PNG to supply 2M ton LNG to Sinopec

Santos announced that the PNG LNG project participants have finalized a binding sale and purchase agreement with Unipec Asia Co Ltd, a subsidiary of China Petroleum and Chemical Corporation (Sinopec), for the long-term sale and purchase of LNG totaling approximately 2 million tons per annum.

Under the agreement, the Papua New Guinea LNG project will supply LNG to Sinopec for a period of 20 years. Details about pricing are not disclosed.

The PNG LNG project is an integrated development which includes gas production and processing facilities, onshore pipelines and offshore pipelines, plus LNG plant facilities. Participating interests are ExxonMobil (41.5%, operator), Oil Search 34%, Santos 17.7%, Nippon Oil 5.4%, Mineral Resources Development Company 1.2%, and Petromin PNG Holdings Limited 0.2%. 

The PNG LNG will supply an LNG terminal that Sinopec is going to build in Qingdao, Shandong Province. Phase I capacity of the terminal is 3 million tons per annum. With the developments of the market, Sinopec plans to expand the facilities to receive 5-6 million tons per year in a phase II stage. 

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China asks for more LNG

China has formally asked additional supply of one million tons of liquefied natural gas (LNG) from Indonesia, but Upstream Oil and Gas Regulatory Body (BPMigas) has reportedly declined to focus on domestic supply, Detikfinance.com reported.

The popular online publication quoted Sulistya Hastuti Wahyu saying "China asked additional supply of one million tons. But Mr Priyono (BPMigas chairman) said, domestic supply will be the priority."

China asked additional supply on Sunday, July 26, when the first LNG shipment from Tangguh plant (Papua) arrived in Fujian LNG Terminal.

Tangguh LNG is built with US$5 billion investment, sourced its natural gas supply from six gas fields in three production sharing contracts (PSCs): Wiriagar, Berau, and Muturi. The gas is transported through 22-km pipeline to the LNG plants.

BP is the owner of 37.16% shares in the project. Other partners are MI Berau BV (16.3%), CNOOC Ltd (13.9%), Nppon Oil Exploration (Berau) Ltd (12.23%), KG Berau/KG Wiriagar (10%), LNG Japan Corporation (7.35%), and Talisman (3.06%). 

Tangguh has a long-term contract to supply 2.6 million tons of LNG to LNG Fujian, China, 1.15 million tons to K-Power and Posco, South Korea, plus a flexible contract to supply up to 3.7 million tons per year to Sempra LNG in Baja California, Mexico. 

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Tangguh LNG first cargo

The first LNG cargo from Tangguh, Papua, has been shipped to Posco's LNG terminal in Gwangyang, South Korea. 

BP, operator of Tangguh LNG, said in a press release this morning that the first shipment marks the commercial operation of the first train of Tangguh LNG with installed capacity of 3.8 million tons per year. The second train is scheduled for commercial operation this quarter.

Tangguh LNG is built with US$5 billion investment, sourced its natural gas supply from six gas fields in three production sharing contracts (PSCs): Wiriagar, Berau, and Muturi. The gas is transported through 22-km pipeline to the LNG plants.

BP is the owner of 37.16% shares in the project. Other partners are MI Berau BV (16.3%), CNOOC Ltd (13.9%), Nppon Oil Exploration (Berau) Ltd (12.23%), KG Berau/KG Wiriagar (10%), LNG Japan Corporation (7.35%), and Talisman (3.06%). 

Tangguh has a long-term contract to supply 2.6 million tons of LNG to LNG Fujian, China, 1.15 million tons to K-Power and Posco, South Korea, plus a flexible contract to supply up to 3.7 million tons per year to Sempra LNG in Baja California, Mexico. 

KBR, JGC Corporation, and PT Pertafeniki are the main contractors for onshore LNG facilities, while Saipem for offshore and undersea construction.

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Govt asks Inpex to build onshore LNG plant

Indonesian government asks Inpex Corporation to build onshore LNG plant for Masela block in Timor Island instead to accelerate the long-delayed project.

Energy Minister Purnomo Yusgiantoro admitted government allows Inpex to build floating LNG plant when the provisional plan of development (PoD) was awarded. "But there are new developments, where the oceanic trenches were initially considered as deep as 2,500 meter, but turned out to be shallow enough to lay down the pipeline," Purnomo said.

He was optimistic an onshore LNG plant would save billions of USD of investment. Other than that, according to Purnomo, construction of the LNG plant could be accelerated to 2013-2014, two years ahead of the schedule for floating facility (2015-2016).

Evita Legowo, director general for oil and gas at the ministry said a feasibility study for the pipeline is expected to accomplish in the coming months.

Inpex Masela Ltd won an open bid for and acquired a 100% working interest in Masela Block in November 1998. The Japanese company then discovered the Abadi gas field in 2000, the first hydrocarbon discovery in Indonesian Arafura Sea. The company submitted POD to Indonesian government last September for a floating LNG concept to produce 4.5 million tons of LNG per year for more than 30 years. FEED was expected to start by the end of this year, to be followed by FID in 2011.

Inpex is one of the largest players in Indonesia's oil and gas business. The company owns 50% working interest in Offshore Mahakam block which supplies Bontang LNG plant in cooperation with Total, and the Attaka Unit (50%), in cooperation with Chevron (50%). 

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LNG Receiving Terminals

Two state-owned companies, PT Perusahaan Gas Negara (PGAS) Tbk and Pertamina, decided not to join forces in the construction of two LNG receiving terminals, Detik.com reported. 

Pertamina CEO Karen Agustiawan said Pertamina will build the West Java LNG Terminal, while PGN will build the North Sumatra terminal. Initially, both companies agreed, based on the heads of agreement signed in April 17, 2009, to establish a consortium to build the LNG terminals. In fact, state-owned electricity company PT Perusahaan Listrik Negara (PLN) also wanted to participate in the consortium.

Agustiawan said the West Java terminal will have installed capacity of 200-400 MMSCFD (equals to up to 3 million tons per year), while in North Sumatra with 100-150 MMSCFD. The West Java Terminal is designed to support two combined cycle power plants (Tanjung Priok and Muara Karang).

In East Java, PT Indogas Kriya Dwiguna, a subsidiary of PT Prime Petroservices, has also launched a plan to build LNG receiving terminals in Pesanggaran and Gilimanuk. 

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First Drop from Tangguh LNG

After four months of delay, Tangguh LNG plant is expected to produce its first drop on June 28, next week. But it is not clear when will be the first shipment from the plant to China's facility in Fujian. 

Evita Herawati Legowo, director general for oil and gas at energy and mineral resources ministry, said that first drop is expected June 28. Energy minister Purnomo Yusgiantoro said last month that the first shipment will be July 1st. As production starts in Tangguh, Bontang LNG plant might has to cut its operating rate because buyers---Japan, Taiwan, and South Korea---have cancelled the purchase of 18 cargoes this year.

Fujian LNG terminal, operated by CNOOC---which is also a partner in Tangguh LNG plant, entered full operation late last month. The terminal will receive 15 LNG cargo shipments from Indonesia within one year. Unter the long-term contract, Fujian LNG terminal will receive 2.6 million tons of LNG yearly from the BP-led Tangguh LNG plant.

CNOOC has begun the building of two additional storage tanks at its second terminal this year after local government decided to double Fujian LNG terminal's capacity. Construction of these new tanks, 160,000 m3 each, is scheduled to be completed in 2011. 

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