Natural gas prices were also falling in the United States as the week got underway. Henry Hub gained throughout last week, hitting some of its highest seasonal levels in years as a prolonged heat wave approached the eastern half of the country. The prompt month surged past $4 during the week. It closed lower on Monday after a cooler shift in forecasts.
Oil also continued to underperform Monday, dipping below $70/bbl. A sizable portion of LNG contracts across the world are tied to the price of crude. Concerns over the Covid-19 Delta variant are mounting. As the virus continues spreading and pushing up case numbers not seen in months in places like the United States and China, it could limit demand.
In other news last week, Woodside Petroleum Ltd. increased the estimated costs for its Scarborough project in Western Australia. The company now expects its plans to develop the Scarborough field offshore and expand the Pluto LNG facility to cost $12 billion. That’s up 5% from its previous estimate issued in 2019 to cover modifications to Pluto train 1 and boost offshore production capacity. A final investment decision on the project is still expected before the end of the year.
Eni SpA also said last week that it would deliver a carbon-neutral LNG cargo to CPC Corp. in Taiwan. The LNG would be sourced from the Bontang terminal in Indonesia.
Eni said all the greenhouse gas emissions (GHG) related to the entire value chain of the cargo, including production, transmission, liquefaction, shipping, regasification, distribution and end use, would all be offset with nature-based credits. Nature-based credits are typically sourced from agriculture, forestry or other land-use projects that help restore ecosystems and help remove GHG from the atmosphere.
Eni is the latest supplier to announce a carbon-neutral delivery. Deliveries of the cargoes have grown from three in 2019 when they began to five in 2020 and 12 so far this year. Relatedly, CME Group said last week that it has launched nature-based emissions offset futures. So far, the exchange said 1,315 contracts have traded since the launch on Aug. 1, or the equivalent of more than 1.3 million environmental offsets.
