Qalhat LNG generated its highest-ever returns to shareholders last year despite challenging conditions in global energy markets, Harib al Kitani, Chief Executive Officer, stated in the company's 2011 Annual Report. Al Kitani described the company’s impressive performance during 2011 as a testament to its ability to surmount — and even thrive — in an adverse market environment.
“Qalhat LNG has another year of solid performance in all segments of our business and managed to flourish in the face of adversity. Our year’s results include generating the highest financial return ever to our shareholders, recording the highest revenue from diversion transactions; achieving maximum optimisation of our shipping costs, and attaining the highest investment returns since exception,” the CEO stated in a review of the LNG producer’s performance during the year.
Qalhat LNG owns the third of three liquefaction trains, each of 3.3 million tons per annum capacity, which together make up the integrated LNG complex at Qalhat near Sur. The Government of Oman has the largest stake in the company, with a 46.84 per cent shareholding. Oman LNG, which owns the first two trains, has a 36.8 per cent stake in the company, while Spanish-based Union Fenosa Gas owns a 7.36 per cent share. The remaining 9 per cent is shared equally by three Japanese energy firms: Itochu Corporation, Mitsubishi Corporation, and Osaka Gas.
An astute strategy governing the company’s cargo diversion activities helped bolster revenues despite the difficult global environment. “This, coupled with significant revenue generated by price reviews of long-term contracts, the positive impact of increased oil prices on condensate and considerable cost savings in our shipping and financing activities, resulted in an exceptional bottom line to stakeholders,” Al Kitani said.
Also contributing to Qalhat LNG’s solid performance during 2011 were successes on the marketing and shipping front, which helped deliver the highest-ever returns from this segment of its business. An “outstanding number” of cargoes were diverted throughout 2011, the majority destined for Japan in the wake of last year’s devastating earthquake and tsunami disaster.
“This was no easy feat and we encountered many challenges, including procurement replacement 1337347939207980500 cargoes from the soaring Atlantic Basin as fear of supply shortages loomed. There was plenty of competition to divert cargoes to Japan and high prices on shipping tonnage made the market quite volatile and difficult to manage from a financial feasibility perspective,” the CEO pointed out.
Commenting on the market outlook for 2012, Al Kitani noted the likelihood of “new threats” and “unprecedented” challenges for the LNG industry. At the same time, he voiced confidence in the company’s ability to cope and respond to these challenges. “Our results in 2011 are proof that we are up to the challenges that an unpredictable environment throws at us — in fact we thrive in situations that are fraught with adversity,” he added.