Page 9 - GLNG Week 39 2021

GLNG ASIA GLNG

China launches first LNG spot pricing index

PERFORMANCE CHINA has launched its first spot pricing index record high on September 30. S&P Global Platts
for LNG imports amid an ongoing power crisis said its Japan-Korea-Marker (JKM) rose to
that has driven a surge in demand for the fuel. $34.47 per mmBtu.
The Shanghai Petroleum and Natural Gas “The global LNG price rally is largely driven
Exchange launched the index on September by the European gas situation,” said Platts’ global
29, municipal government officials revealed director of LNG, Ciaran Roe. Europe has been
at a seminar. The index is a joint effort with struck by a perfect storm of suppressed gas stor-
China’s General Administration of Customs age, constrained LNG imports and surging gas
(GAC). demand. The analyst added that colder than
“Currently, China’s imports are primarily expected temperatures in Northeast Asia, cou-
linked to foreign indices that don’t reflect Chi- pled with limited LNG supplies, were exacerbat-
nese demand and supply, and we’re passive recip- ing the problem.
ients of those prices,” Reuters quoted Shanghai The gas supply pinch comes at a difficult time
Development and Reform Commission energy for China, which has been pushing a domestic
official Wang Zhiqiang as saying. coal-to-gas transition for a number of years. This
An unnamed exchange official said the has not only resulted in swathes of residential
exchange would publish daily fixed-price quotes heating systems being converted to run on the
in US dollars per mmBtu for spot imports over cleaner-burning fuel but has also seen the wide-
the next three months and would track prices spread closure of smaller, less efficient and more
on a delivered, ex-ship basis for shipments of pollution coal mines.
90,000-210,000 cubic metres of LNG. However, with temperatures plummeting
The launch of China’s first spot LNG index and both supplies of coal and gas now scarcer
quotes comes amid a global gas supply crunch than expected, around two-thirds of China’s
that propelled the Asian LNG spot price to a provinces are reportedly rationing power.™

AUSTRAL ASIA

Beach to sell LNG to BP

PROJECTS & AUSTRALIAN independent Beach Energy has
COMPANIES agreed to sell its share of LNG production from
the Waitsia project onshore Western Australia to
super-major BP.
Beach said on September 27 that it had signed
a heads of agreement (HoA) to sell its 3.75mn
tonnes of expected production from Waitsia’s
second phase of the development from the sec-
ond half of 2023. However, the agreement’s terms
include built-in flexibility around the first ship-
ment in order to allow for variables in the pro-
ject’s construction and commissioning activities.
The independent added that annual contract
volumes and supply terms were “aligned to the
provisions in the executed North West Shelf noting that sales would include full upside expo-
(NWS) gas-processing and lifting agreements”. sure to each index as well as a downside price
The two sides are aiming to sign a fully termed protection mechanism.
LNG supply and purchase agreement in the first The company added: “This hybrid pricing
half of next year. structure is expected to provide Beach with
Beach owns a 50% stake in Waitsia, while favourable price movements during North Asia
Mitsui and Co. owns the other 50% and operates winter periods.”
the development, which is one of the country’s Supply will be delivered on a free-on-board
largest onshore discoveries in the last four dec- (FOB) basis from the NWS facilities.
ades. It was the only project to receive an exemp- The Waitsia joint venture reached a final
tion from the WA government’s August 2020 investment decision (FID) in December 2020 on
decision to prevent new onshore gas fields from initial funding for Waitsia’s 250 TJ (6.5mn cubic
selling their production outside the state. metre) per day second phase of development.
Beach said its share of Waitsia’s production Beach said at the time that full funding would
would be sold at a price linked to both Brent and be committed once certain regulatory approvals
Japan Korea Marker (JKM) price indices, while and commercial conditions were resolved.™

Week 39 01•October•2021 www. NEWSBASE .com P9