New supply chain development sees first LNG STS transfer in the Philippines

Business model seen as a solution for developing markets to gain access to LNG volumes, reducing barriers to market entry.

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Updated on 26 May 2017 09:09 GMT

Koch Supply & Trading (Koch) has completed the first of many ship-to-ship (STS) LNG transfers as part of an agreement with Chinese company JOVO and Malaysian ship owner MISC. It was the first LNG STS transfer in the Philippines.

The operation involves the mother vessel loading cargo from Australia before transferring it to a smaller daughter vessel at Subic Bay in the Philippines.

The STS transfers are being managed by Teekay Marine Solutions, with Teekay and MISC providing their LNG experience to administer a safe operation. The cargo is then delivered to JOVO's terminal in China and distributed by truck to one of its customers in southern China.

"This partnership between first class ship owners, industry leading STS service providers and innovative LNG consumers allows companies in developing markets to gain new access to global volumes and a wider variety of logistics and infrastructure players," said Peter Leoni, director of trading at Koch Supply & Trading.

"Looking at how the LNG market is developing, we are challenging the existing business model as a problem-solving, solution-oriented agent for LNG ship-to-ship transfers in emerging economies around the globe, reducing barriers to market entry," observed Tim Mendelssohn, LNG freight and operations manager at Koch Supply & Trading.

"This project's complexity, along with a commitment to safe and compliant operations have created an inherently multinational agreement involving multiple 'best in class' stakeholders including MISC, Teekay Marine Solutions, KLAW LNG and JOVO," said Chris Huang, international manager at JOVO.

Lu Yuan, general manager of international business for JOVO, remarked: "We appreciate the significant role played by Koch Supply & Trading in orchestrating this historic agreement. Together, we are showing that it is possible for multinational corporations to work together to achieve mutual benefit for society. We hope this arrangement with Koch will be the first of many such innovations in the industry."

Stephen Davidson, vice president - LNG, Teekay Marine Solutions, said: "We welcomed this opportunity to work with Koch to bring this project online, and in working with all entities to ensure the operation was conducted in a safe manner following all industry guidelines and recommendations. We hope this is the start of a new long-term partnership with all parties building on the work that has already been completed to bring this first historic job to fruition. We are pleased to be involved in yet another groundbreaking project for the LNG industry."

As previously reported by Bunker Index, the world's first LNG STS transfer was carried out between two Qatargas-chartered ships while transiting the Singapore Strait in February 2014.