Prelude FLNG Restarts Exports

Shell’s Prelude FLNG project restarted LNG exports on Saturday last week, our data show. Shipments from the world’s largest floating LNG plant ceased in July due to industrial action. Since the start of commercial LNG shipments in 2019, the complex offshore project has suffered from several setbacks, including a period of low hydrocarbon prices in 2020 and power supply issues the following year.

Shell’s Prelude FLNG barge restarted LNG shipments last week, our data indicates. The Shell-controlled carrier Minerva Chios arrived at Prelude on Friday and departed with a 0.08mmt cargo for the Far East on Saturday last week. We are currently expecting the vessel to arrive at its destination in early October.

Shipments lined up

Meanwhile, our data suggest another Prelude export has been lined up via the Kool Orca before the end of this week. The Shell-controlled vessel has earmarked Prelude as its destination for 22 September. Whilst this could mean the Kool Orca will have loaded its cargo by end of day on Thursday, we expect loading operations more likely to be complete on Friday.

Initial production suspension due to safety issues

Shell initially stopped FLNG shipments for two months following an emergency shutdown due to a containment system fault in September 2019. Later, an electrical fault in early February 2020 led to a protracted halt to operations following a notification from the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA). The technical issue reportedly limited several of the vessel’s amenities and warranted onboard staff reduction. The vessel was not seen in the market for almost a year following its operational suspension by Shell.

It remains unclear to what extent Prelude’s long market absence at the time was due to engineering issues or high production costs at a time of relatively low hydrocarbon prices. Although Shell has not confirmed CAPEX or OPEX figures for its Prelude project, the company announced a total write-down of up to US$9 billion for its QGC gas venture and Prelude FLNG plant in 2020, citing an average Brent price projection of US$35/bbl for the year.

Prelude subsequently suffered from a power outage that brought operations to a halt once more in December 2021. The protracted lack of power resulted in workers being left without ventilation and clean water supply whilst also affecting the floating plant’s sewage treatment system, an anonymous source told Bloomberg at the time.

Industrial action

The most recent interruption to LNG exports from Prelude resulted from industrial action over a long-running pay dispute. Work on the floating plant stopped in July but Shell and the Australian Workers’ Union and Electrical Trades Union came to an agreement in mid-August, Shell announced in an emailed statement to Reuters. According to our data, it took roughly 22 days for Prelude to re-enter the LNG market once again.