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Petronas Starts Production At Floating LNG Facility Off Malaysia

Petronas LNG

Malaysian state-controlled oil and gas company Petronas said on Tuesday that it had achieved first liquefied natural gas (LNG) production from its floating LNG facility Satu off the northeastern coast of the island of Borneo.

Gas from the Kebabangan field is being fed to the PETRONAS Floating LNG Satu (PFLNG Satu) facility via a flexible pipeline. The floating facility is now used at a new location after producing LNG from the Kanowit gas field offshore a neighboring Malaysian state, where Petronas started a world first production of LNG from a floating LNG facility in 2017.

“We not only prove our concept of relocatable floating LNG facility, but we have also seamlessly achieved the first LNG drop in just 3 days after first gas in,” Petronas Vice President of LNG Asset, Zakaria Kasah, said in a statement.

Malaysia is one of the top LNG producers in the world and will be facing stiff competition in the coming years from a wave of new LNG projects, especially in the United States.

Rystad Energy forecast earlier this year that global LNG production will increase by 11 percent in 2019 and reach 350 million tons per annum on the back of more liquefaction capacity.

Related: OPEC+ Top Priority: Don’t Crash Oil Prices

“This is mostly driven by the commissioning of US projects. The US is expected to see capacity more than double in 2019, thereby making it the country with the third-largest exporting capacity and pushing Malaysia into fourth place. Australia could also overtake Qatar as the world’s largest LNG exporter this year,” Rystad Energy’s head of gas market research Carlos Torres Diaz said in February this year.

According to Wood Mackenzie, more than 60 million tons in annual production capacity is due a final investment decision this year—a record number and a hefty increase over the 21 million tons in capacity sanctioned last year. This could tip the market into oversupply, but not this year: LNG projects take years to build, Wood Mac said in January this year.

In a more recent estimate, Giles Farrer, WoodMac’s Research Director, Global Gas and LNG Supply, said at the end of April:

“While there is a risk that current low LNG prices may cause some proposed projects to be cancelled, we think the risk to new LNG supply development is actually to the upside. In our high case we anticipate that an additional 70 mmtpa could be sanctioned in the next three years.”

By Tsvetana Paraskova for Oilprice.com

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