Petronas, China LNG Deal Calls for Distribution via ‘Virtual Pipelines’
KUALA LUMPUR (Reuters) – An LNG supply deal struck recently between Malaysia’s Petroliam Nasional Bhd (Petronas) and China’s Clean Tiger Energy provides for the Chinese firm to distribute the fuel to remote locations in China using ISO tanks.
Petronas will supply LNG to an ISO tank-filling facility owned by China’s Tiger Clean Energy in the eastern state of Sarawak, the state energy firm said on Wednesday.
ISO tank containers, so called because they meet specifications set by the International Organisation for Standardisation (ISO), offer quick access to the cleaner super-chilled fuel for end-users in locations far from main pipelines who require smaller volumes.
“Through this...approach, we established a virtual pipeline that effectively enables LNG to reach off-grid customers who are not directly served by the natural gas distribution system in China,” Ahmad Adly Alias, the vice president of Petronas’ LNG Marketing and Trading division, said in a statement.
Petronas did not reveal volumes or prices of the cargoes sold.
Traders said the method was rare for container-sized LNG cargoes, since added logistics costs and an absence of economies of scale boost expense.
Petronas said the deal, struck by video teleconference, was the first of its kind that it has done virtually, amid lockdowns worldwide that restrict people’s movements and travel.
LNG spot prices LNG-AS are hovering near record lows as global demand withers amid the coronavirus pandemic, spurring suppliers to write more flexible arrangements into deals as they try to lure buyers, industry sources have said.
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