Gladstone Up and Away

BG Group ramps up exports from LNG plant on Curtis Island

• THE AUSTRALIAN
• JULY 14, 2015 12:00AM

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Matt Chambers

Resources Reporter
Melbourne
British gas giant BG Group has started exporting from the second of two production trains at its $US20.4 billion ($27.5bn) LNG plant on Gladstone’s Curtis Island, boding well for Santos and Origin Energy, which are set to become the nation’s latest LNG exporters in the next few months.
BG yesterday revealed it had made its first shipment from the second train, that it had finished all its infrastructure at Queensland’s onshore coal seam gas fields (where it is sourcing its gas for the Queensland Curtis LNG project) and that its first train had ramped up quickly, shipping more than 1.5 million tonnes of LNG.
“The completion of our upstream infrastructure and the two LNG trains are achievements of which BG Group, particularly our team in Australia, can be proud,” BG chief Helge Lund said in a statement put out yesterday after the close of trading on the Australian stock exchange.
All three LNG plants at Gladstone are being built by US contractor Bechtel, which means a hassle-free start-up for BG, the first to export, is a good sign for the coming Gladstone LNG project operated by Santos and the Australia Pacific LNG project operated by Origin Energy and ConocoPhillips.
For Santos and Origin, the start-up of the plants will mean a step-change in cashflow that has been long-awaited by investors. Santos is expected to export next, targeting the end of the third quarter, while Origin’s project is targeting early in the fourth quarter.
BG had been targeting a third-quarter start for the second train, so to do so in the first half of July is a good result.
What is likely to be more comforting for investors, though, is how well BG’s first train, which started in late December, has performed.
Mr Lunde said QCLNG had already shipped more than 1.5 million tonnes of LNG in 27 cargoes from the first train.
QCLNG is expected to ship about 8 million tonnes of LNG from its two trains (4 million tonnes each) meaning the first train has shipped more than 75 per cent of what it is expected to over a half-year when running at full capacity.
Each train is supposed to take six months to ramp up.
Santos had set an unofficial stretch target of first exports in July from Curtis Island, according to signs on site reported recently by analysts who toured the project.
But yesterday, the company was sticking to its official target of first LNG from “around the end of the third quarter”.
Origin recently pushed back what had been a third-quarter target to one of early in the fourth quarter.
Origin’s shares have fallen 13 per cent in the past few weeks on reports that its major APLNG customer, China’s Sinopec, may try to renegotiate its LNG contracts in the face of lower Chinese demand and low spot LNG prices.
Origin has also revealed it will sell early, precommissioning LNG shipments into weak spot markets.