Page 12 - AsianOil Week 35 2022

AsianOil NEWS IN BRIEF AsianOil

Japan's JERA strikes LNG KNOT takes deliver of dual- Asian LNG prices spike

deal with new Sakhalin-2 fuel shuttle tanker amid Nord Stream outage
operator Knutsen NYK Offshore Tankers (KNOT), Asian spot LNG prices hit a fresh record
an affiliate of NYK, has taken delivery
high in the week ending August 26 as South
Japan's JERA has signed a deal with the new of a dual-fuel LNG shuttle tanker built Korean and Japanese buyers restocked for
operator of the Sakhalin-2 energy project at Daewoo Shipbuilding & Marine the winter and a planned outage at the Nord
in Russia to maintain long-term deliveries Engineering yard in South Korea. The vessel Stream 1 pipeline next week pushed up
of LNG, a spokesperson for the country's has been named “Sindre Knutsen.” European demand.
biggest power generator said on September Like its sister ship “Frida Knutsen,” which The average LNG price for October
1. was delivered on August 2, the Sindre Knutsen delivery into north-east Asia was estimated
Russian President Vladimir Putin vessel will be a dual-fuel shuttle tanker that can at $70.50 per mmBtu, up $13.50, or 23.7%,
signed a decree in June taking charge of the use both heavy fuel oil and LNG. from the previous week, industry sources
project, creating a new legal entity to deal The ship will use LNG fuel, which is more were cited as saying by Reuters.
with for buyers and shareholders, which environmentally friendly than conventional oil- The market is in a firm contango, where
include Shell and Japanese trading houses fuel, and will be equipped with a VOC recovery a futures price is higher than the spot
Mitsui & Co and Mitsubishi Corp. system and an energy storage system, reducing price, with prices from November through
Japanese gas and electric utilities with greenhouse gas emissions. Summer 2023 above $72 per mmBtu.
long-term contracts to buy LNG from The vessel will be chartered to ENI Trade "We expect LNG imports to northeast Asia
Sakhalin-2 have received a new contract & Biofuels S.p.A, a subsidiary of Italy's Eni, to strengthen in the month ahead. Given how
offer from the newly formed operator. and will be engaged in oil transportation in high gas prices are, despite only entering the
"The main conditions such as volume, the North Sea and Barents Sea. Autumn season, there is a potential for prices
price and (payment) currency remained the A shuttle tanker loads crude oil from to move much higher once we are in winter,"
same as the previous contract," the JERA floating production, storage, and offloading said Ryhana Rasidi, gas and LNG analyst at
spokesperson told Reuters, though he did (FPSO) units in deepwater ocean fields data and analytics firm Kpler.
not provide further detail. while maintaining a certain distance, and "There is clearly a lot of panic in the European
For resource-poor Japan, Sakhalin-2 is then transports the oil to crude-oil storage gas market, especially with prices spiking in recent
important for its energy security. It buys units or petroleum storage stations on land. days due to fears that Russian gas flows would not
about 9% of its LNG from Russia, mainly return even after planned maintenance on the
from Sakhalin-2. Nord Stream 1 pipeline," she said.
Other Japanese buyers are still Velesto wins $13.4mn in Russia's Gazprom has announced a three-
considering whether or not to continue day outage for the pipeline which is currently
doing business with Sakhalin 2. work at Petronas field running at 20% of its total capacity, piling
Kyushu Electric Power is leaning toward pressure on Europe as it seeks to fill up gas
maintaining its long-term contract, a Malaysian oil and gas company Petronas storage facilities ahead of winter.
spokesperson said. has awarded a contract to the offshore Freeport LNG, the United States' second
Tokyo Gas said it was still considering services firm Velesto for the plugging and largest producer of the super-chilled fuel,
the matter while Saibu Gas Holdings and abandonment services at Tembungo A & B which halted operations in June after an
Tohoku Electric Power said they were platforms offshore Sabah, Malaysia. explosion and fire, has further extended its
assessing details of the contract. Velesto said on August 25 that the outage. The facility has been a major LNG
Toho Gas, Hiroshima Gas and Osaka Gas contract had an estimated value of 60mn supplier to Europe.
declined to comment. Malaysian ringgits (around $13.4mn). "The 15mn tonne per year plant is now
The buyers, in general, want to keep The P&A campaign is set to last 21 due to restart a month later in November
their Russian LNG contracts as sourcing months for the Tembungo-A campaign rather than October and the operators
alternative supply on the spot market would running until January 2024, with an expect it to be at only 85% at most until
mean paying higher prices. extension option of 12 months for March 2023, which means there is a big
Japanese buyers paid $13.27 per mmBtu Tembungo-B tentatively from January 2024 impact on the second half of the winter
for Russian LNG in June while the average until December 2024. too,” said Alex Froley, LNG analyst at data
spot cargo price for delivery to Japan was Velesto will be providing integrated intelligence firm ICIS.
$23.30, according to state-owned JOGMEC. project management and hydraulic "This is now the best case, and we
Asian spot LNG prices hit a record high workover unit services for the duration of wouldn’t be surprised if there are further
of $57 per mmBtu this month as Japanese the campaign. delays to the timeline in the future."
and South Korean buyers secured supply for The platforms are located at the BP has a ballast vessel nearby
winter, narrowing the price differential with Tembungo offshore oil and gas field, Mozambique's 3.4mn tpy Coral South
Europe where there is renewed appetite for situated 75km from Kota Kinabalu, Sabah project, which could load the first cargo
the fuel in the wake of lower Russian piped and 35 km northeast of Erb West field. The soon. While this could be a boost to global
supply. average water depth in the area is around supply, it is only one-fifth the size of
85 metres. First oil from Tembungo was Freeport, so wouldn’t fully offset it, Froley
produced in September 1974. added.

P12 www. NEWSBASE .com Week 35 05•September•2022