Hazira receives LNG tankers as gas demand picks up

Vol 12, PW 21 (26 Mar 09) Midstream & Downstream
     

When LNG tanker Sohar LNG berthed at Hazira on February 28, executives at Shell and Total – joint owners of the LNG terminal - had reason to smile.

This was the first time after a lull of almost two months that Hazira was receiving a LNG carrier, ever since its major customer Essar Steel deserted LNG for much cheaper naphtha. Sohar LNG carried the first of two cargoes delivered in March, spurred by rising naphtha costs in tandem with crude oil prices, which are now above $50/barrel from less than $40/barrel a few months ago.

Naphtha is traditionally costlier than LNG and this was Shell’s key sales pitch to customers using both fuels. But with the sharp fall in crude prices and the global credit squeeze from late 2008, naphtha prices crashed but gas prices did not, causing a rush of industrial customers to the cheaper fuel.

But now the situation has reversed. Both LNG tankers unloading at Hazira this month were spot cargoes, mainly for GSPC.

Sohar LNG had taken on 134,965 cubic metres LNG at Qalhat port in Oman and began discharging this cargo from half past noon on February 28 at Hazira. Unloading was completed in the early hours of March 1.

This LNG had been bought from Oman LNG. The second LNG tanker came within less than a fortnight, on March 10, when Captain Stephen J.

Tucker guided Al Marrouna carrying 149,510 cubic metres of LNG into Hazira. Al Marrouna began her voyage from Qatar’s Ras Laffan port with LNG from Exxon-affiliate RasGas.

She began unloading at Hazira an hour before noon on March 10 and completed the exercise in the early hours of March 11. GSPC paid Shell the â€کglobal price’ for this cargo, we hear.

“Prices have been falling and this is good for GSPC.â€‌ GSPC is believed to have paid just $6/mmbtu against $8/mmbtu for earlier supplies.