LNG

Seatrium Group of Singapore, formerly called Sembcorp Marine Ltd and renamed as Seatrium following its merger with Keppel Offshore & Marine, has successfully delivered the converted floating LNG production vessel for the BP-led FLNG project offshore Mauritania and Senegal.

Leading Asia-Pacific LNG operator Chevron Corp., along with French industrial gas company Air Liquide, Singapore’s Keppel Infrastructure and Chinese energy major PetroChina have signed an accord to form a consortium to advance the development of large-scale carbon-capture, utilization, and sequestration (CCUS) solutions.

The consortium intends to research, test, and develop technological, logistical, and operational solutions for CCUS in Singapore.

“In doing so, the consortium will look to provide industry-wide CCUS integrated infrastructure, primarily to support the energy and chemicals sector, by capturing and aggregating carbon dioxide (CO2) from large industrial emitters at a centralized collection facility,” they explained.

The CO2 could then be utilized to make useful products, such as plastics, fuels, and cement, and/or transported through either pipelines or ships to suitable reservoirs in the Asia-Pacific region for sequestration via a process of injecting CO2 into deep underground geologic formations.

Chris Powers, vice president, for CCUS at Chevron New Energies, said the operator of the Gorgon and Wheatstone LNG projects in Australia believed in the future of energy was lower carbon.

Advancing technologies

“We are committed to advancing technologies and forming strategic relationships to make it happen,” added Powers.

“We look forward to working with like-minded collaborators to progress and advance the development of large-scale CCUS solutions in the Asia-Pacific region for decades to come,” he stated.

Michele Gritti, vice president for Large Industries and Energy Transition at Air Liquide SEA Cluster, said the company supported the decarbonization of industry to help address the urgency of climate change.

“We are pleased to collaborate with Keppel Infrastructure, Chevron, and PetroChina in this decarbonization endeavour, leveraging our expertise and experience in carbon capture, purification, and liquefaction to build a comprehensive carbon-capture decarbonization solution,” added Gritti.

Chua Yong Hwee, executive director (New Energy) at Keppel Infrastructure, said that hard-to-abate sectors needed to leverage technology and innovation to transit towards reduced CO2.

Singapore environment

“Keppel Infrastructure is well-positioned to support efforts to decarbonize key sectors, given our experience as a leading developer, technology solutions provider and operator of energy and environmental infrastructure in Singapore and the region,” he declared.

Li Shaolin, managing director of PetroChina International (Singapore), said there were various pathways to decarbonization, and CCUS has been identified as a strategic pathway to be thoroughly evaluated and developed.

“PetroChina is pleased to be part of this consortium with Air Liquide, Keppel Infrastructure and Chevron; a partnership that will leverage one another’s strengths, capabilities and respective ecosystems towards the advancement of large-scale CCUS solutions in Singapore,” added Li.

Air Liquide Singapore, a fully-owned subsidiary of Air Liquide Group, now has a workforce of close to 800 employees.

Keppel Infrastructure (KI) is a wholly-owned subsidiary of Keppel Corp., the Singaporean flagship multinational company providing solutions for sustainable urbanisation. 

Eastern Pacific Shipping, the Singapore-based shipping line, and Golar LNG have agreed to join forces to run a Golar spin-off initially comprising eight tri-fuel, diesel-electric LNG carrier in a firm called Cool Company Ltd.

BW Group said a $128.3 million financial package has been arranged with IDB Invest, the private arm of the Inter-American Development Bank, to help fund a converted floating storage and regasification unit (FSRU) as part of a gas-for-power project in the Latin American nation of El Salvador.

The financial package has a 15-year contractual term. The funds provide resources for the purchase and conversion of the “BW Tatiana” LNG carrier to an FSRU.

This is the region's first FSRU, which will be permanently moored at the Port of Acajutla in El Salvador.

A BW Group subsidiary, BW LNG, is developing the project with Invenergy, a multinational power generation and operations company.

“The power project’s use of natural gas will reduce the country's reliance on imported diesel and heavy fuel oil-fired generation, resulting in significant environmental benefits,” said the developers.

Invenergy and BW LNG will jointly commission, operate and maintain the FSRU.

“BW is grateful for the opportunity to bring clean, affordable energy to the region, with the support of Invenergy and IDB Invest,” said Jessica Cheung, Vice President for Treasury and Corporate Finance at BW Group, the Singapore-based shipping and oil and gas projects company with a fleet of around 420 tankers and ships, including 190 LNG and liquefied petroleum gas (LPG) vessels.

“Besides enhancing this project's competitiveness, we hope this financing encourages the development of many more LNG-to-power projects in the region,” added Cheung.

BW LNG said a key part of the El Salvador project was the FSRU, which will have regasification capacity of 280 million standard cubic feet a day and storage capacity of 137,000 cubic metres.

Regasified LNG will be transported via a subsea pipeline to the onshore 378-megawatts natural gas-fired power plant.

The El Salvador project is scheduled to be completed in 2022 and is expected to meet about 30 percent of El Salvador's energy demand.

“The close of financing for the FSRU represents a significant step forward in the completion of the transformational project, the foundation for El Salvador's clean energy future,” said Meghan Schultz, Senior Vice President, Finance and Capital Markets at Invenergy.

“This multi-component project is only made possible through the collaboration and support of our incredible partners, BW LNG and IDB Invest,” added Schultz.

Sembcorp Marine posted a net loss of S$192 million (US$138.3M) for the six months to June 2020, following the “severe deterioration” of activities at all its Singapore yards as a result of the Covid-19 pandemic and amid a planned de-merger from parent Sembcorp Industries.

