PetroChina shuts Rudong LNG terminal

China's state-owned PetroChina is selling some of its excess LNG on the spot market, following the shutdown of its 6.5mn t/yr Rudong terminal in Jiangsu province because of a damaged transmission pipeline.

The firm halted operations at the terminal on 22 September following a vessel collision during a recent typhoon that resulted in damage to the terminal's transmission pipeline, according to market participants. It is unclear when regular operations will resume.

PetroChina declined to comment on the terminal shutdown and its impact on imports.

The shutdown has led the firm to divert its deliveries and offer the cargoes that it cannot receive at Rudong on the spot market.

PetroChina is offering a few November cargoes as a result of the terminal shutdown. But it had already been offering and selling on the spot market in recent weeks as it had overbought cargoes, according to market participants. It is also looking to divert an October cargo and two cargoes for delivery in November, they said.

There are expectations that the firm may offer up to eight cargoes each month during November-March if the terminal remains shut through winter.

The Rudong terminal is able to receive around nine LNG cargoes each month based on its receiving capacity, assuming a cargo size of around 60,000t.

A few cargoes intended for delivery to Rudong in October-November have already been diverted to PetroChina's two other LNG import terminals — the 6.5mn t/yr Tangshan terminal in Hebei and 6mn t/yr Dalian terminal in Liaoning province, market participants said. Details such as the number and source of the diverted cargoes are unclear.

Market participants expect PetroChina to increase LNG deliveries to the Jiangsu region by tanker truck during the shutdown period and boost pipeline gas volumes to east China to meet domestic gas demand.

The firm holds around 70pc of China's pipeline capacity, including three 77bn m³/yr West-East pipelines that run from northwest Xinjiang to east China's Shanghai.

PetroChina has LNG term supply agreements with several projects, including the 6.9mn t/yr PNG LNG project in Papua New Guinea, Australia's 15.6mn t/yr Gorgon LNG plant and Cheniere's 10mn t/yr Corpus Christi facility in Texas, US. It also has a long-term deal for 8.5mn t/yr with Qatar's state-controlled Qatargas.

Spot LNG prices for November deliveries has remained at $5.40-5.90/mn Btu over the last two weeks, supported mainly by firm offers and recent trades.

Sellers continued to hold November offers steady amid expectations that more buyers could emerge on a prompt basis as winter temperatures set in, which might prompt a drawdown in inventories.

They have capitalised on the proposed shutdown of 9-14 South Korean coal-fired units from December-February to keep offers stable, expecting some South Korean buyers to procure more cargoes than expected this winter.

Indicative offers for both halves of November are at $5.60-6.10/mn Btu, against bids around 20-70¢/mn Btu lower at $5.20-5.60/mn Btu.

The most recent trades for November are for two first-half November cargoes at $5.50-5.60/mn Btu, purchased by Japanese firm Nippon Steel, and South Korean firms Posco Steel and SK, respectively, on a tender basis.

The ANEA index, the Argus assessment for northeast Asian spot deliveries, is assessed at $5.455/mn Btu and $5.725/m Btu for first- and second-half November, respectively, today.