubry's letter, a further call between the First Minister and NFI and ADL showed that Mr Swinney advised and asked that Scottish Enterprise 'exhaust all options to support the business'. A note of the meeting cleared by Mr Swinney stated that he requested that 'all options are exhausted before any final decision is taken by ADL'. An official note of a meeting between Mr Swinney and representatives of Alexander Dennis from 12 August says the First Minister 'noted the potential for further capital support should be explored'. By then Alexander Dennis had already benefited from taxpayer-funded grants and support from the Scottish Government worth £90m since 2005. In the same year of the 2023 ScotZEB2 launch, Scottish Enterprise sanctioned a £13.2m grant on top of a £49.7m ADL investment into the development of zero emissions technology for battery-electric and hydrogen fuel powertrains. Some £11.2m was drawn down. John Swinney (Image: PA) Last week, Mr Swinney told MSPs he was 'deeply concerned' about the proposed job losses and said the government was 'exploring all viable options' to support the workforce. He defended the government's record, stating that Alexander Dennis had received more orders than any other manufacturer under the first phase of ScotZEB and was supported with significant research and development funding. However, he acknowledged that UK-wide subsidy control rules limit what the Scottish Government can do to directly support or prefer domestic manufacturers. 'We must work within the law,' he said. 'But we are trying to find a way through the Subsidy Control Act to ensure we can support manufacturing in Scotland.' Union leaders are calling for more urgency. Unite Scotland estimates that up to 1,600 jobs could be at risk when supply chain roles are included and warned of a 'devastating' impact on communities already reeling from the Grangemouth oil refinery closure. A Scottish Government spokesperson said: 'We are exploring all viable options throughout the consultation period to allow the firm to retain their hard-working employees and manufacturing and production facilities at Falkirk and Larbert. 'Since 2020, ADL secured orders for more zero emission buses than any other single manufacturer through the Scottish Zero Emission Bus Challenge Fund and its predecessor the Scottish Ultra Low Emission Bus Scheme. "ADL has received £58m of Scottish Government subsidy for vehicles under these programmes. ADL have secured orders for more than 360 vehicles through Scottish Government zero emission bus funding programmes, compared to the 160 currently on order from Manchester. 'In response to correspondence in August 2024, the First Minister met with the company that same month, and Scottish Enterprise have been supporting the company with additional supportive measures.'
