Final LNG and Economic and Human Impact of Coronavirus Is Still Unclear
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p1-5_LNG 3 28/02/2020 10:36 Page 1 40 pages essential LNG news! March 2020 In this issue: 1 Final LNG and economic and human impact of coronavirus is still Final LNG and economic and human unclear Australia is a main supplier to the Chinese, shipping about 40 cargoes impact of coronavirus is still unclear a month Australia is a main supplier to the Chinese, shipping about 40 cargoes a month 4 Small-scale LNG has The final economic and human impact of important role to play in China’s coronavirus outbreak on LNG helping provide power markets and citizens around the world and clean energy may become clearer in several more Despite the advantages there was still uncertainty as to the durability weeks as activity in key manufacturing of demand in new markets hubs struggles to rebound, keeping a lid on natural gas demand and triggering 6 A round-up of latest more trade flow disruptions. events, company and Restrictions were still preventing industry news millions of workers from returning to work and factories expected only partial For the Record production restarts, with some delaying a return to operations until early March. 20 Worley and consultancy Advisian outline Spectre concepts behind method This has raised the spectre of more Terminal workers at the Sinopec import facility at Tianjin Port in northeast of capturing the cold Chinese LNG importers reneging on China. Some of the 20 terminals had full storage capacity from LNG supply contracts, and suppliers Technology applications can expressing concerns about more cargo diverted and lawyers argue that simply and defining this in the current market increase benefits of cold recovery cancellations after state-run China declaring “force majeure” is not a straight was complicated as not all events trigger and enhance LNG-to-power projects National Offshore Oil Corp., the nation’s forward procedure. It still has to have a a “force majeure”. largest LNG importer, declared “force contractual base. 22 Forecasting of boil-off majeure” in February. Analysts have said that in addition to Testing gas production and LNG A growing number of LNG suppliers, port workers being told to stay at home, That said most LNG Sale and Purchase ageing in Floating including commodities trading firms and China’s 20 LNG import terminal already Agreement have a non-exhaustive list of Storage and national oil companies in the Middle East had high storage levels. events, which provided they satisfy the Regasification Units and elsewhere, had received notifications This is because China like the other general test, are capable of being “force When no regasification takes place in which the effects of the coronavirus Northern Hemisphere countries had mild majeure”. over long periods, boil-off gas production leads to significant were cited. winter weather and much lower demand Contracts also exclude certain events changes CNOOC is the owner of nine Chinese than expected for natural gas. from being “force majeure”, such as the LNG import terminals and has multiple China receives more than 5MT per inability of a party to pay or a breach of 24 Global LNG maritime oil and gas stakes. month of shipments from a diverse list law, or even changes in downstream fuel body Sea-LNG The Chinese major's future project of nations such as Australia, Qatar, markets and reduced gas demand. reports on expanding stakes include the Arctic II LNG joint Malaysia, Indonesia and Papua New French energy major Total said at its gas-powered fleets and venture led by Novatek of Russia. Guinea as well as spot cargoes from West post-earnings conference earlier in bunkering CNOOC also receives regular LNG Africa and elsewhere. February 2020 that there was a strong All shipping sectors have newbuilds shipments from facilities in Indonesia Chinese LNG sourcing has diversified temptation from some long-term on order and leading ports have and in Western and Eastern Australia. as it needs have grown. Imports increased customers to use “force majeure“ to reject fuel infrastructure by 38 percent in 2018 to 53.81MT cargoes under long-term contracts, while Diversions compared with just over 39MT in 2017. still purchasing spot cargoes at lower 27 World Carrier Fleet: China imported a record 61 million Since the beginning of February, about prices. Details of LNG vessels tonnes of LNG during 2019, a 13.5 20 LNG vessels, initially expected to The China Council for the Promotion percent increase on the previous year and deliver their cargoes to China or other of International Trade, which promotes consolidated its position as the No. 2 Far East ports, have been diverted, foreign trade and investment, recently 35 Tables of import and importer after Japan and ahead of South according to shipping data. issued “force majeure” certificates to local export LNG terminals Korea. Lawyers have said that the ability of a companies to protect them