Brunei LNG issues alert on 'operational upset' at facility

Brunei LNG is managing an "operational upset" and flaring and noise could be observed at its facility, the Southeast Asian LNG exporter warned in a public notice on a social media platform overnight.

The company did not immediately respond to queries seeking further details of the incident. The Brunei LNG incident did not involve an "explosion, or fire," said a source with direct knowledge of the matter.

Meanwhile, Singapore-based traders said end-users had not been notified of any changes to their LNG offtake schedules so far. The Brunei issue is unlikely to tighten supply in Asia as it is not a spot seller, although term buyers may have to find alternative cargoes, but it depends on the impact, two traders said.

Brunei LNG exported around six LNG cargoes in October, which is generally not a large enough volume to disrupt the market, but if the outage extends through the peak winter demand season it could cause some pain to buyers.

Brunei LNG operates a 6.7 million mt/year LNG export facility, but its actual exports were lesser at around 4.75 million mt/year in 2023. More than half of its LNG exports go to Japan, and the remaining are sent to China, South Korea, Taiwan and Thailand.

Japan imported a total of 2.225 million mt of LNG from Brunei over January-September 2024, according to the latest data from the Ministry of Finance, with imported Brunei LNG volumes accounting for 4.5 % of Japan's total imports of 49.189 million mt in the period.

A JERA spokesperson said it has not confirmed having any impact on its Brunei LNG procurements for this winter.

A Tokyo Gas spokesperson declined to comment as the company allowed its long-term Brunei LNG contract to expire last year.

A spokesperson for Japan Petroleum Exploration said the company was in the middle of assessing the impact and was collecting information on the matter. Japex started its new supply contract in April 2023 to purchase a couple of cargoes of Brunei LNG over multiple years.

Osaka Gas and Tokyo Gas have confirmed that the Japanese gas utilities let their 10-year contracts, to import 370,000 mt/year and 1 million mt/year of LNG, respectively, from Brunei expire at the end of March 2023.

Osaka Gas and Tokyo Gas were part of a consortium of Japanese buyers along with JERA to import a total of 3.4 million mt/year of LNG on an ex-ship basis from Brunei LNG under the 10-year contract from April 2013 until the end of March 2023.

"Brunei LNG is currently managing an operational upset, which is being actively addressed by our teams. The public may observe visible flaring and elevated noise levels from our plant. These are controlled and expected outcomes of our operational upset and pose no risk to the surrounding community or environment," the company's post said.

"There are no injuries, asset damage, or safety threats to people, the community, or the environment. Brunei LNG internal designated teams are actively managing the situation and working towards operation recovery," the company added.