Page 8 - AsiaElec Week 13

AsiaElec GAS-FIRED GENERATION AsiaElec
Indian LNG buyers claim force majeure
INDIA
INDIA’S decision to impose a 21-day lockdown this week has reportedly driven the country’s liq- uefied natural gas (LNG) importers to issue force majeure notices to their suppliers.
India Prime Minister Narendra Modi ordered a complete lockdown on March 25 in a bid to con- trol the spread of the coronavirus (COVID19). The move led more than half a dozen Indian ports to declare force majeure which, in turn, has forced Petronet LNG, GAIL (India) and Guja- rat State Petroleum Corp. (GSPC) to follow suit, according to Reuters’ sources.
The newswire quoted unnamed sources as saying that Petronet LNG was looking to delay deliveries from Qatargas, while GSPC had also issued force majeure notices to suppliers.
“Gas demand has reduced drastically and it is likely to go down further,” a source at state- run gas utility GAIL said. They added: “Only fertiliser, power and refineries are running at parcel loads. Other local buyers have already issued force majeure, so where should we sell LNG?” The GAIL insider, speaking to Reuters,
added that the company had already served force majeure notice to some of its suppliers and was preparing to notify the remainder.
A source at GSPC said the company had received force majeure notices from most of its customers, adding: “Industries like chemical, textile and ceramics that do not qualify under category of essential commodities are closing.” Another source said that with demand down and LNG storage tanks almost full, cargoes meant for India could soon be diverted to China.
The source said: “Transport segment is already down 10% and retail gas is down to 10% of normal volumes, industrial output has been impacted.” LNG stockpiling could even force state run Oil and Natural Gas Corp (ONGC) to curb its production, company chairman Shashi Shanker told the newswire.
“As of now there is no impact on the pro- duction of oil and gas, but in the coming days gas production might get affected because of less off-take in view of the decrease in domestic demand,” he said.™
Jadestone freezes Vietnamese gas project
SINGAPORE
SINGAPORE’S Jadestone Energy has decided to delay the Nam Du and U Minh natural gas pro- ject in Vietnam owing to the slide in oil prices.
The company said on March 19 that it had made the decision owing to the lack of govern- ment approvals for the field development plan (FDP) as well as to maintain the company’s “strong balance sheet in these uncertain times”.
Jadestone said that by removing the project from its planned 2020 capital expenditure the company would reduce spending by 50%, or $90mn, to $80-95mn. The company added that the cut was made because the project would not have contributed to cash flow before the fourth quarter of 2021 based on receiving government approvals this quarter.
However, given that Hanoi is still to sign off on the project, Jadestone said it did not expect to achieve first gas from the project before late 2022.
Jadestone president and CEO Paul Blakeley said the Nam Du and U Minh fields were an important domestic gas resource for Vietnam, which would ultimately feed power generators and fertiliser manufacturers in south-west Viet- nam’s economy. However, he added, “Vietnam currently has the potential to take temporarily cheap competitor piped gas, which is oil price- linked and benefitting from the current market dislocation, and the Nam Du and U Minh fields
can be developed when investment conditions improve.” As such, the company’s remaining 2020 capital programme is largely comprised of infill drilling at the producing Montara and Stag projects offshore Western Australia and remains “entirely discretionary”.
Jadestone said it would continue to eval- uate all investment, including potential inor- ganic growth opportunities, while maintaining balance sheet strength. The company had an unaudited cash balance of $116mn, including restricted cash of $10mn and gross outstanding interest-bearing debt of $50.1mn, as of January 31.
The company expects to remain operating cash flow positive even at oil prices below $30 per barrel, owing largely to downside price pro- tection through hedging and significant pric- ing premiums on oil from its producing assets in Australia. Jadestone said the markto-market value of the hedge as at February 28 was more than $18mn in its favour.
S&P Global Ratings has warned that interna- tional oil prices could fall to $10 per barrel this year.
Blakeley said: “While the level of economic turmoil is unprecedented, I am pleased that we retain substantial flexibility and will remain nim- ble, and course correct as necessary, to ensure ongoing value add to our shareholders.”™
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w w w . N E W S B A S E . c o m Week 13 01•April•2020