Page 7 - GLNG Week 32

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The ministry is unlikely to get everything it is asking for, given the pilot scheme’s popularity among Russia’s powerful oil lobby. On the other hand, some tweaks will have to be made given the huge budgetary shortfall that the country is facing. The Kremlin will likely have to wade into the dispute and thrash out a compromise.
In other news, Lukoil has reported a sharp decline in oil and gas production in the first half of the year. This is not only due to OPEC+ cuts that came into force in April, but also a steep drop in its Uzbek gas sales to China.
Chinese gas demand has continued to grow this year, in spite of COVID-19 lockdown measures, but at a much slower pace. Chinese companies have prioritised purchases while cutting imports, including from Uzbekistan, where Lukoil operates the Southwest Gissar and Kandym projects.
Turkmen state media have reported progress at several refining projects being undertaken by the country’s favoured contractor, US-registered Westport Trading Europe. But Turkmenistan’s strict control over information flow makes it dif- ficult to determine just how much work is taking place on the ground. After all, despite numerous reports of progress over the years, the country’s throughput capacity does not appear to have changed in five years.
If you’d like to read more about the key events shaping the former Soviet Union’s oil and gas sector then please click here for NewsBase’s FSU Monitor.
More grief for Gorgon LNG
Chevron and its partners in the Gorgon LNG project have been ordered by the government of Western Australia to inspect the propane heat exchangers at Trains 1 and 3 at the 15.6mn tonne per year (tpy) liquefaction terminal. (See: Chevron ordered to inspect remaining Gorgon trains for damage, page 14) This comes as Train 2 at Gorgon remains offline for repairs after an inspection of that train’s propane heat exchang- ers during planned maintenance found weld quality issues and cracks in the equipment.
The US-based super-major previously said Train 2 would be returned to service in Septem- ber. But the Australian Manufacturing Workers
Union has voiced fears that the cracks may not be reparable and may require the heat exchangers to be replaced altogether.
Western Australia’s Department of Mines, Industry Regulation and Safety said the inspec- tion orders for Trains 1 and 3 had to be carried out before August 21. It is not yet clear whether Chevron may have to shut down the trains in order to carry out the inspection – and effect any necessary repairs – but the order raises the pros- pect that the whole plant could be shut down.
This comes as the LNG market continues to struggle to absorb a global oversupply, which has been exacerbated by the hit to demand from the coronavirus (COVID-19) pandemic. Indeed, other LNG producers may welcome an outage at Gorgon. And elsewhere in the world, the current market oversupply is not stopping LNG opera- tors from moving forward with liquefaction capacity expansions that were already underway before the pandemic hit.
Among those companies reporting progress recently are Cheniere Energy, which is now anticipating bringing Train 6 at its Sabine Pass LNG terminal on the US Gulf Coast into service earlier than previously announced, in the second half of 2022. Meanwhile, Kinder Morgan said it would be ready to bring the ninth of 10 small- scale liquefaction trains at its Elba Island LNG terminal in Georgia online this week. And Train 3 at Cameron LNG, also in the US, started com- mercial service this week. (See: Cameron LNG enters full commercial operations with Train 3 start-up, page 14)
Latin America: Argentina bond swap offer
In Argentina, Compañía General de Combusti- bles (CGC) has joined YPF, the national oil com- pany (NOC), in the ranks of companies offering a bond swap.
Last week, the independent oil and gas firm revealed that it was looking to tender an exchange of $300mn worth of senior unsecured bonds due to mature in 2021 for securities that will be repaid in 2025. The move led Fitch Rat- ings to downgrade CGC; the agency explained its decision by saying that the company appeared to be taking this step in the hope of avoiding a default on its 2021 notes.
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