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Petronas' first LNG transfer at sea paves way for small-scale gas market

Singapore (Platts)--14 Jun 2018 409 am EDT/809 GMT


Malaysia's state-owned Petronas has delivered an LNG cargo using break bulking ship-to-ship transfer, a method of splitting large cargoes into smaller shipments, in Brunei Bay for the first time.

Petronas' move is significant for the small-scale LNG market that requires transportation infrastructure to meet the needs of several small natural gas consumers located in dispersed and inaccessible areas like the islands of Southeast Asia.

Distributing LNG to scattered terminals and receiving stations is a challenge for existing supply chains, as they have traditionally catered to large-scale utilities, and built LNG carriers that are only getting bigger like Qatar's Q-Max and Q-Flex ships.

Today's Asian buyers prefer to grow their LNG business gradually by importing smaller parcels, moving away from the traditional mode of long-term supplies over a specific term, Petronas' Vice President of LNG marketing and trading Ahmad Adly Alias said in a statement.

Petronas said the ship-to-ship transfer strengthened its LNG supply portfolio as the new service can be offered in a market that is becoming more liquid and where non-traditional buyers may face operational constraints at their terminals.

An cargo from Malaysia LNG's Bintulu facility on the island of Borneo was transferred from the Seri Bijaksana, a Malaysia-flagged 152,888 cu m LNG carrier, to the Lucia Ambition, a smaller 18,927 cu m Panama-flagged vessel.

The cargo on board Lucia Ambition and the remaining cargo from Seri Bijaksana will subsequently be delivered to respective buyers, Petronas said Wednesday.

Seri Bijaksana is owned by MISC, a Malaysia-based shipowner affiliated with Petronas and which operates one of the world's largest LNG carrier fleets. Lucia Ambition is owned by Petronas Carigali.

Other stakeholders in the exercise included Ports and Harbour Department Sabah, Sabah Port Authority, Argo Engineering, Eastport Marine, MISC and Farenco Shipping.

Neighboring Singapore has moved to accommodate smaller LNG ships in recognition of Southeast Asia?s new fragmented demand centers that will drive future demand, but the challenges faced by the small scale LNG industry are staggering.

Indonesia's Pertamina and PLN have also shown interest in small-scale LNG to generate power in the central and eastern parts of Indonesia as well as other remote areas, although the project faces bureaucratic hurdles and red tape.

Only one small-scale terminal is currently operating in the region -- a floating vessel at Benoa port in Bali that has received LNG from the Bontang export plant to fuel Denpasar's 200 MW Pesanggrahan power plant.

--Eric Yep, eric.yep@spglobal.com

--Edited by E Shailaja Nair, shailaja.nair@spglobal.com




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