LNG

Petronas, the Malaysian state-control energy company, has finally confirmed reports of “force majeure” being declared on natural gas supply to part of its LNG onshore export plant at Bintulu in the state of Sarawak due to a pipeline leak caused by a landslide in the vicinity of the Sabah-Sarawak Gas Pipeline last month.

The Malaysian plant has three liquefaction project divisions at Bintulu called MLNG Satu, MLNG Dua and MLNG Tiga, using the Malay words for one, two and three.

“This has impacted the supply of gas to MLNG Dua’s production facility at the Petronas LNG complex,” stated Petronas.

Petronas said it wished to clarify that the “force majeure” affects the supply of gas to MLNG Dua’s production facility only, while the other LNG production Trains  within the complex continue to operate as usual.

The Bintulu LNG plant has nine production Trains with a combined nameplate capacity of around 25 million tonnes per annum.

Mindful

“Petronas is mindful that this incident has impacted its delivery commitments to some of its contracted LNG buyers and it is in discussions to identify suitable mitigation efforts,” explained the Kuala Lumpur-based company.

The main buyers of cargoes from the three MLNG Dua liquefaction Trains are Taiwan’s CPC Corp. and Japanese utilities such as JERA Co Inc., Tokyo Gas, Osaka Gas and Tohoku Electric.

Petronas added that it was also currently conducting a comprehensive evaluation to ensure the integrity and safety of the Sabah-Sarawak pipeline.

This is the second incident in a year to hit the Bintulu LNG export plant.

In September 2021 a fire broke out but was swiftly tackled and no production was lost at the facility whose main customers are also in China and South Korea as well as Japan.

Incident

That incident occurred at the sea-cooling water outfall channel located outside the process area and the plant’s emergency response team was immediately mobilised to the scene and successfully extinguished the fire.

Petronas said at the time that five contractor personnel sustained injuries in the incident and were immediately taken to hospital and later discharged from hospital after treatment.

Malaysia's overall LNG output increased by 4.5 percent last year to 24.94 MTPA, including all projects.

Japan is the main customer receiving around 10 MTPA from Petronas, followed by Chinese firms with around 6.5 MTPA and South Koreans with 5 MTPA.

This includes volumes from three floating LNG plants deployed in Malaysian waters producing over 4 MTPA.

Golar LNG Ltd, the operator of conventional carriers, floating import and export terminals and a power affiliate backed by its fleet of 27 ships, reported business progress while posting a first-quarter loss amid increased operating revenues.

Golar reported a net loss of $104.24 million for the first quarter compared with $41.74M of losses in the same three months of 2019.

However, total operating revenues were higher at $122.55M versus 114.28M in the year-ago quarter.

“Golar is pleased to report Q1 operating revenues and adjusted EBITDA of $76.2M, that were driven by a solid performance in FLNG, with 100 percent commercial uptime on ‘Hilli Episeyo’ (Cameroon FLNG exports), and strong seasonal results in Shipping,” said Iain Ross, Chief Executive of Golar LNG.

At the Golar Power affiliate, the 1.5 gigawatts Sergipe power plant in northeast Brazil reached its Commercial Operation Date acceptance which triggered earnings under the 25-year Power Purchase Agreement (PPA) and the associated FSRU “Golar Nanook” charter.

Golar LNG said that the first three small-scale customers have also now been formally signed up and LNG distribution operations are expected to start in 2021.

“This short time to cash flow and the very strong project return confirms the attractiveness of our small-scale business,” said the company.

“To date, a further 200 potential customers have signed letters of intent to pursue various small-scale opportunities with Golar Power, demonstrating the robust consumer appetite to reduce both energy costs and environmental footprints,” it added.

Among other highlights, Golar LNG said the power unit entered into a partnership with Petrobras Distribuidora S.A. to facilitate a nationwide rollout of small-scale LNG supply to Brazil's transportation and industrial sectors.

Golar Power also signed an accord with the Brazilian state government of Pernambuco to develop an LNG import terminal in the Port of Suape.

“We also expect to finalize arrangements for locating a Floating Storage Unit (FSU) at Suape over the course of the year,” said Golar.

The affiliate is additionally working with BR Distribuidora S.A to overlay its geographical coverage of LNG distribution onto BR Distribuidora’s 7,600 Brazilian fuel stations.

“This will optimize the roll-out of the necessary infrastructure to convert current diesel, heavy fuel oil and coal consumers to cleaner and cheaper LNG through the provision of a stable and secure LNG supply,” it said.

The floating LNG production from the “Hilli Episeyo” hull deployed offshore Cameroon in West Africa is heading for its 40th export cargo with 100 percent commercial uptime maintained.

Golar also noted that regarding the “FLNG Gimi” being built for production offshore Mauritania and Senegal in West Africa, the company received a “force majeure” claim from UK major BP in relation to a delay in the order of 12 months to the target connection date.

“We are in advanced and positive discussions with our main building contractor, Keppel Shipyard Limited, and with engineering topsides subcontractor, Black and Veatch, on a revised cost and time schedule for the ‘FLNG Gimi ‘conversion that can be implemented as a contingency in response to the 12-month delay claimed by BP on its Tortue project,” Golar explained.

In the LNG Shipping segment, Golar said it expected second-quarter time charters to be at around $40,000 per day, with utilization of at least 80 percent of the fleet based on fixtures to date and the prevailing spot market.

“The current chartering strategy to de-risk the business by targeting more fixed and floating coverage has been successful and we intend to fix more portfolio term-based deals to further de-risk shipping exposure and to hedge expected volatility,” said Golar LNG.

“Except for the ‘Golar Tundra’, scheduled to dry-dock during June, no other dry-docks are planned this year,” it added.

Australian liquefied natural gas shipments have numbered 103 cargoes in the past month and were not affected by the surplus of LNG globally nor by the disruption to trade from the coronavirus, though signs are emerging of some disruption expected in February March.