Angola LNG to Ship its 4th Cargo, Capsize Hits Supply

Source: Reuters 9/19/2013, Location: Africa

Angola's liquefied natural gas (LNG) export plant is to ship its fourth ever cargo early next week prior to a 53-day maintenance shutdown that is now set to begin on Sept. 29, a senior source at the plant said. "The next shipment is due to take place early next week, either Monday or Tuesday," the source said, who added that a fifth shipment awaited by traders may not materialise before the plant shuts for planned diagnostic tests. Maintenance, has been delayed several times due to the discovery of small gas leaks. A shutdown was due to start on Sept. 13 but has been pushed back in order to give site managers more time to evaluate performance.

Production from the $10 billion plant has to reach 75 percent of capacity before maintenance can begin, two sources at the site said. It is currently operating at 50 percent of production capacity, they said.

Gas from BP's Block 18 started feeding the plant for the first time from 1030 local time (0930 GMT) on Wednesday, the first source said, while supplies from ExxonMobil's Block 15 and Total's Block 17 are now also flowing at peak rates.

The supply boost has reinforced hopes that the facility will have enough gas to be able to hit its 75 percent LNG production target later this month. But the plant, which is currently pumping LNG, propane and butane into its two storage tanks, is still not expected to run at peak output in its first year.

"Due to past failures we're taking the ramp up very slowly," the first source said, referring to a string of fires, leaks and pipeline problems that have marred previous startup attempts. "Once all the issues are cleared up, and if the shutdown runs smooth, we will run it at 70-75 percent of production and then increase to 100 percent...But within a year we don't plan to reach 100 percent," he said. The plant faces far bigger challenges, however.

Sources told Reuters that a rig disaster in July that caused one death is also set to delay efforts to link two offshore blocks with the plant, suggesting that Angola LNG may struggle to boost supplies above levels targeted for later this month. On July 1, the drilling rig Perro Negro 6 operated by Italian oil services group Saipem capsized as it was laying a pipeline linking Chevron's Block 0 and 14 with the liquefaction plant. The disaster claimed one fatality and has for the time being cut off supplies from the Chevron-operated blocks, which were to be tied to the plant next year, supplying up to 170 million cubic feet of gas per day initially, the second source said. Angola LNG declined to comment.

A salvage operation to remove the wreck will get underway once Saipem picks a contractor following a recent tender, a spokesman told Reuters. "The timing (of the removal) is depending on the offer that will be presented by the winner of the tender," he said.

Angola LNG has so far exported three cargoes on tankers to Brazil, China and Japan, in that order.

U.S. oil major Chevron operates the project with a 36.4 percent shareholding, while Angolan state oil firm Sonangol has a 22.8 percent stake. Other stakeholders include Total , BP and ENI with 13.6 percent each.

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