According to four industry sources, PetroChina has declared force majeure on natural gas imports, including on liquefied natural gas (LNG) shipments and on gas imported via pipelines, following the coronavirus outbreak.
PetroChina issued the force majeure notice to suppliers of piped gas and also to at least one LNG supplier, although details of the force majeure notice could not immediately be confirmed.
PetroChina did not immediately respond to requests for comment.
According to one of the sources, “PetroChina meets 40% of its total gas requirements through imports with around 70% of imports coming through pipeline gas from central Asia, Myanmar and Russia while the rest are through LNG”.
“The supply cuts will fall on suppliers proportionately but LNG suppliers will have a lesser impact versus those on piped gas”, said a source with direct knowledge of the matter at hand.
While it is not immediately known as to what volumes PetroChina had declared as force majeure on or the time period the notice covers, but according to a major LNG supplier to the Chinese company, PetroChina had requested some cargoes be deferred to the third quarter.
As per the first sources, PetroChina is likely to ask for a cut in daily nominations for piped gas.
In February, China National Offshore Oil Corp (CNOOC), the country’s top LNG importer, suspended contracts with at least three suppliers, which resulted in spot LNG prices touching record lows.
“PetroChina has done its best over the past month mitigating the virus impact and tried not to issue such a notice, including diverting cargoes to India and Singapore,” said a source. “But unlike CNOOC (which sent the notice earlier) which may see demand slowing recovering, PetroChina is grappling with a sharp seasonal demand fall from mid-March (for piped gas) when the heating season ends.”