from the and plants worldwide However, since the coronavirus Chinese buyer to seek “force majeure” commercial fallout of the coronavirus outbreak some cargoes have been protection depends on the LNG contracts, outbreak. p1-5_LNG 3 28/02/2020 10:36 Page 2 DEVELOPMENTS Some lawyers pointed out that a notice Chinese LNG terminals,” said the economic impacts. The East Coast gas by an authority supporting the buyer’s consultants. market will also be affected if cargoes are journal claim may not be sufficient by itself. It “This has in turn led to several cargoes delayed and significant gas volumes have will depend on the facts and the being delayed in discharging, and in some to be diverted to the domestic market,” provisions of the LNG SPA. cases the cargoes being offered elsewhere stated EnergyQuest. on a prompt basis,” they added. The report explained that even if all of Affected China is the second-largest buyer of the Chinese state-owned companies They explained that the affected party Australian LNG. In January, 36 percent declared “force majeure”, they are The World’s Leading LNG publication would typically need to comply with of Australian exports went to China, just unlikely to stop taking the entire term provisions like taking reasonable behind volumes purchased by Japan. volume. Maritime Content Ltd measures to minimize the effects of “force The East Coast plants in Queensland Captain Rajesh Unni, Chief Executive 2 Prospect Road majeure”, and even if the buyer is not are most exposed to the China trade. of Singapore-headquartered Synergy St Albans AL1 2AX entitled to “force majeure” it may have Group, one of the world’s leading ship United Kingdom www.LNGjournal.com rights to divert cargoes to other markets China portion managers, commented: “Seafarers are +44 (0)20 7253 2700 or reduce offtake quantities. The percentage of output delivered to working under tremendous pressure and Australia is a main supplier to China China in January was 85 percent for doing an amazing job keeping world trade Publisher and was watching the situation closely. Australia-Pacific LNG and 67 percent for moving. But many are, understandably, Stuart Fryer Shipments in January 2020 numbered the Royal Dutch Shell-operated anxious about when they can see families Editor 103 cargoes and 41 were unloaded in Queensland Curtis LNG facility. again because of restrictions on crew John McKay China compared with 35 in December Most other projects also have changes and quarantine periods being [email protected] 2019, so were not affected by the surplus significant exposure to Chinese buyers: enforced on arrival at some countries.” Advertising of LNG globally nor by the disruption to Pluto LNG 42 percent, Gorgon 38 percent, The deadly virus has seen severe David Jeffries trade from the coronavirus. Ichthys 27 percent, NWS 26 percent, restrictions put in place on seafarers Only Media Ltd There were still signs that some Darwin 24 percent, GLNG 24 percent. calling at ports across the Asia Pacific Tel: +44 (0) 208 150 5293 disruption could be expected in late The Chevron-operated Wheatstone region. [email protected] February and early March. plant only supplies about 9 percent of its Crew manning the world’s commercial Subscriptions Sales Manager Total Australian LNG shipments in cargoes to China. fleet of tankers, commodity-carrying bulk Stephan Venter January were 7.0MT, slightly lower than “Inventories were also rapidly building carriers and container ships are not Tel: + 44 (0) 7253 2700 the record 7.1MT (104 cargoes) in at receiving terminals owing to a sharp allowed to leave vessels when calling at [email protected] December 2019. decrease in gas demand, as well as the ports in China, the epicentre of the virus. Production According to Australian consultants warm winter temperatures,” said the Restrictions preventing crew leaving Vivian Chee EnergyQuest there was potential for report. the ship or denying seafarers access to a Tel: +44 (0) 20 8995 5540 delays in cargoes. Hence, receiving terminals did not visa-on-arrival are also in place at a [email protected] have enough space to take new cargoes range of countries including Singapore, Delays such as those PetroChina has on contract Indonesia, Malaysia, Philippines, Russia, There were reports of Chinese buyers from the Chevron-operated Gorgon plant Australia and South Korea. Subscription delaying spot on Barrow Island in Western The Australian report admitted that it cargoes, re- Australia. was unclear how much the LNG cargo Print & online £655/€810/US$1050 selling “CNOOC has intake would be reduced, and its timing. Online only £595/€795/US$950 some contracts with Prices have plunged to US$2.90- See website for more details QCLNG. Sinopec US$3.20 per million British thermal www.lngjournal.com “Inventories were has also units for deliveries in the second half of [email protected] indicated it is March and US$2.75-3.05 per MMBtu for hotline +44 (0)20 7253 2700 also rapidly building considering May deliveries.