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Malaysia’s state oil and gas company Petronas announced the loading of the first liquefied natural gas cargo from a floating production facility over the weekend. The facility is located off the eastern coast of Malaysia and the cargo is bound for a client in South Asia, most probably South Korea, according to media.
Reuters reported late last week that the loading of the 144,000-cu-m Seri Camellia tanker had started at the Petronas Floating LNG Satu.
The Satu facility is estimated to have cost Petronas $10 billion, going into operation last year. Thanks to the floating facility, the Malaysian company beat other energy majors such as Shell and Japan’s Inpex, which are also working on floating LNG production projects.
Petronas has shaped up to be one of the leaders in LNG: besides its local LNG operations, the company has a massive, $27-billion LNG project in Canada, the Pacific NorthWest LNG, which has faced several delays because of local environmentalist opposition and cost considerations.
The Canadian project is a partnership with four other Asian companies, including China Petrochemical Corp, Japan Petroleum Exploration Corp., Indian Oil Corp. and Brunei’s national energy company, and will open a new route for Canadian gas to Asian markets – the biggest consumers of LNG currently.
Yet the global LNG market has seen a massive influx of supply over the last year or so, mainly from Australia and the U.S., and this has naturally affected pries, putting a question mark over some projects, such as the Canadian one. Between 2014 and now, LNG prices on the spot market in Asia have fallen about 70 percent, to $5.50 per million Btu.
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The Satu floating production facility, however, has proved resilient. Compared to another two projects, Shell’s Prelude FLNG and Inpex’ Ichtys facility, both in Australia, it has cost less: Prelude has a tag of $12 billion and the Ichthys project is valued at $37 billion. Both Australian projects have met with cost overruns and delays.
By Irina Slav
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.