BG: Net loser in LNG 're-load' deal at Kochi

Vol 18, PW 12 (12 Feb 15) Midstream & Downstream

BG made a bad bet on the direction of the spot market and has suffered a loss on a 're-load' LNG cargo it sent out from Kochi last month (January).

“BG ended up a net loser in this deal,” says an industry source. “The cargo was imported in October when spot prices were high at around $11-$11.50/mmbtu.

Now BG has re-loaded this cargo in a declining market. Prices are below $9/mmbtu and will slide further.

” A source estimates BG paid Petronet-LNG $2.5-$3/cubic metre for 102 days of storage, port, handling, and reload charges. No regasification charges were invoked as the cargo was stored and reloaded as LNG and not re-gasified.

BG also paid LNG tanker hire charges of $75,000-$100,000/day. By contrast Petronet-LNG emerged a winner - not only did it earn money but the cargo helped cool the 182,000-cubic metre storage tank.

“Keeping the storage tanks cool is very important,” says an LNG industry source. “Tanks cannot go empty or they must be de-commissioned.

This is prohibitively expensive.” BG’s 151,125-cubic metre cargo was India's first 're-load' and came aboard LNG tanker GasLog Singapore, leaving for Singapore at noon on January 31.

BG had earlier brought in a 159,298-cubic metre capacity Nigerian cargo aboard LNG tanker Maran Gas Apollonia for storage at Kochi on October 18.