Ann: Magnolia LNG EPC Contract Extended, page-97

For comparison, in terms of transit times, Darwin to Tokyo is around 9 days.  

With the LNG gas glut has come a LNG shipping glut, charter rates have fallen from $140,000 a day during the Fukushima crisis to around $40,000 a day. Ie. you could ship US LNG to China for around 80c-$1 mmbptu.  The shipping differential to Australia is therefore not enough the wipe out the Henry Hub to Asian LNG arbitrage.


In terms of China supply, with know that at current LNG processing capacity, with LNG terminals operating at above nameplate capacity, that there is still not enough LNG getting into China to meet demand- i.e. the government had to divert gas supplies away from industry to feed homes, and also to bring back on coal heating.  

The massive factor inhibting Chinese LNG demand is going to be build out of LNG storage and pipeline capacity that will allow china to store LNG during the low months to meet full demand in the winter months.   And as we know, when China says it will do something then usually it gets done with communist focus and speed.  President Xi has his clean air policy as a key policy agenda item.

Already,  Sinopec and CNPC stating they expect another tight LNG winter this year, predicting a 15% increase.  Ie, Chinese gas demand this year is expected to grow equal to current export capacity of Cheniere.  They are calling for government assistance in building out LNG storage.

We also cant forget the big row over steel subsidies that Trump is introducing and his recent repeated calls for China to reduce the trade deficit with the US.  What a better way to do this then a win/win US gas supply deal.

China's two big oil majors urge tax breaks for building gas storage and imports

Reuters Staff
3 MIN READ


BEIJING (Reuters) - Top officials from China’s two largest oil and gas producers have urged the government to offer tax breaks for the building of gas storage facilities and importing liquefied natural gas (LNG) to help avoid another gas crunch in the winter ahead.

Sinopec (600028.SS) Vice President Ma Yongsheng said the central government should subsidize the construction of underground gas storage, LNG tanks and other facilities.

China National Petroleum Corp (CNPC) [CNPET.UL] President Wang Yilin urged the government to refund value added tax on LNG imports to lower gas costs for consumers.

Members of parliament and the Chinese People’s Political Consultative Conference, the Communist Party’s largely ceremonial advisory body, are encouraged to submit suggestions for future legislation during the current Parliament session.

Their chances of becoming legislation are minimal, but they can form part of future laws.

The proposals from Sinopec and CNPC come as the nation looks for ways to increase storage capacity for natural gas to avoid a repeat of this past winter’s heating crisis.

Millions of households in northern China switched from using coal to natural gas for heating ahead of this past winter, leading to sky-rocketing gas consumption as well shortages across many regions.

The fuel shortages over the last three or four months deepened China’s worries over whether it can secure enough gas and LNG supplies in winters ahead.
CNPC’s Wang said China’s gas demand will grow 15 to 16 percent in 2018 and supplies will continue to be tight, according to a transcript of his speech to a parliament meeting session published in CNPC’s official newspaper.
Sinopec’s Kong Fanqun, who heads the Shengli Oil field said a lack of storage facilities also contributed to China’s gas shortages this winter, according to a transcript of his speech sent to Reuters by the Sinopec Group.
The country needs an additional 50 billion cubic meters (bcm) of storage facilities by 2020 to meet its own demand, Kong said. That is five times the size of China’s current gas storage facilities.
Kong asked the government to give gas producers subsidies as well tax breaks to build and operate gas storage facilities.

Both Sinopec and CNPC officials also proposed removing resource taxes on the development of shale gas, coalbed methane, high sulfur gas and tight gas reserves.