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Exclusive: Vitol targets Southeast Asia's LNG boom with import projects


By Vukmanovic , Drazen Jorgic and Ruma Paul

LONDON/ISLAMABAD/DHAKA (Reuters) - is targeting Southeast Asia's booming liquefied (LNG) markets to boost sales and catch up with rival commodity traders by developing import projects in and

In its biggest potential project, the is teaming up with France's Total on a floating LNG import facility in Port Qasim, Karachi, industry and government sources said.

The unusual alliance between the Swiss trade house and major shows how emerging markets' appetite for gas is becoming a focal point for the global LNG industry as it faces years of strong supply growth.

Rival trading houses Trafigura and are already developing LNG projects in and Bangladesh, betting the countries will account for a rising share of future profits and LNG trade.

The Vitol-Total project joins around eight other proposed LNG terminals in - largely clustered around - vying to tap into a market set to expand five-fold by 2022 to 30 million tonnes per annum.

Floating terminals, known as FSRUs, are faster and less costly to set up than traditional land-based units and offer commodity traders a route into new markets, helping to absorb a growing LNG surplus on international markets.

FSRU projects tend to cost around $250 million which factors in the full range of costs including chartering, port and

In Bangladesh, is going it alone to develop a small-scale FSRU alongside the ageing Sangu in the Bay of Bengal, government officials and industry sources told

declined to comment.

In reference to Pakistan, a said "we are currently exploring various options and opportunities to enter the "

Industry sources said Total, which is also developing projects in and Ivory Coast, started co-operating with after a separate Pakistani LNG project it was involved with collapsed last year.

With trading ties in Pakistan, aims to sell its gas through a nationwide network of 400 owned by local partner

boasts the region's biggest after and

A Pakistani confirmed and Total were working together after their earlier attempts to join more advanced projects fell through.

However, he questioned the probability of success given only had space for up to four more terminals in the next few years.


Once considered backwaters, Pakistan's LNG demand is expected to soar, while may consume as much as 17.5 mtpa by 2025, from zero currently.

Despite offering phenomenal growth, is a relative late-comer to both markets and may struggle to outpace more advanced projects by Trafigura and in Pakistan, industry sources said.

Trafigura aims to develop an in Port Qasim, alongside an existing project in which it also has a minority stake.

meanwhile has joined a consortium, comprising Fatima Fertiliser, and Engro, which is behind what should be Pakistan's third

The playing field may be more level in where all players face headwinds.

For example, Trafigura and have struggled to progress their small FSRU projects meant to supply fertiliser producers on the due to space and logistical constraints, industry sources said.

Even Vitol's rival scheme in the faces challenges.

"The (Sangu) platform is in six metres of water, so they would need very small LNG ships to reach it ... but this is not our headache, they will take the risk," a firm Petrobangla's LNG division told

A runs from the platform to shore.

The main obstacle facing Trafigura, and in is finding enough small LNG tankers to ferry the fuel into their shallow water terminals.

"Once you factor in all of the specialised equipment, cost starts to become a real challenge," a LNG industry source whose company is active in said.

(Reporting by Vukmanovic; Editing by and David Evans)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, March 14 2018. 23:23 IST