(Reuters) - Angola's hopes of becoming this year's
only major new liquefied natural gas supplier suffered another setback
in April after fire occurred at its plant just hours before production
was to begin.
This could further delay the troubled project, which is seen as key to
relieving a global shortage of the fuel and could help push global LNG
prices back towards record highs.
A small electrical fire broke out when a high voltage cable overloaded
as operations were about to begin, according to a private report by
energy consultants Poten & Partners, seen by Reuters and
corroborated by industry sources.
In June 2012, a fire ignited at the site, delaying its opening, which is now 18 months behind schedule.
"Operators were just hours away from making LNG when the incident
occurred," the Poten report said of the April 15 fire, adding the
overloaded cable was connected to a helper motor linked to a compressor.
Helper motors are used to get the plant's turbines and compressors
running during start up. Compressors act like engines, helping cool
natural gas to liquid form so it can be put in special tankers for
shipping overseas.
Angola LNG, a venture led by U.S. oil major Chevron, declined to
comment on the fire, though a spokesman for the project said production
is expected to begin by the end of June, as previously announced.
"Angola LNG is currently in the process of testing and restarting the
plant in readiness for first LNG," the spokesman said. The plant was
originally scheduled to begin in late 2011.
Angola's state-run oil and gas company Sonangol, which has a 22.8
percent stake in the plant, is planning for first LNG to be shipped at
any point between May and November, according to the Poten report.
Sonangol did not respond to repeated calls and emails.
It is so far unclear how serious the damage was and how long it will
take to fix, though Poten said in the report repairs could be completed
within weeks of the incident.
Poten declined to comment on its own report.
Electrical fires are rare, but do occasionally happen when equipment is
being used for the first time, experts said, and recovery times can
vary depending on what has been affected.
"Assuming there is not any significant cable damage outside the
immediate area, that could be a relatively quick fix," said Jeffrey
Beale, president of LNG engineering specialists CH-IV International.
"On the other hand, if they don't have readily available spare parts for that unit, it could be a long time."
The latest incident follows a fire in mid-summer 2012 after a gas
heater unit was left running while the gas flow had been turned off, a
source briefed by engineers said.
MARKET AWAITS SUPPLY
Some LNG traders said the first cargo could come as early as this month, although others are more sceptical.
The project aims to produce one or two cargoes before shutting down
again until August for a full battery of tests, traders briefed by
Angola LNG representatives said, putting off commercial production still
further.
"The big thing in the market is this project. It is one of the reasons
Asian prices have come down a bit because people are expecting it to
start," one LNG market source said.
Asian prices rose to $20 per million British thermal units (mmBtu) this
winter, before slipping to about $14 per mmBtu currently.
Angola LNG was initially meant to supply the United States when
construction began in 2008, but subsequent large increases in U.S.
natural gas output has dented import needs and left Angola seeking other
buyers.
Global supplies are however tight and prices have shot to near record
highs over the past year as demand increases and output stagnates.
Angola LNG is seen as a key relief to that shortage.
The Soyo LNG tanker, which was expected to take on one of Angola's
first cargoes for export, entered the facility on April 16 but sailed
out of the port again on April 17, two days after the fire and has since
left for Spain.
Other Angola LNG stakeholders include Total, BP and ENI with 13.6 percent each
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