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Prelude FLNG Shut Down

February 5, 2020

Prelude FLNG - Image by CapTom - MarineTraffic
Prelude FLNG - Image by CapTom - MarineTraffic

Royal Dutch Shell said on Tuesday it has temporarily suspended production at its Prelude floating liquefied natural gas (LNG) facility off northwest Australia following an electrical trip on Feb. 2.

Work is underway to restore full operations, a spokeswoman told Reuters on Tuesday. 

"Due to some technical issues, there was a delay in starting up the back-up diesel generators which impacted certain amenities on board. These issues are being resolved, and we have made the proactive decision to temporarily reduce the number of people on board," she said. 

With Asian spot LNG prices diving to a record low this week as the coronavirus epidemic sweeping China dents demand from the world's second-largest importer of LNG, the impact of the production cut at Prelude is expected to be minimal, trade sources said. 

"There is still too much gas and very little demand," a Singapore-based industry source said. 

Buyers of LNG in China are bracing for gas demand to be shattered by a virus epidemic that has killed more than 420 people. Many buyers are considering either delaying cargoes or canceling them by invoking a force majeure clause. China is Australia's No.2 LNG export destination by volume, behind Japan. 

Prelude, the world's largest floating LNG facility, has the capacity to produce 3.6 million tonnes a year of LNG, 1.3 million tonnes a year of condensate and 400,000 tonnes a year of liquefied petroleum gas (LPG). It shipped its first LNG cargo in June last year following start-up delays. The project is jointly owned by Shell, Japan's Inpex Corp , Korea Gas Corp and Overseas Petroleum and Investment Corp, a unit of Taiwan's CPC Corp. 

(Reporting by Jessica Jaganathan in SINGAPORE and Sonali Paul in MELBOURNE; Editing by Kim Coghill and Tom Hogue)



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