Petronas says second floating LNG facility to be operational in 2020

KUALA LUMPUR (Reuters) - Malaysian state-owned oil firm Petroliam Nasional Bhd [PETR.UL] said on Sunday its second floating liquefied natural gas (LNG) facility will be operational in 2020.

Petronas loaded its first cargo from the Petronas Floating LNG (PFLNG) 1 in east Malaysia last month, becoming the first company to produce LNG from a floating production unit.

The second one that is under construction, PFLNG 2, will enable liquefaction, production and offloading of natural gas in the Rotan field, 240 kilometers off the east Malaysian state of Sabah upon completion. It is set to have a processing capacity of 1.5 million tonnes per annum (mtpa).

Adnan Zainal Abidin, Petronas’ acting vice president LNG assets, development and production, said development of the second facility was on track and that the company has received interest from other industry players for using both the facilities.

“We are in discussions with a number of third parties who are interested to have our floaters at their locations,” Adnan told reporters ahead of the Asia Oil and Gas Conference in Kuala Lumpur. “It could be the use of existing or new floaters.”

Adnan said the costs of the second facility will be lower than the first floater, though he declined to disclose the cost of the development.

PFLNG 1 will reach its designed capacity of 1.2 mtpa by June, and will be stationed at Kanowit in East Malaysia for five years, said chief executive of PFLNG Feisal Azhar.

Other producers currently developing floating LNG production facilities include Royal Dutch Shell, who is building the Prelude FLNG project in Australia which will be the world’s biggest maritime vessel at a cost of over $12 billion.

Japan’s Inpex is building a similarly big FLNG unit as part of the $37 billion Ichthys export project, also for use in Australia.

But both of these expensive projects have been plagued by delays and a global supply glut as new LNG projects come online in Australia and the United States. The huge development costs have led some to question whether FLNG units on this scale will be ordered again in future.

Petronas’ Adnan said Asia will still be a huge customer for LNG.

He said new markets like India are huge for LNG demand, while Thailand was also buying more LNG, adding that the first cargo from PFLNG 1 went to India.

Reporting by Emily Chow, A. Ananthalakshmi and Florence Tan; Editing by Christian Schmollinger