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Coral, Aided by Shell, Dives into LNG Market

Coral, Aided by Shell, Dives into LNG Market

Coral Energy jumped head first into a new arena last Friday with its 2.8 Bcf purchase of liquefied natural gas (LNG) from Malaysia LNG Sdn. Bhd. The shipment will be delivered to CMS' Lake Charles, LA, LNG import facility later this month. Terms of the transaction were not released.

"Coral is well positioned to become an importer of LNG into the U.S. Gulf Coast market," said Jim Whalen, Coral Chief Commercial Officer. "We have a strong market presence in the area, coupled with an extensive asset infrastructure of intrastate gas pipelines and gas storage facilities. In addition, we can provide LNG producers risk management instruments and the financial strength of our AAA credit rating. Plans for additional LNG imports are under development."

Coral, a Shell affiliate, has retained the services of the Port Harcourt LNG vessel to transport the gas from Bintulu Port in Malaysia to Lake Charles. "This is one snag about the LNG market," said Jeff Holyfield, a CMS spokesman. "There is tons of LNG out there, but one reason why it doesn't have more of an impact is because there aren't enough transport vessels to move it across the ocean."

One of the factors helping Coral with the transportation process was its parent company's heavy involvement. Shell said it was involved in every step of this process from production to marketing. Shell Malaysia, Shell International Gas and Shell Trading and Shipping all assisted in the transaction.

Coral said it will sell the LNG in the U.S. market, but would not be more specific.

For CMS, this shipment is one of 18 expected for its Trunkline LNG terminal at Lake Charles this year. So far, 11 shipments have been delivered. Each one, Holyfield said, has been in the 2.7 to 2.8 Bcf range.

"Lake Charles has been successful because it offers so much flexibility," Holyfield said. "Because of Trunkline [Pipeline], the port has direct access to 15 onshore pipelines, so companies delivering LNG to the facility have a multitude of options. If you look at the trend, it is going exactly like we want it. In 1997, we had 12 shipments go through Lake Charles. In 1999, so far, we have commitments for 18 and we're looking for more."

A large portion of the Lake Charles capacity is being used by CMS' marketing division, CMS Marketing, Services and Trading (MST). In April, the CMS affiliate announced plans for 9.3 Bcf of LNG from Austrailia to be delivered to Lake Charles in three shipments. The shipments will then be transported through CMS' Trunkline pipeline to be distributed in the U.S. market.

MST, however, is not the largest importer of LNG from Lake Charles. That title goes to Citrus Corp., a joint venture between Enron and Sonat, which imports LNG from Algeria and transports 80 MMcf/d from Lake Charles to Florida for gas-fired power plants.

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