Sinopec close to starting up first LNG terminal

日期:2014-09-17 12:20:15
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Sinopec said it has completed nearly all of the field engineering work for its first LNG import terminal and recently held a meeting to prepare for its commissioning, but analysts are sceptical the facility will come online in the short term.

The project, known as Shandong LNG because of its location in the port city of Qingdao in Shandong province, was 98.7% complete as of Monday, according to Sinopec. It has a receiving capacity of 3 mtpa and gas supply capacity of 4.1 billion cubic metres per year.

The commissioning cargo for the terminal is expected to come from ExxonMobil’s PNG LNG plant in Papua New Guinea, from which Sinopec is contracted to lift 2 mtpa.

Sinopec – the last of China’s three NOCs to begin importing LNG – had expected to put the terminal into operation this month, but the startup date is now uncertain because of oversupply concerns in the local market, Zhu Yingxin, a gas analyst with consultancy JYD Online, told Interfax.

Sinopec is likely to bring the terminal online in late October, when gas consumption begins to rise because of winter heating demand, said Zhu.

However, Sinopec is struggling to sign up customers because the Shandong market is already well supplied by a gas liquefaction plant run by Kunlun Energy, the gas distribution subsidiary of PetroChina, according to Zhu.

The plant in Tai’an city has a capacity of 600,000 tpa and came online on 22 August. Ma Hui, an LNG analyst at Sublime China Information, told Interfax Shandong’s current LNG consumption is roughly 620,500 tpa, which leaves little room for extra gas supply.

“Demand is an issue for Qingdao,” said Kang Wu, Asia vice chairman at Facts Global Energy. “It’s more like supply-driven demand because Sinopec has to lift cargoes under the contract, so that is a problem – that it may not be demand-driven, but more because they have supply obligations.”

“Sinopec is still working on whether or not the province can absorb the LNG or send it further down,” Wu told Interfax. But finding other markets could also be difficult, because nearby regions such as Shanghai and Jiangsu are already receiving sufficient volumes through their own terminals.

Civil consumption is growing at a steady but slow pace, so Sinopec will struggle unless the central government calls for more industrial use of LNG, Zhu added.

Kunlun’s LNG plant could also undercut imports from Papa New Guinea on price. The ex-works price of LNG from the plant was RMB 4,550-4,650 per ton ($740-757/t) on Tuesday – which works out at $14.3-14.6/MMBtu. By comparison, PNG LNG’s first cargoes landed in Japan for $14.66/MMBtu.

Sinopec is a latecomer to China’s LNG import business. China National Offshore Oil Corp. has put seven terminals into operation, while PetroChina operates three. They have collectively received around 11.76 mt of LNG so far this year.

Source: Interfax Energy

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