Cove Point LNG Loads First Contractual Shipment

Cove Point LNG
Cove Point LNG

By MarEx 2018-04-16 20:31:07

The first contractual LNG shipment from Dominion Energy’s newly constructed Cove Point LNG export plant in Maryland in the U.S. left the facility on Monday on the 160,000-cubic meter LNG tanker Adam.

S&P Global Platts vessel tracking software shows the Oman Shipping-owned tanker departed Cove Point at about 11:30 pm local time on Sunday with a nearly full load, en route toward the Suez Canal with the destination unspecified.

Cove Point is still expecting two more unladen vessels in the coming week as the Kawasaki Sakaide and the Meridian Spirit continue to travel toward the plant with an estimated arrival of April 19 and 21, respectively.

Dominion is the second U.S. exporter of LNG produced from shale gas. Cheniere Energy was the first when its Sabine Pass terminal exported its first cargo in February 2016.

ST Cove Point, which is a joint venture between Japan's Sumitomo and Tokyo Gas, has a 20-year service agreement to take 2.3 million tons per year. ST Cove Point will export 1.4 million mt/year to Tokyo Gas and 0.8 million mt/year to Kansai Electric Power through Sumitomo's subsidiary PSE, leaving 100,000 mt/year in unsold volume. 

"This extra volume of 100,000 mt/year is regarded as a buffer for Tokyo Gas and Kansai Electric to cope with seasonal fluctuations,” said Hirofumi Nakamura, head of Sumitomo's LNG Business Development. “But when this buffer is not needed, we will sell into the spot market.” 

Cove Point LNG started commercial operations on April 9, and the first cargo for Tokyo Gas, which is expected to load late April, will likely deliver into Tokyo Gas Negishi terminal in a month's time, according to Yoshihisa Yamada, general manager for Gas Resources Management Section and Gas Resources Dept. for Tokyo Gas. 

Yamada said that while Henry Hub-linked LNG cargoes will help diversify Tokyo Gas' portfolio and alleviate changes in oil prices, the company will seek to optimize cargoes from the Cove Point project, which has no destination clause. 

U.S. LNG will account for about 10 percent of Tokyo Gas LNG portfolio, Yamada said. 

In 2016, Tokyo Gas signed a Memorandum of Understanding with U.K. company Centrica, under which LNG procured by Tokyo Gas from the U.S. would be swapped on a cargo unit basis with Pacific-sourced LNG belonging to Centrica.