Page 4 - LatAmOil Week 07 2020

LatAmOil COMMENTARY LatAmOil
Tango LNG is Argentina’s only working gas liquefaction and export facility (Photo: Exmar)
Further down the chain
Exmar’s troubles with Tango FLNG highlight the potential for coronavirus outbreak to cause trouble in every corner of the oil and gas industry
WHAT:
The Bank of China has postponed the release of funding for Tango FLNG because some of its of ces have been closed.
WHY:
The virus outbreak has the potential to affect oil eld service providers and sources of short- term credit.
WHAT NEXT:
Companies that have turned to China for credits may need to nd other lenders.
THE coronavirus outbreak in China has already had a significant impact on the oil and gas industry.
Expectations of a slowdown in Chinese energy demand have roiled world commodity markets. ey have brought prices down and have blunted the impact of events that would typically have had bullish implications, such as the loss of more than 1mn barrels per day (bpd) of Libyan crude production.
e spread of the virus has also disrupted the logistical end of the business. Multiple LNG and crude oil tankers have had to start functioning as oating storage facilities, since their cargoes are stranded as a result of sta ng shortages at Chinese ports.
Meanwhile, one of China’s largest LNG importers, state-owned China National Off- shore Oil Corp. (CNOOC), has fallen into a legal dispute with Royal Dutch Shell (UK/Neth- erlands) and Total (France) as a result of its deci- sion to cite force majeure as justi cation for its cancellation of scheduled LNG deliveries. Both of these majors have rejected CNOOC’s move, not least since they cannot easily divert their
tankers to other destinations or move their fuel back into storage. (Mild winter weather in the Northern Hemisphere has curbed demand for LNG in other markets, and long-term storage is a costly option.)
These disruptions are hardly surprising. China has for some time been the largest source of growth in global energy demand, and it is also the world’s largest importer of crude oil. As a result, events that undercut Chinese economic activity will inevitably have direct consequences for price dynamics and for the movements of tanker eets.
But the impact does not stop there. e virus is also having a ripple e ect on other aspects of the oil and gas industry. is essay will look into one example of disruptions in energy nancing – speci cally, the release of funds for Argentina’s only natural gas liquefaction and export facility
Release of funds
In late January, Exmar (Belgium) said China Export Credit Insurance Corp. (Sinosure) had authorised the release of $40mn from a debt ser-
vice reserve account (DSRA). 
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