LNG

July 12 (LNGJ) - Malaysia’s Jerun natural gas field operated Sapura-OMV Upstream has achieved first gas to boost LNG supply prospects at the Bintulu liquefaction plant in Sarawak. UK major Shell has a 30 percent equity stake in the field, through its Malaysian subsidiary.

   The field is located about 160 kilometres northwest of the Bintulu LNG plant. “Comprising an integrated central processing platform, Jerun will export gas through a new 80km pipeline into the E11RB production hub, for onward delivery to Bintulu-based customers including Malaysia LNG,” said Shell.

Petronas, the Malaysian state-owned energy company with oil and gas projects and onshore and offshore LNG production plants, reported quarterly net profits down by a third while expecting its cargo portfolio to increase after LNG Canada comes on stream and overall cargo sales and prices to improve.

Chinese liquefied natural gas imports for the two-month January-February 2024 period soared by more than 23 percent from a year earlier as prices declined and demand grew during a time that encompassed the Lunar New Year holidays in China.

Japanese liquefied natural gas imports increased for a second month with more shipments being supplied by Asian nations and the US at much lower prices while deliveries declined of thermal coal for power generation.

Deliveries of LNG to the nation’s regasification terminal network rose by 6.4 percent in October 2023 to 5.42 million tonnes, or 80 cargoes, from the 5.08MT, or 75 shipments, received in October 2022, according to preliminary trade data from the Japanese Finance Ministry.

Imports in the previous month of September had risen by 3.8 percent to 5.52MT from the 5.32MT received in September 2022.

The Ministry figures also showed that LNG cargoes cost 37.6 percent less in October2023 at 495.56 billion yen ($3.31Bln) compared with 794.76Bln yen ($5.30Bln) in October 2022.

Deliveries of thermal coal to Japanese ports dropped by 5.1 percent year-over-year to 8.61MT.

Asia steady

The Ministry data showed the imports of LNG last month from Asian nations like Malaysia, Indonesia and Brunei increased by 26.6 percent from October 2022 to 1.19MT. 

Middle East shipments from countries such as Qatar increased by 12.2 percent year-over-year to 421,000 tonnes.

Deliveries from US liquefaction and export plant increased by 175 percent to 568,000 tonnes, though the total was less than the previousmonth’s 707,000 tonnes.

Russian LNG deliveries to Japan fell by 4.6 percent to 506,000 tonnes.

The balance of deliveries to Japan from Australia and the spot market in October 2023 amounted to 2.73MT, which was less than the previous month’s 2.89MT and the 2.92MT logged for this segment in October 2022.

Japan had regained the global No. 1 spot as an LNG importer from China in 2022 with its 72MT of volumes, though the pace of Chinese deliveries has increased in 2023.

Nuclear competition

Japan is also using more nuclear power and intends to bring other reactors on line over the next year or so as public opposition lessens with energy security taking priority.

Almost a dozen reactors are now back in operation compared with the 54 that were online in 2011 before the Fukushima disaster and which had supplied around 30 percent of Japan’s energy needs.

The latest nuclear restart was the Takahama-1 plant owned by LNG importing utility Kansai Electric Power Company and brings to 11 the number of plants in operation from the 33 that are capable of re-starting. 

Japan’s Nuclear Regulation Authority is examining the re-start proposals for 10 more N-plants. 

Among them is Chugoku Electric Power’s plans to restart the No. 2 reactor at its Shimane nuclear power station in August 2024.

The 11 restarted reactors so far are: Genkai-3 and Genkai-4, Ikata-3, Mihama-3, Ohi-3 and Ohi-4, Sendai-1 and Sendai-2 and Takahama-1, Takahama-3 and Takahama-4.

US energy and liquefied natural gas project engineering company McDermott has been awarded an initial contract as part of a venture for the development of a natural gas field offshore Vietnam, one of the newest LNG importing nations.

Avenir LNG, the London-headquartered global energy supplier for small-scale projects and gas carriers, has awarded the management of three LNG bunker vessels to Wilhelmsen Ship Management of Norway.

McDermott, the US energy and liquefied natural gas project engineering company, was awarded an offshore pipeline and installation contract from Shell subsidiary Sarawak Shell for the Selasih natural gas fields pipelay and heavy-lift project off the coast of Sarawak in East Malaysia to help underpin LNG production.

Shell is the operator for the exploration acreage and new fields in the F22 and F27 Selasih area which are part of the Malaysia LNG extension and production sharing contract (PSC).

Nearly all the gas produced offshore Sarawak is supplied to Malaysia LNG and to the gas-to-liquids (GTL) plants in Bintulu.

