LNG

European and Asian liquefied natural gas prices fell over the past week with the Dutch Title Transfer Facility benchmark declining by over 7 percent as European Union storage levels hit 100 percent and energy security concerns waned with cargo deliveries gathering pace and seasonal temperatures prevailed.

European natural gas prices and LNG values declined along with North Asian spot cargo prices as the Northern Hemisphere winter season fades away amid soft prices in the Atlantic and Pacific basins, high levels of supplies and lower spot shipping charter rates.

European Union natural gas benchmarks and North Asia spot liquefied natural gas cargo prices advanced because of concerns that Russia could cut off the main pipeline link to Germany and cause a global LNG supply crisis at a time when US and Australian shipments were down because of outages.

Liquefied natural gas cargo liftings increased and while front-month North Asia spot LNG cargo prices declined along with European benchmarks from records earlier in the week, the March and April spot values for China, Japan and South Korea jumped compared with last week, showing sustained demand further out.

Liquefied natural gas prices increased in Europe as spot values for North Asia eased slightly while cargo liftings began to decline at Atlantic and Pacific Basin export plants and confusion reigned in oil markets where signals were conflicting.

Sakhalin Energy, the operator of the Sakhalin II LNG plant in the Russian Far East supplying four North Asian nations, has started scheduled maintenance at infrastructure facilities and is hopeful of having minimum disruption to exports despite changing loading arms.

“Around 2,500 technical staff from various regions of Russia will be engaged in operations at the facilities,” explained Roman Dashkov, Chief Executive of Sakhalin Energy.

“As part of the shutdown, for the first time in Russia, there will be a replacement of loading arms performed at the LNG jetty of the liquefaction plant,” said the CEO.

The Sakhalin plant has been on stream since 2009 and last year prodcued 10.8 million tonnes of lNG.

However, the joint venture run by Russian natural gas company Gazprom has yet to progress on construction of a long-promised third liquefaction Train at Prigorodnoye on Sakhalin Island.

The main shareholders in the plant are Gazprom with 50 percent, Royal Dutch Shell with 27.5 percent and Japanese company Mitsui & Co. and Mitsubishi with 12.5 percent and 10 percent respectively.

In the past year the Japanese have taken delivery of 51.6 percent of Sakhalin volumes, a further 17.4 percent was shipped to Taiwan, 16.3 percent to South Korea and 14.1 percent to China.

Since the start-up of the plant, Sakhalin Energy has produced and shipped about 130 million tonnes of LNG as of early May 2021 and more than 2,000 cargoes.

The company said that the Russian plant had already begun the maintenance campaign on the PA-B plant, the largest oil and gas production platform of the Sakhalin project.

The PA-B platform is located about 12 kilometres offshore the northeast of the island in waters depths of 32 metres.

“At the platform, it is intended to perform an annual purging of the hydrocarbon multiphase flow separation vessels, a repair of the produced water filters, maintenance of two gas compressors, including a gearbox inspection at one of them, and a number of other maintenance tasks,” explained the company.

The workers would then proceed with the scheduled shutdown of the facilities in the integrated gas chain, including the LUN-A platform.

The Sakhalin maintenance programme is expected to be completed by the start of July.

Reliance Industries of India and BP of the UK said a second natural gas field had come on stream ahead of the mid-2021 schedule in the Krishna Godavari Basin offshore the Indian East Coast, adding to the nation’s gas supply in addition to LNG shipments.

Malaysian Energy company Petronas has announced the launch of its LNG delivery service by truck for off-grid small-scale customers across Peninsular Malaysia from the regasification terminal at Pengerang in the state of Johor.

“Petronas provides industries in Peninsular Malaysia that are not connected to the natural gas infrastructure with an option to switch to gas as an alternative form of cleaner energy,” said the company.

As part of the pilot phase, Petronas completed its first delivery of LNG to a tyre manufacturing plant for the company, Continental Tyre Alor Setar Malaysia.

“The solution forms a part of Petronas’s commitment to environmental sustainability and to drive the growth of natural gas usage in Malaysia,” said Adnan Zainal Abidin, a Petronas Executive Vice President and Chief Executive of the company’s Gas and New Energy division.

He said that by establishing the necessary infrastructure the national oil and gas company offers customers a cleaner and competitive form of energy for power.

“We achieve this by embracing our customers pain-points in our strategies which results in strong collaborations across Petronas’s value chain to provide an integrated solution,” he explained.

“Ultimately, we provide a one-stop centre for off-grid customers, covering supply, loading facilities and logistic services to ensure that their cleaner energy needs are met,” he added.

“The launch of our latest solution is a testament to how Petronas delivers customer-centric solutions through our focus on innovation,” stated Adnan.

Along with other global energy companies, Petronas recently posted a loss due to lower prices and a curtailment of economic activity because of Covid-19.

Petronas reported a first-half loss of 16.5Bln Malaysian ringgit ($3.97Bln) and a 23 percent year-on-year reduction in revenue to 93.6Bln ringgit ($22.5 billion) on the back of lower average realised prices and a drop in sales volumes for processed gas and LNG.

The company said that it was looking at ways of cutting costs, including wage cuts to avoid reducing its number of employees.

Petronas President and Chief Executive Muhammad Taufik Tengku Aziz, said the company was considering pay cuts for its more than 47,000 employees in the light of the continued challenging market conditions.

Keynote speakers at the first Gastech Virtual Summit, including Ministers from Singapore and Canada and the head of Integrated Gas at Royal Dutch Shell, have voiced optimism about the future of LNG and natural gas and their managed role in the energy transition.

A group of Japanese utilities and energy companies will be receiving more liquefied natural gas volumes for the Soma LNG terminal after the new Fukushima Natural Gas Power Plant started to generate electricity at full capacity from its two units in the prefecture where the nuclear plant exploded during an earthquake and tsunami in 2011.