Malaysia's state-owned Petronas has informed some of its Japanese term LNG offtakers and trading houses of a force majeure following a landslide last month that may have resulted in a leak on the Sabah-Sarawak Gas Pipeline.
The landslide in September near Sarawak occurred near the pipeline that supplies gas to Petronas' 30mn t/yr Bintulu LNG complex.
Some term offtakers, including Japanese buyers Tokyo Gas and Toho Gas and possibly some trading houses, have received the force majeure notice. But no other details were provided by Petronas, offtakers said. Petronas did not respond to Argus' requests for comment.
Not all offtakers have been issued with the force majeure declaration. But buyers that received the notice will likely see their deliveries between October and December affected, a source with knowledge of the matter said. But disruptions may extend to deliveries in the first quarter of next year depending on the situation. Market participants project that up to 10 cargoes may be affected.
Petronas had initially requested some Japanese buyers to exercise the downward quantity tolerance clause in their contracts in the immediate aftermath of the landslide, participants said.
While it is unclear if affected offtakers will emerge to seek replacement cargoes from the spot market, most northeast Asian utilities have balanced inventories until December.
Spot LNG prices have been softening since more than a month ago. The front half-month of the ANEA, the Argus assessment for spot LNG deliveries to northeast Asia, was last assessed at $34.40/mn Btu on 5 October, a 52.1pc drop from a new all-time high on 29 August.
This is the latest in a spate of production-related incidents at Bintulu since 2021. Petronas in April requested to defer at least one buyer's June-July term cargoes following unspecified upstream issues, despite production at Petronas' Pegaga gas field off Sarawak having restarted on 21 March.
But there are currently ample spot supplies. Omani state-owned Oman LNG was offering a cargo loading over 22-24 October from its 10.4mn t/yr Qalhat export facility through a tender closing on 6 October. It will arrive in most northeast Asian ports in the first or second half of November, if delivered to the region.
Some market participants said there are many floating November deliveries available as sellers have struggled to find outlet for them with weaker demand. December deliveries originally meant for Europe may also have been diverted to Asia as underground gas storage there continues to fill up.
