Page 12 - AsianOil Week 37

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Magnolia terminal to supply gas to Vietnamese LNG-to-power project
PROJECTS & COMPANIES
AUSTRALIA-LISTED LNG Ltd has struck a deal to supply gas to a province in Vietnam from its Magnolia export terminal in Louisiana, on the US Gulf Coast. The deal covers 2mn tonnes per year (tpy) of LNG to be delivered over a 20-year period, which can be extended. This locks in a buyer for 25% of Magnolia’s output, but it is the only offtake deal in place for the export project after a previous deal with another party lapsed.
The LNG will be shipped to an offshore import terminal in the coastal province of Bac Lieu, which will be linked to a 32,000-MW combined-cycle power plant. Once the gas has been delivered by LNG Ltd, it will be used by Vietnam-based Delta Offshore Energy to generate electricity for use in the province. The Vietnamese project is anticipated to enter service in 2023. The LNG will be sold on a free-on-board (FOB) basis and will be linked to the US Henry Hub benchmark.
“Delta Offshore Energy’s Bac Lieu pro- ject addresses Vietnam’s need for an LNG import terminal to provide access to growing the LNG industry as a feedstock for electricity
generation,” Delta Offshore Energy’s engineer- ing managing director, Bobby Quintos, said in a statement. “Our alliance with LNG Ltd will allow the government of Vietnam to have a stronger relationship with the US market and the long- term stability of the Henry Hub index, which fits perfectly with the Vietnamese National Power Development Plan.”
LNG Ltd has regulatory approvals in place for the Magnolia plant but has yet to announce a final investment decision (FID). Despite having offered capacity at discounted prices compared to some of its competitors, LNG Ltd has strug- gled to finalise sales agreements. The company said the US trade war with China had had an impact on these efforts. It was initially aiming to make an FID last year, but postponed it after Beijing imposed tariffs on imports of US LNG.
The Magnolia plant is approved to pro- duce 8mn tpy of LNG. The operator has requested permission from US regulators to boost capacity by a further 800,000 tpy, though this is still pending.™
EAST ASIA
China’s oil, gas production climbs in August
PERFORMANCE
CHINA’S crude oil production inched up 1% year on year in August to 16.18mn tonnes (3.83mn barrels per day), according to data from the National Bureau of Statistics (NBS).
Production for the first eight months of the year amounted to 127.49mn tonnes (3.85mn bpd), up from 3.78mn bpd recorded in the same period of 2018. China’s natural gas output climbed by 6.6% y/y last month to 13.8bn cubic metres, while output for the eight-month period expanded 9.3% to 114.1 bcm.
The improved oil and gas production figures come as the government continues to pile pres- sure on the country’s producers to extract more from domestic fields. China’s energy planners have become increasingly concerned with the country’s expanding dependency on foreign oil and gas supplies.
China relies on oil imports to meet around 70% of its demand, while gas imports account for around 44% of consumption.
While state developers have halted a slide in production that saw annual output dip from a peak of 4.31mn bpd in 2015 to 3.79mn bpd in 2018, there has been little sign that a marked recovery is on the horizon. This has cast some doubts over the
viability of the Chinese government’s goal of boost- ing domestic oil output to more than 200mn tonnes (4mn bpd) per year by 2020.
Demand is maintaining its rate of growth, how- ever, relentlessly driving up imports. The country ramped up its shipments of crude by 9.9% y/y in August to 42.17mn tonnes (9.97mn bpd). Imports in the January-August period averaged 9.9mn bpd, up from 9.02mn bpd in the year earlier period.
Combined imports of liquefied natural gas (LNG) and piped gas climbed by 7.3% y/y in August to 8.34mn tonnes, bringing the year’s tally to 63.15mn tonnes.
China’s refineries processed 6.9% more crude y/y in August to 54mn tonnes (12.77mn bpd) last month, as new plants came online and gross refining margins (GRMs) rebounded. Refinery runs in the first eight months climbed by 5.9% y/y to 424.16mn tonnes (12.79mn bpd).
While GRMs have been supported by a domes- tic fuel price rise and increased oil product export, Reuters quoted an unnamed executive from an inde- pendent refinery in Shandong Province as saying the outlook for the fourth quarter was full of “uncertain- ties”, owing to the start-up of Zhejiang Petrochemical’s 400,000 bpd refinery in Zhoushan.™
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w w w . N E W S B A S E . c o m Week 37 18•September•2019