August 29, 2022

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Technical Issues Could Delay Coral South Start-Up

Mozambique's Coral South floating LNG plant is understood to have suffered technical issues, which could delay the start-up of the project, potentially further squeezing an already tight global LNG market.

"Serious issues [were] reported at Coral FLNG with one critical distillation column (demethanizer) suspected of having internal damage. Shutdown is required for inspection and repair, which will delay the start-up schedule by several days, if not weeks," a source told Energy Intelligence.

The 3.4 million ton/yr project, located in Area 4 of the Rovuma basin offshore Mozambique, is operated by Italian major Eni, with partners ExxonMobil, China's CNPC, Galp, Kogas and Mozambique's state-controlled ENH.

It is the only export project in the East African country which was expected to come online on time, with the onshore Mozambique LNG and Rovuma LNG projects facing multi-year delays due to security issues in the region.

Vessel Diversion

A recent vessel diversion from the Coral South FLNG plant is in line with the reported technical issues at the facility.

UK major BP's 173,400 cubic meter British Mentor LNG vessel had been broadcasting the Coral South FLNG as its destination since Aug. 7, according to ship-tracking data by Kpler, indicating that the project could load its first cargo sooner than previously expected.

BP has exclusive offtake rights for the entire output of the facility through a 20-year contract.

However, after arriving in proximity to the plant, on Aug. 26 the vessel switched its signal to Oman's Qalhat plant and left Mozambican waters. It is now heading north in the Indian Ocean, according to Kpler.

Eni earlier this month proposed a second FLNG project for Mozambique, signaling that that offshore route is going to increasingly become the path forward for LNG in Mozambique.

Technical issues with the first floating liquefaction off Mozambique cannot help but slow down future floating liquefaction.
Daniel Stemler, Madrid

India's BPCL Says Mozambique LNG Project May Resume in 1H 2023

TotalEnergies and partners are hopeful that the onshore Mozambique LNG project will "take off" in the first half of next year, Bharat Petroleum Corp Ltd (BPCL) Chairman Arun Kumar Singh told the refiner's shareholders Monday.

“Mozambique had [a] law and order problem which has been sorted now,” Singh said during the annual shareholders meeting for the Indian state-owned company. “We are hopeful from first half of 2023 the project should take off. We have already spent $1.6 billion on exploration. Another $1.8 billion will have to be spent on the LNG trains."

By "take off" Singh is likely referring to a restart in construction.

BPCL holds a 10% stake in the multibillion-dollar natural gas development project off the coast of Northern Mozambique operated by Total that involves development of the Golfinho and Atum offshore natural gas fields. Total has a 26.5% stake alongside Mozambique’s state-owned ENH which has 15%, Japan’s Mitsui and Jogmec hold 10% each, India’s state-owned Oil and Natural Gas Corp, and Indian Oil also own 10% each and the rest is with Thailand’s PTT (8.5%).

BPCL has also tied up a 15-year long term contract for 1 million tons of LNG from the project.

In April last year, Total was forced to declare force majeure on the 13 million ton per year LNG project after a series of militant attacks near its facilities in the Afungi Peninsula. Mozambique LNG was expected to start up in 2024, but has been pushed back until 2026 at the earliest.

Total has not given any clear indication about when it will redeploy workers and stresses it will need cast-iron guarantees from the government that it is safe to do so.

Meanwhile, Italy's Eni, developer of the offshore Coral South floating liquefaction is advancing the offshore option for Mozambique LNG exports despite recent technical issues.
Rakesh Sharma, New Delhi


In Brief

Santos Sanctions Pipeline Project

Australia's Santos has sanctioned its Darwin Pipeline Duplication Project, allowing gas from the Barossa gas field to be transported to the Darwin LNG plant.

The pipeline will run about 100 kilometers in waters off the Northern Territory, duplicating a section of the existing Bayu-Undan to Darwin pipeline, and coming ashore at Wickham Point in the Greater Darwin Area.

The US$3.6 billion Barossa project was sanctioned last year and is expected to deliver first gas in the first half of 2025.

The Darwin Pipeline Duplication project is expected to increase Santos' share of capital spending on the Barossa project by about US$311 million.

It will allow the existing pipeline to be used for the development of an offshore carbon capture and storage project.

The Bayu-Undan gas field currently supplies the Darwin LNG plant, but it is expected to be depleted by the end of this year and Santos plans to use the depleted field as a storage site for carbon dioxide.

Santos CEO Kevin Gallagher said the Bayu-Undan CCS project has the potential to capture and store up to 10 million tons of CO2 a year, potentially making it the biggest CCS project in the world.

A final investment decision on the Bayu-Undan CCS project is expected in 2023.

Marc Roussot, Singapore


Data Snapshot

LNG Netbacks at Key Receiving Terminals

LNG Exporter Netbacks Between Key Receiving Ports
($/MMBtu)AlgeriaAustralia WestAustralia EastMalaysiaNigeriaNorwayOmanPeruQatarRussiaTrinidadUS GulfUS East Coast
Dahej, India57.4357.8957.4957.8857.0856.9058.3756.5658.2857.5356.7456.4656.81
Sodegaura, Japan58.0859.4959.5159.6058.0554.6259.1056.9658.9859.9657.2956.4558.22
Zeebrugge, Belgium74.2372.3671.9072.4673.6574.0573.2171.9473.0771.9473.7872.7373.88
Huelva, Spain77.4775.6275.1675.7176.8676.6276.4575.1076.3175.1976.9275.7676.93
Isle of Grain, UK63.5061.7461.3261.8262.9963.3262.6661.3562.4161.3563.0862.1063.18
Everett, US7.986.777.056.817.747.640.017.387.216.508.13----
Created with Highcharts 9.0.0($/MMBtu)QATAR TO NORTHEAST ASIANetbackNetback28. Mar11. Apr25. Apr9. May23. May6. Jun20. Jun4. Jul18. Jul1. Aug15. Aug29. Aug10203040506070Energy Intelligence

LNG Market Indicators

Spot LNG Pricing
Latest WGIDailyDaily Chg.Chg. From Latest WGI
NE Asia0.0060.730.6260.73
SW Europe0.0078.18-0.2278.18
Futures Pricing
($/MMBtu)Chg.LatestPreviousWeek Ago
Henry Hub, US (futures)0.069.359.309.68
NBP, UK (futures)0.0075.0075.0061.65
European Spot Pricing
Chg.LatestPreviousWeek Ago
Dutch TTF-6.1590.5396.6879.69
Zeebrugge (Belgium)----58.02--
German NCG-12.6579.7592.4082.92
NBP (UK)----64.4256.69
US Markets
US Spot Prices
Sabine Pass, Louisiana-0.229.249.469.83
Corpus Christi, Texas0.299.008.719.14
Cove Point, Maryland0.178.898.728.92
Elba Island, Georgia--------
Nymex Henry Hub Futures
Near Month0.069.359.309.68
Second Mth0.079.349.279.65
Third Mth0.079.409.339.71
Created with Highcharts 9.0.0($/MMBtu)GLOBAL GAS PRICINGUS NymexDutch TTFNE AsiaSep '21Oct '21Nov '21Dec '21Jan '22Feb '22Mar '22Apr '22May '22Jun '22Jul '22Aug '22Sep '22Sep…0255075100125Energy Intelligence