Coronavirus Knocks 4 Asia-bound LNG Tankers Off Course

Jessica Jaganathan
Friday, February 14, 2020

Four liquefied natural gas (LNG) tankers bound for North Asia have changed destination or diverted after the coronavirus outbreak hit gas demand in China, the world's second-biggest buyer of the super-chilled fuel, five sources said. 

In addition, 15 LNG tankers are also flagged as "floating storage" globally, with 11 of them scattered across Asia, Rebecca Chia, LNG analyst with data intelligence firm Kpler told Reuters. 

The coronavirus outbreak that has affected about 60,000 people globally has had a wide impact on demand for all kinds of energy and added to weakness in an LNG market already depressed by mild weather. 

China's top LNG buyer China National Offshore Oil Corp's (CNOOC) has invoked force majeure to suspend contracts with at least three LNG suppliers, following the virus, two sources told Reuters on Feb. 6. 

This drove Asian spot LNG prices to a record low of below $3 per million British thermal units (mmBtu) last week and forced companies to scramble to find alternative buyers for these cargoes. 

Three of the four LNG tankers loaded from Qatar and one in Oman and were originally showing 'Far East' as their destination, the sources said, speaking on condition of anonymity. 

Two of them will now arrive at South Hook terminal in the United Kingdom instead, while another made a U-turn in the Arabian Sea and is in the Gulf of Oman, heading back to the Gulf, Kpler's Chia said. Qatargas' tanker Mekaines, which loaded cargo from Ras Laffan on Feb. 5, bound for Asia, made a U-turn in the Arabian Sea on Feb. 10 and is headed back to the Gulf, according to Kpler and Refinitiv ship-tracking data. 

The Qatari energy minister said in a statement on Wednesday that the country's energy companies are "actively engaged" in accommodating requests to reschedule or re-route Qatari oil and gas cargoes to China. 

Out of the 15 vessels flagged as floating, two are in the Middle East, two in western Australia and 11 scattered across Asia, Kpler's Chia said. 

Kpler classifies tankers as floating storage if they loaded the cargo more than five days ago and are travelling at a low speed over a prolonged period, among other factors. 

Until the coronavirus outbreak, it was unusual to see LNG vessels floating at sea during this time of the year, she added. With gas storages nearly full in Japan and Europe, where LNG tankers typically find homes, these cargoes are stranded at sea, traders said. "Some of these cargoes were bought by (Chinese companies) who are now no longer able to receive them and with storage full everywhere, there is no choice but to float," a Singapore-based trader said. 

Storing LNG on tankers is generally seen as riskier than holding crude oil on the water, given higher storage costs and the fact that LNG cargoes degrade over time through evaporation.

(Reporting by Jessica Jaganathan, additional reporting by Ekaterina Kravtsova in LONDON; Editing by Jason Neely and Barbara Lewis)

Categories: LNG China

Related Stories

Petronas Expands Suriname Portfolio with Deepwater Block Acquisition

Woodside Agrees Long-Term LNG Supply with Petronas Unit

Chuditch Gas Field Drilling Ops Get Delayed to Next Year

UK Firm Secures Exploration Extension for Two Blocks off Vietnam

MODEC, Carbon Clean to Advance FPSO-Mounted Carbon Capture Tech

Aker Solutions, PTAS JV Hooks Brownfield Services Extension off Brunei

BP Expands Oil and Gas Scope in Azerbaijan with New Projects and Exploration Rights

Scarborough FPU's Topsides and Hull Come Together in Major Engineering Feat (Video)

Woodside Inks Long-Term LNG Supply Deal with China Resources

ADNOC Signs 15-Year LNG Supply Deal with Osaka Gas for Ruwais Project

Current News

Centrica and Thailand’s PTT Ink Long-Term LNG Supply Deal

Petrovietnam, Partners Sign PSC for Block Off Vietnam

Japan Protests China’s New Oil and Gas Construction Activities in East China Sea

CNOOC Signs Hydrocarbons Exploration and Production Deal with Kazakhstan

Thailand's PTT to Buy LNG from Glenfarne's Alaska LNG Project

Woodside and Jera Agree LNG Cargoes Supply for Japan’s Winter Period

Petronas Expands Suriname Portfolio with Deepwater Block Acquisition

Japanese Oil and Gas Firm Enters Two Blocks off Malaysia

Yinson Production, “K” LINE Target Europe's CCS with FSIU and LCO2 Solutions

Woodside Agrees Long-Term LNG Supply with Petronas Unit

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com