Oil & Gas

08 Aug 2023

China's Zhejiang Energy Receives First Lng Cargo at New Wenzhou Terminal

08 Aug 2023  by spglobal   
Second LNG terminal to start operations in China in 2023Wenzhou terminal has LNG receiving capacity of 3 million mt/yearFourth LNG terminal in Zhejiang province key to downstream gas supply

China's Zhejiang provincial government-controlled Zhejiang Energy Group received the first LNG cargo at its newly built 3 million mt/year Wenzhou LNG terminal in Wenzhou city on the eastern coast Aug. 7, an official with the company told S&P Global Commodity Insights Aug. 8.

The LNG carrier YARI LNG carrying about 68,047 mt or 154,000 cubic meters of LNG from Indonesia, arrived at Zhejiang Energy's Wenzhou LNG terminal at noon on Aug. 7, marking the start of operation of this newly built LNG terminal, the Zhejiang Port and Shipping Management Center, a governmental institution, said.This LNG terminal is the second one to be put into operation in China in 2023, and the 26th LNG receiving terminal in the country. Prior to this, China's Suntien Green Energy started operating its 5 million mt/year Caofeidian LNG terminal phase 1 in Tangshan city, northern China's Hebei province, on June 18, S&P Global reported previously.

The start-up of the Wenzhou LNG terminal was delayed due to some government formalities and typhoons, the company official said. Zhejiang Energy originally planned to start operation of the Wenzhou LNG terminal in early July.

Several typhoons have affected China since July. Typhoon Talim made landfall in southern China's Guangdong province July 17, then Typhoon Doksuri slammed into southeast China's Fujian province on July 28, weather reports showed. After that, shipping terminal services in eastern China were disrupted again due to Typhoon Kanu last week, according to market sources.

The LNG cargo for commissioning was supplied by state-owned PetroChina, and the vessel had arrived in the waters near Wenzhou for some time, market sources said. "The LNG cargo was swapped from PetroChina, and we will return them with our term contract LNG cargo," another company source said.

Zhejiang Energy and ExxonMobil signed a long-term LNG sales and purchase agreement in April 2019 for the supply of 1 million mt/year of LNG over a period of 20 years.

Delivery of the term contract started since October 2022, at around one cargo a month, and Zhejiang Energy mainly received its term contract volumes via ENN's Zhoushan LNG terminal and CNOOC's Ningbo LNG terminal previously, according to the source.

"Wenzhou LNG terminal will enter the trial operation stage after receiving the first LNG cargo, and we will formulate our LNG procurement and import plans according to the actual market conditions," the source noted.

Apart from the term contract signed with ExxonMobil, Zhejiang Energy's subsidiary Zhejiang Energy Natural Gas and Novatek Gas & Power Asia also signed a 15-year LNG long-term contract for buying up to 1 million mt/year LNG from Arctic LNG 2 on a DES basis in January 2022.

The LNG cargoes under this contract are expected to start delivery from Q3 this year, further increasing Zhejiang Energy's natural gas supply capacity, the source added.

As the fourth LNG terminal in Zhejiang province, the Wenzhou LNG terminal started construction on Sept. 18, 2021, completed on Feb. 20, 2023, and passed the inspection on April 13, according to the Zhejiang Port and Shipping Management Center.

The Wenzhou LNG terminal project is jointly invested by Zhejiang Energy (51%), state-owned Sinopec (41%) and a local company Wenzhou Xiaomen Island Investment Development Co., (8%), but only Zhejiang Energy has the operation right, according to a source with Sinopec.

The project has a designed LNG receiving capacity of 3 million mt/year and a LNG storage capacity of 1.08 Bcm, comprising a dock capable of receiving LNG carriers of 30,000-266,000 cu m and four LNG storage tanks with a capacity of 200,000 cu m each, data from Zhejiang provincial government showed earlier.

Zhejiang Energy is a major energy supplier in Zhejiang province, which is mainly engaged in power construction, natural gas development and utilization, coal circulation, and energy services, according to information posted on the company's official website.

Zhejiang Energy has a provincial-level natural gas pipeline network of over 1,800 kilometers, 72 provincial-level natural gas stations, and 27 city gas companies, which supply more than 11 Bcm/year of natural gas, accounting for more than 81% of the total natural gas consumption in Zhejiang province, the company said.


More News