LNG

PetroChina, the Hong Kong-listed arm of China National Petroleum Corp. and with LNG project stakes in Mozambique and Canada, has swung to a first-quarter loss because of the effects of the coronavirus and as its own oil and natural gas output increased in a low-demand period.

The state-controlled Chinese major reported a net loss for the first three months of 2020 of 16.23 billion yuan ($2.29 billion) versus a profit of 10.24Bln yuan ($1.44Bln) in the prior-year quarter.

PetroChina’s revenues fell by 14.4 percent to 509 billion Chinese yuan ($79.9Bln), according to its earnings statement filed with the Hong Kong Stock Exchange.

Crude oil production rose 4.2 percent to 232.7 million barrels and natural gas output increased 8.7 percent to 1,086.9 billion cubic feet.

“The increase in output was driven by new oil and gas capacity built in 2019,” said PetroChina.

“Facing a severe and complicated economy and operational situation both abroad and domestically, the group faithfully acted out the new concept of development, pushed ahead with quality-based development, paid more attention to green and low-carbon development and digital transformation as well as the value creation,” it added.

PetroChina’s managing company CNPC imports pipeline natural gas from Central Asian countries and Russia as well as LNG from projects such as the Yamal plant in Siberia and from PetroChina LNG agreements.

The Chinese major is additionally part of Royal Dutch Shell’s LNG Canada project under its own name PetroChina and has a stake in the Area 4 reserves in the Rovuma Basin offshore Mozambique with Italian company Eni and ExxonMobil.

PetroChina also operations three important Chinese LNG import terminals at Dalian and Tangshan in the northeast of the country and at Rudong in the central Jiangsu province in the coastal area near Shanghai.

PetroChina also receives natural gas pipeline supplies from Turkmenistan, Kazakhstan and Uzbekistan.

“The production and sales plans for the first quarter were set in advance and lagged behind in terms of adjustment,” stated the company.

In response to the coronavirus pandemic and record-low oil prices, PetroChina said it would aim to “dynamically optimise” and adjust spending this year from a previously planned 295Bln yuan ($41Bln)

Its exploration and production business recorded a 14.88Bln yuan operating profit in the first quarter, up 3.9 percent and was helped by an 8.9 percent cut in operational costs.

PetroChina's crude oil throughput at refineries fell by 9.6 percent to 276.5 million barrels, or 3.04 million barrels per day, due to the coronavirus pandemic.

Sales of refined oil products, including gasoline, diesel and kerosene, fell 15.9 percent to 3,547.8 tonnes, reducing profits by around 20.11 billion yuan ($2.84Bln).

Royal Dutch Shell and the privately-owned Chinese company, GCL Oil & Natural Gas Co., have signed an agreement to explore the establishment of a joint venture based in eastern China to market and trade liquefied natural gas.

PetroChina, the Hong Kong-listed arm of China National Petroleum Corp. (CNPC), reported a drop of just over 23 percent in nine-month net profits to 37.25 billion yuan ($5.28 billion) due to a lower oil price and intensified competition in refining as it also faced revenue problems with LNG and pipeline gas imports.

The Rudong liquefied natural gas import terminal in the eastern Jiangsu Province of China and with LNG links to Canada is undergoing repairs after an accident and is not expected to be fully operational again until mid-November.

Woodfibre LNG, the small-scale Canadian export project planned for near Squamish in British Columbia, has been granted a permit by the provincial authorities to proceed with construction.

Pacific Oil & Gas, the Asian-based developer of the Canadian Woodfibre LNG export project in British Columbia, is buying Canbriam Energy, a producer of natural gas in the Montney Shale basin of northeast BC.

Pacific Oil & Gas is a subsidiary of the Royal Golden Eagle group of Indonesian businessman Sukanto Tanoto and whose headquarters are in Singapore.

The Asian and Canadian companies said the Canbriam transaction would create a well-capitalized entity able to grow from its current production of about 200 million cubic feet per day of natural gas, including 6,000 barrels per day of associated natural gas liquids.

The Woodfibre liquefaction and export plant is being built on the site of a former pulp mill at Squamish, north of Vancouver, and is licensed to export more than 2 million tonnes per annum of LNG.

The relatively small-scale Canadian LNG project is expected to start commercial operations by about 2023.

The PO&G purchase of Canbriam includes its natural gas processing plants and water-handling infrastructure to support natural gas pipeline transportation.

“Canada has the opportunity to become a leader in the global energy transition,” said Ratnesh Bedi, President of PO&G.

“Canbriam is one of the lowest cost producers in the Montney and we welcome the opportunity to work in Canada and produce some of the cleanest natural gas,” added Bedi.

Paul Myers, Canbriam’s President and Chief Executive, welcomed his company’s sale to such an experienced energy player.

“This transaction supports ongoing development of our prolific Montney assets and aligns us for future natural gas exports. We warmly welcome Pacific Oil & Gas as our new owner,” stated Myers.

The Woodfibre LNG project is one of the few moving forward on the Canadian West Coast where more than a dozen were previously planned.

Woodfibre owner PO&G also has LNG import assets in China. It holds a 35 percent stake in the Rudong LNG import terminal in China's eastern Jiangsu Province, with 55 percent held by Kunlun Energy, a Hong Kong-listed subsidiary of PetroChina.

PetroChina itself is an investor in the largest LNG export project moving forward in BC, the LNG Canada joint venture with 20 MTPA of initial output led by Royal Dutch Shell and with other stakeholders including Mitsubishi Corp. of Japan and Korea Gas Corp.

The closing of the Canbriam transaction is expected to occur before July 2019.

Macquarie Capital Markets Canada is the acting financial advisor to PO&G and Bennett Jones is acting as legal counsel.

RBC Capital Markets is the advisor to Canbriam and Norton Rose Fulbright Canada is giving legal counsel.

PetroChina plans to expand the Tangshan LNG import terminal that supplies the capital Beijing to become the largest of the nation’s network of 18 terminals, while the company will also start building work soon on its fourth regasfication facility.

PetroChina, the Chinese energy company and liquefied natural gas terminal owner, has commissioned new storage and regasification facilities at the Rudong import terminal, previously visited by British Columbia Premier Christy Clark.