Gas Processing & LNG is Produced by Gulf Publishing Holdings LLC

Buyers seek cuts and delays from Australian LNG supplier Ichthys

TOKYO (Reuters) - Some Japanese buyers are seeking delays in shipment or volume cuts under their long-term contracts from the Ichthys liquefied natural gas (LNG) project in Australia amid slumping spot LNG prices, Inpex Corp's senior executive said.

An inexorable decline in spot market prices for LNG is driving some buyers in Japan and China to request delays in term cargoes, while others are looking to utilise so-called downward quantity tolerances (DQT) to lower the volumes they take under their term contracts from LNG sellers, industry sources have told Reuters earlier this year.

"We are getting those requests as spot LNG market prices are lower than term contract prices," Inpex's Senior Managing Executive Officer Masahiro Murayama said when asked if Japanese buyers are asking for cargo delays or volume cuts from Ichthys.

"(Buyers) have a right to ask to raise or reduce quantity within a certain range agreed under the long-term contracts," Murayama told an earnings news conference.

"It does not mean that we will lose all quantity, but some adjustments such as increasing or cutting quantity have been made," he said.

DQTs are standard provisions allowing buyers to purchase less LNG than their full annual contract quantity, without incurring penalties.

The decline in LNG spot market prices is also pushing utilities in Japan to be more aggressive in price reviews built into traditional long-term contracts linked to oil prices, lawyers and analysts said.

Long-term LNG contracts are typically priced against Brent oil prices which are currently at about $10 per million British thermal units (mmBtu) compared with spot cargoes at about $4 per mmBtu. <LNG-AS>

Murayama said Ichthys is running at around 80% of full capacity, with 24 cargos being shipped in April to June despite a 15- to 20-day maintenance during May.

Inpex, Japan's biggest oil and gas explorer, expects Ichthys to ship about seven to eight cargoes a month this year and the project is forecast to contribute 65 billion yen ($612 million) to its group profit for the nine-month earnings this year through Dec. 31, against its earlier prediction of 60 billion yen.

Murayama said LNG spot market has been weighed down by worries about weakening demand and slowing global economy.

"We may see some delays in final investment decisions in new LNG projects given the current market environment," he said

Copyright © 2019. All market data is provided by Barchart Solutions. Futures: at least a 10 minute delay. Information is provided 'as is' and solely for informational purposes, not for trading purposes or advice. To see all exchange delays and terms of use, please see disclaimer.

                                  CMEGroup                                     Icelogo


Editorial Comment: China eyes continued expansion of smaller-scale LNG
-Adrienne Blume
Smaller-scale liquefaction in China, the world’s second-largest LNG importer, has experienced growth in recent years as China’s government integrates more gas into the country’s energy matrix.
Executive Q&A Viewpoint: SeaOne expands South American energy options with Compressed Gas Liquid technology
-Bruce Hall
SeaOne is a midstream infrastructure and logistics company that leverages its patented Compressed Gas Liquid (CGL™) technology to lower energy costs in various markets, generating new opportunities for economic growth and environmental stewardship.

Corrosion Control for Gas Treating Amines: Technology Leads to Increased Amine Unit Efficiency

Register Now

Accelerated basin drilling activities combined with increased fugitive gas emission capture technologies have increased trace oxygen levels in midstream natural gas. Oxygen present in concentrations even as low 30-50 ppm will cause costly corrosion-related problems in plant operations and processing equipment. One area in the plant most affected by oxygen is the amine unit. Oxygen will degrade MDEA-blended amines to corrosive amino acids and heat-stable amine salts.

Learn how a new technology from BASF combined with innovation from Nalco Water can increase amine efficiency and reduce costs associated with corrosion. This new technology will inhibit the degradation of amines from oxygen attack and control corrosion in process gas, while stabilizing the amine from degradation into bicine and other heat-stable amine salts. Together with Nalco Water’s real-time amine corrosion control program, have been proven to both mitigate oxygen degradation of amine and reduce the overall corrosivity of amine units.

August 19, 2020 10:00 AM CDT

Register Now


Please read our Term and Conditions, Cookies Policy, and Privacy Policy before using the site. All material subject to strictly enforced copyright laws.
© 2020 Gulf Publishing Holdings LLC.