Shell halts operations at Prelude FLNG after fire

Shell has suspended production at the 3.6mn t/yr Prelude floating LNG (FLNG) offshore Western Australia after a fire broke out at the facility on 21 December.

The fire was likely put out quickly with a hand-held extinguisher, said some market participants with knowledge of the matter. An investigation into the incident is likely to follow, they added.

Shell has yet to respond to Argus' request for a comment on the incident at the time of writing.

Prelude FLNG likely resumed production at its facility earlier this week after it was shut for maintenance since the second half of October, market participants said. The Methane Becki Anne approached and sailed alongside the facility on 20 December, suggesting that loadings were likely planned to resume this week.

Output from Prelude FLNG was consistently plagued by technical and safety issues for most of this year, following a fire that broke out at the facility on 2 December 2021. Strike action at the facility that started in early June this year further complicated the resumption of production and loadings.

The market has so far shrugged off the latest incident at the facility, given that the facility has not been regularly supplying the LNG market for an extended period of time. Term offtakers of the facility are by now likely more or less prepared to not expect regular deliveries from the facility, some market participants said.

Prelude supplies LNG to a handful of Asian importers on a long-term basis. Shell, South Korea's Kogas and Taiwan's CPC receive term volumes of 2.43mn t, 360,000t and 180,000t respectively from Prelude on a fob basis. Japan's state-controlled Jera and utility Shizuoka Gas receive 560,000t and 70,000t respectively from Inpex's equity volumes on a des basis.

By Subethira Ahrumugam