Page 5 - GLNG Week 07

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of LNG on behalf of Argentina’s national oil company (NOC) YPF in December 2019 and was processing the gas that would constitute the facility’s third cargo.
Exmar made its announcement on January 23, about three weeks a er the Chinese central government informed the World Health Organ- isation (WHO) of the outbreak. (Coincidentally, January 23 was also the day that Beijing imposed a quarantine that halted travel to and from the city of Wuhan).
Postponement of release
e Belgian company’s next comment on the matter came on February 13. On that date, Exmar published a statement revealing that BoC had not released the $40mn from the DSRA in line with Sinosure’s authorisation. It explained that the bank had not been able to meet all of the necessary conditions for this release because of delays stemming from the coronavirus outbreak.
e statement did not go into details about these delays, but it did describe them as relatively simple in nature. “ ese conditions precedent are merely administrative points that cannot be solved until the o ces from the Chinese author- ities o cially re-open,” it said.
Exmar also stated that it was monitoring the situation carefully and would release more infor- mation on Tango FLNG when appropriate. In the meantime, it said it had secured the “further
extension of its bridge loans until [the] end of February and of certain other capital expendi- ture until mid-March.”
Knock-on effects
At face value, the Belgian company’s announce- ments do not represent anything dramatic. ey merely recount a nancial decision and a delay in the implementation of that decision.
But there is more to the story. Exmar’s expe- rience demonstrates that the virus outbreak has the potential to spread disruption to every cor- ner of the oil and gas industry.
In other words, the slowdown in the oil and gas sector may not just a ect the obvious things – that is, core business operations such as com- modities trading, upstream production or the operation of midstream transportation facilities such as terminals and tankers. It could also hit service providers and contractors, which play a crucial role in keeping oil and gas ows mov- ing all the way from the wellhead to the retail market. Additionally, it could hit the nancial institutions that help Exmar and countless other companies across the sector secure the money they need to keep going in the short term.
As such, the longer the outbreak continues, the more companies depending on Chinese funding are likely to follow in Exmar’s foot- steps – and the more they may need to seek credit elsewhere.™
Tango FLNG dispatched its second cargo of LNG in December 2019 and is processing the gas that will constitute the facility’s third cargo.
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