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Shell's Prelude FLNG Facility Leaves Port for Australia

European oil giant Royal Dutch Shell PLC’sRDS.A flagship project, Prelude floating liquefied natural gas (FLNG) facility, finally set sail from the South Korean shipyard toward the north-west Australia where the next phase of the project will commence. However, the milestone achieved by the project was somewhat offset by the ballooning capital cost due to challenges and delays in the construction of the complex vessel since 2012.

Prelude – world’s biggest floating gas-export vessel – is around 50% bigger than the largest aircraft carrier and is constructed by Technip Samsung Consortium in South Korea. The project is a joint venture among Shell, Overseas Private Investment Corporation, Korea Gas Corporation and Taiwan’s CPC Corporation, with Shell being the chief operator owning a 67.5% stake in the project. 

The massive vessel began its one-month long journey to the Prelude gas field in the Browse LNG Basin, off the coast of Australia. Upon its arrival, the facility will be connected to the seabed by mooring chains before the initiation of hook up and commissioning process.

Being a significant project in the portfolio of Shell, Prelude FLNG is a path-breaking facility for the emergence of floating LNG. Notably, it is also the first and the most versatile in the line of projects planned by the company. The facility will enable the company to unlock new offshore energy sources and provide LNG around the world.

Prelude will handle the production, liquefaction, storage and transfer of LNG at sea, as well as the process, export and condensate liquefied petroleum gas. The facility has a production capacity of around 5.3 million tonnes per annum (mtpa) of liquids, with LNG accounting to 3.6 mtpa or 68% of the total capacity. The production is likely to start in early 2018. The $12.5-billion project is expected to generate cash flow from next year and boost Shell’s Integrated Gas business.

Zacks Rank & Key Picks

Headquartered in Netherlands, Shell is one of the largest integrated energy companies and is engaged in production, refining, distribution and marketing of oil and natural gas. Shell, operating under the Zacks categorized Oil & Gas-International Integrated industry, currently carries a Zacks Rank #5 (Strong Sell).

Royal Dutch Shell PLC Price

Some better-ranked players in the energy space are Braskem S.A. BAK, OMV AG OMVJF and Delek Logistics Partners, L.P. DKL.

Braskem sports a Zacks Rank #1(Strong Buy). The company has delivered an average positive earnings surprise of 107.79% in the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.

OMV, Zacks Rank #2 (Buy) stock has delivered an average positive earnings surprise of 100% in the last quarter.  

Delek Logistics carrying a Zacks Rank #2, is expected to report year-over-year growth of 18.84% in its earnings in 2017.

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