EnergyQuest has revealed that the impact of the coronavirus (COVID-19) is starting to emerge in the global liquefied natural gas (LNG) industry, as cargoes are delayed or redirected.
The consultancy’s February 2020 report outlined that the effect of COVID-19 on Australian deliveries had so far been minor, with its vessel tracking indicating eight cargoes were delayed during February and a further four cargoes redirected.
“Two of these cargoes were sent to India, while one cargo was redirected to Malaysia. Another cargo originally bound for Japan was redirected to China. No significant delays have been identified so far during March,” EnergyQuest stated in its report.
EnergyQuest reported that the disruption to trade with China and Japan from the coronavirus was also starting to become evident in cargoes. While not yet substantial, it has been most pronounced in shipments from Gladstone, which supplies CNOOC and Sinopec.
In total, Australian projects delivered 29 cargoes to China in February, down on 40 in January, but more than the 26 delivered in February 2019.
However, EnergyQuest reported the cargoes delivered from Gladstone fell from 17 a year ago to 14 this February.
Further up the supply chain, 12 Australian cargoes destined for China were delayed or diverted in February. Shipments from Gladstone bound for China amounted to 1.05 million tonnes (Mt) in February, down from 1.24 Mt a year earlier and the lowest since September 2018.
However, COVID-19 continued to have wide impacts across the LNG industry during February, with Wood MacKenzie expecting the virus outbreak to shave 4.4-10.4Mt off Chinese gas consumption this year.
In addition, LNG imports are predicted to be between 2.6 Mt and 6.3Mt lower as a result.
Following the drastic drop in oil prices, EnergyQuest expects cheaper LNG contracts not to accelerate China’s LNG demand recovery due to the virus and high gas inventories after a mild winter.