MELBOURNE (Reuters) - Royal Dutch Shell on Monday shipped the long-awaited first cargo of liquefied natural gas from its massive Prelude floating LNG plant off northwest Australia, sealing the nation’s position as the world’s top exporter of the fuel.
Prelude’s start-up marks the end of a $200 billion LNG construction boom in Australia over the past decade, during which eight LNG plants were built on the country’s eastern and northwestern coasts.
Prelude’s first cargo had been targeted for 2018, but was delayed as the company tackled a string of teething problems at the world’s biggest floating vessel. The 490-meter long (1,600 ft) ship is longer than four soccer fields and as big as six large aircraft carriers.
Shell declined to comment on how much Prelude cost, but consultancy Wood Mackenzie estimates around $17 billion.
“Today’s first shipment of LNG departed from Prelude FLNG, safely,” Shell’s integrated gas and new energies director, Maarten Wetselaar, said in a statement.
The shipment on the Valencia Knutsen LNG tanker is going to customers in Asia, Shell said.
Prelude will produce 3.6 million tonnes a year of LNG, 1.3 million tonnes a year of condensate and 400,000 tonnes a year of liquefied petroleum gas (LPG).
The start-up comes just as spot LNG prices have sunk to more than three-year lows, with new projects in Australia and the United States boosting global supply while demand in Asia was dented by a mild winter.
Prelude is jointly owned by Shell, Japan’s Inpex Corp, Korea Gas Corp and Overseas Petroleum and Investment Corp, a unit of Taiwan’s CPC Corp.
Shell had expected Prelude to be the world’s first floating LNG project, but was beaten by Malaysia’s Petronas, which shipped the first cargo from its PFLNG Satu project two years ago. Prelude is the world’s biggest floating LNG plant, however.
It took two years from the time the vessel was first parked on top of the fields that feed it to ship the first LNG cargo.
“How fast Prelude delivers its second and third cargo and ramps up to plateau output will be a key indicator of success,” said Daniel Toleman, an analyst at Wood Mackenzie.
Chris Meredith, another analyst Wood Mackenzie, earlier said it was no surprise that Prelude had faced lengthy delays.
“It’s such a novel technology and an isolated location. It was always going to be difficult,” he told Reuters in an interview in late May.
Inpex’s $40 billion Ichthys project at an onshore plant in Darwin has more than double the LNG capacity of Prelude at 8.9 million tonnes a year. That project shipped its first LNG cargo last October, also following lengthy delays.
Reporting by Sonali Paul; Editing by Richard Pullin and Joseph Radford