Energy giant bets on Chinese market, orders 8 LNG carriers

2019-03-05 09:00

The "PAPUA" LNG carrier, built by Hudong-Zhonghua for ExxonMobil

Betting on China's surging LNG demand, energy giant ExxonMobil is making significant investments in LNG projects in Papua New Guinea and Mozambique, and plans to order new vessels to build its own LNG fleet. Considering ExxonMobil's cooperation with two major LNG projects and "two barrels of oil," coupled with a later delivery date, Chinese shipyards will have a chance to get a share of the pie this time.

Betting on the Chinese market, planning to order 8 LNG carriers

It is reported that ExxonMobil plans to order 8 LNG carriers of 170,000 cubic meters. ExxonMobil hopes to start receiving these LNG carriers in the first quarter of 2022, which means that the relevant orders must be signed this year. It is unclear which shipyards ExxonMobil has contacted.

Sources said that ExxonMobil plans to directly order new vessels to build its own LNG fleet, rather than relying on chartered vessels. At the beginning of this year, ExxonMobil has begun to evaluate the delivery slots of shipyards.

It is understood that these LNG carriers ordered by ExxonMobil may mainly be used to transport LNG cargo to the Chinese market. Last year, it was reported that ExxonMobil was betting heavily on China's surging LNG demand, combining billions of dollars in global production projects with its first storage and distribution center in mainland China.

Sources familiar with ExxonMobil revealed that the company's natural gas strategy is advancing on two tracks: expanding the production of super-cooled natural gas in Papua New Guinea and Mozambique, while creating demand for these supplies by opening ExxonMobil's first import and storage center in China.

This strategy will help ExxonMobil avoid the global trade war. ExxonMobil's large-scale LNG projects in Papua New Guinea and Mozambique will not be subject to China's 10% tariff on US natural gas. Beijing consulting firm SIA Energy predicts that China will become the world's largest natural gas importer this year; by 2020, China's LNG imports will increase by 70% from 38.1 million tons in 2017.

Two major LNG projects and cooperation with "two barrels of oil", Chinese shipyards have opportunities

Although ExxonMobil did not specify which LNG projects these LNG carriers will be used for, sources speculate that ExxonMobil's expanded PNG LNG project in Papua New Guinea and the Rovuma LNG project in Mozambique may need to obtain LNG carriers to transport LNG cargo.

ExxonMobil PNG LNG project

It is understood that the PNG LNG project, costing US\$19 billion, is the first LNG project in Papua New Guinea and the largest development project in the country's history. Since its commissioning in April 2014, the PNG LNG project has been providing reliable LNG supply to four major long-term customers in Asia, including Sinopec, CPC, Osaka Gas Co., Ltd. of Japan and Tokyo Electric Power Company.

Currently, ExxonMobil and its project partners plan to add a third production line, thereby doubling the export volume of the Papua New Guinea PNG LNG project from the current 8 million tons/year to 16 million tons/year. The third production line is scheduled to be put into operation in 2024.

In addition to Papua New Guinea, ExxonMobil also needs LNG carriers to transport LNG cargo from its Rovuma LNG project in Mozambique, which will be put into operation in 2024 with an annual output of about 7.6 million tons. CNPC is one of the partners of the project. The Rovuma LNG project is expected to be approved this year, and it is reported that the project may require 8 LNG carriers.

The Rovuma LNG project is operated by Mozambique Rovuma Venture S.p.A., a joint venture owned by ExxonMobil (35.7%), CNPC (28.6%) and ENI (35.7%).

Sources said that considering the important role played by Sinopec and CNPC in ExxonMobil's two projects, it is not ruled out that ExxonMobil will place part of this LNG carrier order in Chinese shipyards.

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