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As Trinidad's LNG output grows, cargoes flow further afield

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LNG Industry,

Reuters are reporting that LNG production in Trinidad is recovering thanks to a new field start up, but competition from US shale is forcing sellers of its output to go much further afield.

Trinidad built LNG facilities during a second wave of the industry’s expansion in the 1990s with the goal of supplying North and Latin America. But supplies from the US shale gas revolution have since dented that strategy.

Trinidad’s 15 million tpy Atlantic facility, which liquefies natural gas for export and in which BP and Royal Dutch Shell are major shareholders, ran at 75% of capacity last year as gas deposits become depleted.

Its production fell almost 30% from a peak of 34.32 million m3 of LNG in 2010 to 25.07 million m3 LNG last year. The latest data from the energy ministry, issued this week, showed total March output rose to 2.6 million m3, up 0.4 million m3 from February and 0.7 million m3 higher than a year ago.

Output has been broadly rising since November after the US$2 billion BP-operated Juniper project came onstream in August. BP said at the time that the project would add 590 million ft3 of natural gas a day to its capacity in the country.

The completion of an onshore compressor by Atlantic’s Point Forint terminal, which improves gas recovery from BP’s low-pressure wells, has further raised its gas capacity by 200 million ft3 per day.

The additional gas from the two projects translate to 5.9 million tpy of potential LNG production compared to Atlantic’s 15 million tpy capacity, according to Reuters calculations, although actual gas output plus domestic consumption needs to be taken into account before calculating any consequent increase in LNG output.

“Take a little for domestic and you’d certainly see something like 3 to 4 mmta (added to LNG production),” said Trevor Sikorski, head of natural gas and carbon research at London-based consultancy Energy Aspects. “It’s hard to say whether it would go to 15 million tpy ... They’ve only ever done that once, in 2010.”

BP has sanctioned another gas project while appraising a further two discoveries and Shell has invested further, buying out Chevron’s assets in the country – trends that should increase and maintain Trinidad’s LNG output in the medium term.

Nevertheless, although LNG exports rose in the first four months of this year, flows to North and Latin America have fallen.

Instead, cargoes have gone as far as China, which received twice as much in the first four months of this year as last year; as well as India, with a 50% increase in volumes; the UK, where flows have just exceeded last year’s; and Thailand.

“LNG cargos are making some incredible trips. You’ve seen trips from Norway to China, big trips around the bottom of South Africa,” Bernstein analyst Oswald Clint said, explaining changing trade flows dictated by high Chinese demand.

The explosion of US LNG supplies – thanks to new export facilities – from just a single cargo leaving in January 2016 to 27 tankers carrying 4.1 million m3 LNG in January this year, has not only supplied China but also flooded the regional market.

“I don’t think it (Trinidad’s increased production) is disruptive,” Clint said, of the North and Latin American LNG markets. “It’s more about whether there is sufficient material uplift against greenfield capacity expansion. The quantity is not big enough to cause a big enough disruption.”

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