Analysts note that Shell is still very active in Malaysia and is involved in oil and gas offshore Sabah and Sarawak under about 16 PSCs in which its interests range from 20 percent to 85 percent.

Offshore Sabah, the UK-based major’s local subsidiary operates two producing oil fields, including the Gumusut-Kakap deepwater field, with Shell’s interest 29 percent, and the Malikai deepwater field, Shell interest 35 percent.

However, Shell is even more active offshore Sarawak where it is the operator of eight producing gas fields with Shell’s interest 50 percent.

Among the projects were included the 2019 abandonment of depleted wells for the Serai field and the Saderi fields.

Shell then signed agreements for the extension of the Malaysia LNG PSC using other sources.

McDermott scope

Under the scope of the latest contract with Shell, McDermott said it would perform transportation and installation services for two pipeline segments and one section of flexible pipelay.

McDermott will also provide pre-commissioning works on all infield pipelines and perform the structural installation of three jackets and topsides.

“This is the fourth project we are executing for Shell under the Subsea and Floating Facilities project portfolio, demonstrating the strength of our long-standing relationship,” said Mahesh Swaminathan, McDermott's Senior Vice President for Subsea and Floating Facilities.

The project management and engineering will be executed in Malaysia, leveraging the local expertise.

Offshore installations will be performed using the “DLV2000”, McDermott's versatile heavy lift and pipelay vessel.

“To ensure efficient project delivery, we will draw upon the expertise from our Kuala Lumpur center, which supports the global execution of subsea and offshore projects,” stated Swaminathan.

Osaka Gas, a leading Japanese LNG importer, reported a 43 percent increase in consolidated net sales for the fiscal year to the end of March 2023, mainly due to higher prices for city-gas in Japan, though profits fell year-on-year because of the shut-down of Freeport LNG in Texas for most of the year from June and the higher cost of replacement cargoes.

Osaka Gas, which is part of the Daigas Group, increased annual sales to 2.27 trillion yen ($16.8 billion), up from 1.59 trillion yen ($11.8Bln) in the previous fiscal year.

The utility’s gross annual profits dropped to 282.2 billion yen ($2.09Bln) from 314.2Bln yen ($2.33Bln) in the 2021-2022 fiscal year.

Ordinary profits declined by 33.5 percent on the year to $74.65Bln yen ($560.8M) versus 113.52Bln yen ($841.5M) in the previous fiscal year.

“This was primarily due to the higher unit selling price of city gas under the fuel cost-adjustment system and an increase in sales from a rise in LNG prices and in the Domestic Energy Business and an increase in sales from the upstream project in the USA and Australia in the International Energy Business,” said Osaka Gas.

Negative impact

“In the Domestic Energy Business, although the negative impact of the time lag between fluctuations in raw material costs and their reflection in the unit selling prices diminished compared with the previous fiscal year, costs for LNG procurement increased,” the company explained.

Osaka Gas added that its number of consolidated subsidiaries was currently 154, with nine subsidiaries added and five removed since the fiscal year ended.

In its explanation of reduced profits from Freeport LNG, Osaka Gas noted that a fire broke out at the liquefaction plant of the Freeport LNG project, one of the Daigas Group’s investments and LNG sources.

“In response to the shutdown, we prepared to secure replacement LNG for the volumes the Group originally planned to procure from the project during the shutdown period and arranged modification regarding the contracts related to LNG procurement from the Freeport Project. The Project restarted operations at the plant in February of this year,” said Osaka Gas.

Global volumes

Osaka gas also has booked volumes from other global projects such as Oman LNG in the Arabian Peninsula, Gorgon LNG in Western Australia, the nearby Northwest Shelf Project and the Bintulu LNG plant in Malaysia.

Other Osaka Gas suppliers include Papua New Guinea LNG and the Sakhalin export plant in the Russian Far East.

In its future earnings forecast to March 2024, the utility said that consolidated ordinary profit was expected to increase by 83.3Bln yen ($607M) year-on-year to 159.0Bln yen ($1.78Bln) with Freeport back on stream.

“This is primarily due to an increase in profit in reaction to the absence of costs and losses associated with the Freeport fire in this fiscal year,” said Osaka Gas.

Japan has formally retaken from China its position as the World No. 1 LNG importer with more volumes coming from Australia, Russia and its Asian neighbours even as overall deliveries to Japanese terminals fell in 2022 and slumped in December.

Dec 27 (LNGJ) - Malaysian energy company Petronas said it reached a positive final investment decision for a nearshore liquefied natural gas production facility in the state of Sabah on the north of the island of Borneo. “The project will be located near the Sipitang Oil and Gas Industrial Park and was expected to produce 2 million tonnes per annum of LNG when it comes onstream in the second half of 2027,” said a statement.