Sembcorp Marine’s results in the same six months of 2019 had amounted to a loss of S$7M.

The first-half 2020 earnings showed group revenues were S$906M and the net order book had S$1.91Bln of work outstanding, including liquefied natural gas sector ships such as LNG-powered vessels, bunkering ships and floating LNG storage.

A total of 74 vessels were repaired or upgraded at Sembcorp Marine yards in the 2020 first half, less the half the total of 153 vessels in the first six months of 2019.

The Sembcorp construction and conversion work for LNG mainly affects projects involving joint ventures of Japanese shipping company Mitsui OSK Lines.

Since April, when the Singapore government imposed its Covid-19 “circuit breaker” measures, in particular movement restrictions that disallowed migrant workers from leaving their dormitories for work, there was a substantial reduction in the group’s operating yard workforce (including sub-contractors) from about 20,000 to 850 persons.

Sembcorp Marine’s Singapore yards had to stand down and discontinue production activities, resulting in significant delays to project executions.

As a consequence, all divisions posted losses for the six months period, with the exception of Repairs & Upgrades which reported higher profits.

The company said Specialised Shipbuilding revenue was S$35M, up from S$7M in the year-ago period on higher earnings for Roll-On-Roll-Off passenger (Ropax) ferries as well as the LNG bunker vessel projects.

Revenue from Repairs & Upgrades totalled S$258M, which was 5 percent higher than the $245M in the 2019 first half.

This was due to higher revenue per vessel at S$3.49M from several upgrade projects for floating storage and regasification units (FSRU) and cruise ships.

Revenue for the Rigs & Floaters segment was S$459M, well down on the S$1.22Bln recorded in the 2019 first half.

Offshore Platforms revenue was S$130M. This included platforms successfully delivered for the Tangguh gas modules project in June 2020 from Sembcorp Marine’s Batam yard in Indonesia.

Singapore’s state wealth fund Temasek recently stepped in to support a S$2.1Bl rights issue by Sembcorp Marine to help its finances and as it also demerges from its parent company Sembcorp Industries.

Temasek in 2019 had offered to buy control of another Singaporean conglomerate Keppel Corp, whose businesses includes the hard-hit rig-building sector.

Sembcorp Industries owns 61 percent of Sembcorp Marine.

Sembcorp Marine President and Chief Executive Wong Weng Sun said during an earnings call on July 15 that the company had been positioned for recovery in 2020 before being hit by the double crises.

“Given the delays in executing our existing projects, and with new orders likely to remain depressed in 2020, the group now foresees that recovery will be pushed out to 2021 and beyond,” explained Wong.

“While we have yet to announce significant new orders this year, we have resumed discussions on several project opportunities,” added the CEO.

He has also brought in pay cuts across the board in all divisions of the company.

Wong said he had volunteered to take a 50 percent pay cut, senior management will take 15 percent salary reductions and middle management will be paid 10 percent less.

All other employees in Singapore and overseas will take a 5 percent pay cuts, except for those earning under S$1,800 a month. 

The Baltic Exchange Escrow Service continues to gain traction, with new transactions completed in the fourth quarter of 2019 and the first three months of 2020.

The Baltic Exchange, owned by the Singapore Exchange, follows a robust due diligence process and complies with the Monetary Authority of Singapore requirements without compromising on flexibility and service speed to ensure the transactions are handled seamlessly. 

This is reinforced by the strict internal control of fund movements from the dedicated escrow account held with AA-rated Singapore banks Overseas-Chinese Banking Corp (OCBC) and United Overseas Bank (UOB).

The escrow service, operated from Singapore, facilitates both shipping and non-shipping transactions around the world. 

Escrow services give certainty to all sides in a transaction that payments will be made on completion as they are held by a trusted third party.

In LNG, the London-based Exchange collects data from shipping brokers to provide assessment of three routes on the CME Group trading platform.

These form the basis for a suite of assessments for gas shipping and freight contracts, the first LNG derivative swap took place in July 2019, with cleared trades following since then as company built open-interest positions.

The LNG swaps based on shipments from Australia’s Gladstone port in Queensland to Tokyo, from the US Sabine Pass LNG plant in Louisiana, owned by Cheniere Energy, to the UK. A third freight contract is from Sabine Pass to Tokyo.

So far the Baltic Exchange’s transactions supported by escrow have included asset sales and disputes. However, the service is available for any transaction requiring an escrow agent. 

The Baltic Exchange is an independent organisation whose international membership is mainly made up of shipowners, shipbrokers and charterers. 

It is the provider of trusted benchmarks and settlement data in the shipping industry. Its escrow service builds on this independence and trust. 

Users of the service are assured of the highest levels of confidentiality, professionalism and security. 

“The Baltic Exchange acted as escrow agent in the context of a recent sale and purchase transaction providing a professional, swift and efficient support at each stage of the process,” said customer  Federico Grimaldi, Sale &Purchase Manager at shipping company Vroon B.V.

“A customer-oriented approach, professionalism and high responsiveness of the Escrow team allowed for a seamless transaction,” added Grimaldi.

Dmitry Pismenny, who heads up the escrow service, said that the Exchange was very pleased to see growing interest in the escrow service. 

“Our flexibility and efficiency in supporting different types of transactions has earned plaudits from our clients.,” added Pismenny.

The growth of liquefied natural gas as a maritime fuel option when the 2020 sulfur limit enters into force has been boosted by the Port of Singapore’s plans to prohibit the discharge of wash water from open-loop exhaust-gas cleaners into its waters.