Page 10 - GLNG Week 36

GLNG COMMENTARY GLNG

Prelude is the world’s
largest FLNG project.

would have to be shut down, but Chevron has gas flows to Prelude as a precaution.
agreed a staggered shutdown schedule with There is now speculation that Prelude – which
regulators. is thought to be one of the most complex LNG
The issues with the kettles are the latest in a facilities in the world, as well as the largest FLNG
series of setbacks for the 15.6mn tonne per year project – may not be back online until 2021.
(tpy) Gorgon LNG project, which suffered cost However, no further details were available this
blowouts and delays during construction, and week. The facility has been offline since February
subsequently struggled to start up. Until the as a result of technical issues.
shutdown of Train 2, however, the facility had Prelude has a production capacity of 5.3mn
recently been performing more reliably. tpy of liquids, with LNG accounting for 68%, or
Chevron operates Gorgon with a 47.3% stake. 3.6mn tpy. However, full production capacity has
Shell and ExxonMobil each own 25% interests not been reached at the facility to date since it
in the project, while Japanese firms Osaka Gas, began operations in December 2018.
Tokyo Gas and JERA hold minority stakes of The outages
1.25%, 1% and 0.417% respectively. What next?
Chevron noted that it continues to meet its The outages at Prelude and Gorgon Train 2 are at Prelude and
contractual obligations to provide gas to the helping to push up LNG spot prices for delivery Gorgon Train 2
Western Australian domestic market and LNG to north Asia. In the week up to September 4,
to international markets throughout the outage the spot price of cargoes for October delivery are helping to
at Gorgon. The super-major has offtake agree- rose to $4.50 per million British thermal units
ments in place for the facility with Japanese and ($124.47 per 1,000 cubic metres), marking an push up LNG spot
South Korean customers. eight-month high. This was also an increase
of 143% on record lows of around $1.85 per prices for delivery
Restart troubles mmBtu ($51.17 per 1,000 cubic metres), which to north Asia.
Meanwhile, Shell said on September 4 that it had were seen in May.
begun restart procedures at its Prelude FLNG While LNG producers will welcome this
facility and the gas fields offshore Broome that trend, analysts have warned that there is not
supply feedstock to the vessel. much evidence of a significant demand recov-
However, Shell is reported to have run into ery yet, with prices instead being propped up by
challenges almost immediately. A source on supply issues.
board the vessel was cited by media as say- LNG producers will be hoping that the com-
ing the restart had some issues with “multiple ing winter will be colder than the last one, and
trips” of the plant and two swivels inside the that there will be no more large-scale lockdowns
turret that moors the giant LNG facility in needed to contain any new waves of coronavirus
place. And Shell is reported to have suspended (COVID-19) infection spikes.™

P10 www. NEWSBASE .com Week 36 11•September•2020