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Wed 30 Jun 2010 03:15 AM

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Offshore LNG storage equals 3 months China demand

43% of the total capacity of tankers in Gulf of Oman are holding LNG.

Offshore LNG storage equals 3 months China demand
LNG SURPLUS: LNG tankers parked off the coast of Fujairah, UAE, are storing the equivalent of 3 months of Chinas average purchases. (Getty Images)

Liquefied natural gas tankers parked off Fujairah in the UAE are storing the equivalent to about three months of China’s average purchases, signaling an oversupply in the market.

About 43 percent of the total capacity of tankers in the Gulf of Oman are holding LNG, Pan EurAsian Enterprises Inc said in an email yesterday, citing data from Odysseus tracking service.

That’s equivalent to about 1.4 million metric tons of the cleaner burning fuel. China imported 7.63 billion cubic meters, or 5.6 million tons, last year, according to BP’s Statistical Review of World Energy 2010.

An oversupply of gas and weak demand have sent spot charter rates to the cheapest in five years, prompting producers and traders to take advantage of the low charges to store the fuel.

Qatar, the world’s biggest producer of LNG, was idling at least eight tankers in the Gulf of Oman as of June 3, according to ship tracking data from AIS Live. The vessels have a combined capacity of 1.8 million cubic meters, enough to supply the UK for more than a month.

The 32 vessels off Fujairah include 26 Q class tankers with a capacity of more than 200,000 cubic meters each, the US energy consultant said.

The parked vessels have a capacity of about 3.1 million tons, or about 14 percent of the global capacity afloat, the consultant said, basing its estimates on the posted draft of the ships.

The LNG stored is equivalent to about 62 billion cubic feet of natural gas (1.7 billion cubic meters), the note said. Qatar will idle 66 percent of its export plants at various times this year, according to company statements and Bloomberg calculations.

LNG is created by cooling gas to about minus 260 degrees Fahrenheit (minus 162 degrees Celsius), shrinking it to about a 600th of the original volume, according to the US Department of Energy.

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