PipeChina’s third party LNG access bonanza starts

LONDON (ICIS)–China’s newly inaugurated national oil and gas infrastructure operator PipeChina has started offering spare capacity to third parties across its LNG terminals, natural gas pipeline network and storage facilities.

A similar process for offering third party access (TPA) on crude oil and refined product pipes has also begun.

Just ten days after launching, shippers are being offered infrastructure access for both November and December of this year.

Before seeking to book capacity, counterparties need to first register with PipeChina as a shipper before 20 October. A full list of would-be shippers has therefore yet to emerge.

As well as listing available capacity across its network, in many instances associated tariffs have also been published.

Since the start of the month PipeChina has become the operator of six LNG import terminals, three natural gas storage sites and much of the country’s long-distance gas pipeline network.

The LNG terminals are: Beihai, Tianjin, Shenzhen Diefu, Fangchenggang, Yuedong and Hainan Yangpu. Beihai used to be operated by Sinopec with the other five run by CNOOC.

Although TPA is accessible through a centralised platform in many instances there is little free capacity available. This is because Sinopec, CNOOC and CNPC/PetroChina have retained their long-term bookings.

In outright terms just under 10% of LNG import capacity is being offered across the six terminals that have a collective nameplate capacity of 21.6m tonnes per annum (mtpa).

However, once additional tank and transmission bottlenecks are considered, ICIS calculates that just 5.8% of the terminals’ annual capacity is up for grabs in the last two months of the year.

LNG

Data from PipeChina show that of the six LNG terminals Beihai has the largest amount of import capacity available to the wider market (see table).

In both November and December there is 240,000 tonnes of spare import capacity free at Beihai along with 824,000 tonnes of tank storage and 271,000 tonnes of transmission capacity available.

Capacity is being sold at an equivalent price of $0.73/MMbtu, based on current exchange rates. ICIS understands this price to be relatively low when compared to winter-time slots offered by the previous terminal owners.

At Shenzhen Diefu, some 502,000 tonnes of import capacity has been offered in each of the two months, although there is only 120,300 tonnes of tank capacity available in November and 45,000 tonnes free in December.

As there is substantially less tank capacity than import capacity, this likely suggests the actual ability to import is constrained to the tank’s capacity. The Shenzhen Diefu tariff is equivalent to $1.26/MMBtu.

PIPES

Capacity is also being offered across the vast gas pipeline network.

Along various sections of the Russia-China pipeline, which is the domestic extension of the Power of Siberia pipe, as much as 842mcm/day of capacity is available at $1.74/MMBtu/1,000km, PipeChina data show.

This vast amount of unbooked capacity is equivalent to more than 30 billion cubic metres (bcm)/year, suggesting large swathes of this pipe are not yet needed to ship the volumes bought under long-term contract by CNPC from Russia’s Gazprom. That contract is for 30bcm/year, but is currently only in ramp-up mode.

The PipeChina data shows that the cost of shipping gas from Central Asia via the West-East trunk line is considerably cheaper than from Russia, but relatively little capacity is being offered for this route, apart from on the Jian-to-Fuzhou spur.

On the main truck line the western leg of the West-East pipe is priced at just $0.54/MMBtu/1,000km, while east of Zhongwei at $0.91/MMBtu/1,000km.

STORAGE

In terms of gas storage, operatorship of Sinopec’s huge 3.27bcm Wen 23 site also moved to PipeChina, as has the 1.7bcm Jintan facility and the 455 million cubic metre (mcm) Liuzhuang unit.

At Wen 23, 14.8mcm of daily withdrawal capacity is being offered in November, but nothing is available in December. This is likely because Sinopec will have already reserved this capacity for its own portfolio needs.

At the much smaller units of Jintan 44.5mcm/day of withdrawal capacity is being offered, while at Liuzhuang just 11.8mcm/day is available for November.

Additional reporting by Elena Qi