…As global LNG prices slump on Pacific supply, muted Nigeria impact
13 August 2016, Sweetcrude, Abuja – Nigeria LNG (NLNG), operator of the giant Bonny export plant, said it will reduce salaries and review manning levels at its shipping unit due to the ongoing LNG shipping industry downturn.
Nigeria LNG can confirm that “reviewed manning levels and wage scale for officers on Bonny Gas Transport (BGT) vessels will become effective on 1st September 2016,” the LNG operator said in a statement issued on Wednesday.
“This action is in line with the depressed global market situation, and consistent with prevailing industry rates – and has been taken in the interest of the sustainability of the business,” the statement added.
According to reports, the salaries could by reduced by 50%. According to NLNG, this decision has been taken in response to a more than 60% reduction in company revenues and global oil price, which have dropped from $140 to about $40 per barrel.
It said it had also taken the action to “minimise the need for staff layoffs or retrenchment”, as has been the case in several companies in the industry in response to the steep decline in revenue.
Meanwhile, Asian spot liquefied natural gas (LNG) prices fell for a second week as Pacific producers added supply and curbs on Nigerian output were to be lifted by the end of the month, amid thin demand.
Prices for September delivery fell to around $5.60 per million British thermal units (mmBtu), 20 cents below last week’s levels, with October trading five to 10 cents below September, sources said.
Two of four cargoes recently sold by Russia’s Sakhalin II plant fetched a price in the high $5 per mmBtu range – reflecting end-user demand, one trader source said, citing it as above-market.
Multiple cargoes were offered by Malaysia’s state-run Petronas across September and October, coinciding with the start of its new floating LNG production facility, one trader said.
Cargo numbers could not be immediately confirmed.
Indonesia is also reportedly offering cargoes.
In Nigeria, Shell declared force majeure on gas supplies to the Nigeria LNG export plant this week, raising the possibility of shipment delays or even cancellations owing to inadequate feedstock.
A source said that up to seven cargoes could be delayed as a result of the force majeure, with some long-term buyers potentially already notified of postponements.
“The plan is to lift the force majeure by the end of the month,” the source said.
Elaborating on how Nigeria LNG may apportion cargo postponements, he said: “I think different (offtake) contracts will be treated differently. NLNG will take a view on which cargoes it cancels depending on the underlying prices in each contract.”
Indian Oil Corp. is seeking two cargoes for October delivery in a tender valid until Aug. 23, while peer Petronet closed a tender to buy a September cargo on Thursday, sources said.