A stranded Chinese LNG tanker is blocking one of Australia’s export terminals and is starting to draw the attention of the global energy markets. The concerns were sparked today, November 28, when Australia’s upstream producer Origin Energy announced it has commenced “turning down production” to reduce the flow of gas to the LNG facility after several shipments have been deferred.
The Chinese-owned LNG tanker CESI Qingdao (95,600 dwt) is a regular caller at the terminal as part of a dedicated export operation with the vessel operating under a long-term time charter with Chinese energy company Sinopec (China Petroleum & Chemical Company) which is also one of the three investors in Australia Pacific LNG. The ship was built by Hudong-Zhonghua Shipyard and delivered in 2017 to a JV between Sinopec, COSCO Ship, and Mitsui O.S.K. Lines (MOL). With a capacity of 174,000 cbm she is one of six carriers built in a class of ships specifically for the transport of LNG from the terminal to China for Sinopec.
The problem began on November 21 when the vessel arrived for one of its regular calls at the terminal on Curtis Island near Gladstone, Australia, which is operated by ConocoPhillips as part of Australia Pacific LNG. While the vessel was loading it lost power in what its owners are describing as a “propulsion failure,” while media reports in Australia attributed to the Australian Maritime Safety Authority said it is a generator issue with AMSA calling the vessel “unseaworthy” at this time. The laden vessel was due to sail late last week for Wenzhou, China.
Australia Pacific is one of the country’s largest producers and exporters with a capacity of 9 million metric tons annually. However, the terminal only has one dock and according to Orion the tanker “has lost power and is currently unable to leave the terminal.” They reported that no other cargo can be loaded until the situation is resolved.
Orion reports it has begun reducing production while it is taking steps to bank its non-operated portfolio production. They report that the terminal normally loads a new ship every three days and so far, two shipments have had to be deferred. AIS signals show that there are now three LNG tankers anchored off Gladstone waiting while Orion in its statement said, “It is expected that more LNG cargos will be deferred.”
The total number of cargoes to be deferred will depend on the timeframe for resolution according to Orion. They noted that ConocoPhillips is working with the vessel, its owners, and the maritime authorities to resolve the situation as quickly as possible. However, Australia Pacific is a major supplier to Sinopec and also to Japan’s Kansai Electric. The disruption comes as LNG demand traditionally increases during the colder weather season in China and Japan.
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