Sun. Jun 23rd, 2024

CNOOC Gas & Power sizing up entry into new Cambodia LNG import terminal

CNOOC Gas & Power, China’s largest liquefied natural gas project developer, is considering farming in to an LNG import terminal to be built in Cambodia’s capital Phnom Penh.

Several industry sources familiar with the project said the company is preparing to take a stake in the terminal as part of China’s Belt & Road programme, which is a global infrastructure development strategy adopted by the Chinese government in 2013 to invest in nearly 70 countries and international organisations.

The size of the stake CNOOC Gas & Power is considering taking is not known, although it is understood to be minor.

CNOOC Gas & Power’s sister company Offshore Oil Engineering Company (COOEC) has completed the feasibility study and basic design for the terminal.

The study covers the terminal’s infrastructure including a jetty and a tank with LNG storage capacity of 220,000 cubic metres.

Contracting sources said that COOEC is waiting for the final investment decision from owner Cambodia Natural Gas Corporation (CNGC) and possibly also completion of CNOOC Gas & Power’s mooted farm-in process before moving to the engineering, procurement and construction phase.

“There are concerns that the local gas demand in Cambodia doesn’t look big enough to justify a terminal with bigger regasification capacity,” said one source.

In May 2019, CNGC received government permission to proceed with a three-phase natural gas project in Phnom Penh.

The first phase — from 2019 to 2020 — involved the import by CNGC of LNG via shipping containers.

In a second phase from 2021 to 2023, CNGC plans to construct a gas-fired power generation facility and the supply of gas to the facility using a chartered floating storage and regasification unit with 550,000 tonnes capacity.

The third phase calls for construction of an import terminal with 3 million tonnes per annum of import capacity between 2024 and 2029.

CNGC’s plan includes 27 urban LNG multi-function stations, a fleet of LNG trucks and 2825 kilometres of inter-provincial high-pressure pipelines. Medium and low-pressure pipeline networks and point-to-point regasification stations in the cities are also being considered.

This 15-year plan is intended to help reduce Cambodia’s dependence on coal and hydropower.

The Ministry of Mines & Energy envisages LNG and natural gas will be important components of the nation’s energy mix in the near future and it has plans for up to 3600 megawatts of gas-fired power plants by 2030.

“Coupled with Cambodia’s surging demand for power and relatively creditworthy national utility company, these plans justify cautious optimism for the future of the country’s LNG-to-power sector,” US-based law firm White & Case said in a May report.

However, there are potential hurdles to development, it cautioned, including the absence of gas infrastructure, absence of clear gas legislation, the fragmented power grid and competition from solar power.

“While major upgrades to Cambodia’s physical and legal infrastructure are required to incentivise investment in domestic LNG-to-power projects, the fundamentals are encouraging and lifted by political tailwinds supporting alternative baseload capacity,” said White & Case.

“Investors wishing to participate in the region’s undeniable growth story should keep watchful eyes on LNG-to-power opportunities in the heart of the former Khmer empire.”

Sources said that the global Covid-19 pandemic has already hit the FSRU schedule.

In January last year, CNOOC Gas & Power exported its maiden LNG cargo to Cambodia on a container ship, which was offloaded at Sihanoukville Port.

CNOOC Gas & Power could not be reached for comment. CNGC is yet to respond to Upstream’s request for comment. Xu Yihe and Amanda Battersby in Singapore and London.

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