LNG

The Hong Kong floating LNG import terminal, the “Bauhinia Spirit” FSRU deployed to the east of the Soko Islands, is operating well after entering service in July 2023 and has been receiving diverse cargoes.

CLP Power Hong Kong and The Hongkong Electric Company are the charter owners of the facility and they have recently updated investors on the benefits of LNG imports for the former British colony handed back to China in 1997.

“The operation of the terminal has enhanced Hong Kong’s fuel supply stability by the addition of a new supply source for natural gas, facilitating the city’s energy transition,” they said.

The “Bauhinia Spirit” is the world’s largest FSRU and has an LNG storage capacity of 263,000 cubic metres. 

It is moored at the jetty of the terminal to receive, store and regasify LNG before the natural gas is sent by two separate subsea pipelines to CLP Power’s Black Point Power Station and HK Electric’s Lamma Power Station.

“The terminal gives the power companies direct access to international LNG markets and provides a long-term alternative fuel source to meet Hong Kong’s generation needs,” they added.

Reliability

“It also strengthens the companies’ supply reliability, and ability to source competitively-priced gas for the benefit of customers and Hong Kong as a whole,” the statement explained.

The CLP Holdings Chairman, Sir Michael Kadoorie, said that the construction of the offshore LNG terminal took place in the midst of the pandemic, exemplifying Hong Kong’s engineering prowess and the city’s can-do spirit. 

“Being the first of its kind in Hong Kong, the offshore LNG terminal bears great significance in supporting the city’s energy transition,” Kadoorie added.

“CLP Power and HK Electric have been serving Hong Kong for over a century. This new terminal signifies a proud collaboration between us to support Hong Kong’s energy development,” he explained.

“We would like to take this opportunity to express our greatest gratitude to the many parties who helped make this engineering wonder possible - our business partners, marine experts, engineers, technicians, construction workers and HK Electric and CLP Power colleagues,” Kadoorie stated.

John Lee, Chief Executive of the Hong Kong Special Administrative Region (HKSAR), said that the offshore LNG terminal was a great benefit to the people of Hong Kong.

“The terminal not only ensures a more reliable and diversified energy supply for Hong Kong, but also helps to promote more stable electricity prices,” Lee concluded.

Chinese liquefied natural gas imports increased last month by 30 percent as energy demand recovered because of lower prices and more regasification capacity has come on line, including in Hong Kong.

May 19 (LNGJ) - Chinese LNG imports in April 2023 rose by 10 percent to 4.77 million tonnes compared with 4.34MT in April 2022, according to China’s General Administration of Customs.

   Analysts noted that the increase was from an already low base as the April 2022 deliveries took place during Covid-19 lockdowns in large cities like Shanghai when economic and industrial activity were curbed along with fuel demand. The Chinese LNG deliveries in April 2022 had also been the lowest total for more than two years.

The Hong Kong floating liquefied natural gas import project has begun commissioning for the start of commercial operations planned for June using the world’s largest floating storage and regasification unit, the “FSRU Bauhinia Spirit”.

The commissioning cargo, provided by Hong Kong stock exchange-listed Chinese major, PetroChina, was unloaded on May 15 and will contribute to cool-down operations along the specially built jetty, as well as the storage tanks and pipelines.

Two subsea gas pipelines are connected from the FLNG terminal to Hong Kong’s Black Point Power Station and the Lamma Power Station respectively.

The terminal trial processes are also part of the procedure before the senior project contractor, the China Offshore Oil Engineering Company (COOEC), a subsidiary of China National Offshore Oil Corp. (CNOOC), hands over the facility to the joint venture company Hong Kong LNG Terminal Ltd.

Owners

The owners of the terminal venture are the two local power utilities, Hong Kong Electric Power Co. and Castle Peak Power (CLP) Hong Kong Ltd..

They had initially proposed the terminal to Japanese shipping company, Mitsui OSK Lines, using MOL’s “FSRU Challenger”, now renamed “FSRU Bauhinia Spirit” and with 263,000 cubic metres capacity.

