GDF SUEZ in long-term China strategy; US LNG exports upcoming

Edward Cox

27-Nov-2014

Global LNG supplier GDF SUEZ believes the developing competition among private Chinese companies for LNG imports is a trend that cannot be stopped. It also has a positive view on the potential expansion of the US Cameron export plant in which it has a stake, Philip Olivier, President of GDF SUEZ LNG told ICIS in an interview earlier this month.

“The monopoly of the three main Chinese importers will change and the utilities will be tomorrow’s importers. Some private companies have access to import terminals already and that is a trend that cannot be stopped – the government has a reason to open the market and let competition play,” Olivier said on the sidelines of the CWC World LNG Summit in Paris.

GDF SUEZ recently signed a broad deal with Chinese energy investor and infrastructure company Shenergy that includes areas of LNG, pipe gas and gas-fired power generation.

“It will take some time as the regulation needs to be in place and the companies need import permits but we will make room for mid- and long-term deals as the potential is big,” Olivier said on the future of LNG deliveries into the country.

The expected increase in LNG imports into China is a central industry talking point but with divergent views on future demand scenarios.

Several private Chinese companies have this year imported or at least discussed LNG imports either by chartering their own vessel or by taking a capacity slot at one of the major import terminals. Such companies include Jovo Group, ENN Energy and CERCG.

Asian indexation?

Olivier noted Asian LNG buyers’ current push for greater spot indexation and flexibility within their purchase contracts but he was cautious on the speed with which any traded Asian hub would develop.

“I know this is a wish from buyers who want transparency on this Asian hub but it is not that easy. If you look at the European hubs you can see that regulation and political will are needed alongside physical interconnection. This took a long time to mature in Europe and will take even more time in Asia,” Olivier said.

GDF SUEZ recently signed a deal to supply Japanese utility Chubu Electric with around 1.2m tonnes of LNG over 27 months from the first quarter of 2015. At the time there was a lot of noise that the deal had been agreed on a spot Asian index.

Olivier said the majority of the mid-term deal’s pricing was in fact linked to the price of oil with a small proportion priced on an Asian spot index.

Chubu Electric was one of the most prominent voices in support of an Asian traded hub and price index at the conference, which was held last week.

Cameron LNG update

US energy infrastructure development company Sempra Energy in August announced a final investment decision on the 12mtpa US Cameron export plant alongside its project partners GDF SUEZ and Japanese traders Mitsui and Mitsubishi.

The current timeline states that the first three-train phase of the plant will start operations in 2018.

“Trains four and five are on our radar and would offer the most economic additional supply. But the first step will be debottlenecking the first phase up to 13.5mtpa. Beyond that we shall have commercial discussions with our partners,” said Olivier.

Step back on Bonaparte FLNG

Earlier in 2014 GDF SUEZ said its potential Australian floating liquefaction plant, Bonaparte LNG, no longer met its commercial requirements and would not be moved into the Front End Engineering and Design phase.

“Australia needs to digest the big wave of new supply to come and then the market should move to more US-indexed LNG. I am sure there is a future for our Australian project either land-based or floating, but we will not be the first in the FLNG sector like Shell or PETRONAS,” said Olivier.

GDF SUEZ has a 60% operator stake in Bonaparte LNG. Edward Cox

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