by Ganesh Sahathevan
Petronas, through its subsidiary, Petronas LNG Ltd (PLL), signed a binding heads of agreement on Oct 1, 2018, with Singapore-based Vitol Asia Pte Ltd for a long-term liquefied natural gas (LNG) supply deal.
“The primary supply to Vitol will come from LNG Canada and other PLL's global LNG supply portfolio. LNG Canada is a major LNG project located in Kitimat, British Columbia, Canada, where Petronas is one of the joint venture participants with an equity holding of 25%,” it said in a statement today.
Reuters reported the same but included this additional bit of information:
Royal Dutch Shell decided in October (2018) to construct the export terminal. It was the first major investment decision in a new North American LNG export project for two years and was expected to launch a new wave of such projects in the region.
Petronas, the Malaysian oil and gas company that bought a 25 percent stake in the project in May, will supply Vitol with 0.8 million tonnes per year (mtpa) of LNG starting from 2024 for 15 years, Vitol said in a statement.
Vitol joins Asian utilities Tokyo Gas, Toho Gas and Korea Gas Corp (Kogas) as buyers, committing to offtake around 2.4 mtpa collectively.
Such long-term agreements normally underpin project finance and are critical before a final investment decision is taken.
But because Shell and partners Petronas, PetroChina, Mitsubishi and Kogas are such large players in the LNG market, they can absorb the output into their global portfolios without needing to find significant other buyers.
erm contract
Under previously announced deals, Toho Gas will buy 0.3 mtpa, Tokyo Gas 0.6 mtpa and Kogas 0.7 mtpa from LNG Canada.
In other words, Petronas has agreed to put-up the massive capital investment that
will enable Vitol, a trader, to secure its supplies of LNG under a long term contract. In contrast, the other investors in the project have invested to secure long term supplies for their long-term customers, to whom the cost of the investment will be passed on.
Which makes one wonder, is Petronas a charity,and is its management in competition with Santa Claus?
END
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Friday, November 30, 2018
Petronas & Vitol: Why, How Much, And Petronas Must Make Contracts Public
by Ganesh Sahathevan
Petronas recently announced that it entered into a 15 year LNG sale contract with Vitol, one of
a handful of privately held oil and gas traders whose trades are so large they rival the majors (Exxon, Shell ,Chevron and others).
The deal seems odd for Petronas as a national oil company (NOC) has rights ,access and financing that the likes of Vital and even the majors can only dream of. The LNG will come from Petronas' long delayed Canadian Kitimat project, where Petronas' JV partners have rights to product in exchange for their investment.
Petronas has a 25% stake, and it is hard to understand why Petronas needs the likes of Vital to sell the LNG.Quite apart from direct contact with NOCs around the world, Petronas has trading hubs in ,among others, Singapore and the UK.
In the spirit of New Malaysia, Petronas needs to explain why this deal with Vitol is necessary.
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