LNG shipment leaves Australia
The first cargo of liquefied natural gas has sailed from the mammoth Australia Pacific LNG facility in Queensland, ConocoPhillips and its partners in the project announced Monday.
The shipment, carried on the 935-foot tanker Methane Spirit and bound for customers in Asia, is among the first in a wave of liquefied natural gas projects that are coming online even as low oil prices have dragged down the value of natural gas on international markets.
For the companies behind it, the cargo is an important first step toward changing the project from a cash sink to cash generator after years of construction and more than $17 billion in investment.
Houston’s ConocoPhillips and Australia’s Origin Energy each own a 37.5 percent stake in the venture. China’s Sinopec owns the remaining 25 percent and is its largest customer. Kansai Electric Power, a
Japanese utility, also has signed contracts for some shipments.
The Australia Pacific LNG, or APLNG, facility takes natural gas from Eastern Australia, liquefies it and then ships it on specialized tankers.
The project’s backers began construction of the liquefaction plant in 2011, hoping to capture the margin between cheap U.S. natural gas and more expensive intentional gas.
Unlike U.S. natural gas, the fuel on the international market tends to follow oil prices, which were above $100 a barrel for much of that year.
The oil bust that began in 2014, however, has depressed natural gas prices abroad and left immediate profitability of Australia Pacific LNG in question.
Origin has said international benchmark oil must sell between $38 and $42 per barrel for it to record positive cash flow from its investment, according to the Sydney Morning Herald.
Brent crude, the international benchmark, ended Monday trading at $31.55.
Still, the project’s backers have continued to pour billions into its construction.
ConocoPhillips said in a statement that an operational Australia Pacific LNG would allow it more financial flexibility moving forward. The independent oil and gas producer expects the project to be self-funding after the second production unit, called a train, comes online later this year.
“This is a significant milestone for our company, and we are proud to have safely loaded the first cargo,” ConocoPhillips Chief Executive Ryan Lance said in a written statement.
Another Houston company, Cheniere Energy, is set to begin exporting soon from the $18 billion natural gas liquefaction and export terminal the company has in Cameron Parish, La.
The 950-foot tanker Energy Atlantic, which last reported a position about 30 miles off Louisiana, is scheduled to call at Sabine Pass and could soon become the first ship to depart the mainland in recent years U.S. carrying a cargo of American liquefied natural gas.