The FSRU had arrived offshore Hong Kong in the middle of April to prepare for the project launch at a site about 25 kilometres (15.5 miles) southwest of Hong Kong Island

HK Electric is the historic supplier of electricity to customers on Hong Kong and Lamma Islands.

CLP Hong Kong Limited (CLP Power) is a subsidiary of CLP Holdings, a company listed on the Hong Kong Stock Exchange and now one of the largest investor-owned power businesses in Asia.

The CLP Group has other power assets in Mainland China, Australia, India, Southeast Asia and Taiwan.

The Hong Kong project increases regasification facilities available to the Chinese to 25 and with half-a-dozen other projects planned on the mainland, not including the expansion of existing terminals.

Coal-to-gas

CLP Power said that it had substantially increased the proportion of natural gas in Hong Kong’s fuel mix to around 50 percent since 2020.

“Planning and construction of the offshore LNG terminal began a few years ago which underlines the importance of long-term planning to the energy industry,” added CLP Power.

HK Electric’s Managing Director Wan Chi-Tin said that the utility has always aimed to switch from coal-fired to gas-fired generation as natural gas is a fuel for the energy transition.

“The commissioning of the gas-fired unit L11 in 2022 at Lamma Power Station enabled us to generate over half of our electricity from natural gas,” he said.

“Another gas-fired unit, L12, is expected to commence operation in early 2024, which will further increase the share of natural gas in our fuel mix. The offshore LNG terminal, once in operation, will enhance supply security and cost effectiveness,” Wan added.

Hong Kong Electric, the former British colony’s main power company, said the first LNG import project in the territory now administered by China, including the world’s largest floating storage and regasification unit, will start operations in mid-2022.

The Singapore office of international law firm, Ince, has given additional details of the planned Hong Kong offshore LNG import terminal project, involving the world’s largest floating storage and regasification unit.

Ince acted as adviser to the Japanese shipping line, Mitsui O.S.K. Lines (MOL), which is chartering the FSRU to two Hong Kong utilities.

The project involves a joint venture between sponsors Castle Peak Power Co. Ltd. and the Hongkong Electric Co.

MOL will provide the vessel “MOL FSRU Challenger”, along with operations and maintenance services, to the project aimed at supplying regasified LNG for gas-fired power at the Black Point and Lamma Island power stations.

“With a storage capacity of 263,000 cubic meters, the ‘MOL FSRU Challenger’ is the largest FSRU in the world and the project will ensure a reliable and stable fuel supply for Hong Kong,” said Ince.

The “MOL FSRU Challenger” is currently deployed as an import facility offshore Turkey.

MOL had previously said the FSRU is expected to enter service off Hong Kong around the end of 2020 or early 2021 and after an accord was signed by the shipping line back in June 2018.

The Japanese-owned vessel will supply the Black Point Power Station located in the New Territories and the Lamma Power Station on Lamma Island to improve air quality and the environment in Hong Kong, which was returned to Chinese sovereignty in 1997 after 156 years of British rule.

Law firm Ince said it advised MOL on the negotiation of the FSRU Time Charter Party and Services Agreement, Hong Kong regulatory issues and complex finance-related issues.

The Ince team which comprised of shipping, energy and finance lawyers was led by Devandran Karunakaran, Singapore office Managing Partner, with a team of lawyers from Singapore and Hong Kong.

“We are delighted to have supported one of our key clients, MOL, on this project, a milestone both in terms of the FSRU and energy sectors,” said Karunakaran.

“Ince’s role in this project is a testament to our vast experience in, and continued commitment to, the offshore energy sector in general and the FSRU sector in particular,” he added.

“Our cross-border team was able to give real-time advice on shipping, offshore energy, finance and local regulatory issues,” the lawyer stated.

Simon Hems, the firm's head of Energy and Infrastructure and a Partner in London, said Ince's involvement in supporting one of the most significant players in this market-leading project, is testament to its global team’s ability to advise on complex, cross-border energy projects.

“We look forward to standing with MOL in their future endeavours and wish them every success with the Hong Kong Offshore LNG terminal project,” said Hems.