LNG

Shell is moving ahead with the development of 145 new onshore coal-seam gas wells to maintain the necessary production levels at the Queensland Curtis LNG export plant on Curtis Island near the port of Gladstone.

Chevron Corp., one of the world’s leading LNG production companies with three operated plants in Australia and Angola, said it would spend $14 billion in 2021, mainly targeted at its upstream activities, including the US shale assets in the Permian Basin.

Chevron Corp. said it restarted LNG production at Train 2 of the Gorgon liquefaction and export plant it operates on Barrow Island in Western Australia.

Origin Energy, the Australian utility and shareholder with China’s Sinopec and ConocoPhillips in the Australia-Pacific LNG plant in Queensland, said revenues dropped during the quarter, driven by lower realised prices for long-term LNG and it was cutting back on coal-seam feed-gas output because of subdued demand.

Axpo, the Swiss renewable energy producer and global energy trading firm, is opening an office in Singapore to become the latest firm to join Asia's growing liquefied natural gas trading market in the city-state where 50 LNG trading and shipping firms have offices.

The Gazprom-run Sakhalin liquefied natural gas export plant in the Russian Far East has started maintenance work and has shut down one of its processing Trains.

Sakhalin Energy, the plant operating company, had originally planned for work to be done on both Trains at the same time, but logistical difficulties occurred caused by the Covid-19 pandemic and resulting safety measures.

The main buyers of Sakhalin cargoes are Japanese, South Korean and Chinese energy companies.

The shareholders in the plant are Gazprom with 50 percent plus one share, Royal Dutch Shell with 27.5 percent and Japanese companies Mitsui and Co. and Mitsubishi Corp. with 12.5 percent and 10 percent respectively.

Under its new plans some scheduled maintenance work has now been postponed until 2021.

“Due to current economic downturn and the pandemic challenge, we had to modify the initial turnaround scope,” said a Sakhalin Energy statement.

“To ensure the safety of our people and reliable production, the company has decided to follow the original timeline, but shut down only one Train at the LNG plant,” the company added.

LNG production at the two-Train Sakhalin plant has remained at just over 11 million tonnes per annum in recent years. The plant was Russia's first and came on stream in 2009.

The newer Yamal LNG plant started up in 2017 with output of 16.5 MTPA from three Trains and is operated by independent Russian natural gas company Novatek.

A long-planned expansion at the Sakhalin plant and the construction of a third liquefaction Train has so far failed to take place.

However, Gazprom notes that regular de-bottlenecking and equipment adjustments over the past 11 years has seen output raised to more than 11 MTPA from the nameplate capacity of 9.6 MTPA.

LNG cargoes produced and marketed at Sakhalin are supplied on a free-on-board basis and shipped by the company’s LNG carriers, “Grand Elena”, “Grand Aniva” and “Grand Mereya”.

Two other vessels, the “Amur River” and the “Ob River” carriers are used by the company under long-term charter agreements.

Japanese liquefied natural gas imports dropped last month and the nation’s cargo costs fell along with lower LNG prices while thermal coal deliveries were preferred for power generation.

Japan imported 6.64 million tonnes of LNG in February 2020, down 9.6 percent from the 7.35MT received in February  2019.

The Japanese had imported 7.51MT in January 2020, down 0.5 percent from the 7.54MT received in January 2019.

The shipments cost the nation 351.42 billion yen ($3.26Bln), 24 percent lower in yen terms than the import bill for February 2019 when it was $462.22Bln yen ($4.13Bln), according to the preliminary figures from the Japanese Finance Ministry.

Thermal coal imports, a major replacement for LNG in the power sector, came to 9.14MT in February 2020, down just 1.6 percent on the 2019 figure and in line with the January 2020 shipments.

The country’s imports of LNG fell for the whole of last year to 77.32MT,  which was 6.7 percent lower than the 82.85MT of shipments that arrived in 2018.

The costs of cargoes sent to Japan amounted to 4,354 billion yen ($39.72Bln) in 2019, down 8.1 percent from the previous year.

Annual thermal coal shipments came to 111.05MT in 2019, down just 2.2 percent on the 2018 total.

Asian LNG cargo deliveries from nations such as Malaysia and Indonesia, Papua New Guinea and Brunei amounted to 1.66MT in February 2020, down 18.7 percent on the same month a year ago.

Middle East deliveries from countries like Qatar, the United Arab Emirates and Oman came to 1.31MT, a drop of 15.1 percent.

Shipments from Russia, mostly from the Sakhalin Island plant in the Far East, amounted 597,000 tonnes, a decline of 1.1 percent on the same month last year.

US cargo deliveries to Japan continue to rise as more capacity comes on stream and came to 473,000 tonnes versus 403,000 tonnes in January 2020, and 41.2 percent higher than the 335,000 tonnes received in February 2019.

Japan will be importing a bigger proportion of low-priced US cargoes in the years ahead from booked volumes and the spot market with six US export plants now in operation.

Last year the US shipped 3.69MT to Japan, a rise of 48.2 percent on 2018.

The balance of Japan’s January imports came from Australia, African nations and the spot market and amounted to 2.60MT versus 2.83MT in February 2019 and 3.22MT in January 2020.

South Korea, the third-largest LNG importer, posted a 15 percent decline in liquefied natural gas shipments last month even at seasonally low prices, with Australia and Malaysia as the leading suppliers.

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.