Royal Dutch Shell Plc  .com Rotating Header Image

China secures 1st spot LNG cargo from Russia-sources

Reuters UK

Thu Apr 16, 2009 7:58am BST

BEIJING, April 15 (Reuters) – China has secured its first spot cargo of liquefied natural gas from Russia and will receive the tanker in a few weeks, industry sources said on Thursday, attributing the order to revived interest following the collapse of gas prices.

The cargo of more than 50,000 tonnes costing less than $5 per million British thermal units (mmBtu) is scheduled to arrive at China’s first LNG terminal Dapeng in coastal Guangdong province later this month or early May, several sources said.

Dapeng, which gets most of its input from Australia under a long-term deal, is a joint venture between CNOOC, parent of CNOOC Ltd (0883.HK)(CEO.N), BP Plc (BP.L) and some other local companies.

China last year paid as much as $22 per mmBtu for spot LNG, but has made only small purchases in the cash market since October because of weakening energy demand in the coastal areas where export orders slumped in the wake of the global financial crisis.

The LNG purchase from the Sakhalin II project, controlled by Russia’s gas monopoly Gazprom (GAZP.MM), was also prompted by increasing gas demand from CNOOC’s 240,000-barrel-per-day Huizhou plant that started operations last month, the sources said.

The Sakhalin II project, Russia’s first LNG plant, could supply 5 percent of global LNG demand when it reaches full capacity next year, Russian President Dmitry Medvedev said when he launched the plant on the southern tip of Sakhalin island last month.

Top executives of Royal Dutch Shell (RDSa.L), a minority stakeholder in Sakhalin II, did not directly confirm the China shipment in a company press briefing on Tuesday in Beijing.

Shell Chief Executive Jeroen van der Veer said at least four LNG shipments had sailed from Sakhalin to various destinations since late last month.

“Cargos predominantly go to South Korean, Japan and the United States, but there is a small volume of spot cargos that can go everywhere, so one of the four cargos is not bound for the principal markets; we are aiming that it should go to a different market,” said Shell Chief Financial Officer Peter Voser.

“There is a possibility from the spot cargo point of view that in the future cargos could end up in China,” he said.

Gazprom, a symbol of resource nationalism in Russia, took control of Sakhalin II from Shell in 2007 after a prolonged crisis that forced Shell, the project’s formal leader, and partners to reduce their holdings.

(Reporting by Chen Aizhu and Jim Bai, editing by Chris Lewis)

 

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

0 Comments on “China secures 1st spot LNG cargo from Russia-sources”

Leave a Comment

%d bloggers like this: