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The Petroleum
Economist Ltd 2004
Foreword
Financing
Shipping
Trading, Marketing
and Power Generation
Return to Masthead
Introduction
General Usage
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LNG Industry CD-ROM simply click the green tabs on the left-hand side of the page. This will
take you to contents of that section within the book. The green tabs stay constant throughout
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Exporters
Importers
Design
and Technology
History of the
Worlds LNG Industry
LNG Statistics
Advertisers
This function allows you to search for particular words and names.
www.lng14.com
Foreword
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Financing
LNG 14
Shipping
Web link
Trading, Marketing
and Power Generation
Exporters
Importers
Design
and Technology
History of the
Worlds LNG Industry
LNG Statistics
view information
ADGAS
web link
Angola LNG
ANZ Investment Bank
web link
Black & Veatch
web link
BASF
web link
BG Group
web link
BP
web link
ChevronTexaco
web link
ConocoPhillips, Bechtel
web links 1 2
Consolidated Contractors Group
web link
ExxonMobil
web link
Fluor
web link
Gorgon Australian LNG
web link
Kaefer Isoliertechnik GmbH & Co. KG
web link
Nigeria LNG Ltd
Qatargas
web link
RasGas
web link
Sakhalin Energy Investment Company Ltd
web link
Shell
web link
Sonatrach
web link
Total
web link
Tractebel LNG
web link
Virgin Atlantic
web link
Wrtsil
web link
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Foreword
Return to Masthead
Foreword
Financing
1.1
1.2
Shipping
1.3
Working together
Lee Raymond, chairman and chief executive, ExxonMobil
Trading, Marketing
and Power Generation
1.4
1.5
Exporters
Importers
Design
and Technology
History of the
Worlds LNG Industry
LNG Statistics
Advertisers
Foreword
Return to Masthead
Financing
Financing
2.1
2.2
Shipping
Trading, Marketing
and Power Generation
Exporters
Importers
Design
and Technology
History of the
Worlds LNG Industry
LNG Statistics
Advertisers
Foreword
Return to Masthead
Shipping
Financing
3.1
3.2
Shipping
3.3
Trading, Marketing
and Power Generation
3.4
Contract challenges
Goh Mei Lin, of Watson, Farley & Williams
3.5
Exporters
Importers
Design
and Technology
History of the
Worlds LNG Industry
LNG Statistics
Tanker loading at
ALNG
BG Group
Advertisers
Foreword
Return to Masthead
4.1
4.2
Shipping
4.3
Trading, Marketing
and Power Generation
Exporters
Importers
Design
and Technology
History of the
Worlds LNG Industry
LNG Statistics
Advertisers
Foreword
Return to Masthead
Exporters
Financing
5.1
5.2
Shipping
5.3
Trading, Marketing
and Power Generation
5.4
5.5
Exporters
5.6
Importers
5.7
5.8
Design
and Technology
5.9
History of the
Worlds LNG Industry
LNG Statistics
Advertisers
Foreword
Return to Masthead
Importers
Financing
6.1
6.2
Shipping
6.3
Trading, Marketing
and Power Generation
6.4
6.5
Exporters
6.6
Importers
6.7
6.8
Design
and Technology
6.9
History of the
Worlds LNG Industry
Inside the
Sodegaura LNG
terminal, Japan
Shell
LNG Statistics
Advertisers
Foreword
Return to Masthead
7.1
Larger is greener
Robert P Saunderson, Joseph M Petrowski and James C Bronfenbrenner, Air Products and Chemicals
7.2
Shipping
7.3
Trading, Marketing
and Power Generation
7.4
7.5
Exporters
7.6
Importers
Design
and Technology
History of the
Worlds LNG Industry
LNG Statistics
Advertisers
Foreword
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Shipping
Trading, Marketing
and Power Generation
Exporters
Importers
Design
and Technology
History of the
Worlds LNG Industry
LNG Statistics
Advertisers
Foreword
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Shipping
Trading, Marketing
and Power Generation
Yamal
Peninsula
Exporters
Design
and Technology
Arzew
Sfax
Tiaret
History of the
Worlds LNG Industry
Arzew
RABAT
Madeira
(Port.)
Skikda
Gabes
Mohammedia
TUNISIA
MOROCCO
ALGERIA
Tenerife
Canary I (Sp.)
In Amenas
In Salah
La Aiun
WESTERN SAHARA
Sahara
MAURITANIA
NIGER
MALI
NOUAKCHOTT
DE
BANJUL
SENEGAL
THE GAMBIA
BAMAKO
BISSAU
GUINEA-BISSAU
NIAMEY
BURKINA FASO
OUAGADOUGOU
GUINEA
CONAKRY
SIERRA LEONE
YAMOUSSOUKRO
MONROVIA
LIBERIA
Abidjan
Kaduna
ABUJA
TOGO
COTE
D'IVOIRE
FREETOWN
BENI
N
DAKAR
PORTO NOVO
LOME
ACCRA
NIGERIA
Lagos
CAMERO
Warri
Limbe
Port Harcourt
YAOUN
NLNG (Bonny Island)
EQUATORIAL
EQUA
GUINEA
GUIN
LIBREVILLE
LIBRE
GULF OF GUINEA
Port Gentil
GABON
LNG Statistics
Importers
Advertisers
The information within this section is based upon or redrawn from various authoritative sources and
whilst all reasonable care has been taken in the preparation of this section no warranties can be
given as to its accuracy and/or no reliance should be placed upon the same without further detailed
inspection and survey. The publishers cannot therefore accept any liability or responsibility for any
loss or damage. The international and other boundaries in these maps are taken from authoritative
sources and believed to be accurate as at the date of publication. The representation of any pipelines
is no evidence of the existence of rights of passage or the use of the same.
No reproduction whatsoever of these maps or any part thereof is permitted without the prior consent
of the copyright owners.
Foreword
Return to Masthead
LNG Statistics
Financing
Shipping
Trading, Marketing
and Power Generation
Exporters
Importers
Design
and Technology
History of the
Worlds LNG Industry
LNG Statistics
Advertisers
ADGAS
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HOME
Angola LNG
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Luanda Office:
Telephone: (244) 2 39 26 46
Facsimile: (244) 2 39 43 48
HOME
Samsung Heavy
Industries
Greenfield Shipping
Co. Limited
Bonny Gas
Transportation Ltd
US$283,000,000
US$1,364,000,000
US$115,000,000
US$165,000,000
US$190,000,000
Securitisation of LNG
shipbuilding receivables
Financial Advisor
Co-ordinator
Lead Arranger
Structuring Bank
Structuring Bank
Global Co-ordinator
Underwriter
Bookrunner
Arranger
Documentation Bank
Bookrunner
Agent
Agent
Bookrunner
Australia LNG
Malaysia International
Shipping Corporation
Nigeria LNG
Kakinada LNG
Egypt LNG
US$300,000,000
US$ 820,000,000
US$800,000,000
carriers
processing trains
Egypt
LNG, China
US$1,000,000,000
India
Bookrunner
Arranger
Insurance Bank
New York
Brian Knezeak
Tel: +1 212 801 9139
Email: bknezeak@anz.com
Bahrain
Jeremy Dixon
Tel: +973 17549292
Email: jrmdixon@batelco.com.bh
Gary Clarke
Tel: +44 20 7378 2223
Email: clarkeg@anz.com
Ken MacArthur
Tel: +1 212 801 9122
Email: kmacarth@anz.com
Singapore
Thy Dam
Tel: +65 6539 6073
Email: tdam@anz.com
Gaurav Seth
Tel: +44 20 7378 2461
Email: seth@anz.com
www.anz.com
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Bookrunner
L I Q U E F I E D
N A T U R A L
G A S
LNG Facility
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BASF
problems with
trace sulfur?
Advertisers
H2S
COS
Mercaptans
we solve them!
OmniSulf , the one stop-shop for natural gas treating, jointly
developed by Lurgi and BASF, recovers 99.3% of total sulfur
OmniSulf is based on
the following processes:
p BASFs aMDEA
p Lurgi Multi-Purpose Burner
p LTGT, AQUISULF (Lurgi)
p Purisol (Lurgi)
p 13X Mole-Sieve (Zeochem)
Lurgi OelGasChemie
BASF
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BG Group
BG Group
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Our involvement?
We drill, produce,
liquefy, ship and
sell it.
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BP
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An Active Present
A Promising Future
1990s ASIA
1980s AFRICA
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2000s CIS
1990s C. AMERICA
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ChevronTexaco
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ConocoPhillips, Bechtel
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ExxonMobil
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Fluor
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Kaefer
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Qatargas
Customer Satisfaction
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Profitability
Qatargas pioneered LNG in Qatar, delivering its first cargo to Japan in 1997.
Over 650 cargoes have been delivered on specification and on time, mainly to our Japanese buyers.
Recent state-of-the-art expansion projects have uniquely positioned Qatargas at the forefront to be the
world's leading supplier.
www.qatargas.com
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RasGas
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Shell (1 of 2)
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WHAT DO WE
REALLY NEED
IN TODAYS
ENERGY
HUNGRY WORLD?
MORE
GARDENERS.
Which is why, when Shell went looking for oil and natural gas
in this region, we looked for help from Jim Ray a marine biologist
and Shell employee.
Because at Shell, we focus on energy but that s not our only focus.
To find out more, see the Shell Report at www.shell.com
For some thirty years now, Jim and others just like him have been
HOME
Waves of change
NEXT
Shell (2 of 2)
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BEFORE EXTRACTING
WHATS UNDERGROUND,
WE LISTEN TO
EXPERTS
During exploration, problems can
arise that we cant solve on our own.
TO RESTORE
WHATS ABOVE.
BACK
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Sonatrach
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Total
Lefret - Scorpius
www.total.com
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We know that oil and natural gas will be the main sources
of world energy needs both now and in the foreseeable
future. Today, thanks to increasingly sophisticated
technologies, were finding new ways to produce energy.
We need new techniques to take us into a better future.
Tractebel LNG
Advertisers
TRACTEBEL LNG LTD., 101 WIGMORE STREET, LONDON W1U 1QU, UNITED KINGDOM. TEL: +44 (0)20 7915 3900, FAX: +44 (0)20 7915 3911
EMAIL: info@tractebellng.com www.tractebel.com
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Virgin Atlantic
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Wrtsil
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Foreword
Abdullah Bin
Hamad
Al Attiyah
1.1
HOME
Broog one of
Qatargas 10
dedicated LNG
vessels
Photo: Qatargas
13
Foreword
M-F Chabrelie
1.2
14
Atlantic/Pacific arbitrage
Positioning evolves
HOME
Snhvit construction
under way, Melkya
Island, Norway
Statoil
NEXT
Foreword
1.2
Capacity constraints
Production-capacity constraints and soaring prices recently
sparked the return of LNG in the US. Prospects of a sustainable and reasonably supported price of $3.50-4.00/m
Btu in the US gas market have spawned numerous receiving-terminal projects. In addition to existing regasification
capacity of about 24m t/y, more than 30 projects are on
the drawing board, most of them offshore the US,
Canadian and Mexican coasts in order to avoid stringent
onshore environmental constraints.
Despite the uncertainties surrounding the future level of
gas demand and gas competitiveness with other energies
(petroleum products, distillates or coal), LNG should again
boost its share of the North American market to reach
about 34m t/y in 2010 and 67m t/y in 2020.
With 39.5bn cm received in 2002, LNG accounts for only
8.1% of Europes gas supplies. A comparison of OECD
Europe production and demand prospects reveals that the
gas deficit will widen considerably. Consequently, LNG is
very likely to increase its market share substantially in the
BACK
HOME
15
NEXT
Foreword
1.2
BACK
16
HOME
Foreword
Working together
Mark Twain said there are two times in a mans life when he should not speculate when he
cannot afford it and when he can. In the spirit of that observation, Lee Raymond, chairman and
chief executive, ExxonMobil, examines some salient facts about energy markets and LNG
Lee Raymond
1.3
18
HOME
NEXT
Foreword
The RasGas
facility
ExxonMobil
1.3
BACK
20
HOME
Foreword
Gavin Law
1.4
Frank Harris
HOME
21
NEXT
Foreword
provision of an inflexible, long-term LNG supply contract. As doned. The key question for developers is how to maximise
a result, major buyers are increasingly contracting for vol- the competitiveness of their own projects.
umes solely on a short to medium-term, rather than a longOne of the most obvious trends aimed at increasing comterm basis (for example, Kogas), or for a base level of long- petitiveness has been the focus on economies of scale
term volumes supplemented by optional volumes often with from expansions of existing facilities to the construction of
significant associated flexibility (for example, major bigger liquefaction trains and ships. In the early 1970s,
Japanese buyers). An interesting example was a contract typical liquefaction trains were around 1.3m tonnes a year
Tepco signed with Malaysias MLNG Tiga in 2003 that is (t/y) and ships were no larger than 75,000 cm, but the
renewable on an annual basis. The need for flexibility is near future will see trains in excess of 5m t/y and ships of
also driven by seasonality in gas demand, something that 200,000 cm. With such developments, companies concould be a requirement in the US and the UK, both of tinue to strive to reduce unit costs.
which experience a degree of seasonality.
Although significant scale developments in terms of train
Buyers are also attempting to manage price risk by seeking and ship size will be seen in the next five to 10 years, it is
new types of indexation in contracts that link LNG purchase not yet clear whether this momentum will continue at the
prices to factors other than the oil price, which was tradition- same rate thereafter. With increasing scale comes the chalally used. Examples include linking prices to spot-market gas lenge of marketing larger volumes of gas and potentially
prices, such as Nymex (where gas-to-gas competition is com- restricted flexibility, and it is possible that only large-scale
mon or anticipated), or to electricity
players, such as Qatar and Nigeria, will
prices, where the LNG is primarily used
see further scale developments in both
Buyers are adopting an
for power generation and the generator
train and ship size tied to long-term,
increasingly active position in point-to-point trades. In areas with sigdoes not want to be at a cost disadvantage relative to competitors. There have
nificant, relatively low-cost gas
the business, compared with
also been examples of contracts being
companies and governtheir historically passive stance resources,
linked to other competing fuels, for
ments will increasingly look at the
example to coal in the Iberian market. In
development of integrated gas comthe Pacific basin, the Guangdong contract signed between plexes incorporating LNG, GTL and other gas-monetisation
CNOOC and North West Shelf LNG in 2002 signalled a shift processes. Such complexes are being developed in Qatar
towards competitive tendering rather than bi-lateral negotia- and Equatorial Guinea.
tion and a lowering of absolute pricing levels.
In addition, suppliers have also identified the value of
The other major change on the demand side is that buyers integration in the LNG value chain. Historically, suppliers
are adopting an increasingly active position in the LNG busi- focused on supplying customers and building relationships,
ness, compared with their historically passive stance where but the rise in competition and greater market liquidity have
they just handled LNG from the discharge port onwards. Key meant that creation of market pull for proprietary LNG and
LNG purchasers, such as Gas Natural, Gaz de France, Tokyo exploitation/protection of margin across the value chain
Gas and Tepco have expanded along the LNG value chain, have become increasingly important. Companies such as
becoming involved in shipping, and in some cases trading Shell, BP and BG were the first to identify that access to
and even liquefaction and upstream. The motivations behind market and the ability to control each aspect of the value
this strategic change are diverse, ranging from the need to chain would assist in the monetisation of reserves and
develop greater proprietary operational flexibility (for exam- allow the level of flexibility required to exploit evolving
ple, through ownership of shipping) to cope with seasonality opportunities. In the last two years, many of the other key
and price/volume risks, to the requirement to diversify rev- players in LNG supply have followed suit.
enue streams and take advantage of increased buying power
Increasing supply flexibility
in light of the potential excess supply.
Technology developments and integration trends will influence
Commercialisation drives competition
the shape of the supply business, but pressure from the buyGas reserves across the world continue to increase and ers and the competition for those buyers will have the most
the commercialisation of stranded gas is becoming fundamental impact on trade. The shift by buyers towards
increasingly important to both international oil and gas portfolios of long- and shorter-term, more-flexible contracts is
firms and host governments. While this presents a signifi- forcing a greater requirement for supply flexibility. Historically,
cant challenge to the industry the potential rewards are projects required a high proportion of long-term offtake comimmense with over 113 trillion cm of discovered, but as mitments before a final investment decision was taken, but a
yet uncontracted, gas. While other monetisation routes, greater level of volume risk is being adopted by new supply
such as gas to liquids (GTL), dimethylether and com- projects. This risk can be attributed partly to buyer need and
pressed natural gas, are gaining momentum, LNG still partly to the effects of competition, and is being mitigated to
represents the most prominent and feasible option for some extent by the ability of firms to utilise their integrated
maximising the value of stranded gas and, as such, com- positions to transport and place additional, uncontracted volpetition in LNG supply is intensifying.
umes. The major players, with portfolios of LNG assets, are
In 1995, global LNG production amounted to 67m able to offer a much greater level of flexibility to buyers withtonnes from eight countries. By 2002, output had reached out compromising the commercial integrity of supply projects.
112m tonnes from 12 countries. Within the rest of this
However, the industry will continue to be underpinned by
decade, overall supply will at least double with five or more long-term offtake agreements between suppliers and buyers
countries including Egypt, Norway and Russia entering (even if buyer and supplier are different units of the same
the supply business. However, the number of proposed liq- company). But with increasing market liquidity and increasingly
uefaction projects has increased exponentially and Wood integrated portfolios, a greater proportion of the overall market
Mackenzie forecasts that by the end of the decade poten- will be traded on shorter-term or more flexible arrangements,
tial supply could significantly exceed demand. meeting the demands of the buyers. Companies with the
Consequently, not all projects will meet their proposed broadest portfolios throughout the value chain will be in a
timetables, with many being delayed, deferred or aban- position to capitalise on these evolving market trends.
1.4
BACK
22
HOME
Foreword
Roland Kupers
1.5
Substantial challenges
The challenges are substantial. The technology involved is
difficult, expensive and is still evolving. Compared with oil,
there are fewer capital assets in production; many more
are planned or under construction, with high requirements
for capital. This, in turn, calls for long-term partnerships
between governments, resource holders, developers and
the financial markets. Increasing environmental concerns
add real, if justified, pressures. We are learning that the
gas market is different from that of oil. The industries are
at different stages of maturity. More importantly, as the
global context has changed, this means the international
gas market has to develop in a very different environment
from the way oil developed.
The basic costs of producing, liquefying, transporting and
regasifying LNG are much higher than in the equivalent oil
chain. Transportation and distribution is a far higher proportion
of the delivered cost of gas a typical LNG tanker is about
four times the cost of a crude carrier of the same capacity.
During transport and storage, LNG cannot be perfectly insulated and some 0.15% a day is typically lost through boil off
24
HOME
200
LNG
Pipeline imports
Indigenous supply
% change over 2000
500
200
100
75
2010
2020
2030
Source: Shell
Maintaining US supply
What is different now is that there will be no equivalent of
Canadian gas or substantial new US domestic fields to
meet the continued increase in demand. The 25-year scenarios developed by the National Petroleum Council confirm
that maintaining US gas production at its current level will
take considerable effort. The contribution of Alaska is
already factored into supply projections.
In the past two years, the US has imported LNG from
Trinidad, Algeria, Australia, Nigeria, Oman, Qatar, Indonesia
and the UAE. In the five years to 2003, US LNG imports
doubled and these are only early days (see Figure 2). US
gas consumption is expected to increase by more than
50% by 2025. Behind these bare figures are fundamental
implications for economic prosperity and social cohesion.
As the US secretary of energy, Spencer Abraham, said at
the December 2003 Washington summit: This is not just
about low reserves or supply and demand imbalances. This
is about real people and the real problems they confront
NEXT
Foreword
a first train of at least 4.7m t/y, based on Shell LNG technology, with potential for further expansion trains.
Refinement of these assumptions will inform the final
investment decision, scheduled for the end of 2005. The
first cargo shipment is due at the end of 2008.
The project is operating under a preliminary development
agreement, but is expected to move into a formal joint-venture agreement shortly. The partners are state-owned PdV
(60%), Shell (30%) and Mitsubishi (8%), with 2% reserved
for national capital investment.
MSLNG illustrates a number of the challenges facing LNG
developments. It will be a greenfield development, in moderately deep water, involving multiple production structures.
Once under way, construction will continue over several
decades requiring a constant stream of investment. More
significantly, the MSLNG project will be fully integrated, with
a new liquefaction plant at Cigma receiving the gas. This
means the whole development must be planned from the
outset across the entire value chain, right down to delivery
of the gas to consumers in export markets.
A key objective of the development plan is maximising
local content and fostering Venezuelan LNG project management capabilities as this capacity grows and more
industry positions are filled by Venezuelan nationals, the
transfer of technology and expertise will benefit the
MSLNG project, the Venezuelan economy, and the LNG
industry in general.
1.5
1975
Source: Shell
BACK
1980
1985
1990
1995
2000
HOME
25
Financing
Patrick Barr
2.1
Gaurav Seth
HOME
Short-term/spot supply
300
200
100
0
1994
1998
2002
2006
2010
Facing change
Except where pre-completion support is justified, the
financing is not underpinned by sponsor-backed financial
guarantees. Traditionally, financiers have relied on a longterm GSA with a creditworthy gas offtaker before lending
the considerable sums involved. However, in the future,
some of this is set to change. The following are changes
being experienced by the LNG industry, particularly to the
gas-offtake market, and the challenges they present to the
financing of projects:
Competition on supply The success of the LNG business has encouraged the proving up of gas reserves when
in the past they were often regarded as of lower value.
Sponsors are, therefore, expanding LNG export schemes to
monetise the new-found value of gas. The actual and
potential LNG supply side has developed to the point where
potential supply exceeds the demand to take it. This is
leading to new supply contracts being aggressively bid on
pricing and contract terms favourable to the buyer;
Regulatory pressure Regulators are starting to have
an impact on both the gas and electricity markets in a number of end-user countries. In some markets (Japan, for
example), buyers are contracting shorter-term offtakes to
avoid long-term, market-price risk exposure. In Europe,
there is pressure to have less restrictive destination clauses.
Such pressures are leading to gas buyers taking a more
cautious approach to the pricing and duration of GSAs;
Growing short-term/spot market As the number of
export and receiving terminals grows, suppliers are required
to offer greater flexibility to meet demand fluctuations. For
example, buyers experiencing short-term demand change,
or energy majors spotting price arbitrage opportunities, are
requiring short-term cargoes at short notice;
Growing exposure to emerging-market risk Much of
the new supply and demand are in countries with lower coun-
NEXT
Financing
Existing
China (A2)
Planned
France (Aaa)
Construction
Greece (Aaa)
India (Baa3)
Importer (credit rating)
Italy (Aaa)
Japan (Aaa)
South Korea (A3)
Puerto Rico (Aaa)
Spain (Aaa)
Taiwan (Aa3)
Turkey (Ba2)
UK (Aaa)
US (Aaa)
BACK
20
40
60
80
100
120
2.1
their primary destination will be required to take the benchmark gas-price risk in these markets. In addition, the gas is
often sold to an intermediary buyer and the identity of the
ultimate gas buyer may not be known. Until now there has
not been an LNG project specifically project financed with
lenders taking such price risks.
For lenders, the key issue is how financially robust the
project is to generate cash flow, even when prices are at a
sustained low. In the traditional way of evaluating LNG projects, lenders will test a number of what if? downside scenarios and will compare such breakeven analysis with historical precedents in order to become comfortable. However, in
a world where LNG trades even more freely and where gas is
sold under shorter-term contracts, the competitiveness of
one project over another is key. Therefore, rather than just
taking a view as to the revenue of a project, lenders will
increasingly also wish to evaluate its competitive advantage.
Lenders are familiar with this type of analysis within the
petrochemicals sector and it is expected to become more
commonplace in the LNG sector. A couple of projects in
Qatar are already being structured with such price-risk structures and can be expected to prompt the development of
the financing market to take on such risks.
HOME
27
NEXT
Financing
Existing
Angola
Planned
Construction
Australia (Aaa)
Bolivia (B3)
Brunei (NR)
Egypt (Ba1)
Indonesia (Caa1)
Iran
Libya
Malaysia (Baa1)
Nigeria
Norway (Aaa)
Oman (Baa2)
Peru (Ba3)
Qatar (A3)
2.1
Russia (Baa3)
Trinidad & Tobago (Baa3)
UAE (A2)
US (Aaa)
Yemen
0
10
20
30
40
50
60
70
80
challenge have been financed. In such projects, multilateral agencies, export-credit agencies (ECA) and political-risk providers played a part in mitigating political risks.
An example is Nigeria LNGs $1bn financing in late 2002
for part-funding the construction of its trains 4 and 5. The
facility comprised a $0.62bn ECA facility, a $180m international, commercial bank loan facility and the balance of
$200m provided by African banks and the African
Development Bank.
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Going forward
A greenfield LNG chain can involve $3bn of investment in
the three projects regasification, transportation and liquefaction. Based on even a conservative 2:1 debt:equity mix
to finance, a $2bn debt to be raised against a single
stream of cash flow is significant. Where the financing is to
fund a greenfield LNG trade and in a challenging country,
there is a limitation to investor capacity.
Maximisation of debt capacity across the three projects
requires refined and equitable risk allocation, careful coordination and sharing of project intelligence. In some
instances, parties resist market co-ordination and compartmentalise their own financing. With the interdependence of
the gas chain and, moreover, the expected investment
requirements, this must, inevitably, change.
Financing
VERY FORECAST reflects unprecedented gas consumption growth over next 30 years. The US Energy
Information Administration has revised its forecast for
total growth in US imports from 2.1 trillion to 4.8 trillion
cubic feet by 2025. This revision reflects the speed at
which changes are happening in the LNG industry.
Production capacity is projected to increase from 139m
tonnes a year (t/y) in April 2003, to up to 275m t/y by
end-2007. New production from Norway, Angola,
Equatorial Guinea and Venezuela will give rise to a more
dynamic LNG market in the Atlantic basin, bringing opportunities for cargo swaps and arbitrage. The development
of this spot market, which had an 8% share of the total
LNG market in 2002, is projected by some analysts to
grow to 20% by 2010. The availability of tanker capacity
is essential if the spot market is to develop.
Commercial development of LNG transportation began in
the late 1950s when a Liberty-Type, 1945-built tweendeck
SP vessel, Marlene Hitch, was converted to an LNG vessel
in Alabama, US, and renamed Methane Pioneer. Methane
Pioneer carried the first LNG cargo, of 5,000 cubic metres
(cm), in 1959 from the US to the UK. Methane Princess
and Methane Progress were the first two custom-built LNG
vessels, with capacities of 27,500 cm, built in 1964 to
carry cargo from Algeria to the UK. Since then, the basic
design of an LNG vessel, except for slight modifications,
has remained the same. The only significant development
has been in the size of the vessels.
Saleem Alavi
2.2
Capacity shift
In the first decade, cargo capacity increased from 27,500
cm to 125,000 cm. However, an increase in cargo capacity
to 140,000 cm has now been achieved and, recently, Gaz
de France placed an order for a 153,500 cm vessel with
the Alstom shipyard in France.
So far, the basic size of the vessels has been dictated by
the terminal restrictions in the two main LNG importing
countries, Japan and South Korea. However, with the
emergence of new gas markets and construction of new
terminals, further orders for larger vessel can be expected.
In future, the LNG fleet will have vessel sizes as small as
4,000-6,000 cm and as big as 250,000 cm.
During the 1980s, US and European shipyards saw a
decline in market share, losing ground to Japan and South
Korea (see Figure 1). There are now eight active yards, six
in Asia and two in Europe. Poised to enter the foray are
three Chinese yards at Hudong, Jiangnan and Dalian
and one Iranian yard.
The current fleet consist of 149 vessels, with total cargo
capacity of about 17.24m cm. The LNG sector has one of
the youngest fleets with over 50% less than 10 years old.
This is even more significant considering the average tanker
life span is 40 years, barring any new regulations. By 2007,
28% of the operational fleet will be more than 25 years
old, increasing to 32% by 2010.
Newbuild LNG vessel prices have fallen sharply, by nearly
30
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1975
1980
Europe
1985
US
1990
1995
Japan
2000
2005
South Korea
Conservative approach
Traditionally, conservative players dominate LNG shipping
and have not been receptive to new members. Rapid
expansion in the industry, however, has changed the
owner/vessel pattern. By 2006, the sector will be dominated by independent vessel-owners, with their share rising
from 14% in 1999, to 38% by 2006.
In addition to firm project requirements, another 50-60
vessels will be required for the projects that are close to
finalisation ExxonMobil recently tendered for 28 vessels,
China is contemplating four to six vessels and Iran is considering 15-18 vessels.
For oil majors, LNG potentially offers the largest business
returns. By 2007, the investment on capital infrastructure
and vessels is expected to be $39bn. Traditional LNG
financing structures have been relatively straightforward
and standardised. In general, LNG financing provides high
advance ratios, over long-term periods, with low costs to
the sponsors, because of the strength of the underlying
commitments, usually involving a government.
Recently, many of the proposed financing structures have
become significantly more aggressive, as the medium as
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Financing
22%
Equity IRR
Project IRR
25%
20
15
10
5
0
Long-term
$63,000
Short-term
$72,500
Short-term
$80,000
Short-term
$87,500
However it is argued that when all the proposed LNG projects are built, there will be a significant capacity requirement, which spot vessels can exploit.
Participating in future LNG financings will pose significant
challenges for conventional vessel-finance banks. The traditional LNG finance model, with its long-tenor, investmentgrade quality offtaker/sponsor, has attracted relatively fine
pricing in the finance market. Whilst, on a risk-adjusted
basis, fine pricing may be acceptable to banks, the emergence of non-investment grade counterparties is likely to
result in pressure to increase pricing.
In contrast, but similarly challenging, the new structures
being proposed are becoming unacceptably risky and seem
to be driven by over-competition among the top arranging
banks in this sector. To continue to win mandates that
banks understand and are comfortable with in this sector,
seems to be pushing the limits beyond what is a reasonable and justified risk, based on the proved asset values
and the strength of the balance sheets liquidity/cash flow
supporting the projects.
2.2
The Polar
Eagle
Photo: courtesy
ConocoPhillips
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31
Shipping
OMMERCIAL LNG shipping started in the late 1960s from production or gas sales and their income will rely on
and early 1970s with a series of ships constructed to the difference between the ship charter rate and their
carry up to 70,000 cubic metres (cm) of liquefied operating costs.
gas. At that time, ships of this size were powered by steam
The price attached to the consumption of boil-off gas
turbines, connected by a gear-reduction box to a single pro- has always been a controversial issue that, in the early
peller. Three kinds of tank and containment system were years, was assigned a value of zero dollars on the basis
used, two of the supported-membrane type and one of the that a seagoing reliquefaction plant was not available and
self-supporting spherical type.
the ship was effectively burning free gas that would otherDuring the 1970s, the next generation of LNG ships was wise be vented to the atmosphere and lost. Because, in
introduced, with their capacity almost doubled, but using these original contracts, the gas buyer was also part of the
the same propulsion and containment systems. One of the project consortium, the need to deliver as much LNG as
major advances of using steam propulsion was that boil-off possible was not as important as it is now. New projects
gas, created by thermal conductivity through the tank walls should consider the value of the gas burnt onboard at the
and movement of the liquid in a seamarket price to the customer and
way, could be readily burned in the
assess the relative benefits of using
In the early 21st century, an
ships boilers. This saved the conboil-off gas as fuel for propulsion, or of
sumption of fuel oil and avoided the unprecedented number of new reliquefying boil-off for delivery at the
need to consider installing a reliquedischarge port.
LNG ships are on order or
faction plant on board.
under construction
Cargo-containment designs
In the next 25 years, a regular numDuring the 40 years that LNG has
ber of ships have been built each year
for new projects, of almost exactly the same specification been transported by sea, only five or six cargo-tank
none has taken advantage of new propulsion means that designs have been put into international deep-sea serhave become available. Now, in the early 21st century, an vice. Of these, the Conch design was the first to be
unprecedented number of new LNG ships are on order or developed and constructed, but also the first to be abanunder construction almost all with the same 1970s tech- doned. Only six ships were ever built with this system.
The first membrane-tank ships were delivered in 1969
nology on board. Some of these ships will undoubtedly be
employed in short-term charters or spot-market trading, and 1970, two built to the Gaz Transport design (with two
where operating flexibility and day rates will play an impor- membrane linings of 36% invar steel only 0.5mm thick) and
the third built to the Technigaz design (with a waffle-type,
tant part in determining their economic viability.
stainless-steel primary membrane of 1.2mm). Since 1994,
Commercial considerations
these two companies have been merged into GTT, although
Until recently, the number of owners and operators of LNG both types of membrane system are still designed and
ships was limited, as was the number of shipyards capable licensed worldwide. They offer the GT No 96 and Technigaz
of constructing them. Shipping was usually a minor part of Mark III systems, and a new CS1 combined system.
the LNG chain, which required a major investment in gas
production, liquefaction plant and loading terminals, plus Increased cargo capacity
one or more discharge terminals and regasification plants, The Moss spherical tanks were developed from an existing
to be undertaken before the first cargo could be moved. liquefied petroleum gas ship design and were marketed
Therefore, project management and finance was normally and licensed so successfully (particularly to US and
controlled by a combination of the oil and gas company Japanese shipyards) that they quickly overtook the other
and the gas purchasers, who all wished to minimise the designs in terms of ships built during the 1970s. The
major changes since then have been a reduction in the
project risks throughout the gas delivery chain.
Once the original LNG ship designs had been proved reli- number of tanks for a 135,000-145,000 cm ship from six
able, there was little benefit seen in changing the shipping to five, and then to four. The membrane ships have simitechnology. Far more was at stake through a failure to larly reduced their number of tanks from five to four. This
deliver the cargoes on schedule than could be gained by has enabled an increase in cargo capacity of up to 10%
reducing fuel consumption or improving the shipping eco- within the same overall length.
Of the LNG ships trading, more than half are of the Moss
nomics. The shipping companies involved often had little
say in the overall project and contract strategies, and the spherical-tank design, with most of the others being of the
shipyards had no need to offer innovative designs to reduce membrane type (the Gaz Transport invar-tank design being
twice as prevalent as the Technigaz stainless-steel design).
operating costs and improve transportation efficiency.
Shipyard numbers are still limited, although Spain has Two ships have been built by Japans IHI shipyard to their
recently started to deliver LNG carriers, and China will own self-supporting prismatic tank design.
The spherical-tank design dominated new construction
become a producer in the near future. However, the market situation has changed significantly, with far more until the end of the 1990s, but the new order boom in
players interested in owning and operating LNG ships. the past few years has seen a shift towards the GTTMany of these will receive little or no part of the profits membrane systems.
Ian Harper
3.1
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A number of other systems have been mooted at various times, almost all being self-supporting. Most, but not
all, have been for refrigerated and non-pressurised tank
designs. The prime drivers for new systems are increasing
cargo capacity in a given hull size, reducing the capital
cost of tanks and insulation, and reducing the overall
construction time of ships. The limiting factor for all successful LNG shipbuilders is space in the shipyard. South
Koreas yards have been forced to increase their
berthing-quay space to boost the number of LNG ships
they can build each year, because designs need the ships
to sit alongside a berth for many months while tank
installation and outfitting are carried out.
Cargo-handling systems
In the early days of LNG shipping, boil-off gas from cargo
tanks was either burnt as fuel or vented, although the port
of Tokyo banned venting early in the 1970s. Potential reliquefaction plant designs are now available for LNG ships,
but, apart from an MHI prototype, have yet to be built or fitted. This may change as the commercial economics shift in
favour of reducing fuel consumption and conserving LNG.
Submerged electricity-driven cargo pumps have been
used on all LNG carriers to date and have proved their reliability. Gas compressors (either steam or electricity driven)
are used for returning boil-off gas to shore during loading
operations and for cooling, inerting, warming up and gasfreeing the tanks. Gas fuel for the ships boilers is generated either by natural boil-off pressure, or a low-duty gas
compressor. The cargo-handling systems on all LNG ships
are very similar and, therefore, there are few problems
experienced or changes foreseen.
Research and development into floating LNG (FLNG) production systems and floating storage and regasification
units (FSRU) will bring changes in the cargo-handling sys-
3.1
Although the present LNG carrier Methane Princess (above, delivered 2003) has more than 5 times the capacity of the
original Methane Princess (opposite, delivered 1964), and was constructed using the latest construction methods and
containment system technology, it retains much the same steam-turbine machinery system as its predecessor
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Shipping
Control systems
Control and automation systems have probably been the
one area on LNG ships where continuous technical development has taken place and where the latest technology is
in use. It is also the one major area where retrofitting of
new systems is taking place on existing ships to take
advantage of the latest designs although the main reason
for this is the difficulty of finding spare parts and skilled
maintenance technicians.
The technology of automation, control and monitoring
has moved from the semi-automatic and predominantly
pneumatic controls of the 1960s and 1970s, through a
process of continuous development to integrated computer-based systems. In that time, the cargo control room
has moved from the midships compressor house into the
accommodation block and the engine control room has
been either in the engine room or combined with the cargo
control in the accommodation block. No one has yet combined all the controls for an LNG carrier on the wheelhouse,
although the Moss-type tanks normally result in the cargo
control room being only one or two decks below the bridge.
By contrast, many other vessels and types of vessel have
been doing this for a long time.
Although not all seagoing staff like the idea of monitoring
and controlling the ships systems from a single location,
there are a lot of potential advantages the most obvious
is the improved communication between the deck and the
engine room. This can particularly benefit the monitoring of
cargo systems, where both departments have joint responsibility for safe and efficient operation.
The recent development and application of integrated
automation systems (IAS) has the potential to link all systems on the vessel, which should bring with it the capability
to combine all systems on a single workstation display.
This, in turn, can allow control from one location and,
equally, make it available everywhere on the ship.
The potential need for redundancy in both control and
propulsion systems will result in the application of Failure
Mode and Effects Analysis (FMEA) techniques to the design
of these ships. FMEA is already being requested by owners
and classification societies in their specifications for the
integrated control system and its components, and it may
BACK
Methane Princess
at Canvey Island
well spread to the overall machinery systems on the vessel.
As well as ensuring that unsafe conditions and situations
are avoided, this type of study also improves the availability
of the ship at all times and reduces the downtime and possible demurrage costs.
Dynamic positioning (DP) is another specialised control
system that may be specified for the enhanced manoeuvrability required for FLNG and FSRU facilities. This technique
has been around for nearly 40 years and in the last 20 it
has become proved and established in the offshore and
cruise-ship industries. The main manufacturers of DP systems also deliver IAS solutions, so that they can either be
stand-alone or integrated.
With the recent orders by Gaz de France of diesel-electric
propelled ships and the issue of tenders at the end of
2003 for bigger ships with alternative propulsion systems,
the industry is finally seeing some movement in the application of technology advances to future LNG ship designs.
3.1
Commercial priorities
The increase in the number of shipowners and operators
will introduce more commercial priorities to ship specifications and this will affect both the flexibility and the economic design of tankers. Inevitably, it will result in changes
to the power generation and propulsion systems installed
gas-turbine and diesel-engine manufacturers will eventually
see their products installed in LNG ships.
Developments of the existing containment systems, and
possibly alternative designs allowing cheaper and quicker
building of self-supporting tanks, should allow shipyards to
reduce the overall building time and, possibly, cost.
Because the tanks may be constructed off-site, this will
also expand the number of shipyards able to construct
LNG ships. Compared with the 28 shipyards that have
built LNG tankers since 1964, the 60-80 ships on order
between March 2004 and 2007 will be constructed by
less than 10 shipyards.
The technology in LNG ships will catch up with the
advances made in other ship types over the past 10-20
years and will probably move ahead in specific areas of
propulsion and cargo handling. It is also likely that more
diverse designs of LNG carrier will evolve, particularly as
floating production and reception facilities are developed.
Ian Harper has been involved in LNG ship design, construction
and operation for over 30 years. Wavespec is participating in
the construction of a number of new LNG ships worldwide,
including the development of the 200,000-cm, or larger, ships
under negotiation for Qatargas export projects.
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Shipping
3.2
million cm/y
800
700
600
500
400
300
Historic demand
Historic supply
Supply (all projects)
Optimistic (13.25%)
Realistic (11.9%)
Pessimistic (9.5%)
AAG (6.6%)
250
200
Optimistic (13.25%)
Realistic (11.9%)
Pessimistic (9.5%)
Newbuild deliveries*
150
100
200
50
100
19
7
19 0
80
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
20
10
20
12
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2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
*Equivalent number of 138,000 cm ships
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fleet of single-hull crude oil tankers within the next few years.
This may lead to an increase in price and a decrease in available building slots for LNG tankers. However, being highervalue ships, this may not develop to its fullest extent. The
best deals will be won by the first to secure building slots with
the shipbuilders capable of delivering these ships, although
this depends on the timing of each project.
Cargo swaps
One trend that has not been accounted for has a negative effect upon shipbuilding demand cargo swapping.
For example, a cargo bound for Zeebrugge, Belgium, from
Trinidad may be swapped with another from Algeria
bound for Lake Charles. This saves on a transatlantic
journey and effectively increases transportation capacity
by 100% so that if this tactic were followed consistently
over a year, the two ships would be available to carry
other cargoes for six months of the year and still satisfy
demand from the two cargo owners.
Not only is there the ship-availability advantage, but
also the potential for additional income when the cargo
swap occurs because of a price advantage. There are,
however, many factors restricting the ability of owners to
take advantage of this trend, including LNG prices, cargo
quality, timing, awareness of opportunities before others
become aware and logistics. Other potential cargo swaps
exist in Asian trades, although, at present, cargo swapping is a low-volume activity.
There are clouds on the horizon for older ships stemming
from the recent ban by India on crude tankers over 25
years of age (see Figure 3). Will other countries follow
Indias lead and could this affect LNG tankers? As yet,
most countries have not followed suit and shipowners associations worldwide are working hard to counter the image of
the oil tanker industry held by the public and politicians.
The European Union is implementing legislation that accelerates the phase-out dates of single-hull tankers carrying
crude or heavy grades of oil and extending this by requiring
other ship types to store bunker fuel in safe, double-hull
tanks. Given this action, these are difficult questions to
answer with any degree of confidence. The good fortune for
3.2
Inside an
LNG tank
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0-4
On
order
World fleet
The worlds LNG tanker fleet is made up of 202 ships, with
a total capacity of 24.6m cubic metres (cm), including both
existing ships (151) and confirmed new constructions (51).
Looking forward to 2012, the world fleet is likely to
increase by between 40 and 180 ships (assuming a standard size of 138,000 cm) amounting to a capacity increase
of between 6m and 25m cm. Should the more likely import
projects be realised, this is an impressive growth rate.
There are three main technical developments in the
tanker-building industry:
Ship size new projects indicate large numbers of ships
may be needed for long transit distances and large volume
imports. Ship designs are being discussed in the region of
200,000-250,000 cm, which will probably be achieved
within existing draught limitations and using five-tank designs;
Propulsion diesel-electric ship technology is well developed and it has been indicated that such ships are economically more attractive throughout the life of the ship.
Two newbuilding orders have been placed at Chantiers de
LAtlantique for Gaz de France. One of the attractive economic characteristics is the ability to fit more cargo within
the same hull envelope for a membrane ship; and
Partial filling fundamental research indicates a tank
and pipe tower loading issue with restrictions imposed for
filling between 60% and 10% for certain approved configurations. There are no Lloyds Register-class LNG ships
approved for unrestricted partial filling.
Disclaimer
Lloyds Register, its affiliates and subsidiaries and their respective officers, employees or agents are, individually and collectively, referred to in this clause as Lloyds Register Group.
Lloyds Register Group assumes no responsibility and shall not
be liable to any person for any loss, damage or expense
caused by reliance on the information or advice in this document or howsoever provided, unless that person has signed a
contract with the relevant Lloyds Register Group entity for the
provision of this information or advice and in that case any
responsibility or liability is exclusively on the terms and conditions set out in that contract.
Shipping
Skikda, Algeria
International Convention Relating to the Limitation
of the Liability of Owners of Sea-Going Ships
(Brussels, 1957)
Algeria ratified the above-noted convention (the Brussels
Convention) in 1964. Under the Convention, the owner,
charterer, manager and operator of the Janus, as well as
Philip Weems
3.3
Kevin Keenan
Zeebrugge, Belgium
International Convention on Limitation of Liability for
Maritime Claims (London, 1976)
The London Convention, which serves as the basis for the
maritime liability laws of 40 countries, was ratified by
Belgium in 1989. Aside from liability limits that were
intended to be (and but for todays gold price would be)
higher than the Brussels Convention, one of the most
important changes brought about by the London
Convention is that liability limitations are extended not only
to shipowners, charterers, operators, managers and salvors
(and those persons for whose actions the shipowner or
salvor is responsible), but also to all of their insurers.
Limits of liability for claims governed by the London
Convention are also stated in SDR. Like the Brussels
Convention and its 1979 Protocol, limits of liability under
the London Convention are based on the ships tonnage
(gross rather than net tonnage) and, in particular, are
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3.3
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Arun/Bontang, Indonesia
Omnibus & Waiver Agreements and Conditions of Use
Indonesia is not a party to any of the foregoing international
conventions and has adopted its own regime, set out in its
Commercial Code. However, that regime is largely academic
at Arun and Bontang, where LNG tanker owners find their liability governed by the Omnibus & Waiver Agreements and the
Conditions of Use (collectively, the Port Liability Agreements)
contractual documents entered into among the master of
the vessel, the vessel owner, the vessel operator, the terminal
owner, and the LNG buyer and seller.
The Port Liability Agreements provide a quid pro quo that
although not yet tested in any court of law because of
LNGs envious safety record appears to be an acceptable
allocation of liability to the shipping and insurance industries. In exchange for a strict liability regime that ascribes
liability to visiting LNG tankers and their owners regardless
of fault (except if damages arise from the terminal owners
gross negligence or wilful misconduct), the terminal owner
grants to the tankers and their owners a limitation of liability equal to $150m. In addition, the Port Liability
Agreements provide that the full $150m must be covered
by the vessels P & I Club and the certificate of entry must
include a specific reference to such agreements. Vessels
calling at Arun or Bontang also waive all rights to limit liability under international conventions. Personal injury claims
are handled on a knock-for-knock basis, with each party
responsible for damages incurred by its own personnel.
If the Janus were to suffer a catastrophic casualty at
Arun or Bontang, assuming the terminal owner is not
found grossly negligent or guilty of wilful misconduct, the
shipowner would be liable for all damages occasioned by
its use of the harbour, regardless of fault, up to a maximum of $150m.
Yanai, Japan
London Convention Augmented with Social
Responsibility Insurance
Japan ratified the London Convention in 1982. While limitations of liability for marine casualties in Japanese waters
would be governed by the London Convention, and while traditional P & I cover is procured on that basis, Social
Responsibility Insurance (SRI) evolved in the early 1980s in
response to a Japanese concept albeit unofficial and
legally non-binding that ascribes liability to persons thought
to be in breach of the social contract (the responsibility of
citizens to be socially responsible in the communities in
which they operate and to assume responsibility for their failure to exercise prudent judgment and reasonable care).
Where a breach of social responsibility occurs, the community affected by the breach may seek to impose sanctions on the person or entity they perceive to be the perpetrator. In most cases, the party perceived to be responsible
is the local company in its capacity as LNG buyer as the
community affected has little knowledge of the shipping
interests involved in transporting LNG, but significant knowledge, for obvious reasons, of the local company importing
it. Although sanctions may vary, sometimes consisting only
of an official request for a public apology, payment of
money to compensate individuals and public authorities
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Additional/Potential limitations
300
250
200
150
100
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Sakhalin-2, Russia
The International Convention on Liability and
Compensation for Damage in Connection with the
Carriage of Hazardous and Noxious Substances by Sea
The above-noted HNS Convention was ratified by Russia in
2000. Although not yet in force, it is the first liability convention to deal specifically with LNG. The HNS Convention
introduces strict liability for the shipowner, establishes
higher limits of liability, creates a fund for compensating
victims when damages exceed limitations and includes a
system of compulsory insurance.
Like the London Convention, the HNS Convention calculates the shipowners liability in SDRs. Unlike the London
Convention, limitations under the HNS Convention are the
same whether the claim is made in respect of property
damage or for personal injury. For the Janus, having a
gross tonnage equal to 96,000 tonnes, liability of the
shipowner under the HNS Convention would be capped at
SDR 98.56m ($147m). This is considered the first tier of
liability limitation under the HNS Convention. To help
ensure shipowners are capable of meeting their first-tier
obligations, the Convention makes mandatory for all vessels registered in a member state the procurement of
insurance coverage in amounts not less than the limitations provided.
The second tier under the HNS Convention offers a further layer of protection to victims of marine casualties. To
the extent that damages incurred in connection with the
Janus casualty exceed $147m, or if the shipowner is incapable of meeting that obligation (a risk that is significantly
BACK
mitigated by the compulsory insurance requirement discussed above), claimants may be entitled to compensation
from a fund established under the HNS Convention in an
amount up to a maximum of SDR 250m, inclusive of the
shipowners first-tier contribution, if any.
Contributions to a separate LNG Account established
under the HNS Fund are made annually by all persons
holding title to LNG immediately prior to its discharge. For
Fob sales of LNG, buyers will be liable for the annual contribution to the HNS Fund in the applicable member state.
For delivery ex ship (DES) sales of LNG, sellers will make
the applicable contribution.
Voluntary compensation
Limits of liability are far from uniform and lead ultimately to
a wide range of available compensation for third-party damages. The public image of the LNG industry will be adversely
affected by an accident following which victims are uncompensated because of what might, under the circumstances,
be perceived as unreasonably low limitations of liability
under existing regimes. Perhaps the time has come to
address the disparity and ensure the industry retains, even
in the face of a catastrophic accident, its record of responsible management and concern for public health and
safety. To maintain the status quo is to risk public outcry
and adverse governmental action following such an event,
either of which could be far more costly to the industry.
Concerns as to adequate levels of compensation for
LNG-related casualties have been voiced for at least 20
years. At an International Bar Association conference on
LNG in 1982, Dr. DW Abecassis, at the time head of LNG
shipping at Shell International Marine in London, presented
a paper arguing that legal regimes limiting shipowner liability are inadequate and that the LNG industry should club
together to create a scheme of voluntary acceptance of
strict liability, similar to Tovalop and Cristal (both of which
served as interim liability regimes pending the widespread
adoption of the 1969 Civil Liability Convention and the
1971 Fund Convention). Abecassis said that not only in
the interests of those who might suffer loss or damage from
an accident, but also in the long-term interests of the LNG
business, the LNG industry should [create a scheme of voluntary acceptance of strict liability].
The questions raised by Abecassis are as valid today as
they were in 1982. The limits that would be provided by
the 1996 Protocol to the London Convention are still
arguably too low in the LNG context and the HNS
Convention, while arguably on the horizon, is not a certainty. The LNG industry enjoys an excellent safety record,
but it is in everyones best interest to ensure victims are
adequately compensated in the event of a serious casualty. Failure to do so could lead to strict liability and/or
over-relaxation of liability limits (or even the abandonment
of limits altogether), among other things.
The Janus scenario illustrates the need for a more uniform system of compensation. Given the apparent reluctance of nations to adopt limitations regimes for various
political and economic reasons, accomplishing this design
through international conventions may never happen without a move by industry towards a voluntary system.
Looking forward, with LNG trades becoming more prolific, as new projects come on stream, the value of an
industry-wide effort to bring more uniformity and fairness
to bear is apparent. Although enviable and excellent,
LNGs record will one day be called into question. After
all, according to Grace Murray Hopper military leader,
mathematician and educator [a] ship in port is safe,
but thats not what ships are built for.
HOME
3.3
41
Shipping
Contract challenges
As global gas demand rises, LNG will play an increasing role in world gas trade. Increased
trade and volumes will require more tanker capacity and a shift from traditional long-term
supply contracts. Goh Mei Lin, of Watson, Farley & Williams, looks at the implications for
LNG shipping contracts
HE LNG industry is the fastest growing sector in the oil structured, traditional approach to long-term LNG contractand gas market although, globally, LNG is trading at ing. A rise in the number of LNG carriers being built, which
significantly lower levels than the more mature oil mar- are not dedicated to specific projects and which are, thereket. However, world LNG trade is set to grow at a rate of 6- fore, available to transport surplus production will assist the
8% a year over the next 20 years.
development of the spot market. As certain parties seek
Only a small percentage of world gas supply is trans- more flexibility in GSPCs, so, too, greater flexibility is being
ported as LNG. Nevertheless, given rising gas demand, the sought in LNG shipping contracts.
greater number of countries and companies developing and
For charter-parties, greater flexibility can be achieved
looking to develop remote gas reserves and the develop- through short-term contracts and the modification of certain
ment of new LNG producing and consuming regions, the provisions contained in traditional long-term time charters.
growth of the LNG industry and the increase in demand for The mortgagee of an LNG carrier would typically have the
LNG carriers should come as no surprise.
right to approve the charterer and the terms of the charterThe capacity of the LNG fleet stands at about 14.6m party (which would include the list of approved ports), where
cubic metres (cm). According to Ocean
the ship is on a long-term time charter,
Shipping Consultants, there are about
but not where it is on a spot charter.
The use of short-term, or spot
65 LNG carriers on order and, based
However, a short-term charterer is
charters could simplify the
on anticipated LNG trade growth, a furunlikely to be able to secure a right of
ther 33 new ships will be required by
quiet enjoyment against the mortgagee
drafting and negotiation
2010 to meet the forecast cargoof the ship. While, in long-term time
process of the charter-party
capacity requirements. However, given
charters, a great deal of time is spent
the delivery schedule of the ships
negotiating this right to achieve the
under construction (24 are due to be delivered in 2004), required balance between the charterers right of quiet
there will be an over-supply of carriers in the near term.
enjoyment and the mortgagees ability to protect, maintain
and enforce its security. In addition, the charter-hire proviGreater flexibility
sions in a short-term charter would be considerably simpler
Apart from the expansion of the global LNG fleet, it appears than in a long-term time charter, which usually comprise
likely that more LNG buyers and suppliers will seek spot- both a fixed and floating element.
trading opportunities and greater flexibility in their gas sales
Furthermore, a short-term charter is less vulnerable to
and purchase contracts (GSPC). There will be further regu- changes in terminal specifications that may require modifilatory changes in countries such as the US, regarding new cations to the ship. Therefore, in some ways, the use of
onshore and offshore terminals, and not only are there short-term, or spot charters could simplify the drafting and
more players entering the LNG shipping market, there are negotiation process of the charter-party.
also new types of players entering the markets.
The focus on environmental issues is likely to continue Nominated for service
and given the level of terrorist activity in recent years, secu- Contracts of affreightment (COA) would also provide greater
rity and safety issues remain of paramount importance. All flexibility than a long-term time charter. Unlike a long-term
these factors will affect the way shipping activities are time charter, under which the owner and charterer agree
that a specific ship be chartered for a period of 20-25
structured and the way LNG shipping contracts are drafted.
LNG shipping contracts typically comprise the shipbuild- years, certain ships would be nominated for service under a
ing contract, the charter-party (usually a long-term time COA on a periodic or cargo basis, but need not be specificharter) and the ship-management agreement, with ancil- cally dedicated to the COA. The shipper under a COA would
lary contracts, such as the performance bond and charter agree to ship a minimum amount of cargo, for an agreed
guarantee. A shipping contracts effectiveness should be basic freight rate, which would be payable regardless of
considered as: between the parties; one of the links in the whether or not cargo is available. A loading and discharge
LNG chain (particularly if the carrier is being constructed for schedule would be agreed between the parties and the
owner would be required to ensure ships are available at
a specific project); and a bankable contract.
When the Asian financial crisis in 1998 caused a dip in the load ports within the agreed time periods.
The owner, therefore, has the flexibility to decide which of
regional energy consumption, certain countries had to continue imports of LNG that they did not need, because of their the nominated ships is assigned to carry a particular cargo
long-term contracts. On the production side, political unrest and the shipper has the flexibility to obtain cargoes on the
in Indonesias Aceh province, which forced the temporary spot market. However, a shipper with a long-term GSPC
shutdown of the Arun LNG facility in 2001, necessitated the may prefer the comfort of having a dedicated ship. There
sourcing of alternative LNG supplies, while the shut-down of could be vessel-specific COAs, but in these cases, the disfive nuclear plants in Japan resulted in the need for an alter- tinction between a COA and time charter is less clear.
Similarly, shipbuilding contracts for tankers that will not be
native energy source (in this case, LNG) at short notice.
These are just some events that demonstrate how certain delivered for long-term time charters, would, in certain ways,
market demands are not adequately served by the highly be simpler than those for dedicated ships. For example,
3.4
42
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Shipping
3.4
repeated owner defaults, as well as the ability and reputation of the third-party ship-manager to ensure proper operation of the ship. A charterer may also find a performance
bond from a sponsor with little or no LNG shipping experience and expertise to be of limited value.
Environmental issues
The LNG industry has an admirable safety record and is
required to meet stringent safety standards set by countries
such as the US and Japan. Nevertheless, safety standards
continue to be raised and countries are adopting stricter
environmental policies. Certain lenders are increasingly
concerned about the potential liability of a mortgagee in
the event of an environmental incident and are seeking
greater restrictions in the charter-party, on an owners and
charterers ability to trade the ship to certain jurisdictions.
There will, therefore, be a conflict between an owners and
charterers need for flexibility to trade and a lenders wish to
minimise any contingent exposure. Some LNG ship owners
and operators are utilising finance schemes, such as UK tax
leases and Islamic Ijara leases, in which the lessor of the
ship is essentially a bank or leasing company entity. In these
situations, the lessor would have similar concerns about its
contingent exposure as registered owner or lessor of the
ship. For owner/operators, the lenders should be prepared to
accept the environmental law position at the date on which
the charter and the financing documents are entered into.
Thereafter, the owner/operator would have to be prepared to
take charge of environmental law risk.
The extent to which lenders seek to protect themselves
will have a significant effect on the charter-party and the
level of due diligence required in respect of the jurisdictions
to which the ship is likely to trade. Under US Federal Law,
for example, would due diligence be required in respect of
the Oil Pollution Act of 1990 only, or is the net to be
thrown wider to include issues such as potential liability for
ultra hazardous activity?
Gas is not regulated by the Comprehensive Environmental
Response, Compensation and Liability Act. As environmental regimes are tightened and lenders become more concerned about their contingent liability in such circumstances, it will become more challenging to document shipping contracts (particularly the charter-party) to ensure the
lenders position is protected but not so much so that the
operator is significantly hindered.
Technology
New types of player
For a charterer, the provisions relating to the availability of
a substitute ship is important to secure its ability to fulfil
obligations under the GSPC. However, for new players,
these provisions are of little value in the event that the
owner or the sponsors do not have an existing LNG fleet
from which substitute ships may be drawn.
Additionally, a charterer may require tighter default provisions from new players and would, in such circumstances,
place greater reliance on the option to convert a long-term
time charter into a bareboat charter in the event of
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44
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Shipping
An open market
However, because of increases in liquefaction capacity, it is
becoming commonplace for LNG sellers to be able to provide LNG to multiple buyers or projects. And buyers are also
more willing to purchase LNG from multiple sellers in order
to diversify their supply sources. In this way, one-to-one
correspondence between a sellers capacity and a buyers
purchase volume has been chipped away and, in the
future, excess production and fleet capacity will be available for an open market.
This situation has given rise to the three new types of
contracts: SPAs for smaller (less than 1m tonne) volumes;
SPAs for medium-, short-term or spot trades; and SPAs
allowing for cargo swaps or loan transactions. And for the
fledgling market to become more developed and sustainable, the following three prerequisites must be satisfied:
abundant and flexible supply from sellers; robust demand
from buyers; and flexible shipping capacity.
The LNG transportation market is moving towards a free
and open market, similar to its elder peers (such as crude
oil tankers or bulk carriers), as the number of aged, but
available, LNG tankers grows, as more tankers are owned
and operated by oil majors or utility companies for their
own use, and there is more speculative ordering by independent ship-owners.
Another important factor promoting a more market-oriented trend in LNG trade and shipping is the emergence of
the US market, which is very flexible and open to competition. Because the US markets potential is too huge to
ignore, even for quite conservative ship-owners, a pro-market approach is required.
The volumes of spot/short-term LNG cargoes traded in
2000, 2001 and 2002 increased rapidly from 5.4m
tonnes a year (t/y), 7.7m t/y and 9.9m t/y, respectively. In
2003, the volume of trade will rise again. With total world
LNG production capacity of more than 125m t/y at present,
growth of the open market will be even more dramatic if
the necessary market conditions can be achieved.
Stable margins
Ship-owners would also prefer a market where they have
conservative, but stable, margins rather than considerable
upward or downward shifts in profit. Stable margin expectations make it easier for ship-owners to undertake new
investments. Such investments then increase market
capacity, which, in turn, serves customers needs.
It is also necessary to convince financiers of LNG carriers
that the open market is growing rapidly, which will give
lenders room to accept the asset-risk of the vessel.
Traditionally, SPA cash flow was almost the only gauge to
evaluate the credit quality of ship investment or finance.
However, now ship-owners and finance lenders must
assess the asset value of the vessel, which can be the core
security of any finance arrangement.
It is time for all interested parties to consolidate differing
interests and create an open LNG transportation market
that is based on the common interest. To engage in the
creation of an open LNG transportation market ship-owners
must increase their fleet capacity. They can also meet the
demands of the developing market by promoting standardisation of tanker specifications, through collaboration with
shipyards, while encouraging low-cost and speedy financing
in the financial markets.
3.5
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Michael Tusiani
4.1
Supply glut
Despite demand optimism, several European countries
could face a gas/LNG supply glut by mid-decade. Some
incumbent gas suppliers may already have contracted supplies for markets being targeted by new competitors.
Oversupply could result, particularly if gas-fired power
plants are not built as planned and gas sales fall short of
expectations. Turkey is experiencing this problem, and
Spain and Italy could face a similar situation within a few
Figure 1: Atlantic basin LNG supply and demand
140
Demand
million t/y
120
100
80
140
Other Americas
US
Other Europe
Italy
France
Iberia
120
100
80
60
60
40
40
20
20
0
2000
2005
Contracted supply
million t/y
2010
0
2000
Uncovered demand
Other Middle East
Qatar
Equatorial Guinea
Norway
Egypt
Nigeria
Trinidad
Libya
Algeria
2005
80
million t/y
70
60
50
80
Uncovered demand
Other Europe
Italy
France
Iberia
70
60
40
30
30
20
20
10
10
2005
Uncovered demand
Other Americas
US
50
40
0
2000
Americas
million t/y
2010
0
2000
2005
2010
Demand
2010
46
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Gas demand in the Atlantic basin is being driven by requirements of the power sector, where combined-cycle gas-turbine (CCGT) technology is increasingly preferred. Efficiency
improvements in gas-to-power conversion and third-party
access regimes for transmission systems have helped
underpin the construction of new gas-fired capacity. At the
same time, the dismantling of monopolies and the emergence of merchant power generators favour the short lead
times and low capital costs for gas-fired power plants.
NEXT
plies. In the US, this is less likely, as LNG will still find a
ready market if it can compete with piped-gas prices.
Import capacity is a vital link in the LNG supply chain.
European capacity was only about 35m t/y in 2001 and
when the decade began there were only nine receiving terminals. By 2010, this number could double. The Iberian
Peninsula will be important in the future of European LNG
trade. Two new terminals were commissioned in 2003,
boosting the regions total to five, and there are another two
under construction. And in the UK an existing peak-shaving
facility is being converted for LNG delivery and two grassroots terminals, in Wales, are in the permitting process.
Import infrastructure
The potential expansion of import capacity in North America
is even more impressive. Until recently, only two terminals
operated in the US: at Everett, Massachusetts; and Lake
Charles, Louisiana. When US gas prices soared to $10/m
Btu in late 2000/early 2001, firms dusted off plans to reopen mothballed LNG terminals and expand existing facilities, and to build new terminals.
Capacity doubled to nearly 19m tonnes last year, as two
mothballed LNG import terminals were re-commissioned
Georgias Elba Island terminal re-opened in December
2001 and the Cove Point, Maryland, terminal in 2003.
After the completion of expansion plans in 2005/2006,
these four terminals serving the US market will be able to
import more than 26m t/y. Re-commissioning and expan-
4.1
US gas prices
During the 1980s and 1990s, US
benchmark gas prices at Henry Hub
ranged from $2.00-2.50/m Btu on an
annual average. During this period,
North American gas supplies were
ample to meet demand and gas traded
at a significant discount to oil on a Btubasis. Simplistically, gas sold at a 10:1
ratio to oil at a $25 a barrel oil price,
gas sold at about $2.50/m Btu. By contrast a Btu-basis would indicate a 6:1
ratio $25/b oil would equate to
$4.00/m Btu gas. This would be roughly
equivalent to present gas pricing in the
US. From 2000 to 2004, gas prices
have averaged $4.15/m Btu, with a low
of $3.05/m Btu in 2002 and an estimated high of $5.50/m Btu in 2003.
Declining productivity in mature North
American gas basins in the US and
Western Canada and the costs of
developing and delivering frontier gas to
market argue persuasively that the era
of $2.50/m Btu gas is at an end. While
gas prices promise to demonstrate considerable volatility based on short-term
supply/demand imbalances, gas supply
economics set the medium- and longterm theoretical floor price.
Available data indicate that drilling
activity tends to fall dramatically when
gas prices drop below $2.50/m Btu. At
the same time, low prices encourage
demand growth. A high level of drilling
activity is required to maintain gas production in the onshore lower-48 states
and in the shallow-water Gulf of Mexico
(GoM). History suggests the resulting
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Proposed
Developing
Advanced planning
Under construction
Existing
60
40
20
0
2003
2004
2005
2006
2007
2008
2009
2010
4.1
Production capacity
Until 1999, only 25% of the worlds LNG production capacity
was in the Atlantic basin (including the Mediterranean). With
the exception of an occasional spot cargo from the Middle
East or Asia-Pacific, the region was the domain of Algeria.
The countrys oil and gas company, Sonatrach, supplied
European and US customers from plants on the
Mediterranean coast, which, since restoration in the 1990s,
produce around 23m t/y. The recent explosion at the Skikda
plant destroyed three trains with a total production capacity of
2.5m t/y. Libya provides another 0.8m t/y of production
capacity from an ageing complex at Brega.
Then, in 1999, two grassroots Atlantic basin LNG projects started production Trinidad and Tobagos Atlantic
LNG (ALNG) and Nigerias Bonny Island LNG facility (NLNG).
First was ALNGs single-train 3.0m t/y plant, in April 1999,
followed six months later by the first of NLNGs two 2.95m
t/y trains. These were the first new export projects in the
Atlantic basin in nearly two decades. They boosted regional
LNG production capacity to 33m t/y and provide the foundation for adding cost-competitive expansions.
Additional export capacity, either under construction or in
the advanced planning stage, is expected to more than
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Shipping
Shipping is a key strategic asset prized by LNG export ventures and importers alike. Control of shipping is a way to
minimise demand and price risks as well as to generate
trading profits (under the right commercial
Table 1: World LNG fleet
structure, cargoes can be diverted to markets
Price Implications
where their sale commands higher prices). All
Number of ships
Pacific
102
Market pricing in the US and in Europe
parties to the transaction can share the addiAtlantic
53
should support the growth of Atlantic basin
tional revenues.
Total
155
LNG trade as forecast. As costs for LNG
But these innovative deals are difficult to
Orders
54
infrastructure (both import and export) and
arrange in a tight shipping market. About 53
Options
26
Total H1 07
209-235
shipping have dropped in recent years, LNG
ships are employed in the Atlantic basin,
supply chains are increasingly cost competialthough the fleet is undergoing an unprecetive for gas supply. According to the forthcoming Poten & dented expansion and nearly twice this number will be
Partners study, LNG Cost and Competition: A Global Survey required by the end of the decade (see Table 1). Many of
of LNG Export and Import Projects, which analyses the these ships have already been ordered.
economics of over 60 LNG export and import facilities
Unlike in the past, when most LNG new-builds were
worldwide:
ordered to deliver cargoes to Asia-Pacific, many of the
At the low end of the forecast price range, say $2.50/m ships on order are dedicated to Atlantic basin trades.
Btu ex-ship, a number of projects (including most expan- Others have not been ordered for any specific trade and
sion trains) generate attractive returns to venture partners many of these are expected to trade in the Atlantic basin.
(for exports to the US GoM);
Moreover, there will be a tendency for ships to trade more
In the mid-range, about $3.00/m Btu, most Atlantic globally. For example, a few of the ships dedicated to delivbasin grassroots projects and new Middle Eastern trains are ering to South Korea and Japan are transporting cargoes to
competitive to this market; and
Europe and the US during the summer when there is less
At the upper end of the price range, or $3.50 to call on their services from Asia-Pacific destinations.
$3.75/m Btu, most Atlantic basin grassroots projects are
There will be ample shipping capacity to cater for a
feasible, although profitability for some could be slim.
tripling of Atlantic basin trades during the decade and the
However, firms operating in the gas and power busi- possibility of surplus tonnage cannot be discounted. This
nesses and the regulators governing their activities are could have adverse consequences for the truly speculative
only slowly beginning to understand the changing com- ships and owners may be forced to accept unattractive
mercial realities of the liberalising markets. What is charter-hire terms or risk lay-up.
unclear is whether commodity pricing, with its inherent
volatility and unpredictability will provide the incentives Commercial developments
required for massive investments in production and deliv- Atlantic basin LNG trade is predicted, largely, to continue to
ery infrastructure. In Europe, the incumbent gas utilities be project-based, tied to long-term, take-or-pay contracts,
argue it will not. Even in the US, where market opening is owing to the inherent operational complexities of the supply
chain and financing requirements. However, market growth
Figure 4: Projects ex-ship, COS to Lake Charles, US
will accompany and drive changes in the business structure
of LNG projects as well as in the industrys commercial
$(2003)/m Btu
framework to reflect the realities of liberalised gas markets.
Shipping to Lake Charles
Buyers confronted with the loss of national and regional
Sovereign take
market franchisess will seek to restructure their supply portSponsors' take
Opex
folios and diversify their market outlets. Mechanisms for
buyers to succeed in the Atlantic basin include:
Direct equity participation in export ventures;
Negotiation of flexible supply terms (including gas market-linked pricing, relaxation of destination restrictions and
Liquids
shorter-term contracts);
credits
Control of shipping;
A1* A2* A3 A4 A5 A6 A7 A8* A9 A10 A11 A12* A13* A14
Ownership of and/or third-party access rights to import
(2-T) (1-T) (1-T) (1-T) (1-T) (2-T) (1-T) (1-T) (1-T) (1-T) (1-T) (2-T) (1-T) (2-T)
terminals;
Cost of service is the real price per unit of LNG output that the project must
Multiple supply sources and market outlets; and
receive (net of condensate and LPG co-product credits) to provide: forward
capital and operating outlays; recovery of capital employed at start-up,
Strategic alliances.
including a required rate of return (hurdle rate); and sovereign resource and
Enhanced flexibility within this structure will lead to
income taxation on that return.
trading opportunities, or at the very least cargo swaps
* Expansions
that will generate substantial shipping cost savings. LNG
Source: Poten & Partners and Merlin Associates
export ventures that can accommodate these buyer
requirements will prosper.
4.1
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4.2
Falling costs
Reduced capital costs associated with LNG investments is
one of the enablers for new trains being developed without
full sales commitments for the capacity before construction. The cost of new liquefaction capacity has fallen from
$400 a tonne in the 1980s to $200/t. Over the same
period, the cost of new shipping capacity has fallen from
$1,900/cm to $1,200/cm. The costs of building a new terminal have fallen by over a quarter.
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4.2
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Consumption growth
The future looks bright for the LNG trade. Consumption is
growing steadily in the great primary importers of Japan
and South Korea South Koreas Posco and SK Power
have just signed for 1.35m t/y from BPs Tangguh project
in Indonesia. And there are attractive opportunities to
supply China and, potentially, India.
Europe has nine countries capable of supplying a continent increasingly concerned with security of energy supply. Even in the UK, aware of the decline of its North Sea
hydrocarbons reserves, at least two new terminals have
been announced, one of which is the converted Isle of
Grain facility, where Sonatrach and BP plan to import
LNG from early 2005.
Across the Atlantic, in the US, the sheer size of the
existing market, at 0.67 trillion cm in 2002 and with significant decreases in indigenous reserves, is an obvious
candidate for LNG imports as four terminals are reactivated and more are discussed. With the recent and continuing decrease in the cost of the LNG supply chain, LNG
has proved to be increasingly competitive in the US market. With all three major markets highly active, the potential for inter-regional trade is considerable.
This is the merchant model. It brings LNG into line with
global gas-market liberalisation and into a world of
increased energy security by diversifying supply, aligning
risks and phasing developments to suit the consumer.
The pioneering days are over. The sea-borne movement
of gas is not only going to increase more rapidly than
exported pipeline gas, but it will also become more flexible, more in tune with its risks and more and more an
everyday phenomenon.
Martha Carnes
4.3
Michael Hurley
Duncan Michie
HOME
August 2003
20.0%
Nuclear
24.2%
Nuclear
3.0%
Other
0.2%
Other
2.0%
Gas
40.9%
Gas
65.0%
Coal
1.2%
Net imports
10.0%
Oil
Source: DTi
32.9%
Coal
0.4%
Oil
0.2%
Hydro
NEXT
subsidies for LNG facilities, or support for communities facing coal-mining cuts, may be necessary.
Once these three impacts are considered, Figure 2 could
appear more like Figure 3.
If policy were to result in the introduction of a carbon tax
on coal-fired generation, this could serve to increase the lifetime cost of coal-fired generation. In the same way, a moratorium on new coal build would limit the scope for coal-fired
generation, providing a market opportunity for LNG.
A situation with a similar effect to that shown in Figure 3
occurred in Japan during 2002. When a number of nuclear
power plants operated by Tokyo Electric Power were taken
out of operation for safety reasons, substantial increases in
LNG imports were required. In terms of Figure 3, LNG would
effectively make up for a substantial reduction in the size of
the block marked nuclear in this situation.
In practice
The importance of regulatory action in energy markets has
been demonstrated on a number of occasions in the past.
In the US, the Federal Energy Regulatory Commission
(Ferc) appears to have improved its approval times for LNG
developments. However, as a counter balance to this, a
continuing safety-regulation debate may affect LNG new
build. In the UK, the dash for gas was temporarily halted by
the moratorium on new gas-fired capacity that ran from late
1997 to 2000/01. The relaxation of the moratorium, combined with the UK energy review, which stressed diversity of
supplies as indigenous gas supplies run out, has provided a
spur to UK LNG projects.
Figure 2: The economics of alternative fuels for power generation
Lifetime cost of
generation option
(USc/Wh)
LNG capacity
that could be
built if required
50GW
Hydro
Nuclear
Piped gas
LNG
Coal
50GW
BACK
4.3
Total additional
generating
capacity required
Hydro
Coal
Nuclear
Piped gas
LNG
Lifetime cost of
generation option
(USc/Wh)
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55
Exporters: Qatar
ITH MASSIVE, low-cost gas reserves and an ambitious, yet pragmatic, approach to business, Doha
has established thriving LNG and petrochemicals
industries and is attracting widespread interest in the fledgling gas-to-liquids (GTL) sector.
In the next few years, the gas industry of this small Middle
East country, which has a population of around 600,000, is
set for a significant expansion. Several GTL projects involving the worlds largest private oil and gas companies have
been proposed. Royal Dutch/Shell is leading the way late
last year, the company announced plans for a $5bn,
140,000 barrels a day (b/d) GTL plant, which it expects will
come on stream before the end of the decade.
5.1
Quadrupling capacity
Meanwhile, the countrys two LNG plants, Qatargas and
RasGas, are in expansion mode and further bold capacity
increases are planned. If all plans were to proceed, on
schedule, the countrys liquefaction capacity about 14m
t/y would more than quadruple by the end of the decade.
Thinking big is one of the secrets of Qatars success,
says Paul Sankey, an oil and gas analyst at Deutsche Bank.
The Qataris have been extremely smart. They had a vision
from a very early stage that they wanted to become the
biggest LNG producer in the world and they have not taken
their eye off that long-term aim. High initial spending on
Ras Laffans port facilities has meant that future expan-
Qatargas 1 T1-3
RasGas 1 (Ras Laffan)
1997
1999
QP 65%; Total 10%;
QP 63%; ExxonMobil
ExxonMobil 10%; Mitsui 25%; Itochu 4%; Japan
7.5%; Marubeni 7.5%
LNG 3%; Kogas 5%
Qatargas
RasGas
8.0
6.6
3
2
APCI
APCI
North Field
North Field
340
420
Italy; Japan; South
India; Italy; South Korea
Korea; Spain; Turkey; US
Qatargas expansion
Three-train Qatargas 8m t/y nameplate capacity is being
expanded to over 9m t/y by 2005 through de-bottlenecking.
Plans are to add a further 7.5m t/y of capacity by 2009
(Qatargas III) and discussions are under way for Qatargas II,
which would see the addition of two 7.8m t/y trains in a
similar time-frame. Total output capacity would amount to
about 33m t/y if all proposed expansions proceed.
The feed gas for the two plants, both in Ras Laffan
Industrial City, is produced from the nearby North Field
the largest known non-associated gasfield in the world.
Discovered in 1971, the 6,000-square-km fields proved
reserves, according to Qatar Petroleum (QP), are over 900
trillion cubic feet (cf). The BP Statistical Review of World
Energys more conservative estimate of total Qatari proved
natural gas reserves 509 trillion cf at end-2002 would
still place Qatar third in the world in terms of size of gas
Qatargas
LNG plant
at night
56
HOME
NEXT
Exporters: Qatar
reserves, after Russia and Iran. As Andy Flower, an indeA second company, RasGas II, was established in 2001
pendent consultant specialising in LNG and gas, puts it: by QP (70%) and ExxonMobil (30%) to construct and own
Qatars reserves arent an issue not for the next 200- the offshore and onshore facilities required to supply LNG
300 years, anyway.
to Petronet, of India, Edison Gas and future customers. A
Low-cost and plentiful supplies of gas are Qatars great- third train at the plant, with a capacity of 4.7m t/y began
est strengths in the LNG trade, enabling the projects to production on 1 February, boosting RasGas offshore gas
offer competitive terms, even in remote markets. In addi- production capabilities to almost 2bn cf/d and onshore
tion, the Qatari LNG business is well established, costly production from 6.6m t/y to 11.3m t/y. The third train,
infrastructure is in place and North Field gas is rich in con- coupled with incremental volumes from the first two trains,
densate an important additional revwill meet Petronets requirements of
enue stream. Qatars geographical
5m t/y for 25 years.
US gas prices have risen
location also means that Asia, Europe
In 2001, RasGas II agreed to supand are likely to remain at
and the US are within its range, giving
ply Italys Edison with 3.5m t/y, for 25
it access to a wider choice of markets
years starting in 2005. The contract
levels that can justify largethan that available to most LNG prorequires the construction of a fourth
scale LNG investments
jects. This positions them well to
train, which will have a capacity of
exploit some interesting commercial
some 4.7m t/y, bringing the plants
opportunities, says Patrick Barr, head of oil and gas at overall output to 16m t/y. Start-up is expected in
ANZ Investment Bank.
September 2005. Last year, RasGas broadened its links
Evidence of that advantage has already emerged. Last with Europe when it signed a 0.8m t/y, 20-year sales and
year, RasGas signed a Heads of Agreement (HOA) with purchase agreement with Spains Endesa, with deliveries
Taiwans Chinese Petroleum Corporation for the supply of due to start in April 2005. The company is also examining
3m t/y for 25 years to the Ta-Tan power plant, a 4.2 the possibility of sales to Belgium.
gigawatt combined-cycle gas-turbine facility. Further market
In October, considerable new prospects for RasGas
opportunities are likely to come from India and China, in opened up. QP and ExxonMobil said they had signed an
addition to the established Asia-Pacific markets. In the HOA to supply the US for 25 years. The HOA involves the
opposite direction, huge export deals are planned to the US. development by RasGas II of two trains, with combined
capacity of 15.6m t/y (about 2bn cf/d). Total estimated
Distance to market
investment, including ships, is $12bn, with start-up of
Nonetheless, the distances to these markets are consider- deliveries scheduled for 2008/09.
able. Qatargas and RasGas plan to offset high shipping
costs partly through economies of scale. If they are built, Investment justified
the trains whose output is aimed at the US and UK with In the past, gas prices in the US have been too low and
capacities of up to 7.8m t/y each will be the largest in the trading patterns too short-term in nature to support multiworld. Significant increases in the size of LNG vessels are billion dollar investments in liquefaction facilities. Without
the luxury of long-term pricing contracts, the US was far too
expected to result in further cost savings.
Set up in 1993 to produce LNG and other hydrocarbons risky a market to serve as the anchor for an LNG plant.
products from the plants first two trains, Ras Laffan However, with domestic US gas production reaching a
Liquefied Natural Gas (RasGas) is owned by Qatar plateau, demand rising and Canadian imports unable to fill
Petroleum (QP) (63%), ExxonMobil (25%), South Koreas the gap, US gas prices have risen and are likely to remain
Kogas (5%), Itochu (4%) and Japan LNG (3%). The two at levels that can justify large-scale LNG investments.
According to Flower, US gas prices averaged $1.80/m
trains have a nameplate production capacity of 6.6m t/y of
LNG, 45,000 b/d of stabilised condensate and 300 t/d of Btu from 1990 to 1994, $2.26/m Btu from 1995 to 1999
solid sulphur. Gas supplies from 15 offshore wells, pro- and $4.31/m Btu from 2000 to 2003. From Qatar to the
US, shipping and regasification costs are probably of the
duced through three platforms, amount to over 1.1bn cf/d.
5.1
BACK
58
Purchaser
Chubu Electric Power
Tokyo Gas
Osaka Gas
Tohoku Electric Power
Kansai Electric Power
Tokyo Electric Power
Chugoku Electric Power
Toho Gas
Kogas
Gas Natural
Gas Natural
Destination
Amount
Contract
country
(million t/y) length (years)
Japan
4.00
25
Japan
0.35
24
Japan
0.35
24
Japan
0.52
23
Japan
0.29
23
Japan
0.20
23
Japan
0.12
23
Japan
0.17
22
South Korea
4.92
25
Spain
1.50
8
Spain
0.58
5
Start
1997
1998
1998
1999
1999
1999
1999
2000
1999
2001
2002
Signed
1992
1994
1994
1994
1994
1994
1994
1994
1995/1997
2001
2001
Petronet LNG
Edison Gas
Kogas
Eni
Endesa Generacion
Taipower (CPC)
ExxonMobil
ExxonMobil
ConocoPhillips
ExxonMobil
India
Italy
South Korea
Italy
Spain
Taiwan
UK
UK
US
US
2003
2007
2003
2004
2005
2008
2007
2007
2010
2009
1998
2001
2003
2003
2003
2003
2003
2003
2003
2003
7.50
4.70
2.00
0.90
0.80
1.70
7.80
7.80
7.50
15.60
25
25
1
20
20
20
25
HOME
Remarks
Qatargas, plus option 2m t/y; 2-4m t/y 1997-2000
Qatargas
Qatargas
Qatargas
Qatargas
Qatargas
Qatargas
RasGas, Fob
Qatargas
Qatargas, option to convert to medium-term
contract 3-5 years
RasGas, final agreement 1999; SPA 2003
RasGas, Amended 2003
HOA
RasGas, SPA
RasGas, HOA
Qatargas, HOA
Qatargas, HOA
Qatargas, HOA
RasGas, HOA
NEXT
Exporters: Qatar
order of $2/m Btu, he says. If you are selling into a market where prices are averaging $2.26/m Btu, there will not
be much left to pay for liquefaction and production. But the
expectation is that prices will remain relatively strong over
the longer term.
Rising end-user prices accounts for only part of the
improvement in the economics of long-range exports to the
US. Costs have also come down and continue to do so. Rex
Tillerson, senior vice-president of ExxonMobil, says unit
costs for the third LNG train at RasGas were about 33%
lower than for the first trains. Unit costs of the 7.8m t/y
trains will, at $150/t per year, be 16% lower than for the
third train. Additionally, says ExxonMobil, larger LNG ships,
with capacities of 200,000 cubic metres (cm) or 250,000
cm, will cut costs by $0.20-0.40/m Btu for gas delivered to
the US Gulf coast from Qatar.
BACK
1998
1999
2000
2001
2002
Source: Cedigaz
5.1
Spot-market activity
Meanwhile, RasGas has also remained active on the spot
market. In September, it signed its sixth spot sales agreement with South Koreas Kogas, for nine LNG cargoes to be
delivered from October through March 2004. Since first
production in 1999, RasGas has delivered over 290 cargoes to Kogas, including base-contract volumes of 4.9m t/y
and spot purchases.
Qatargas, the countrys first LNG company, founded in
1984, is also in expansion mode and obviously benefits
from the same geographical and cost advantages as
RasGas. Qatargas offshore production facilities are
designed to produce 1.45bn cf/d of gas and 55,000 b/d of
condensate. Production capacity is about 8m t/y, but could
quadruple in the next few years.
The LNG plant is owned by QP (65%), Total (10%),
ExxonMobil (10%), Mitsui (7.5%) and Marubeni (7.5%).
Shareholders of the upstream operations (including the offshore production facilities and the onshore receiving facilities) are QP (65%), Total (20%), ExxonMobil (10%), Mitsui
(2.5%) and Marubeni (2.5%).
In July 2003, QP and ConocoPhillips signed an HOA for
the development of Qatargas III, which will involve the
construction of a 7.5m t/y LNG train. ConocoPhillips will
purchase the LNG and be responsible for regasification
and marketing within the US. Average sales volumes are
expected to be about 1bn cf/d, with start-up expected in
2008 or 2009.
In the same month a year earlier, QP and ExxonMobil
announced another HOA for two 7.8m t/y LNG trains at
Qatargas (Qatargas II), with supplies targeted at the UK.
LNG shipments to the UK are scheduled to begin in
2006/07 and extend over 25 years.
Like the US, the UK is facing an imminent gas shortage.
Self-sufficient in gas for well over a decade, the maturity
of the UK sector of the North Sea and declining exploration rates mean the UK will soon have to import gas
possibly as early as next year. Transco, the UK pipelines
HOME
Drilling
at Qatars
North Field
59
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Exporters: Qatar
5.1
A question of timing
BACK
60
HOME
Exporters: Yemen
Securing a market
Yemen LNG intends to market 6.2m t/y of LNG from its future plant in the country. The
project will be launched as soon as an anchor buyer is secured, hopefully in 2004.
Engineering studies have been completed and the first LNG deliveries may begin in 2008.
By Jean-Francois Daganaud, general manager, Yemen LNG
Well-defined project
The government has granted Yemen LNG the exclusive use
of the gas reserves of the Marib area fields, which have
been producing oil since 1986. The fields reserves, dedicated to Yemen LNG, include 10.2 trillion cubic feet (cf) of
proved and 1 trillion cf of probable gas reserves, with 1 trillion cf being reserved by Yemen LNG for domestic use.
Therefore, there are sufficient reserves to produce and
Jean-Francois
Daganaud
5.2
Project investment
The extraction of the needed 1bn cf/d of gas requires
mostly tie-ins to the existing facilities. Some additional
wells and compression will be needed later in the life of the
project. Project investment to access the gas is, therefore,
relatively limited. The project plans to build and operate a
25-km line to connect the two gas processing centres. A
175-km, 14-inch spur line will bring gas from the fields to
Sanaa, and a 320-km, 36-inch pipeline will connect the
processing centres to the liquefaction plant, at Bal-Haf,
160-km along the coast, west of Mukalla.
The LNG plant is designed with two trains and a production capacity of 6.2m t/y. The plant could be debottlenecked to produce 6.9m t/y with minor additional investment. A two-tank storage facility and a dedicated terminal
with harbour services will be built near the LNG plant. The
terminal has been planned at a site that does not raise
environmental concerns, with the least possible impact on
the coastline, the lowest geotechnical risks and the least
downtime because of winds. There is a natural protection
against the main eastern waves of the monsoon and a
deep harbour, so the terminal can be developed with one
jetty and without a breakwater. It will allow 24-hours-a-day
operation, weather and visibility permitting.
HOME
Sanaa, the
capital of
Yemen
61
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Exporters: Yemen
5.2
Artists
impression of
the Yemen
LNG plant and
terminal
BACK
62
HOME
Exporters: Iran
Field development
The offshore South Pars gasfield, the largest non-associated gasfield in the world, is being developed in phases.
Each phase will provide nearly 10bn cm/y. Phases 1-3 are
on stream, Phases 4-10 are under development and negotiations are under way for Phases 11-14. Meanwhile, tender procedure for Phases 15-16 has begun and Phases
17-20 should be developed during the countrys fourth fiveyear plan, which runs from 2005. The winner of the Phases
15 and 16 tender will be announced in 2004.
The development of the onshore, 20bn cm/y Tabnak gasfield has been completed and the development of other
onshore fields in the same region (Assaluyeh, Zireh, Varavi,
Shanul, Homa, Gardan and Day) are under consideration.
The Khuff reservoir of the Salman oilfield, at which National
Iranian Oil Company (NIOC) plans to produce 4.5bn cm/y of
gas, is under development. The North Pars gasfield has a
potential production capability of about 40bn cm/y.
Considering this huge potential and its geographical location, Iran could play an important role in supplying Western,
as well as Eastern markets, through gas export projects.
Location
Persian Gulf
Persian Gulf
Persian Gulf
Bushehr Province
Fars Province
Khurasan Province
Bushehr Province
Fars Province
Persian Gulf
Fars Province
Hormouzgan Province
Persian Gulf
Fars Province
Bushehr province
Gas in place
Situation
(trillion cm)
Under development
14.000
Undeveloped
1.671
Undeveloped
0.954
Developed
0.945
Developed
0.857
Developed
0.697
Developed
0.505
Developed
0.412
Undeveloped
0.354
Undeveloped
0.328
Developed
0.317
Undeveloped
0.294
Developed
0.293
Undeveloped
0.265
R Javadi
5.3
NIOC LNG
Iran LNG
Persian LNG
Pars LNG*
2008
2009
TBD
TBD
NIOC 100%
NIOC 40%; BP 36%; Reliance 24% NIOC 50%; Repsol YPF 25%; Shell 25% NIOC 50%; Total 30%; Petronas 20%
TBD
TBD
TBD
TBD
10.0
8.8
10.6
8.0
2
2
2
2
Linde or Axens Axens
Shell DMR
Axens
South Pars 12 South Pars
South Pars 13
South Pars 11
Asia, Europe,
Europe; India
Europe; India
Asia; Europe
India
* Feasibility study completed. Consortium partners have reportedly agreed the principal terms of the joint-venture agreement and hope to finalise the terms
of the deal by early 2004. Socit Gnrale has won the financial advisory mandate; the deal is at its final stages. Comprises two 5m t/y trains.
Feasibility and Feed study have been completed, pre-qualification for EPC contractors has been finalised and tender documents have been issued.
HOME
63
Exporters: Oman
Sustainable provision of a
new resource
Three years on from making its first delivery, Oman LNG has established itself as a reliable
gas supplier to world markets. Now it is looking to the future. By Haitham A Al-Kharusi and
Nasser Al Kindi, communications department, Oman LNG
5.4
Last year, was very successful for OLNG. The company delivered over 100 cargoes, reaffirming its pledge to customer
service and further enhancing its status as a reliable LNG
producer. An unwavering focus on cost-effectiveness and
budget control, coupled with increased sales and underpinned by high market prices made 2003 the best financial
year for OLNG so far. The companys significant progress in
ensuring sustainable debottlenecking has resulted in a
noticeably smoother operation of the two trains.
In 2003, the Sultanate signed an engineering and procurement contract with Chiyoda Foster-Wheeler to build a
third liquefaction train (Qalhat LNG). This move will consolidate Omans production of LNG, which is set to exceed 10m
t/y the train should produce its first shipment in 2006.
The companys Omanisation drive is in full swing and
Omanis now make up over 68% of its workforce. To consolidate this drive, a Leadership Competency Programme has
been launched, which will give every member of staff the
chance to have a structured development plan.
In 2003, OLNG completed 10m man-hours (4 years of
Social contributions
Omanisation plan and training scheme to ensure the
company is run mainly by Omanis by 2008.
Training and educational assistance.
External trainees put through a technical trade training
programme.
120 trainees sponsored for a contractors training
scheme.
Sponsorship for small-business training scheme, which
has trained 230 students.
Community aid.
Funded the construction of a general hospital.
Funded local infrastructure projects.
Established a Community Fund for the development of
local communities.
Grants and donations programme.
2000
State of Oman, 51%; Shell, 30%; Total, 5.54%;
Korea LNG, 5%; Partex, 2%; Mitsubishi,
2.77%; Mitsui, 2.77%, Itochu, 0.92%
Operator:
Oman LNG
Capacity (million t/y)::
6.60
Number of trains
2
Process method
APCI
Gasfields
Barik; Saih Nihayda; Saih Rawl; Central
Oman gasfields
Storage capacity (000 cm):: 240
Exports to:
Kogas, Osaka Gas, BP, Shell Western, Unin
Fenosa, Total, GdF, Tractebel and others
64
HOME
Amount
Purchaser
(million t/y)
Kogas
4.10
Osaka Gas
0.70
Shell Western LNG
0.88
Unin Fenosa
0.75 & 0.60
BP
0.70*
Contract
length
25
25
5
2
6
Start
2000
2000
2002
2004
2004
Signed
1996
1998
2001
2002
2003
*At plateau
NEXT
Exporters: Oman
Sustainable development
OLNG considers its commitment to contribute to sustainable development as a key to its overall success as a
business. It conducts its business responsibly, being sensitive to the needs of all involved and meeting the triple
BACK
5.4
Tanker sailing
from OLNG
Photo: Foster
Wheeler
HOME
65
A pioneer producer
Adgas has built a reputation as one of the safest, most reliable and experienced
suppliers of LNG and LPG world markets. To maintain its reputation and commitment to
its customers, Adgas has embarked on a number of major initiatives to enhance the
longevity and reliability of its plant.
BU DHABI Gas Liquefaction Company (Adgas), a member of the Adnoc group of companies, has been producing and exporting LNG and liquefied petroleum gas
(LPG) since 1977, mainly to Asia-Pacific markets. Adgas,
the first LNG facility in the Middle East, was envisaged and
established thanks to the foresightedness of the president of
the United Arab Emirates (UAE), His Highness Sheikh Zayed
Bin Sultan Al-Nahyan.
Adgas has been a pioneer in the production of clean
energy and protection of the environment through processing the gas separated during the process of oil production,
which would otherwise be flared.
The Adgas facility consists of three processing trains.
Each of trains 1 and 2, which were commissioned in April
1977, has a production capacity of 170 tonnes an hour.
Train 3, the largest LNG train in the world when constructed, was commissioned in July 1994 and has a production capacity of 320 tonnes an hour.
Feed gas for the LNG facility is made up of both associated and non-associated gas. The associated gas is separated at Abu Dhabis offshore oilfields under various pressures. The non-associated gasfields include Abu Al Bukoosh
Khuff, Uweinat, Areaj, and Umm Shaif Khuff.
5.5
LNG
C3, C4 and C5+
Train 3
start-up
(1994)
6
5
De-bottlenecking of
Trains 1 and 2 (1984-85)
4
2
1
1978
1982
1986
1990
1994
1998
2002
Source: Adgas
66
Tepco
BP Gas Marketing
4.70
0.75
To 2019
4 years
1977
2002
1972
2001
Renewed 1994 +2m t/y; 25-years
Environmental initiatives
Since Adgas early days, numerous initiatives have been
undertaken to improve the environment, including the commissioning of sulphur-recovery plants and reducing sulphur
dioxide emissions. All have resulted in significant environmental improvement and new projects are planned, including the installation of a third boil-off gas compressor, to
reduce flaring further, and the upgrading of the sulphurrecovery unit, to reduce emissions. Adgas is moving
towards ISO14001 certification during 2004 to register its
success in the area of environmental management.
Human resources
HOME
Exporters: Indonesia
NDONESIA HAS undergone oil-and-gas sector restructuring with the establishment of the new Oil and Gas
Law. The main intent of the Law is to streamline government supervision, and ensure internationally competitive terms and conditions.
The Law also establishes BPMIGAS prominent role in
LNG marketing. Future marketing will be structured on the
basis that the appointment of a Seller of Record is done by
BPMIGAS concurrently with the operator of the source of
supply, allowing BPMIGAS oversight responsibility for marketing while having direct access to the source of supply.
When BPMIGAS or the Seller of Record markets the LNG to
potential customers it has the authority of the state, which
has title to the resources.
25
South Korea
20
Japan
Fathor Rahman
15
10
5
0
1980
1985
1990
1995
2000
Source: BPMIGAS
5.6
LNG business
Indonesias LNG sector began with the discovery of two
large fields in the early 1970s Arun, in Nanggroe Aceh
Darusalam province (in north Sumatra), and Badak, in East
Kalimantan province. Arun operates only four of its six
trains because of declining gas reserves, but has installed
capacity of 12.3m tonnes a year (t/y). Arun still has a dual
supply contract with Bontang - the LNG project based on
the Badak gasfield to South Korea and single-source contracts to Japan and South Korea.
The development of the industry was unique, as both the
Arun project and the Badak project started up simultaneously, promoting synergies between them. The early LNG
development was a dual system, featuring two widely dispersed gas sources, two LNG plants, two loading harbours
and two separate shipping routes. Only five and a half years
after the gas was discovered, the countrys first LNG shipment was delivered from Bontang to Japan in August 1977,
followed by the first supply from Arun three months later.
Launch success
The success in launching both projects was followed by the
successful completion of several additional sales contracts
in Japan and by the pioneering of LNG sales to both South
Korea and Taiwan, after concluding long-term sales contracts with Kogas and Chinese Petroleum, respectively. This
substantial expansion of Indonesian LNG exports was supported by large gas discoveries made by Total, in East
Kalimantan, and by associated gas from neighbouring
Unocal fields. In the 1990s, when Indonesias original,
large sales contracts with Japanese customers were
approaching expiry, the country was able to extend those
contracts for 10 years.
More than three decades after the first gas discoveries,
Indonesia is the largest LNG producer in the world, with a
total commitment of 27m t/y produced from 12 LNG
trains in the original two LNG projects, Arun and Bontang
(see Figure 1). And the country is well placed to maintain
this position. Although gas reserves supplying Arun LNG
are in decline, there have been several new discoveries: in
deep water off East Kalimantan; in Central Sulawesi by
Pertamina and Exspan; at the offshore Massela fields by
Competitive terms
Bontang has expanded to be the worlds largest producing LNG facility at a single location, with capacity of
22.3m t/y. With commitments to all existing north Asian
markets (Japan, South Korea and Taiwan), Bontang has
proved its capability to create and capture market share
and intends to maintain this hard-earned supply position
by meeting buyers requirements. Like some other LNG
suppliers, Bontang is beginning to approach the end of a
number of existing contracts and will aggressively offer
competitive terms.
The large gas discoveries in Papua province will supply
the Tangguh project, which has been promoted as a
national priority project. Tangguh has successfully signed a
sales-and-purchase agreement with CNOOCs Fujian LNG
import project, in China, and a heads-of-agreement with
SK/Posco in South Korea. Indonesias third LNG project,
Tangguh LNG is on schedule to start up in 2007 with two
trains producing 7m t/y. Tangguh is now working for a sales
purchase agreement to the US West Coast.
Despite tight competition in international LNG markets,
Table 1: Indonesias LNG plants
Project
Start-up
Shareholders
Operator
Capacity (million t/y)
Number of trains
Process method
Gasfields
Storage capacity (000 cm)
Exports to
HOME
Bontang A-H
1977/1983/1989/1993/1997/1999
Pertamina
PT Badak NGL
22.10
8
APCI
East Kalimantan Basin
634
Japan; South Korea; Taiwan
67
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Exporters: Indonesia
efforts to strengthen Indonesias position in traditional markets (Japan, South Korea and Taiwan) and reach new markets in China, on the US west coast and the Philippines are
continuous. LNG production capacity will continue to rise
through the expansion of the Bontang plant and the development of new sites at Tangguh and Donggi. This will
strengthen Indonesias position as a reliable supplier under
the strategy of one contract, multiple sources.
Arun LNG
With the continuing decline of gas reserves, supplies have
been prioritised for domestic use, particularly in the fertiliser industry. Some LNG export volumes will be transferred to Bontang to avoid shortages of supply for committed customers. The plant has a capacity of 6.6m t/y
from four trains.
The plant has one sales contract with Japan, for 3.51m
t/y, one with South Korea, for 2.28m t/y, and a joint-supply
contract with Bontang to South Korea for 1.02m t/y.
Bontang
Certified gas reserves in East Kalimantan are up to 51.8
trillion cubic feet (cf). Adding new, not yet certified,
reserves of 6-12 trillion cf from recent discoveries in the
Makassar Straits deep waters raises total reserves to
around 60 trillion cf. Sales commitments amount to 33.3
trillion cf, leaving uncommitted reserves of 18.5 trillion cf,
or around 27 trillion cf if the new discoveries are included.
5.6
On-line
1977
1983
1989
1993
1997
1999
Capacity
5.377
5.377
2.875
2.912
2.912
3.136
22.589
Nautical miles
2,200
1,600
2,250
1,900
1,600
7,100
Donggi
Indonesia is proposing a fourth LNG project, Donggi, in
Central Sulawesi province. Large gas discoveries the
Matindok and Senoro gasfields that would supply the project are undergoing further appraisals, but potential
reserves have been estimated about 9.2 trillion cf. Donggi,
which would be the first LNG venture led by the national
companies, Pertamina and Exspan, would have an initial
capacity of between 3.5m and 7m t/y with two trains. The
first shipment is expected in 2010 targeting the US west
coast and Asia.
There is also an option to send LNG from Donggi to Java.
For now, gas supplies to the island are limited to those
from nearby gasfields, but Javas gas market, which consumes close to 1bn cf/d of pipeline gas, is expected to
grow significantly.
Arun LNG,
north Sumatra
BACK
68
HOME
Exporters: Australia
2008
ChevronTexaco, 57.14%; Shell, 28.57%;
ExxonMobil, 14.29%
Operator:
ChevronTexaco
Capacity (million t/y)::
10.00
Number of trains:
2
Process method:
TBD
Gasfields:
Gorgon; Chrysaor; Dionysus; W Tryal Rocks;
Spar
Storage capacity (000 cm):: Exports to:
China; Mexico; US
Peter Glass
Shell Gas
and Power
2
20
2008
2003
Gorgon LNG,
MOU
ChevronTexaco
2
20
2008
2003
Gorgon LNG,
MOU
China
4
25
2008
2003
CNOOC-Gorgon
Australian LNG
Agreement
5.7
Reserves
The Greater Gorgon Area has estimated gas reserves,
including the deep-water exploration drilling successes over
the last three years, in excess of 40 trillion cubic feet (cf).
The development is based on proved gas reserves of 12.9
trillion cf in the Gorgon fields, about 130 km offshore
Western Australia, in water depths of slightly over 200
metres. The 10 wells drilled in the Gorgon field, and full 3D seismic coverage, have enabled completion of a full-field
3-D-simulation model. This high-quality data has delivered
a very detailed understanding of the geology and characteristics of the Gorgon reservoir.
The Gorgon structure is a fault-bounded Triassic horst
block, some 45 km long and ranging in width from 5 km in
the south to 10 km in the north, where subsidiary shoulder
blocks form the bounding structural elements. The top is
defined by the Intra Jurassic Unconformity (IJU), a relatively
flat surface over the horst, which has steep fault escarpments to the east and smaller fault escarpments to the
west. The Triassic beds within the horst dip to the northwest, along the southern and central areas, and plunge to
the north, in the northern areas.
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69
NEXT
Exporters: Australia
5.7
20
15
10
5
The field will be developed sequentially, with initial production from a single production centre (fed by up to five wells)
in the northern part of the field. A further three production
centres and associated wells will be added as customer
demand increases and reservoir depletion requires. This
enables a fit-for-purpose approach with minimum preinvestment needed for later growth. Eventually, four production centres and up to 18 wells will be constructed to
access the Gorgon reservoir completely.
Once gas lands on Barrow Island, it will be treated and
processed by the facilities on the island, which will most
likely comprise an LNG plant. LNG is the most mature market opportunity and LNG facilities are being progressed as
the initial foundation project for Gorgon. This will underwrite
the initial development infrastructure to bring the Gorgon gas
to the island and will serve as an important first step in
opening up all the gas resources in the Greater Gorgon Area.
Once a foundation project is established on Barrow
Island, or soon thereafter, Gorgon intends to construct a
pipeline connection to the mainland to enable gas to be
delivered to the existing gas pipeline network servicing
Western Australia.
GHG efficiency
In line with global and national efforts to reduce greenhouse gas (GHG) emissions, the Gorgon LNG facilities will
be one of the most GHG-efficient projects in the world.
Gorgon has a range of GHG mitigation/sink options, including the sequestration of reservoir carbon dioxide (CO2) for
the first time in Australia. Barrow Island offers the unique
70
25
Reserves certification
Sequential development
BACK
HOME
Certified proved
Certified proved
plus probable
Certified proved
plus probable
plus possible
Subsea development
The use of a subsea gas-gathering concept is a key feature
of the Gorgon field-development plan, along with a 70-km
tieback to land-based gas receiving facilities on Barrow
Island. The plan has been continuously refined and optimised in recent years to improve the developments cost
structure, enabling it to deliver both domestic gas supply
and LNG at a competitive unit cost.
The use of a subsea solution has a number of benefits:
G It is more cost effective, investing in facilities only as
they are needed and not before. It avoids the large, upfront, pre-investment in a platform, along with the attendant problems in fixing it to the seafloor and considerable
operating cost;
G It presents less safety risk, with no personnel working offshore, except during well maintenance from a diver-support
vessel and no regular helicopter transport of personnel or
concerns over cyclones; and
G It is more reliable, not being subject to nuisance shutdowns that can occur with the myriad of safety systems
necessary on manned platforms.
G However, this will be one of the first applications of an all
subsea system to feed an LNG train. It will require a highquality approach to procurement and engineering to ensure
the installed system works effectively and reliably throughout the projects life.
Gas processing
Central to the commercial viability of the development of
the Gorgon Area gasfields is the siting of gas processing
facilities on Barrow Island. Barrow contains one of
Australias most important onshore oilfields, which has
operated since 1967. It is also a Class A nature reserve,
particularly important as a refuge for rare wildlife species.
Barrow is Western Australias second-largest island 65
km off the coast 23,000 hectares in area. ChevronTexaco
(previously Western Australia Petroleum) is the operator on
Barrow Island, with responsibilities for producing crude oil
and protecting its native flora and fauna. Environmental
activities on the island have been internationally recognised
for achieving sustainable development alongside oil production for almost 40 years and is an excellent example of
development coexisting with bio-diversity protection.
As operator of the facilities, ChevronTexacos commitment to the environment, and its worldwide reputation for
leadership in environmental management and safety, will
be dedicated to ensuring the conservation values of
NEXT
Exporters: Australia
Market focus
Gas from the Gorgon development is being actively marketed to customers worldwide, as well as to potential
domestic industrial consumers. The reserves are sufficiently
large to support both LNG export markets over the longterm and Western Australias industrial gas markets, meaning there is potential for an integrated LNG/domestic
pipeline gas development.
Australia is well-positioned to secure a significant share
of the growing global LNG trade. It offers a stable investment environment, significantly reducing the investment
risk for a long-term international LNG export development.
And LNG projects in the country receive strong government
support at all levels. The country is internationally established as a reliable gas supplier. This reputation is based on
its political and economic stability as a nation and the
5.7
Gorgon
project
upstream
layout
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71
Exporters: Brunei
5.8
Global challenges
Trading globally presents challenges, given the different drivers of regionally segmented LNG and natural gas markets.
Although the traditional northeast Asian markets Japan,
South Korea and Taiwan are relatively mature, growth
potential will depend largely on the evolution of policies to
deregulate the energy industry and their effect on the competitiveness of natural gas.
New projects will have to compete with existing suppliers to
secure market entry. With the growing number of aspiring
suppliers and the rapid expansion of emerging markets, such
as China and India, adjustment to the evolving LNG market is
one of the greatest challenges facing BLNG. However, politi-
Lumut
1972
Brunei State, 50%; Shell, 25%; Mitsubishi, 25%
Brunei LNG
7.20
5
APCI
SW Ampa; Fairley; Gannet; Champion
130
Japan; South Korea
Amount
(million t/y)
4.03
1.24
0.74
0.7
Contract
length (years)
To 2013
To 2013
To 2013
16
Start
1973
1973
1973
1997
Reaching milestones
Another milestone was reached in April 2002, when BLNG
became one of the first of Shells LNG facilities to receive
the ISO 9001:2000 series certification. This achievement
places the Quality Management System firmly at the heart
of the plants aim to become more customer-focused. The
ISO 9001:2000 series promotes customer communication,
essential to the success of any organisation, and emphasises performance results and requires demonstration of
continuous improvement.
In the same year, BLNGs laboratory became the first
testing laboratory in Brunei Darussalam to be accredited to
ISO 17025:1999 in the fields of chemical and biological
testing (for petroleum and natural gas) and the field of
environmental testing (for water). All these are in addition
to the achievement of the ISO 14001 standard for its environment-management system in July 2000, making BLNG
the first Shell-advised LNG plant in the world to attain that
recognition.
Brunei LNG
control room
Shell
72
HOME
NEXT
Exporters: Brunei
New reserves
Supporting upstream companies in their efforts to find new
gas reserves, Brunei National Petroleum Company
(Petroleum Brunei) has awarded two blocks, J and K, under
a production-sharing contract, in the deep waters of the
Brunei Exclusive Economic Zone to consortia led by Total
and Shell, respectively. Blocks J and K are about 5,000
square km each, while onshore Block L is about 2,500
square km. This exciting development offers three vast
areas of significant potential and attractive prospects for
commercial petroleum discoveries.
The venture is part of the governments commitment to
future exploration and development of Brunei Darussalams
oil and gas industry, not only to support the expansion and
further extension of the countrys LNG business, but also in
an effort to develop indigenous downstream industries.
Being one of the first LNG plants to start up, BLNG is one
1975
1980
1985
1990
1995
2000
Source: Cedigaz
5.8
Expansion plan
The Brunei government plans to build a new world-scale
production train Train 6, with a capacity of 4m t/y. The
project will require additional gas reserves, for which exploration efforts are under way.
When the programme of engineering activities is completed, BLNG will be in a stronger position for growth from
2006, and beyond the expiry of the existing sales contracts
in 2013. BLNG is leading the industry and demonstrating
that a technical life of 60 years without major interruption
to its production profile is indeed possible.
Aerial view of
the Brunei
LNG plant,
Lumut
BACK
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73
Exporters: Russia
Andrew Seck
5.9
Signing
ceremony
with Tokyo
Gas, 2003
74
HOME
2007
Sakhalin Energy (Shell 55%;
Mitsui 25%; Mitsubishi 20%)
Sakhalin Energy
9.60
2
SDMR
Lunskoye; Piltun-Astokhskoye
200
Japan, with plans for Korea, China,
US west coast, and Mexico
Phase 1
The Sakhalin II project has rightly become known as the
project of many firsts. Not only did Sakhalin Energy sign
Russias first PSA, but under Phase 1 it also concluded the
first non-recourse project financing in Russia and achieved
the countrys first offshore oil production, when the PiltunAstokhskoye field came on stream in 1999.
Oil production of about 70,000 barrels a day (b/d) is carried-out on a seasonal basis, during the ice-free period
between May and December, at the Vityaz production complex, built around the Molikpaq platform. Molikpaq was previously based in the Beaufort Sea as an ice-class drilling
rig, before being converted by Sakhalin Energy for use as a
production and drilling platform. Oil is transported by subsea pipeline to a single anchor-leg mooring buoy and a
floating storage and offloading unit, from where it is transferred to shuttle tankers.
December 2003 saw the completion of the fifth production season, with a total 10.3m barrels of crude produced.
Oil production is forecast to increase following commissioning of a $300m pressure-maintenance project in 2004,
which will deliver an incremental oil recovery of 260m barrels. To date, almost 50m barrels of sweet, high-quality,
high-yield, crude has been sold to customers mainly in
Japan, Korea and China. And in 2003, first sales were
made to Taiwan, the Philippines and the US west coast.
NEXT
Exporters: Russia
While only a niche player in the Asia-Pacific crude marThe first contract was signed with Tokyo Gas, on 12
ket, because of the seasonal production, Phase 1 has May for 1.1m t/y from 2007, for a period of 24 years.
brought great value to the project as a whole. Apart from
Then, on 19 May, the second contract was signed, with
the obvious revenue generated from sales, Phase 1 has Tokyo Electric, for 1.2m t/y from 2007 for 22 years. This
demonstrated that Sakhalin Energy could develop a world- was then followed by a third heads-of-agreement with
class project in Russias far east.
Kyushu Electric, on 24 July, for 0.5m t/y from 2010 for 21
Despite the many uncertainties of Russia, Sakhalin years. The sales contracts with Tokyo Gas and Tokyo
Energy produced the countrys first offshore oil under a PSA Electric are on a Fob basis, while the contract with Kyushu
regime and sales of crude oil have built energy bridges with Electric is on a delivery ex-ship basis. These deals will
customers throughout Asia-Pacific increasing the brand strengthen economic ties between Russia and Japan,
awareness of Sakhalin Energy and the companys credibility which will significantly enhance the political dialogue
in the market place.
between the countries. Japan, for the first time, believed
Potential and existing LNG customers for Phase 2 pro- in and trusted Russia to play an active long-term role in
duction including most of the major LNG customers in its energy security. A true accolade for the progress
the Asia-Pacific have travelled to Sakhalin to see the Russia has made since the break-up of the former Soviet
projects progress. As year-round oil production under Union, in 1991. Sakhalin Energy expects to sign further
Phase 2 of the project rises to
LNG sales contracts in the very near
170,000 b/d in 2006, Sakhalin
future, as well as selling more than
Energy will move from being a niche LNG is inherently more flexible one train into the Japanese market.
than pipelines for Sakhalin II,
player to significant crude supplier.
The other significant aspect of the
as it allows us to reach more Japanese firms decisions was their
Phase 2
commitment to buy gas in the form of
markets in more countries
The highlight of 2003 for Sakhalin
LNG from Russia. Sakhalin Energy
Energy and its shareholders was the
believes LNG is a better choice for the
announcement of the Declaration of Development Date customers than a pipeline to Japan because from the
for the Lunskoye field, on 15 May. This $10bn decision customers perspective they have over 30 years experito move ahead with Phase 2 of the project will make ence of importing LNG and none for pipelines.
Sakhalin II the largest single foreign investment project
It is easy for Japan to continue its diversification of
in Russia. It is Russias first LNG project and will have a energy by importing LNG through its well-established
capacity of 9.6m tonnes a year (t/y).
infrastructure, while time is still required to resolve a
The key features of Phase 2 are:
number of critical issues regarding potential pipeline gas
A second platform on the Piltun-Astokhskoye field;
imports.
Conversion of the existing seasonal operations of the
Sakhalin Energys shareholders have long recognised that
Molikpaq platform to year-round production through a LNG is inherently more flexible than pipelines as it allows us
tie-in to the Phase-2 pipeline infrastructure;
to reach more markets in more countries.
A platform on Lunskoye to produce up to 17bn cm/y of
Customer value proposition
non-associated gas;
An onshore processing facility to take the gas and Although Asian gas demand is forecast to grow strongly
over the next two decades, there is no doubt the Asiacondensate from Lunskoye;
Parallel gas and oil pipelines laid down the spine of Pacific gas market is very competitive. Nevertheless,
Sakhalin Energy has been and will continue to be successthe island to Prigorodnoye, at Aniva Bay, in the south;
An oil-export facility capable of year-round operation; ful in securing LNG customers, as it develops individual
customer-value propositions. Specific benefits include:
and
A two-train LNG plant, capable of year-round opera- The proximity to the market. Sakhalin is the closest
tion, which will have the largest liquefaction trains in the source of LNG to key northeast Asian markets (the sailing
time to Japan is only one to three days and only two-three
world, at 4.8m t/y each, when completed.
Aniva Bay is relatively ice-free, driving the decision to days to South Korea or China);
locate the LNG plant in the far south of the island, pro- Winter-biased seasonality, particularly important for
viding assurance to customers of a stable LNG supply, markets that experience a high degree of seasonality
even during the winter months. LNG tankers loading car- because of city gas usage in the winter (for example,
goes at Prigorodnoye will require only some minor ice South Korea); and
strengthening. On 12 December 2003, Sakhalin Energy Security of supply. Sakhalin LNG represents a new
announced a tender for the supply of one LNG tanker source of energy diversification for Asia.
Sakhalin Energy is looking forward to further extending
(plus the option for one more) by the third quarter of
its progress in the markets of Japan, South Korea, China,
2007 to supply delivery ex-ship customers.
Additionally, Phase 2 requires major upgrades to the Taiwan and even the US west coast and Mexico. In 2004,
islands infrastructure, including roads, bridges, railways, it hopes to announce the conclusion of additional LNGNogliki airport and Kholmsk port, to support project con- sales contracts, and expects to close non-recourse prostruction activities. Sakhalin Energy will fund some ject financing for Phase 2 with a consortium of interna$300m-worth of island infrastructure upgrade projects, tional lenders.
which, when completed, will also provide lasting benefits
Table 2: Sakhalin II supply contracts
to the islands inhabitants.
BACK
Purchaser
Amount (million t/y)
Contract length
Start
Signed
Remarks
HOME
Tokyo Gas
1.10
24
2007
2003
Sakhalin Energy, HOA
5.9
75
Exporters: Nigeria
A Jamieson
5.10
Early beginnings
Nigeria LNG (NLNG) was incorporated as a limited liability
company on 17 May 1989 to harness the countrys vast
gas resources and produce LNG for export. Much of
Nigerias gas has been, and is still being, flared, although
the volume has been significantly reduced over the past
four years and is projected to be eliminated by 2008.
In November 1995, a final investment decision was taken
by the shareholders Nigerian National Petroleum Corporation
(NNPC), Shell Gas BV, Total and Eni to build an LNG plant at
Finima, on Bonny Island, Rivers State. Construction began in
February 1996 and today the site houses three production
trains with a combined capacity of 9m tonnes a year (t/y) and
1.2m t/y of natural gas liquids (NGLs). All three trains have the
flexibility to use 100% associated-gas feedstock.
NLNGPlus will further expand the NLNG complex through
the addition of Trains 4 and 5, producing a further 8.0m t/y
of LNG and 1.5m t/y of NGLs. Train 4 is expected to start up
in June 2005, while Train 5 will start up in December that
year. On completion of the NLNGPlus project, the NLNG
plant will have an overall capacity of 17m t/y of LNG, 3.4m
t/y of LPG and 5.31m barrels of condensate, requiring a
Shipping
Ten ships, with cargo capacities of between 120,000 and
135,000 cm, carry LNG from Bonny Island to buyers, principally in Europe, but also in the US. Nine are owned by NLNG
through its wholly owned subsidiary Bonny Gas Transport
(BGT) while the tenth, LNG Delta, is chartered on a longterm basis from Shell Bermuda Overseas. Eight more vessels will be required for NLNGPlus. Four of these ships will
be chartered from Norways Bergesen under a 20.5-year,
long-term charter agreement, the rest will be chartered from
BGT. The first of the vessels will be delivered in November
2004. For Train 6, NLNG will charter six more vessels four
from Bergesen; and two from NYK, of Japan.
Community relations
NLNG is implementing a community-relations policy based
on stakeholding for sustainability. The company supports
projects that communities need and are able to sustain
viably. This concept ensures a long-lasting partnership
between the company and the community with results that
are mutually beneficial.
76
Project
Start-up
Shareholders
NLNG T1 & T2
1999
NNPC 49%; Shell Gas 25.6%;
Total 15%; Agip 10.4%
NLNG T3
2002
NNPC 49%; Shell Gas 25.6%;
Total 15%; Agip 10.4%
NLNGSix
2007
NNPC 49%; Shell Gas 25.6%;
Total 15%; Agip 10.4%
Operator
Capacity (million t/y)
Number of trains
Process method
Gasfields
Nigeria LNG
5.90
2
APCI
Niger Delta
Nigeria LNG
2.95
1
APCI
Niger Delta
240
France; Italy; Portugal;
Spain; Turkey; US
See T1&2
France; Italy; Portugal;
Spain; Turkey; US
Nigeria LNG
8.20
2
APCI
Bomu; Ibewa; Idu; Obagi;
Oshi; Soku; Ubeta (SPDC,
EPNL NAOC fields)
See T1&2
France; Italy; Portugal;
Spain; Turkey; US
Nigeria LNG
4.10
1
Bomu; Ibewa; Idu; Obagi;
Oshi; Soku; Ubeta (SPDC,
EPNL NAOC fields)
See T1&2
Europe; Mexico; North
America
HOME
Brass LNG
2008
ConocoPhillips 20%;
Agip 20%; NNPC 40%;
ChevronTexaco 20%
ConocoPhillips; Agip
10.00
2
Agip/ChevronTexaco JVs
US
NEXT
Exporters: Nigeria
Nigerianisation
5.10
BACK
78
HOME
Amount Contract
(million t/y) length
2.59
20
1.19
20
Start
1999
1999
Gaz de France
Botas
Transgas
Enagas
Transgas
Iberdrola
Eni
Shell Western LNG
Transgas
BG LNG
0.37
0.89
0.26
2.00
0.74
0.36
1.10
1.10
1.50
2.50
20
20
19
20
20
20
20
20
20
1999
1999
2000
2002
2002
2005
2005
2005
2005
0.86
0.75
20
10
2007
-
1.40
20
Signed Remarks
1992 Option 252,000 t/y
1992 Plus 432,000 t/y
in 1996
1992 1995 1997 Up to 360,000 t/y
1999 T3
1999 T3
- SPA (T4)
2001 SPA (T4)
2001 SPA (T4)
2002 SPA (T4 & T5)
2003 SPA (T4 & T5); plus
excess from T1-3
2003 SPA (T4 & T5)
2003 Agreement in
principle
2003 SPA (T6)
Quality workforce
But the most important of the challenges is developing the
right quality and calibre of workers to discharge the enormous responsibilities a six-train operation will demand.
NLNG is implementing one of the fastest expansion programmes in the industry. The successful implementation
and management of this growth will depend largely on the
quality and commitment of the organisations personnel.
The continued success of the company will hinge more
on the ability to source, train and retain quality and highly
motivated staff at the right time. To achieve this, the company recently carried out a Human Resource (HR) Master
Plan to review its HR structures and put in place the people
who will implement the expansion plans and future business requirements of the organisation. The main thrust of
this programme is to design and implement the right architecture to support the companys aggressive growth across
the LNG value chain, maximise its capacity and reduce
operating costs.
NLNG has achieved its vision of creating a balanced portfolio within the Atlantic basin. It is a vision that will guide its
future expansion, which may be embarked upon when
management concludes its consolidation programmes.
Exporters: Egypt
Gaining momentum
With two major LNG projects set to begin production in the next two years, Egypt is looking
to monetise its substantial gas reserves with the help of international players. By Mohamed
Farghaly, vice-president for gas exports, BP Egypt
PSC terms
The development of all of BPs discovered gas is so far
based on gas-sales agreements signed with upstream partners (including Eni, BG/Edison, Shell and Apache) and
EGPC. All gas is sold to the domestic market, with the operator of each concession leading negotiations with EGPC to
secure the daily contract rate to be produced. Other terms
(price formula, cost-recovery mechanism and profit split)
are all previously agreed in the production-sharing contract.
During the 1990s, there was no pressure to create an
alternative market for Egyptian gas, or to seek any integration or enhancement of the economy of scale of individual
upstream concession developments. These factors may
have been instrumental in the development of the standalone projects. In the late 1990s, the domestic market
began to be saturated, leading upstream investors to pursue separate initiatives to export excess gas by pipeline to
the eastern region and as LNG to Turkey.
As producers focus on the LNG option increased, their
attention turned to new markets, motivated by cost reductions realised in shipping and liquefaction technology and
the soaring US gas price. These factors were accompanied
by the governments desire to maintain the pace of exploration activity and, specifically, to promote exploration in
the deep-water Nile Delta.
Additionally, and more importantly, the government
wanted to enhance hard-currency income from the oil sec-
tor. In 2000, Egypt announced its support for the development of gas exports and underlined this by visits to a number of European markets to confirm governmental and institutional support. The interest has been mutual, as the
western buyers responded positively to the Egyptian LNG
invitation. Buyers could see two advantages of Egyptian
LNG it provides diversification of supply; and it is competitive because of its proximity to European markets.
The role of the countrys government and state-owned
energy companies in creating the conditions in which an LNG
export scheme can emerge is vital. And so too is their ability
to make commercial deals happen and at pace. In June
2000, Egypt signed a 25-year LNG deal with Unin Fenosa
for EGPC to supply 450m cf/d to the Spanish firms LNG project. The project plans to deliver its first production by the
end of 2004 to Spain. Unin Fenosa has no upstream position in Egypt EGPC will supply gas from the national grid.
This breakthrough in the Egyptian LNG industry triggered
other LNG deals with gas producers, namely BG and Edison
(Petronas later bought Edisons share in the Idku LNG project). BP is focusing on exploration. Total production from
fields operated by BP and its partners is 1.2bn cf/d. In
addition to producing fields and those scheduled for development, recent discoveries on Western Delta acreage
and a strong acreage position with a yet-to-find potential of
more than 15 trillion cf confirm BP and its partners will
have significant quantities of Egyptian gas available for
development and supply by 2008-10. BP plans to be a
main gas supplier to future LNG expansions in Egypt. BPs
strategy in the country is to develop its business to become
the main provider of Egyptian gas to the domestic and
export markets.
Mohamed
Farghaly
5.11
HOME
79
Exporters: Egypt
Martin Houston
5.12
Significant investment
The project is of major significance to BG. The plant will
form a strong component of the companys Atlantic Basin
LNG portfolio (see Box). So far, BG Egypt and its partners
have invested $1bn and investment is expected to amount
to $2.7bn over the 1997-2006 period.
Construction of Train 1 and the common facilities started
in September 2002 and, in June 2003, the projects partners authorised the start of the engineering, procurement
and construction programme for Train 2. LNG production
from Train 1 is scheduled to start in the third quarter of
2005, with Train 2 coming on stream about nine months
later. Both trains will use Phillips liquefaction technology
and will share storage and marine facilities.
The gas supply for Trains 1 and 2 will come from the
West Delta Deep Marine (WDDM) concession, offshore the
Nile Delta. BG has a 100% exploration and appraisal success rate, with 16 wells drilled to date on the WDDM area
now established, under BGs operatorship, as the most prolific concession area in the country.
ELNG T1
2005
BG 35.5%;
Petronas 35.5%;
Egas 12%; GdF
5%; EGPC 12%
Egyptian LNG
3.60
1
POCP
Simian; Sienna
France
ELNG T2
2006
BG 38%; Petronas
38%; Egas 12%;
EGPC 12%
Egyptian LNG
3.60
1
POCP
Sapphire
Italy, US
GdF
3.60
20
2005
2002
ELNG T1
BG Gas
Marketing
3.60
2006
2003
ELNG T2, SPA
LNG tank
under
construction
80
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Exporters: Egypt
the ELNG Company will consist of any facilities not specifically dedicated to a particular liquefaction unit or train.
This will include, among other things, the marine facilities,
power generation and storage tanks;
A separate train company (Train Company) will own each
individual train and will lease the land from the ELNG
Company and pay for use of the common facilities. The liquefaction trains will be owned by individual train companies. Up to six train companies are envisaged at the site.
Each train company is responsible for its own marketing
and gas sales contracts; and
An operating company will operate all trains on behalf of
the train companies and the common facilities.
This structure means the shareholding of the train companies does not have to be the same as the holding company. Each train company could also have a different
shareholding structure. For example, Gaz de France (GdF),
the customer for all of the Train 1 output has a 5% stake in
Train 1, but is not participating in Train 2.
BG will be conducting further exploration activities in
WDDM in 2004 in an effort to identify reserves for future
trains. BG and its partners are seeking offers from suppliers
for gas to feed a possible third train, which, depending on
market demand, could be operational by mid-2007. This
third train would also be designed with 3.6m tonnes a year
(t/y) of capacity. Construction would require some expansion
of the supporting facilities, such as an additional storage
tank. However, because of the commercial structure,
entrants would not bear the cost of the existing facilities.
Comparison with contemporary projects shows ELNG is
extremely cost-competitive. Furthermore, it is being completed quickly. Speed-to-market has been an important competitive advantage. ELNG has also set a benchmark in Egypt
for its environmental impact assessment, with extensive public consultations and continuing dialogue with communities.
5.12
BACK
ery. BG maximised efficiencies by taking its own equity gas and converting it
to LNG at Atlantic LNG (in which it
owns equity). This LNG was then
transported to US terminals, including
Lake Charles, on BG-owned or chartered ships.
ALNG Trains 1, 2 and 3 are already
operational, with Train 4 expected to be
operational in early 2006. Once Train 4
is operational, ALNG will have 15.1m t/y
of liquefaction capacity.
Lake Charles, US
Brindisi, Italy
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81
5.13
In Salah
Three other upstream projects Ohanet, In Salah and In
Amenas should increase gas output by over 22bn cm/y. A
cluster of seven fields in the In Salah area, in the centre of
the country, will be exploited by BP and Sonatrach. They
will produce at a plateau rate of 9bn cm/y, with first gas
expected in the third quarter of 2004. Gas will be treated
and piped 460 km north through a new 48-inch line to the
Hassi RMel hub.
In Amenas
BP and Sonatrach are also implementing the In Amenas
wet-gas development, in the deep east of the country. The
first of four fields in the Illizi basin Tiguentourine, Hassi
Farida, Hassi Ouan Abech and Ouan Taredert is due to
start flowing in late-2005. The development will produce
9bn cm/y at plateau.
82
1975
1980
1985
1990
1995
2000
Ohanet
Also in the Illizi basin, a BHP-headed group (comprising
BHP, 45%, three Japanese companies, with 30%,
Woodside, 15%, and Petrofac, 10%), in association with
Sonatrach, is working on the Ohanet development. Four
gas/condensate reservoirs will produce at a plateau rate of
6.8bn cm/y of gas with 26,000 b/d of condensate and
21,000 b/d of liquefied petroleum gas.
Pipelines
Algeria also plans to increase pipeline exports. The recently
renamed Enrico Mattei line has a capacity of 15bn cm/y. It
carries gas from Hassi RMel, across Tunisia, subsea to
Sicily and then subsea to the Italian mainland.
The Maghreb-Europe line, renamed Pedro Durn Farrell,
takes a westerly route from Hassi RMel, crossing Morocco
and the Strait of Gibraltar to enter Spain. Capacity has
been increased to 11bn cm/y with the construction of a
third compression station.
The countrys third export pipeline on which construction is due to commence in 2004 will follow a more
direct route to Spain, from Beni Saf to Almera. The
$1.5bn line, named Medgaz, will be owned by a group
made up of state-owned Sonatrach (20%), Cepsa (20%),
BP (12%), Endesa (12%), Eni (12%), Gaz de France
(12%) and Total (12%).
Purchase contracts have been signed with Gas Natural,
3bn cm/y; Cepsa, 1bn cm/y; Distrigas, 1bn cm/y; Iberdrola,
1bn cm/y; and Total, 1bn cm/y. The capacity of the system
Table 2: Algeria export projects
Volume
(bn cm)
3.20
10.20
0.50
2.20
5.95
4.08
0.76
26.89
Source: Cedigaz
1970
Source: Cedigaz
1965
Project
Start-up
Shareholders
Operator
Capacity (m t/y)
Number of trains
Process method
Arzew GL1Z
1977
Sonatrach
Sonatrach
7.95
6
APCI
Arzew GL2Z
1981
Sonatrach
Sonatrach
8.40
6
APCI
Arzew GL4Z
(Camel)
1964
Sonatrach
Sonatrach
0.90
3
Classic cascade
Gasfields
Storage capacity ('000 cm)
Exports to
Hassi-R'Mel
900
Europe; US
Hassi-R'Mel
900
Europe; US
Hassi-R'Mel
71
Europe
HOME
Skikda GL1K
Phase I&II
1972
Sonatrach
Sonatrach
4.70
6
Teal (1-3),
Prico (4-6)
Hassi-R'Mel
1,540
Europe
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Spain
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
1970
1975
1980
1985
1990
1995
2000
Source: Cedigaz
Marsa El Brega
1970
NOC
NOC (Sirte Oil)
2.30
3
APCI
Meghil, Rabuga, Zelten
96
Enagas, Spain
UK
Sonatrach is also investing in European gas infrastructure.
From 2005, it will be supplying LNG to the UK again.
Sonatrach provided the worlds first shipment of LNG to the
UK in 1964 and has signed a 20-year agreement with BP
to supply the Isle of Grain terminal, 32 km east of London.
Together, the firms intend to supply 5.2bn cm/y of gas
Swap deals
In 2003, Sonatrach was involved in a spot deal, with
Qatargas buying two cargoes of Algerian LNG for delivery to
Gas Natural. Two cargoes were then despatched from Qatar
to Chubu Electric to meet increased demand in Japan.
Libya
Libya exports small volumes of LNG from its plant at Marsa
el-Brega brought on stream in 1970, when the country
became the worlds second LNG exporter. The three-train
plant has a capacity of 2.3m t/y and the authorities have
long-standing plans to upgrade and refurbish the facility.
There is a 96,000-cm storage facility.
The facility has technical limitations because, unusually, it
was designed to liquefy natural gas liquids together with the
feed gas, and the resulting product has to be regasified at a
terminal with a fractionation column. So, the only buyer of
Libyan LNG for many years has been Spains Enagas, which
has mostly been taking less than 1bn cm/y. Gas is supplied
from the Meghil, Rabuga and Zelten fields.
5.13
Gas utilisation
plant, Jakhira,
Libya
Wintershall
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83
Exporters: Norway
Sverre Kojedal
5.14
Snhvit facts
The field: The Snhvit area comprises the Snhvit,
Albatross and Askeladd fields. The first gas discovery was
made in 1981.
Recoverable reserves: 193bn cm of natural gas, 3.1m6.2m barrels of condensate. and 120,000-140,000 tonnes
of liquefied petroleum gases (LPG).
Water depths: 250-345 metres.
Development solution: No surface installations. Subsea
production wells, pipeline to the land plant, where the gas is
liquefied for export by ship. Production on the field is
remotely operated from land.
Annual production: 5.67bn cm LNG, 0.75m tonnes of
condensate and 247,000 tonnes of LPG.
Construction: A total 28,000 work-years will be performed
in 2002-2006, two-thirds associated with the land plant.
84
HOME
Operator:
Capacity (million t/y):
Number of trains:
Process method:
Gasfields:
Storage capacity (000 cm):
Exports to:
2006
Statoil 33.53%; Total 18.4%; GdF 12%;
Amerada Hess 3.26%; RWE-Dea 2.81%;
Norway (state) 30%
Statoil
4.2
1
Statoil/Linde
Snhvit; Askeladd; Albatross
250
Spain; US
New postponement
Less than two weeks after the Storting go-ahead, the Efta
Surveillance Authority (ESA) which monitors the European
Economic Area (EEA) contacted the Norwegian government. It wanted to establish whether special depreciation
rules adopted for Snhvit might breach the provisions on
state subsidies in the EEA agreement between Norway and
the European Union.
Bellona, a Norwegian environmental organisation, which
has campaigned to halt offshore operations in the Barents
Sea, raised this issue with the ESA. The ESA intervention
meant site preparations on Melkya were suspended until
the authority announced, in early June, that it had
approved revised tax terms for Snhvit. Adopted by the government in late May, these restrict the tax rules for the project to the far northern county of Finnmark and four local
authorities in the neighbouring county of Troms.
Snhvit will be the first major development on the
Norwegian Continental Shelf with no surface installations.
No fixed or floating units will be positioned in the Barents
Sea. Instead, the subsea production facilities will stand on
the seabed, in water depths of 250-345 metres. A total of
20 wells will be drilled to produce gas from the Snhvit,
Askeladd and Albatross fields.
And Snhvit is also going further in other areas. The
pipeline carrying production from the subsea installations to
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Exporters: Norway
Snhvit LNG
project
development
Barge-mounted
The whole process plant will be constructed on a massive
barge (9 metres high by 154 metres long and 54 metres
wide) to be built at the Spanish shipyard group Izar
Construcciones Navals yard in Ferrol. Following completion,
the barge will be towed to the Dragados outfitting yard
where about 30,000 tonnes of process equipment for the
gas liquefaction plant will be installed on its deck. From the
outfitting yard the barge will be transported to Hammerfest
and Melkya on a heavy-lift ship and installed in a dock
blasted out in advance.
The chosen building approach greatly reduces the need for
steelwork on Melkya and provides cost savings as well as
higher productivity compared with building the plant on site.
The LNG carriers scheduled to ship gas from the Melkya
plant are very large, measuring 290 metres in length, with
each of their four spherical cargo tanks having a diameter
of 40 metres. One carrier will load every six days at
5.14
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85
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Exporters: Norway
5.14
Special features
Snhvit is the best-studied project Statoil has ever applied
to develop. More than 2,000 pages of technical documentation, involving most of Norways specialist expertise in this
field, form the basis for the extensive environmental-impact
assessment compiled for the development application submitted to the authorities in 2001. Several special features
of Snhvit make this an advanced project in technological
and environmental terms:
The highest subsea production so far to be remotely operated over a distance of 143 km from field to control room;
No surface installations to interfere with fishing and the
subsea facilities can be over-trawled;
The field will be produced in a closed system, without
harmful emissions or discharges;
An onshore biological treatment plant will handle environmentally harmful components;
The longest offshore pipeline for carrying unprocessed
wellstreams to land;
CO2 to be stored underground, in the second-largest
industrial storage project after the Sleipner fields also
operated by Statoil;
Energy-efficient gas liquefaction plant developed in cooperation with Germanys Linde; and
LNG carriers built to the strictest environmental and
safety standards.
The gas and condensate resources in Snhvit represent
major assets for northern Norway and the Norwegian community as a whole. Developing Snhvit will contribute to a
substantial enhancement in local expertise and value creation. This project is set to create new industrial jobs in the
region, which can have synergies with existing industry.
Based on estimated petroleum prices and future exchange
rates, revenues from the development for 2006-30 are
expected to be around NKr200bn.
About NKr45bn will be invested in the Snhvit development, with about NKr30bn being spent from 2001-06 in
other words, before revenues start to flow. This investment
primarily relates to the subsea installations on the field, the
pipeline to Melkya, the receiving terminal on land and the
associated gas liquefaction plant. Costs associated with
LNG ship construction are additional.
Project schematic
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86
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Exporters: Americas
TLANTIC LNG (ALNG) is a joint venture of stateowned National Gas Company (NGC), with four
international companies BP, BG, Repsol YPF and
Tractebel. The facility, at Point Fortin, on the southwestern coast of Trinidad, was the first greenfield LNG plant
to be built in the western hemisphere in the past 25
years, costing around $1bn. Operations started up in
April 1999.
With the green light given by the government for a fourth
train at ALNG, Trinidad and Tobago has committed no less
than 85.5% of its proved natural gas reserves to LNG production. The four trains will utilise 17.8 trillion cubic feet
(cf) of proved reserves of 20.8 trillion cf.
1999
2000
2001
2002
Source: Cedigaz
Sticking point
This use of so much gas by one industry was a major sticking point in the negotiations between the ALNG partners. It
also drew expressions of concern from non-LNG gas users,
such as local conglomerate CL Financial (CLF), the leading
investor in the countrys methanol plants.
Rampersad Mootilal, the chief executive officer of CLFs
Methanol Holdings subsidiary, pointedly told the government that the increased emphasis on LNG may impact
negatively on the petrochemicals sector. That sector has
been a major success story in Trinidad, which, with five
plants, has the worlds largest methanol export industry.
This position will be enhanced when Methanol Holdings
brings its M5000 plant on stream this year.
At 1.8m tonnes a year (t/y), M5000 is the largest
methanol plant planned in the world and Methanol
Holdings had feared it might have difficulty sourcing gas for
it. But officials at NGC, which makes the bulk of its income
from domestic gas trading (its shareholding in Train 4 will
propel it into the export market for the first time), say adequate gas supply for M5000 is lined up.
What reassured the government as far as gas reserves
were concerned was the confidence of the big players,
5.15
such as BP and BG, that probable reserves of 9.3 trillion cf
and possible reserves of 6.1 trillion cf will, pretty soon,
shift into the proved column, as exploration and development work proceeds.
BP alone will embark on a $25m 3-D seismic shoot on
its East Coast Marine Area acreage this year, in an effort to
identify new gas in the deeper sections of the continental
shelf (15,000 feet and below). BP regards Trinidad as one
of its six core areas for upstream growth.
Reserves potential
The big companies agree that, in addition to 3P reserves,
Trinidad and Tobagos offshore acreage contains another
30.7 trillion cf in identified exploratory leads plus about
28 trillion cf of gas resources classified as unidentified.
The deep shelf falls into the former category.
Once the fear of a gas reserves shortage was allayed, the
government seemed willing to allow 0.8bn cf/d to be consumed by Train 4 from January 2006 5.8 trillion cf over a
20-year period. This will be converted into 5.2m t/y of LNG,
which is said to make this the biggest train in the world with
Atlantic LNG
1999
BP 34%; BG 26%; Repsol YPF
20%; Tractebel 10%; NGC 10%
Atlantic LNG
3.30
1
POCP
Mahogany; South Seg
204
Puerto Rico; Spain; US
Atlantic LNG T4
2005+
BP 37.78%; BG 28.89%; Repsol
YPF 22.22%; NGC 11.11%
Atlantic LNG
5.20
1
POCP
N coast (BG); E coast (BP)
160
US
Atlantic LNG T5
2008
BP 34%; BG 26%; Repsol YPF 20%;
Tractebel 10%; NGC 10%
Atlantic LNG
5.20 (minimum)
1
POCP
N coast (BG); E coast (BP)
US; Spain
Cabot
1.80
20
1999
1995
Gas Natural
1.20
20
1999
1995
Gas Natural
0.70
-
Gas d'Euskadi
0.70
-
HOME
Repsol YPF
2.10
-
BG
2.10
-
Cabot
0.30
-
AES Group
0.75
-
87
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Exporters: Americas
all the necessary consents. With Train 4, total ALNG production at the Point Fortin complex will be 15.1m t/y, confirming Trinidad and Tobagos position as the worlds fifthlargest exporter.
Although the all-your-eggs-in-one-basket concern was
legitimate, paradoxically it was the predictable commercialisation of a substantial portion of gas, over a fairly lengthy
span of time, which appealed to the government. Eric
Anthony Williams, the minister of energy and energy industries, tells Petroleum Economist that, while the local petrochemicals producers are entitled to express their apprehensions over gas usage, global gas demand for products such
as methanol and ammonia is slowing down, whereas
demand for LNG is rising.
There have been several very favourable predictions for
LNG growth in the US, and Trinidad is the closest producer
bar the Marathon-ConocoPhillips plant at Kenai, Alaska,
which has a nameplate capacity of only 1.5m t/y.
Cambridge Energy Research Associates, for one, forecasts
LNG will meet 11% of US gas demand by 2010, up from
1% today. This means about 9bn cf/d of LNG imports will
be needed by the US at that time, a significant part of
which can best be provided by Trinidad, says Williams.
Stable production
ALNG is already the major supplier to the US, having met
68% of demand in 2002. LNG represents 57% of annual
domestic gas utilisation since Train 3 commenced production in April 2003 and Train 4 will boost that percentage
considerably by 2006, depending on how other gas-using
industries grow during the period. LNG can keep Trinidads
gas production stable for a very long period of time, the
energy minister says.
Trinidads gas also has the advantage of being free of
components such as propane and butane, which are
extracted before liquefaction, giving the countrys exports
an edge over those of potential competitors. Our LNG can
go into all four of the existing US terminals, Williams says,
because it is reasonably dry of liquids and meets Btu burning requirements.
While production from ALNGs first three trains is sold in
the US, Spain, Puerto Rico and the Dominican Republic,
almost all the production from Train 4 is likely to end up in
5.15
Alaska
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88
1969
ConocoPhillips (70%), Marathon (30%)
ConocoPhillips
1.50
1
Phillips Cascade
North Cook Inlet, Kenai gasfield
105
Japan (Tokyo Gas, Tokyo Electric Power)
HOME
1.0
0.5
0.0
1970
1975
Source: Cedigaz
1980
1985
1990
1995
2000
Importers: US
A revitalised market
US LNG imports will rise at an average rate of 16% a year between 2002 and 2025, supported
by a large number of import-terminal proposals. Although many proposals face permitting
challenges, not least of which is local opposition, companies have responded with creative
solutions. By Damien Gaul, industry economist, Energy Information Administration
6.1
HOME
89
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Importers: US
6.1
Owners
Location
Start-up
ChevronTexaco
Marathon, Golar LNG, Grupo GGS
Mitsubishi
Sempra Energy, Shell
Crystal Energy
Tractebel
BHP Billiton
2007
2006
2007
2007
2006
2007
2008
0.75
0.75
0.70
1.00
0.60
0.50
1.50
Florida/Bahamas
Ocean Express LNG
Freeport
Calypso
AES
El Paso
Tractebel Bahamas LNG
2006
2007
2007
0.85
0.50
0.83
Gulf coast
ExxonMobil LNG
Sabine Pass/Cheniere
Port Pelican
Cameron LNG
Altamira
Corpus Christi LNG
ExxonMobil/Sabine Pass LNG
Liberty
Main Pass Energy Hub
Gulf Landing
Vermillion 179
Mobile Bay LNG
Freeport LNG
Energy Bridge
ExxonMobil
Cheniere Energy
ChevronTexaco
Sempra Energy
Shell
Cheniere Energy
ExxonMobil
HNG Storage/Conversion Gas
Freeport-McMoRan Sulphur
Shell
Conversion Gas Imports
ExxonMobil
Freeport, Cheniere, Contango
El Paso
2007
2008
2007
2007
2004
2008
2008
2007
2006
2008-9
2008
2008
2006
2005
1.00
2.00
1.60
1.50
0.50
2.00
1.00
3.00
1.50
1.00
1.00
1.00
1.50
0.50
East coast
Canaport
Weaver's Cove
Access Northeast Energy
Fairwinds LNG
Providence LNG
Crown Landing
Somerset LNG
Irving Oil/ChevronTexaco
Poten
Access Northeast Energy
TransCanada, ConocoPhillips
Keyspan, BG LNG Services
BP
Somerset LNG
2006
2007
2008
2009
2005
2008
2007
0.50
0.40
0.50
0.50
0.50
1.20
0.43
Source: EIA
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Importers: US
its stated goals of building two more import terminals in the opposition to the project. Additionally, the Fairwinds LNG
GoM, one at Sabine Pass, Louisiana, and the other at proposal, for Harpswell, Maine, has stalled, at least temCorpus Christi, Texas. These two facilities, now before Ferc, porarily, as local fishermen and other groups have launched
would each have capacity to deliver up to 2.5bn cf/d. opposition. Fairwinds, proposed by TransCanada and
Competitors for onshore GoM facilities include supermajors ConocoPhillips, would deliver up to 0.5bn cf/d. The compasuch as ExxonMobil, which plans to build at least three nies engaged the community surrounding the small town
facilities, in part to accept deliveries from its planned 7m early in the process, detailing the benefits in dollars to the
tonnes a year (341bn cf/y) liquefaction plant in Qatar community over time, even stating up-front that the project
scheduled to begin operations in 2008.
was a non-starter if the town of Harpswell did not support
Projects in the GoM require a large capital investment, it. At the time of writing, the town councils vote on the proabout $0.6bn on average. But the investment amount ject had been delayed twice, but was expected to take
depends heavily on site-specific considerations (including place in January 2004, at the earliest.
whether or not the terminal is designed for the offshore).
The difficulty in siting terminals onshore is one reason
Generally, these projects are larger than those planned for behind about a dozen offshore proposals. In California,
other US locations. In market areas such as the northeast Crystal Energy has proposed the conversion of a former oil
and California, the proposed terminals are, generally, platform, about 15 miles off the coast of Ventura County,
smaller and require less investment capital average costs to an LNG terminal at a cost of about $100m. Most
are about $400m for a facility with deliverability of about recently, Australias BHP Billiton has proposed an import
0.5bn-0.6bn cf/d.
terminal about 25 miles off the coast of southern
These facilities are being proposed
California, presumably to draw LNG
for markets that experience a premium
from liquefaction projects in Australia.
It is important to gain the
price relative to prices in the GoM.
Both are before the US Coast Guard
With the basis between Boston and acceptance of local groups for for approval.
the Henry Hub averaging over $0.60/m
the proposal to avoid lengthy
Supply chain integration
Btu over the last five years and at
permitting delays
Generally, regasification costs are as
times spiking to $10/m Btu or more
low as $0.30-$0.50/m Btu of the
during the coldest winter days, when
pipeline access is restricted, this premium can be substan- supply cost, which can range between $3 and $4/m Btu
tial. There is also the economic option of storing LNG in to bring LNG to the US market. Import costs can vary
places with high peak-winter heating requirements, much widely depending on the distance and the cost of
feedgas. However, with regasification costs a relatively
as the Distrigas facility has operated in Everett.
small portion of the overall cost to market LNG, investPermitting
ment decisions are not necessarily dependent on, or
LNG terminals are large industrial facilities, requiring deep- even based on, the construction of regasification termiwater accessibility and, to limit costs, an established har- nals. It is possible to conceive of multiple LNG regasificabour facility. Typically, project sponsors seek out tracts of tion terminal projects moving forward without firm comland of 100 acres or more, although the facility itself occu- mitments in place for supplies.
pies about 40 acres.
However, supply chain integration has been a significant
Siting a facility requires detailed studies on marine con- characteristic of the LNG industry because of the difficulty
gestion and other logistical issues, as well as evaluating and risk in co-ordinating upstream supplies, including
construction costs relative to the condition of the land tract shipping. Additionally, financing is often contingent on
or depth of the water passage. It is also important to gain long-term agreements throughout the value chain.
the acceptance of local groups for the proposal to avoid Terminal owners also need to know whether, and where,
lengthy permitting delays, or even rejection by government long-term supplies are available. As a result, many indusreviewers. One project proposed for Mare Island, California, try observers say the projects backed by sponsors with
the former site of a naval shipyard complex near San good credit and ownership throughout the LNG supply
Francisco, has been withdrawn because of local opposition chain have an advantage.
just six months after being tabled by its sponsors, Shell and
Bechtel. One local group involved in that battle has a web- Btu content
site and is providing consultation to other local communi- Much attention has focused on the relatively high Btu content of LNG from various countries (Libya has the highest,
ties opposing proposed LNG terminals.
Locating new terminals in the GoM, with its existing at about 1,162/cf). Natural gas with such a high heat conindustrial base and less resistance by the local popula- tent is incompatible with many appliances and exceeds the
tion, is expected to reduce the length of time and difficulty US interstate-pipeline standard of 1,035 Btu/cf with a
in obtaining regulatory approval. However, even in the range of plus or minus 50 Btu.
Although the heat content of LNG became a short-term
GoM, substantial opposition can occur. The day after
receiving port-authority backing to build a terminal in concern, limiting LNG supplies during 2003, the industry is
Mobile, Alabama, community groups filed lawsuits for moving fast to address the issue. There are several soluallegedly circumventing the port-approval process. And tions, more than one of which has been implemented. At
Freeport LNG, which has received preliminary environmen- Everett, Distrigas uses in-tank blending of pipeline gas with
tal approval for its facility, was subjected to a last-minute LNG to meet standards, while at Lake Charles, Southern
filing of opposition to the project at Ferc by the Audubon Union mixes high heat-content natural gas in with gas
Society, which was disturbed by the proximity of the facil- being transported in pipelines. El Paso is equipping its
facility with air-injection devices to dilute Btu content at
ity to a nearby bird sanctuary.
In the northeast, local opposition has formed around the the Elba Island facility. Lastly, Dominion is spending $28m
proposed Weavers Cove project, outside Boston, to equip Cove Point with a nitrogen-separation plant, also
Massachusetts, where the mayor of Fall River has to dilute LNG heat content. In the long-term, concerns
demanded new studies on the safety of LNG as part of his over Btu content will fade.
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6.1
91
Importers: US
Philip Weems
6.2
Lisa Tonery
Kevin Keenan
The Lake
Charles
terminal,
Louisiana
Photo: CMS
Panhandle
92
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Land-based terminals
In December 2002, Ferc adopted a new policy governing
onshore import terminals. This new policy grants operators
the right to charge market-based rates, eliminates the
requirement to hold an open season (the process by which
potential users of a facility submit bids indicating the terms
under which they agree to take service) for terminal capacity and limits the open-access requirement to the downstream pipeline component of a receiving terminal. Under
the prior policy, in force for more than two decades, open
access and rate regulation was applicable from the discharge of LNG at the tankers rail.
To ensure and facilitate the required open access, an
open season had to be conducted with respect to the terminals entire capacity. In effect, greenfield terminal developers had the worst of both worlds: Fercs open-season
requirements denied the developer the sole use of a terminals capacity to import its own cargoes, while the cost-ofservice limits restricted return on the developers investments to 10-12% a year (in many cases resulting in new
terminals falling below management investment hurdle
rates). Under the new policy, open-access requirements and
rate regulation only begin to apply at the point where the
vaporised LNG is delivered to the interstate pipeline grid.
During 2002, Ferc indicated it shared the growing view
that imported gas will be needed to meet growing US
demand, especially demand from new power generation
capacity. Ferc took the opportunity to articulate its change
in policy through a preliminary determination (the Order),
conditionally authorising Hackberry LNG Terminal, then a
subsidiary of Dynegy, to site, construct and operate an
import terminal in Hackberry, Louisiana, and to build an
associated pipeline to connect to the interstate grid. In the
Order, Ferc approved Hackberrys proposal to site, construct and operate an LNG import terminal, and granted
Hackberry authority to provide terminalling service to an
affiliate, Dynegy Marketing & Trade, at rates, terms and
conditions agreed to by Hackberry and Dynegy Marketing.
The Order also approved Hackberrys proposal to construct
and operate a 35.4-mile pipeline connecting the terminal to
Transcontinental Gas Pipe Lines interstate system. In the
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Importers: US
Order, Ferc indicated that the Hackberry terminal (but not facilities to be used for the sale or transportation of gas in
the downstream pipeline) would be treated as equivalent to interstate commerce, there is no right of eminent domain
a producing well and, accordingly, would not be subject to available to applicants under Section 3 (which governs
tariff and rate regulation. Ferc noted that the economic risks facilities used for the import and export of gas).
of the project would be borne fully by Hackberry, as there are
And there is still a certain amount of public resistance to
no captive customers that could be forced to bear any costs land-based LNG terminals in populated areas, because of
or, for that matter, risk of cost recovery.
safety and security concerns, as well as a general not-inFerc indicated in the Order that its change in policy was my-backyard sentiment which business units of Shell and
the result of several factors. First, sales of imported LNG El Paso recently found insurmountable in connection with
were deregulated under the Energy Policy Act of 1992 and plans for onshore facilities at Mare Island, California, and
the sale of this gas will occur in competition with the sale Radio Island, North Carolina, respectively.
of gas produced in the US Gulf coast region. Additionally,
all economic risk associated with the project will be recov- Offshore terminals
Offshore oil terminals have been in existence world-wide for
ered solely through the sale of gas at competitive prices.
Ferc indicated that this new regulatory approach may pro- many years (although only one exists in the US). However,
vide incentives for the development of additional energy while offshore LNG terminals have been in the planning
stages since the early 1990s, no facilinfrastructure, while ensuring competiity has been put into operation. Recent
tive commodity prices. It also noted
The industry has reacted
legislation passed by Congress, perthat its change in policy was supported
favourably to the new policy haps partly in response to safety and
by comments at a public conference in
October 2002 that discussed signifi- several applications for onshore security concerns at congested US
ports, has opened the way for the US
cant issues facing the US gas industry.
terminals have been filed
to serve as a testing ground for offDuring that proceeding, representatives
shore LNG terminal technology.
of the LNG industry (including business
Jurisdiction over LNG terminals constructed offshore in
units of Shell and BP) argued that the open-access and
open-season requirements deter investment in new facili- federal waters was recently transferred from Ferc to the DOT
ties. They indicated that investors need certainty of access under the Maritime Act. The Maritime Act, which amended
to terminal capacity and that foreign governments are reluc- the Deepwater Port Act of 1974 (as so amended, the Act)
tant to approve export projects to US ports given the existing to include jurisdiction over gas facilities, exempts owners of
US regulatory climate. Ferc further noted in the Order that offshore LNG facilities from open-access or common-carrier
its change in policy would help to keep onshore terminals provisions, granting owners the right to reserve for themon competitive parity with offshore terminals, regulatory selves all the import and storage capacity at their facilities.
jurisdiction over which was recently transferred from Ferc to Although the transport secretary has delegated the processing of deep-water port applications to the US Coast Guard
the Department of Transportation (DOT).
(USCG) and the Maritime Administration (Marad), the Act
Degrees of regulation
requires that the secretary makes the final determination on
The policy change applies to all land-based LNG import ter- all deep-water port applications after consulting with other
minals whether in areas where there is robust gas compe- federal agencies and adjacent coastal states.
tition, such as the US Gulf coast, or where there is limited
competition, such as New England. Despite the relaxed reg- The governors approval
ulatory hurdles resulting from the Order, Ferc has not with- In issuing notice of a deep-water port application in the
drawn all intention of regulating onshore terminal opera- Federal Register (the journal in which US federal public
tions. In announcing this new policy, Ferc noted in the Order notices are published), the secretary will designate as an
that its decision to adopt a less intrusive degree of regula- adjacent coastal state any coastal state that would be
tion here does not affect our jurisdiction in this case and directly connected by pipeline to a deep-water port as prothat if it were to receive complaints of undue discrimination posed in an application, or would be within 15 miles of any
or other anti-competitive behaviour, it would consider proposed deep-water port. Additionally, other states may
apply for adjacent-coastal-state status. The secretary may
reasserting its jurisdiction over the Hackberry terminal.
The industry has reacted favourably to the new Ferc pol- not issue a licence for a deep-water port without the
icy, as several applications for new onshore terminals have approval of the governor of each adjacent coastal state.
Under the Act, a deep-water port is defined as any fixed
been filed with the Ferc since issuance of the new policy
and several more are in process. While Fercs change in or floating manmade structure other than a vessel, or any
policy can be expected to diminish some of the regulatory group of such structures, that are beyond state seaward
and economic barriers to development of land-based LNG boundaries and that are used or intended for use as a port
terminals, it does not address all existing impediments. For or terminal for the transportation, storage or further hanexample, the environmental permit and review process dling of oil or natural gas for transportation to any state.
remains a protracted part of the approval process for appli- The term deep-water port includes all components and
cants seeking authorisation to construct import facilities, equipment, including pipelines, pumping or compressor
stations, service platforms, buoys, mooring lines and similar
especially in areas perceived as environmentally sensitive.
There is also no statutorily prescribed timeframe within facilities that are proposed or approved for construction and
which Ferc must act on an application for authorisation to operation, to the extent they are seaward of the high-water
construct onshore import facilities. Additionally, the right of mark and do not include interconnecting facilities. Any
eminent domain (the right of governments to put private facilities landward of the high-water mark would not fall
property, following fair compensation, to uses deemed nec- within the definition of a deep-water port and would probaessary for the public good) will no longer be available for bly be subject either to the jurisdiction of Ferc or a state
onshore LNG terminals because such facilities will be regulatory commission.
The regulatory approval process for offshore facilities that
authorised solely under Section 3 of the NGA. Unlike
Section 7(c) of the NGA, which governs the construction of fall within the definition of a deep-water port promises to be
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Importers: US
more streamlined than the approval process for similar landbased facilities. By constructing facilities offshore, some of
the time-consuming permitting, environmental and other
issues associated with land-based terminals will be eliminated. And unlike the review process for land-based facilities, there is a prescribed timetable for action on applications filed under the Act. Specifically, barring stoppages for
civil suits and requests for large amounts of additional information, the entire approval process should take no more
than a year from application to final approval or denial.
Towards this end, the Act establishes a period of 21 days
following receipt of an application for USCG and Marad to
determine if the application contains all required information. Within five days of making the above determination,
assuming the application is sufficient, USCG and Marad
must publish a notice of the application in the Federal
Register. All public hearings associated with the application
must be held within 240 days from the date a notice is
published in the Federal Register. Following the last public
hearing, federal agencies and the governors of the adjacent
coastal states have 45 days to comment on the application
so that the transport secretarys decision can follow within
90 days of the last public hearing.
Potential challenges
While it sounds promising, there are potential challenges facing the implementation of the Act and its regulations.
Construction of facilities offshore does not eliminate all environmental issues or the need for an applicant to apply for
and receive the appropriate environmental permits and clearances. Moreover, although there is an established timeframe
that requires the expeditious processing of deep-water port
applications, there is not a well-established infrastructure to
carry out this mandate, because no offshore receiving terminal has been built in the US for over 25 years.
The US only licensed deep-water terminal is the
Louisiana Offshore Oil Port (Loop), in the Gulf of Mexico
(GoM), 18 miles south of Grand Isle, Louisiana. In 1977,
when Loop received its deep-water port licence, the USCG
staff charged with processing deep-water port applications
consisted of about 25 people. At that time, the USCG had
the expertise and systems in place to process a deep-water
6.2
Applications accepted
In November 2002, Port Pelican, an affiliate of
ChevronTexaco, filed an application to own, construct and
operate a deep-water port off the coast of Louisiana. The
project will deliver gas to the Gulf Coast using existing gassupply and -gathering systems in the GoM and southern
Louisiana. Gas will be delivered to shippers using existing
pipeline facilities. The project consists of an LNG receiving,
storage and regasification facility, and the Pelican interconnector pipeline to carry the gas to the existing offshore gasgathering system, which, subsequently, will take the gas to
shore. In November 2003, the transport secretary published
his decision to issue a deep-water port licence.
In December 2002, El Paso Global LNG filed an application with the USCG to construct and operate an offshore gas
deep-water port in the GoM. Scheduled to be operational by
the end of 2004, the gas delivery system will be around
116 miles off the coast of Louisiana. El Paso plans to build
an offshore buoy and riser system that will interconnect with
two existing sub-sea pipelines to deliver gas to the main
pipeline grid. The proposed offshore terminal is intended to
be used with the deployment of on-board regasification vessels employing EP Energy BridgeTM technology. The decision
to issue a deep-water port licence was published in
December 2003.
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port application. However, having not received a deepwater port application for over two decades the USCG no
longer has the depth of in-house expertise to expeditiously
act on an application, let alone several applications.
Recognising this problem, the USCG is re-establishing
the necessary processes and procedures to review and
approve these applications, as well as establishing
synapses with other agencies to draw on their expertise in
the review of similar applications. On 6 January 2004, DOT
issued a temporary interim rule governing deep-water ports
and deep-water port applications, making clear strides
towards streamlining the application process.
Recent applications
Two applications for offshore LNG terminals have been
accepted by the USCG and a decision to issue a licence to
each under the Act has been reached (see Box). Similar to
authorisations for the construction and operation of
onshore terminals, each deep-water port licence, including
those issued to Port Pelican and El Paso Global LNG,
includes conditions with which an applicant must comply.
There are no procedures in place to appeal or modify these
conditions, but as these licensing procedures are still evolving, that is likely to change.
Notably, both the Port Pelican and El Paso projects have
opted to utilise existing sub-sea pipelines to deliver gas to
the pipeline grid. Neither applicant proposed to build a
pipeline from its proposed facility to a point onshore. By
interconnecting with existing offshore pipelines, which are
prevalent in the GoM, Port Pelican and El Paso each minimised its exposure to regulatory uncertainty and delay by
placing their projects squarely within the purview of the Act
and unquestionably outside the purview of onshore regulations, jurisdiction for which commences when a pipeline
makes landfall at the shoreline.
While the issue of regulatory oversight for a pipeline that
runs from an offshore receiving terminal to an onshore
pipeline interconnect has yet to be addressed under the
Act, it is logical to assume the construction and operation
of land-based segment of such a line would be subject
either to the jurisdiction of Ferc or a state regulatory commission, depending on whether the pipeline were to be
used to transport gas in interstate or intrastate commerce.
The more regulators involved in the approval process, the
greater the likelihood for delay.
After years of discussion by terminal developers on
greenfield terminal infrastructure, it seems the regulatory
conditions are set to encourage the expansion of LNG
imports into the US. The combination of high prices, growing demand, shrinking domestic production, and an
increasingly friendly regulatory environment will undoubtedly
result in the construction of new facilities and the expansion of existing import capacity.
Given the shorter regulatory review and approval process,
as well as general public concern over safety, it is likely a
significant number of developers will opt to site new projects in onshore areas near other energy infrastructure or
offshore (if possible, near existing sub-sea pipeline capacity). While land-based LNG facilities (especially those in the
GoM) are still expected to play a significant role in the US
LNG trade, the protracted environmental-approval process,
security and safety concerns, and the threat of delay
caused by landowner and community activist involvement,
suggest a significant part of future import capacity may be
filled offshore. It remains to be seen if the friendlier environment toward new terminal capacity will dampen the
enthusiasm for developers investing huge sums in Mexican,
Canadian and Bahamian LNG infrastructure.
Importers: Europe
NG IS THE hottest topic on the agendas of those who gas demand, with the UK slightly ahead of Germany. Both
supply and use energy, as well as the governments countries are being targeted by major new gas pipeline
that regulate them. Gas is the default fuel for those projects, as well as maintaining significant existing piped
seeking a significant position in the power sector. Electricity gas supplies.
generation is increasingly dependent on gas, particularly
The UK will be supplied by gas from Norways Ormen
given the environmental desire to reduce dependence on Lange field, into Easington on the northeast coast of
nuclear and oil-fired generation, and to phase out coal. All England, in 2008. At the same time, two large LNG prothe major international oil companies have stated their jects, at Isle of Grain and Milford Haven, in the southeast
intentions to make gas and power operations the corner- and southwest of England respectively, between them are
stone of their future strategy and earnings growth. expected to import up to 25% of the UKs future gas needs.
However, the worlds biggest gas users foresee a supply
For Germany, Russia intends to land gas near Bremen
shortfall within the next five years.
from a new subsea pipeline running
According to our estimates, the UK
under the Baltic Sea from St
People understand that
will need annual supply equivalent to
Petersburg by 2008. Like the UK,
development is essential,
the whole of Norways 375bn cubic
which already receives gas at St
metres (cm) Ormen Lange field from
Fergus and Bacton, Germany takes
but they are not ready to
2007 to satisfy even modest domestic
substantial piped supplies from
accept it at any cost
demand growth, as supply declines
Norway. France has LNG regasificafrom indigenous gasfields. The US will
tion terminals on both its Atlantic and
become just as import-dependent in a similar timeframe, Mediterranean coastlines, and surplus supply from Fluxys
also because of falling indigenous supply as well as the existing LNG facility at Zeebruggee may be utilised in
need for electricity generators to provide greater security of future at Dunkerque, in France.
supply. And Japan, which is a significant gas importer, will
The critical year will be 2008, when major new LNG and
see its dependence increase as the electricity sector is piped gas projects are scheduled for completion. Because
deregulated and seeks more-flexible energy sources.
a number of these projects are chasing the same markets,
However, most of the worlds gas trade is conducted whoever completes their project first will alter the economthrough pipelines linking supply points to demand centres, ics of all subsequent projects, even to the point of making
meaning gas has been bought and sold in a series of later competing projects potentially uneconomic.
regional markets, unlike oil, which has been globally traded
for a number of years. LNG could change pipelines domi- Improved market position
nance if the substantial planned investments, in particular LNGs position in the European gas market has improved
by the major international oil companies, are made and are significantly, compared with piped gas, in the last couple of
years. With the departure of trading-led US energy compasuccessful, bringing more flexibility to gas supplies.
nies, at least for the time being, the European Union (EU)
Supply competition
has turned its attention to security of supply issues rather
The planned investments mostly involve taking gas from than a liberalisation and deregulation agenda. EU-Russia
fields where those companies already have an equity inter- dialogue, among other initiatives, has demonstrated that
est, transporting gas using their own tankers and landing the regulators are prepared to be flexible to ensure the gas
gas in countries whose demand is greatest. However, at the infrastructure necessary to enhance security of supply is
point of delivery, supplies will face competition from incum- soundly financed and built. This means an acceptance that
bent, state-owned companies, which several years of liberali- long(er)-term contracts must underpin security of supply.
sation and deregulation have failed to affect significantly.
In the same way, flexibility has been shown by national
These national champions typically own and operate and EU regulators in conceding that third-party access
the pipeline infrastructure that carries gas to consumers, (TPA) rules may not need to apply for certain key points in
and they too have aspirations to control the whole of the the gas value chain. This derogation of TPA rules has given
gas value chain from wellhead to burner tip the only an important boost to LNG aspirations, as has the realisaway to gain optimum value from gas assets and trading. tion by international oil companies, unlike in previous years,
As a result, the incumbents, which already understand that a key element of their growth (and even survival) in
and control mid- and downstream operations, are invest- ever more competitive oil-only markets is massive investing heavily in the same upstream operations that are con- ment in gas and power strategies.
trolled by the major international oil companies. The
Most gas and power markets are effectively closed to
result will be a battle for control of the gas value chain, these international oil companies by the increasingly prowith LNG in the forefront.
tective outlook of national utilities (especially in Germany),
There will be no fiercer competition than in northwest as well as the failure of key countries to deregulate and libEurope, in particular in the UK, Germany, France and eralise in the way the EU intended. As a result, the only
Belgium. The UK and Germany are Europes biggest gas effective way to compete in European gas and power marmarkets, together accounting for over 50% of European kets is with supply. The decision of Shell and Esso to dis-
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Importers: Europe
6.3
price competition
As the international LNG trade expands beyond previous
expectations, competition has increased throughout the
LNG cycle. Costs of liquefaction, which account for over
half of all costs in the LNG train, have been cut significantly. Competition in markets has led to a sharpening of
price terms in all new sale-and-purchase agreements and
has precipitated a redefinition of organisational structure.
Exporters use their own LNG carriers to keep shipping costs
and profits in-house. Buyers of LNG are increasingly offered
participation in the upstream portion of the value chain.
All of these developments will help to move the delivered
cost of LNG into northwest Europe closer to the costs at
which indigenous producers have in the past been able to
deliver piped gas. But they will not move the location of the
battle itself the beach.
LNG GOLDMINE
The essential LNG industry data
Energy data
The LNG Goldmine CD-Rom contains the following key LNG data:
LNG Exporters: Country and Projects; Status; Start up; Share holder;
Operator; Present Capacity; Number of Trains; Process Method;
Gasfields; Storage; Export to; and Notes
LNG Importers: Country and Projects; Status; Start up; Promoter;
Operator; Receiving Source; Present Capacity; Storage; and Notes
LNG Contracts: Purchaser; Amount; Contract Years; Start; and Remarks
LNG Trade Movements: Exports From and Imports To
The CD-Rom also contains the following Petroleum Economist publication
LNG A Glossary of Terms
LNG Exporters
LNG Importers
LNG Contracts
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Importers: Spain
Pipeline advantages
Gas transported by pipeline offers the advantages of allowing connections with other European Union (EU) countries
to be increased and eliminates supply problems in winter
when weather conditions are particularly adverse. Pipeline
disadvantages include:
The scarcity of potential suppliers, which could lead to
the application of uncompetitive prices compared with
those set in other EU countries;
The time needed to execute interconnection projects,
with an added difficulty of co-ordinating long-term supply
contracts with building the necessary transmission pipelines
in a regulated environment, which allows access to the system to third parties that assume no investment risk; and
The impossibility of changing suppliers for a given system-entry point.
The sole disadvantage of LNG, is the risk of ports being
closed for a limited number of days because of adverse
weather conditions. In contrast, LNG offers the advantages
of flexibility of origin and volume, shorter periods for the
Antonio
GonzlezAdalid
6
3
0
1970
1975
1980
1985
1990
1995
2000
Source: Cedigaz
6.4
installation of needed entry capacity, lower costs and modulating possibilities with regard to necessary investments.
Above all, it provides the certainty that the price of the LNG
brought into the Spanish system will be competitive compared with gas prices in the systems of the main EU countries, which, in turn, constitutes the best guarantee that the
price of pipeline supplies will also be competitive.
The gas and electricity network plan approved by the
Spanish Congress in October 2002, which is indicative on
the issue of supply, opted for a pragmatic solution. It recommended a balance between both types of supply and introduced the criterion that neither piped gas nor LNG should
have a market share of less than one-third of the total.
Barcelona
1968
Enagas
Cartagena
1989
Enagas
Huelva
1988
Enagas
Bilbao
2003
Bahia de Bizkaia Gas
(BP 25%; Iberdrola 25%;
Repsol YPF 25%; Ente
Vasco de la
Energia 25%)
Enagas
Operator:
Enagas
Enagas
Source:
HOME
Mugardos
Sagunto
2006/7
2006/7
Reganosa (Unin
Unin Fenosa 50%;
Fenosa 20%; Endesa 20%; Endesa 25%;
Groupe Tojeiro 18%;
Iberdrola 25%
Xunta de Galicia, Caixa de
Galicia, Caixa Vigo, Banco
Pastor 17%; Sonatrach 15%)
Reganosa
Planta de Regasificacion
de Sagunito
Algeria
Egypt; Oman
4.50
300.00
2.75
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Spurring plans
Together, these changes have given a spur to plans for
multiple LNG projects. These projects have a substantially
more open-ended scope, as they hope to capitalise on the
new situation, where LNG from the Middle East can reach
the east coast of the US regularly and at competitive
prices. Furthermore, the first regasification plant projects
carried out at the promoters own risk before long-term
contracts have been signed to guarantee the economic viability of the investment are being considered.
Considering the expected development of the LNG spot
market, the Spanish gas system will benefit from two highly
relevant aspects:
The possibility of obtaining the best possible LNG
prices in Europe, as the main LNG market in the EU, both
in terms of unloaded LNG volumes, and having the high-
6.4
Infrastructure development
Spanish demand for natural gas will continue to grow over
the course of this decade at rates much higher than the EU
average. This growth will be particularly marked in the next
three years, when several combined-cycle electricity generation units will be put into operation.
Even taking into account the 3bn cm/y increase in the
amount of gas that Spain will receive through the MaghrebEurope pipeline from Algeria, beginning in 2005, Spain
must increase regasification capacity and contract additional LNG, if it is to meet the additional demand projected
for the near future.
Spanish legislation entrusts the regulator (the ministry of
economy) to define the compulsory regasification capacity
the gas system must have. However, it is left to the transporters to decide where to locate facilities and what their
capacities should be.
The country has four regasification plants, in the northeast (Barcelona), southeast (Cartagena) and southwest
(Huelva), owned by Enagas, and the BBG terminal, in the
north (Bilbao). Two other projects have been approved, one
in the east (Sagunto), with construction already under way,
and another in the northwest (Mugardos), which has suffered some delays.
Although the promoters of the Mugardos and Sagunto
plants initially claimed they would be operating by 2004,
and although they have communicated successive changes
in the starting dates, they have not yet obtained all the permits they will need to start up. It seems unlikely either
plant will be available to the system before 2007.
Regardless of the progress of projects promoted by other
companies, Enagas plans to increase the capacity of its
three plants to ensure that they, along with the Bilbao
plant, can provide the gas system with the LNG supply it
needs until at least 2007.
Enagas Barcelona
receiving terminal
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Importers: Belgium
LUXYS LNGs Zeebrugge terminal is a regulated, openaccess facility offering terminaling services that cover
unloading of LNG carriers, cycling storage, regasification and send-out through the Fluxys transmission grid. The
terminal has an excellent safety and environmental record
and over 850 LNG carriers have been unloaded since the
commissioning of the facility in 1987.
The key asset of the Zeebrugge terminal is its prime location, triggering opportunities for an investment strategy
aimed at further developing gas infrastructure. The terminal
sits at the heart of the Atlantic basins LNG market and the
nearby Zeebrugge Hub the largest gas hub in Continental
Europe, with over 50 trading parties and an estimated gross
traded volume of 15m cubic metres (cm) per hour.
Prime location
The terminal is also at the crossroads of two major axes in
cross-border European gas flows Zeebrugge is the landfall
of both Zeepipe (a subsea pipeline carrying Norwegian gas
into the Fluxys system) and the Interconnector (another
subsea pipeline moving gas either from the UK to the
Fluxys system in forward flow, or from the Fluxys system to
the UK in reverse flow). The terminal, Zeepipe and the
Interconnector together represent a maximum flow corresponding to about 15% of Continental western European
gas consumption. The total contracted border-to-border
transit capacity in the Fluxys system amounts to 48bn
cm/y, about three-times the volume of the gas being
shipped for consumption in Belgium.
Because the terminal is connected directly to the Fluxys
system, it offers LNG shippers a strategic gateway to the
Belgian market and to some of the largest gas markets in
Zeebrugge
1987
Fluxys LNG
Fluxys LNG
Abu Dhabi; Algeria; Australia; Nigeria; Oman; Qatar
4.0
261.0
Walter Peeraer
6.5
Storage
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Importers: Belgium
a project to build a fourth storage tank and additional sendout capacity. Also included in the project are technical solutions for blending gas, enabling LNG shippers to meet the
problem of multiple gas-quality standards applicable in
Europe. A board decision on whether or not to invest will be
taken in early 2004.
Both the increased number of LNG shippers and the additional volumes made available at Zeebrugge would further
increase liquidity at the Zeebrugge Hub. This increase would,
in turn, strengthen gas-to-gas competition and have a positive impact on price setting. The multi-shipper and multi-supply source concept would also increase security of supply.
The legal and regulatory framework in Belgium provides
that TSOs must submit new tariffs for approval to the regulator every year. This system bears the risk of tariff volatility
and endangers any negotiation with new long-term LNG
1987
1989
1991
1993
1995
1997
1999
2001
2003
Source: Cedigaz
Infrastructure projects
Several gas companies are discussing infrastructure projects, both pipeline and LNG, to make sufficient transport
capacity available for supplying northwest Europe as a
whole and the UK in particular. In view of this competitive
environment, timing is critical for the Zeebrugge extension
project. All preparatory work on engineering and permits is
being conducted to enable construction to take off swiftly
once a positive investment decision is made. The additional send-out capacity could be made available as early
as 2006 and the fourth LNG storage tank could be commissioned during 2007. This tight schedule is possible
because the original lay-out of the terminal was designed
with extension in mind. Projects to further boost terminaling capacity would require more extensive study and a different time-lag.
6.5
Artists
impression of
the Fluxys
LNG terminal
expansion
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Importers: UK
NGTs role
NGT was formed in 2002 as a result of the merger of
National Grid Group and Lattice Group. The merger formed
an international energy-delivery business, with principal
activities in the regulated electricity and gas industries in
the UK and US. In the UK, it owns and operates the natural
gas transmission and distribution system through its
Transco subsidiary. NGT also owns and operates the highvoltage electricity transmission network in England and
Wales, and the largest electricity transmission and distribution network in the New England/New York region of the
US. The Isle of Grain is owned and operated by Grain LNG,
a wholly owned subsidiary of NGT.
The Isle of Grain peak-shave LNG plant was commissioned in 1981 and has 200,000 cubic metres (cm) of
storage space in four double containment LNG storage
tanks. The send-out capacity is comparable in scale with
many of the worlds import terminals, with a peak send-out
rate of 22m cm/d. The tanks are filled with LNG from two
small liquefaction plants, an open-loop expander plant,
which makes use of the high demand requirements for lowpressure gas in southeast England and a closed-loop nitrogen-expander plant, which gives the site the ability to produce LNG at any time of the year.
The installation has a typical peak-shave configuration of
slow fill-times and high send-out rates, taking 270 days to
fill and only five days to empty the LNG storage.
The site has been in continuous operation since it came
into service in 1981, providing LNG storage services both to
Transco, as the system operator, and to gas suppliers in
the UK. Because of the strategic location of the LNG site,
even after imports commence, the Isle of Grain facility will
still play an important role in the safety and integrity of the
UK pipeline systems. During the conversion, the site is
Project
Start-up
Promoter/Operator
Milford Haven
2007
ExxonMobil,
Qatar Petroleum
Isle of Grain
2005
Sonatrach, BP
NGT
Qatar
15.00*
-
Algeria + others
3.30
200
Mark Johnson
6.6
Ian Belmore
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Importers: UK
The second stage commenced in early 2003, with an the existing equipment installed on the site for future baseindustry-wide call for expressions of interest in capacity at load operation. The suitability of the marine approach for
the Isle of Grain terminal. A proposals document was sent to LNG carriers and the attitudes of the local regulators and
over 25 companies. From this process, companies were residents were also considered - particularly the safety and
asked for indicative proposals for the securing of the capacity environmental aspects of the terminal which is located
and for comments on the GTCs for the sale and operation of adjacent to a nature reserve. This report highlighted no irrethe capacity. These comments were taken into account and solvable issues and resulted in the project moving to cona revised set of GTCs were issued to the shortlisted compa- ceptual design and initiation of the commercial processes.
nies, which proceeded to stage three. This was for the proviDesign of the import terminal
sion of indicative bids for the capacity at the Isle of Grain.
The final stage commenced in July 2003 and involved the The design concept involves connecting the existing LNG
provision of firm, legally binding bids for the terminal capac- storage facility to a new jetty through an above-ground
unloading line, converting the existing
ity. Four companies were invited to
tanks from peak-shave duty to being
enter the final round of the process,
The philosophy for the design able to accept LNG from ships at far
which included detailed negotiations.
is to re-use existing site plant higher flow rates, installing new and
This structured process had a nummore efficient LNG vaporisation equipber of advantages over the more tradiand equipment, to minimise
ment and larger boil-off gas comprestional negotiated route. First, it
project costs and lead time
sion to dispose of the flash gas accomensured all interested parties had an
panying the ship offloading.
equal chance of securing the terminal
The philosophy for the design is, where possible, to recapacity. Second, key principles, which underpinned the
GTCs, were set and these were enhanced and improved fol- use the existing site plant and equipment, in order to minlowing comments received from the industry. Third, a firm imise project costs and lead time, while ensuring a design
and fixed timeline was followed, which enabled all partici- life for the new terminal of 25 years. A major challenge for
pants to plan their response and ensure internal sign-off the project was therefore the modification and revalidation
before submission. Upon completion, Grain LNG was able of the existing storage tanks for use in importation duty.
to demonstrate that it had the best offer available from the
market for the service and that the process had been an Modification of storage tanks
Four 50,000 cm, double-walled LNG storage tanks are
open and competitive one.
installed. These peak-shave storage tanks are designed to be
The technical process
filled at 900 cm of LNG a day. This fill-rate is increased to
The technical challenges of the conversion relied on obtain- 12,000 cm an hour on conversion to importation duty to
ing answers to fundamental questions as to the practicabil- ensure that a 138,000 cm ship can be offloaded in 12
ity of the conversion at a very early stage much earlier hours. This step-change in fill-rates requires that significant
than these issues would normally be addressed. For exam- adjustments are made to the connections to the tank, as well
ple, was it feasible to re-engineer the LNG tanks within the as to the instrumentation and safety systems. Furthermore,
project timeline? This was critical to the success of the pro- the modifications to the tanks, two of which were commisject. To answer these questions a pre-feasibility study was sioned in 1979 and the other two in 1981, are to present
undertaken, where past studies on the Isle of Grain and standards, which has had a significant impact on the design.
new fundamental issues were examined. This study looked
Initially, it was hoped the tanks could be modified in serat the length of the unloading line (some 3.5 km), the rapid vice and the option of re-using existing nozzles on the tank
de-commissioning and re-commissioning of the LNG tanks, for the faster fill-rates was extensively analysed during conthe capital cost of the modifications and the suitability of ceptual design. It was envisaged that three of the emer-
6.6
Aerial view of
the Isle of
Grain site
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102
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Importers: UK
gency relief valve nozzles could be used for fast filling, while
upgrading the remaining nozzles to ensure adequate relief
capacity. Ultimately, this method of tank conversion was
deemed unacceptable because of inadequate heat breaks
on the nozzle penetration and the potential of in-service
failure because of vibration harmonics.
In view of this, and also to allow revalidation inspections
to extend the design life of the tanks for a further 25 years,
it was apparent that the tanks would have to be fully
decommissioned and warmed up. This was well within the
initial design parameters of the LNG tanks, with an
allowance of six warm/cold cycles.
In addition, as the Isle of Grain was to continue to perform its role as a peak-shaving plant while the modifications were made in order to maintain security of transmission supplies, only two tanks could be decommissioned at
any time. Furthermore, hydro-testing of the tanks after the
modification needed to be avoided because of the complexity and cost involved. Therefore, no modifications to the
tank internals, which would affect the integrity of the primary containment vessel, were to be undertaken that
would necessitate a further hydro-test of the facilities.
Scope of works
The decommissioning of each tank would follow the following basic steps: pump out, warm up, purge to nitrogen,
purge to air, isolation, initial tank entry, tank inspection and
construction, de-isolation, drying and purge to nitrogen,
purge to gas, cool-down and refill.
The modifications to the tanks are the provision of new
24-inch fill and boil-off gas lines (compared with the 3-inch
fill and 12-inch boil-off lines presently fitted), an increase in
the amount of available process pressure relief (to handle
the fill case), the provision of three independent level measurement systems, an independent high-level trip system
for overfill protection at the new fill rates, and additional fire
and gas protection on the tank roof around the in-tank
pumps and relief valves. The tank volumes were also to be
recalibrated following the modifications.
To meet the timescales of the project, a number of
methods of reducing the time-frame for tank modifications
were examined. Two areas of efficiency were examined in
detail, namely reducing the warm-up times of the tank by
supplying additional heat input and reducing the boil-off
times by insertion of a temporary pump to reduce the level
of LNG, following pump-out to a minimum (heel removal).
It was estimated that the heel of the tank would take up
to six months to evaporate, jeopardising the project completion date of January 2005. A method for insertion of a
temporary pump, pump down of the heel and removal of
the pump was developed and utilised.
For the purposes of revalidation of the tanks to demonstrate that no part of the tank had warmed up at greater
than 4C per hour, it was decided that the tank would be
allowed to warm up naturally.
Project progress
Decommissioning of the first tank was initiated in
December 2002, with the tank level reduced to 380
milimetres (mm) by the in-tanks pumps. The temporary
pump was inserted into the tank in January 2003, with the
level reduced to below 35 mm. It was envisaged that the
removal of the heel saved one month per 100 mm of heel
removed, saving three and half months from the programme for each tank. This procedure was completed
within two weeks, with no technical or health and safety
problems, by a joint team from Grain LNG, Skanska
Whessoe and Carters Cryogenic Services. This has subse-
BACK
0
-50
-100
-150
-200
11:00
05/12/03
TI point 1
TI point 3
TI point 6
TI point 9
01:00
06/12/03
01:00
07/12/03
19:00
07/12/03
The future
The conversion of the Isle of Grain will enable the terminal
to accept 3.3m tonnes a year (t/y) of LNG. This does not,
however, meet the expected market demand for LNG or
utilise the installed assets to their optimum capacity.
Therefore, a further expansion is being planned for the terminal with a second open season approach to the market
to commence in early 2004.
Permit applications for up to an additional 570,000 cm
of storage capacity held in three large total containment
tanks, additional vaporisation and associated plant have
been submitted. These applications are being evaluated
and permits are expected to be granted in early 2004. This
expansion would increase the capacity of the terminal to
10.5m t/y and could be operational for the winter of 2007.
The conversion and reuse of the existing peak-shave LNG
storage tanks at the Isle of Grain will allow the base-load
terminal project to be developed within two years from
award of contract and four years from project conception.
The commercial process has secured a 20-year capacity
contract from a BP/Sonatrach joint venture, while providing
a demonstrably open and competitive process.
The expansion proposals for the Isle of Grain will ensure
NGT and the Isle of Grain will be at the forefront of the
development of the UK LNG market, ready to expand to
meet the requirements of the UK gas market and help
meet the shortfall in supply.
The construction of the site is well under way, with full
commercial operation on schedule for first-quarter 2005.
This fast-track process with pre-investment by NGT has
ensured the Isle of Grain will allow the first large scale LNG
imports to return to the UK after a 20 year absence.
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103
6.6
Importers: France
Pierre Clavel
6.7
Supply contracts
France was one of the first purchasers of Algerian LNG
the signature of the first contract with Sonatrach, still in
force, dates back to 1965, and accounts for about 10bn
cm/y of supply. The countrys other long-term contract
supplier is Nigeria LNG, which began deliveries in 1999.
At that time, Frances position at the centre of major continental natural gas importing roads allowed GdF to enter
swap arrangements involving LNG for pipeline natural gas,
in particular a long-term swap agreement signed with
Italys Enel.
More recently, GdF has entered a long-term agreement
to purchase and lift the entire production of the first train of
the Idku plant, in Egypt, in which the company owns a 5%
stake. First commercial deliveries are expected by the end
of 2005. GdF also holds a 12% stake in Norways Snhvit
LNG project and has elected to lift its equity share of the
LNG, 0.7bn cm/y, from 2006.
In 2000, GdF concluded a joint-venture deal with
Sonatrach (Med LNG and Gas) to market LNG to various
markets, including Asia and the US. Depending on opportunities and shipping availability, GdF, either alone or through
Med LNG and Gas, regularly enters short-term deals, buying
spot quantities from producers such as Sonatrach, Adgas,
Oman LNG, Qatargas or Nigeria LNG, either for its European
market or for delivery elsewhere.
HOME
Owner
Messigaz *
Messigaz *
Methane Transport
Sonatrach
Snam - LNG Shipping
MISC
Fos-sur-Mer
(Tonkin)
1972
GdF
1.90
150.0
Montoirde-Bretagne
1982
GdF
4.20
360.0
Fos-sur-Mer
(Cavaou)
2007
GdF, Total
5.80
330.0
LNG shipping
GdF charters six LNG carriers (see Table 1). Two further
vessels are on order from Chantiers de lAtlantique for
delivery in October 2004 and October 2005. The GdF
energY, with a capacity of 74,000 cm and 220 metres in
length, is designed to the maximum size of vessel that
can load at Algerias Skikda plant and enter the existing
Fos Tonkin terminal and the Italian terminal of
Panigaglia. The design of the new ship is innovative. The
LNG containment units will implement a highly efficient
membrane design and a diesel-electric propulsion unit,
which is characterised by a greater efficiency than traditional steam units, saving space in the vessel while minimising environmental impacts.
The second new tanker will implement the same innovations in the design as the GdF energY, but will have a
capacity of 153,000 cm the largest LNG carrier ordered
so far. She will be delivered in October 2005.
Importers: Portugal
OR MORE than 40 years, the LNG industry has been Sines terminal had to maximise plant automation, as well
developed on long-term, take-or-pay sales contracts, as being constructed on a modular basis that would enable
dedicated to certain markets and backed up by sover- the business to expand with marginal investments and
eign deals. Recently, LNG shipping investments have trans- minimum business disruption.
formed a market that was short of transportation flexibility
Consequently, in July 2002, the terminals sponsor was
and rising US gas prices, spurred by declining domestic able to double its transmission capacity to the grid, at
production, have initiated a revolution in commercial trends marginal capital expenditure, and with only a one month
in the LNG market, particularly in the Atlantic basin.
extension of the engineering, procurement and construcSimultaneously, on the east of the
tion contract duration. The first LNG
Atlantic, important market changes
cargo arrived in 2003, adding a sevThe Sines LNG terminal has
have been introduced as a result of libenth supply gateway to the Iberian
eralisation of European Union (EU) started commercial operations gas market.
energy markets, as well as fast-grow- in a very different environment
Traditional terminal activities
ing gas demand supported by the
to that five years ago
Traditionally, LNG terminals were
development of environmentally
defined as infrastructure that transfriendly combined-cycle gas turbines,
form delivered LNG into a continuous natural gas export
such as has been seen in Spain.
Developed to diversify the sources of natural gas supply stream. In markets with alternative gas production or
into Portugal, the Sines LNG terminal has started its com- pipeline imports, LNG terminals would act as the system
mercial operations in a totally different environment to baseload and minimise the costs resulting from adverse
that five years ago, when the go ahead decision was gas demand fluctuations. Storage capacity was designed to
taken by the Portuguese government. However, the con- provide a buffer between periodic ship discharges and
struction philosophy undertaken by its promoters has would correlate the size of the vessels cargo and the freenabled the development of an infrastructure not only quency of their arrival into port. In markets isolated from
able to cope with todays gas market characteristics, but gas production or pipeline imports, LNG terminals would
also able to act as a strategic, asset-supporting, flexible have extra storage capacity, guaranteeing both a strategic
and a peak-shaving stock.
market-oriented gas player.
The scope of traditional LNG terminals was limited to
Construction philosophy
unloading tankers, operational LNG storage and regasificaIn 1998, the EU Gas Directive set the basis for the liberali- tion under a predictable, scheduled business that would be
sation of the European gas market by directing the enough to satisfy vertically integrated incumbent gas playunbundling of vertically integrated gas businesses, the ers operating in a monopoly gas market. These services
granting of third-party access (TPA) to gas infrastructures at have been the focus of a regulated TPA regime by the
transparent tariffs and the creation of national regulators.
1998 and more recent 2003 EU gas directives.
It was natural that, after government authorisation later
that year, the Sines LNG terminals sponsor, Gas de Contributors to LNG chain flexibility
Portugal (later on merged into the Portuguese oil and gas In other markets, such as the UK and the US, characterised
player Galpenergia) decided to develop the project as a by the liberalisation of gas production and market liquidity,
tolling unit, completely unbundled from the remaining gas LNG terminals were closed during the period of low-cost
chain. (This was the worlds first LNG terminal to be project domestic production. However, they are resuming operafinanced as a tolling unit.) In such a context, the Sines LNG
terminal had to prove, from the start, its economic and reliability merits when compared with the existing gas-import
source the Maghreb-Europe gas pipeline.
The special purpose company formed in 1999 was
asked to design an LNG terminal that would minimise
costs and optimise the balance between capital expenditure and operating costs, while safeguarding the paramount factors of safety and integrity. To achieve this, the
Anibal Fernandes
6.8
Miguel Martn
2003
Galp Atlntico
Galp Atlntico
Nigeria
4.00
240.0
Aerial view of
the Sines LNG
terminal
Galp
Atlntico
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105
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Importers: Portugal
Tanker
unloading
Galp
Atlntico
6.8
Sines LNG
terminal,
process area
Galp
Atlntico
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HOME
Importers: Japan
Kazuya Fujime
30
20
10
0
1970
1975
1980
1985
1990
1995
2000
Source: Cedigaz
6.9
LNG prices in the Asia-Pacific market are by no means stable, as they are indexed to crude prices. Price formulae
have been established to prevent excessive swings in the
price of LNG in response to fluctuations in oil prices.
Japan imports about 80% of its LNG from the Asia-Pacific
region, with the remainder coming from the Middle East.
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Importers: Japan
benefits, LNG-fired thermal power is competitive, even economically, not only with oil-fired, but also with coal-fired
thermal power. In addition, when the cost of reprocessing
spent fuel, disposing of radioactive waste and other requisites are included, the cost of nuclear power is substantially
higher. As such, in a liberalised market, nuclear power is
reportedly less competitive than LNG-fired thermal power,
also because of its substantial initial investment.
50
City gas
Power
40
30
20
10
LNG demand for city gas exhibits a firmer trend than that for
electricity generation and the share of LNG consumption
occupied by city-gas feedstock is forecast to rise above 30%
in the near future. The LNG share of city-gas feedstock rose
from 15.1% in 1970 to 51.1% in 1980, 75.8% in 1990,
87.2% in 2000 and 88.6% in 2001. Consequently, it is
approaching its upper limit. Riding on the wave of market liberalisation, city-gas firms have begun building LNG-fuelled
power plants, expanding their electricity sales, confirming
LNGs superiority in competition in a liberalised power market.
1970
1975
1980
1985
1990
1995
2000
2005
6.9
Supply/demand outlook
The Advisory Committee on Natural Resources and Energy
an advisory department to the minister of economy, trade
and industry is preparing a long-term energy
supply/demand outlook extending to fiscal 2030 (with revisions of figures in the preceding outlook for 2010), to be
released in June 2004. Because of constraints on carbon
dioxide emissions, some observers claim energy consumption as a whole, and of electricity and city gas, may level
off, or even go into decline, in the long term.
Nevertheless, the government is targeting economic
growth of 2% a year and energy consumption, including
electricity and city gas, will probably continue to rise in the
long term, provided the economy does not record negative
rates of growth. As a result, LNG imports are forecast to
rise by around 60%, from 54.5m tonnes in 2000 to over
87m tonnes in 2030.
Start-up
1983
Chita (Kyodo)
Chita-Midorihama
Fukuoka
Futtsu
1977
2001
1993
1985
Hatsukaichi
Higashi-Niigata
Higashi-Ohgishima
1995
1984
1984
Himeji
Himeji II
Kagoshima
Kawagoe
Negishi
Ohgishima
Senboku I
Senboku II
Shin-Minato
Shin-Oita
Sodegaura
1979
1984
1996
1997
1969
1998
1972
1977
1997
1990
1973
Sodeshi/Shimizu
1996
Tobata
1977
Yanai
1990
Yokkaichi (LNG Centre) 1987
Yokkaichi (Works)
1991
BACK
108
Promoter
Chita LNG (Toho Gas; Chubu
Electric Power)
Toho Gas; Chubu Electric Power
Toho Gas; Chubu Electric Power
Saibu Gas
Tokyo Electric Power
Operator
Chita LNG
Toho Gas
Toho Gas
Saibu Gas
Tokyo Electric Power
Capacity Storage
Source
(million t/y) ('000 cm)
Australia; Indonesia; Malaysia; Qatar
5.40
780.0
HOME
1.75
4.20
0.50
6.00
300.0
200.0
70.0
1,110.0
0.37
6.30
5.00
170.0
540.0
540.0
4.41
3.70
0.13
5.43
3.50
2.20
0.77
5.83
0.26
5.00
7.50
1,080.0
740.0
36.0
480.0
1,180.0
600.00
180.0
1,585.0
80.0
460.0
2,660.0
0.96
177.0
5.95
480.0
2.40
7.00
0.70
480.0
320.0
160.0
Importers: Taiwan
A second terminal
Yung-An remains the only import facility on the island,
although construction of a second terminal by Tung Ting
Gas, with a capacity of 3m t/y in the north of the island,
should start this year and is due for completion and to
begin commercial operations in 2008.
The major facilities at the Yung-An terminal include six
underground LNG storage tanks, 24 second-stage pumps
Yung-An
1990
CPC
CPC
Indonesia; Malaysia
7.87
690
1990
Source: Cedigaz
1994
1998
2002
HOME
109
JC Liou
6.10
Importers: India
Ashutosh
Shastri
6.11
million cm/d
Power
Fertiliser
Other
industrial
Local
distribution
Shrinkage
0
10
15
20
25 0
20
40
60
80 100
55% of the demand by 2008. Consequently, both international and domestic pipeline developments are critical.
To analyse the viability of LNG projects in India requires
close monitoring of: evolving inter-fuel competition in the
consuming sectors; evolving regulation in the gas and power
sectors; and tracking of gas and power infrastructure development activity. The policy and regulatory level changes in
the Indian power sector have been tremendous and hold the
key to understanding the evolving economics of Indian LNG.
Market trends
The share of natural gas in electricity generation in India, at
8% (see Figure 2), is significantly lower than in Europe
(25%). Of the 41 gigawatts (GW) of new generating capacity expected to come on line by 2005 about 20-22 GW is
likely to be combined-cycle gas turbine (CCGT) a considerable proportion is either under construction or close to
financial closure (see Figure 3).
In the longer term (2005-2010), however, the contribution from independent power producers (IPPs) is likely to be
overshadowed by state and central sector plans. Most of
the central sector plans are for non-gas-fired capacity, particularly ministry of power plans to install 50 GW of hydro-
Capacity
5.0-10.0
5.0
2.5
2.5-5.0
3.0
2.5
5.0
2.5
2.5
Promoters
Petronet LNG and GdF
BG Group
Reliance Industries
Shell and Essar Group
Total, Tata Group, Gail
Proposed by Petronet
Enron, Bechtel, GE and MSEB
Petronet LNG and GdF
Unocal, Woodside, IOC,
Siemens, CMS
2.5 BP, IOC, Petronas
5.0 Al-Manhal Group, Industrial
Promotion and Investment
7.0 Fertiliser Industry Co-operative
Gas sourcing
RasGas
Yemen LNG- MoU
NIOC-Iran/South Pars
Oman LNG
Yemen LNG, Oman LNG, Adgas
Not pursued
Oman LNG, Adgas, Petronas
RasGas
RasGas, Woodside, Pertamina
Comments
Operational
Suspended
Under development
Under construction
Suspended
Cancelled
Construction suspended
Under development
Under development
Under development
Speculative
Speculative
110
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Importers: India
15
13.5
10
8.5
5
0
Plants under
construction
Plants with
construction permits
Expected new
capacity
Creative strategies
ashastri@candesic.com
6.11
Liquid fuels
3%
Nuclear
8%
Natural gas
24%
Hydro-electric
64%
Coal
Construction of the
Dahej terminal
Photo: Petronet LNG
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111
Larger is greener
LNG train size will increase to 8m t/y with the introduction of the AP-XTM Hybrid LNG Process,
bringing the opportunity to realise economic and environmental benefits. By Robert P
Saunderson, Joseph M Petrowski and James C Bronfenbrenner, Air Products and Chemicals
Robert
Saunderson
7.1
Joseph
Petrowski
James
Bronfenbrenner
Air Products MCR processes are the most widely used liquefaction cycles in the baseload LNG industry. The C3-MR
version of the MCR process was first used in the early
1970s and has remained the liquefaction process cycle of
choice, as train capacity more than tripled over the past 30
years. A comparison of net LNG output to fuel gas consumed shows a 13% advantage in overall plant-fuel efficiency for the C3-MR cycle compared with the second most
commonly used cycle (see Table 1). Another strength of
MCR processes is flexibility they can maintain high efficiency through feed composition changes and daily/seasonal temperature variations.
Over the past 30 years, power-generation turbines and
refrigerant compressors have evolved to provide better efficiency at a lower unit cost $ per kilowatt (kW). The time
between scheduled maintenance outages has also
increased substantially, yielding a higher on-stream factor.
Early C3-MR-cycle LNG trains used steam turbines to generate refrigeration power. During the 1970s, gas turbines
gained acceptance as the main refrigerant-compressor drivers because of improved reliability. As a result, the capital
investment in steam generating equipment was reduced.
In the 1990s, the transition from dual-shaft to large single-shaft gas turbines increased fuel efficiency by 10-15%.
Certain single-shaft turbines could be directly connected to
the refrigerant-compressor shaft eliminating the need for a
speed-altering gear and its associated power losses. The
power output of large-frame, single-shaft gas turbines more
than doubled the power output of existing dual-shaft turbines (see Table 2).
Process
C3-MR
Cascade*
60
40
20
1960
1970
1980
1990
Frame 5C
Frame 5D
Frame 6B
Frame 7EA
*Fuel efficiency
(kWh/kg of fuel)
2.32
2.41
2.55
2.62
*ISO power
(MW)
28.3
32.6
41.5
87.4
112
Net LNG/
fuel consumed
8.7
7.7
80
Fuel gas
consumed
(million Btu/d)
50,573
55,419
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kg of CO2/kg of LNG
0.35
kWh/cm of LNG
0.35
0.30
0.30
0.25
0.25
0.20
0.20
0.15
0.15
0.10
0.10
0.05
0.05
0.00
0.00
1970
1980
1990
2000
Cascade
C3-MR
C3-MR
Rasgas
C3-MR
C3-MR
Emissions factor
(kg of CO2/gigajoule)
55
68
91
95
eration system to accomplish LNG sub-cooling. The refrigeration load absorbed by the nitrogen-expander system alleviates the need to increase the size and quantity of the
propane and MR system equipment. The manner in which
the C3-MR cycle is enhanced to form the AP-XTM cycle is analogous to the way the C3-MR cycle was originally invented. At
that time, the single-MR cycle used in an early LNG train was
augmented with a propane-refrigeration system used for feed
gas and MR pre-cooling. The AP-XTM process patent also has
an embodiment where a dual-MR system is similarly
enhanced with a nitrogen system for LNG sub-cooling.
*CO2 exhaust
*2003 turbine
emissions at 30C capital-cost factor
(kg-mole/hr)
($)
8 x 463 = 3,704
8 x 1.0 = 8.00
2 x 1,112 + 463 = 2,687 2 x 2.78 + 1.0 = 6.56
BACK
7.1
*Power at 30C
(MW)
79.4
120.8
HOME
113
*2003 turbine
capital-cost factor
($)
1.00
1.16
Barend Pek
7.2
Cas Groothuis
INCE THE beginning of the LNG industry, train capacities have continued to rise to capture the advantages
of economies of scale. Over 30 years, train capacities have increased from 0.5m tonnes a year (t/y) to nearly
5m t/y. In real terms, the specific capital cost for plants,
expressed in dollars per tonne a year of LNG, has more
than halved during that period, mainly because of the application of larger trains.
It is only in the last few years that developments at the
design stage have created another leap in LNG train capacity from 5m to 8m t/y, further reducing the specific capital
cost by another 10-15% on an equal stream-day basis. In
an increasingly competitive climate, the rapidly expanding
LNG business drives further train-size increases for both
greenfield plants and brownfield expansions. Traditionally,
Air Products and Chemicals (APCI) has held a dominant
role with its C3-MR process, but other processes and licensors have emerged in the last decade (see Figure 1).
Although the lowest specific capital cost has always been
an important driver (and to a large extent still is), an overriding objective for all projects is to achieve the highest net
present value per dollar invested. This is a factor that also
takes account of the sales build-up even more significant
for mega projects. However, very large train capacities pose
a new set of challenges, which will need to be addressed in
a wider context.
Higher-capacity trains attract more risk regarding the
availability of proved gas reserves, marketability and technical step-outs, and all three aspects should be balanced in
their development. High-capacity trains do not fit well in a
scenario with limited outlook for extra gas reserves and a
gradual projected market build-up. The drive to higher
capacities in a number of locations is primarily fuelled by the
opening of the North American market, combined with LNG
projects that have access to large reserves. To capture fully
the diminishing advantages (10-15%) in economies of
scale, the assessment and control by all relevant stakeholders of technical risks has become even more important.
Technologies
Several licensors offer liquefaction-train technologies in the
5m-8m t/y capacity range, they include:
APCI provides its C3-MR split MR process in a capacity
range of between 4.5m and 5m t/y, based on two GE F7
drivers. Trains are under construction in Egypt and Qatar.
APCI has developed the 8m t/y AP-XTM process, based on
large GE F7 or F9 drivers a three-cycle, in-series liquefaction process, with a propane cycle as pre-coolant, mixed
refrigerant for gas liquefaction and initial sub-cooling, and a
nitrogen cycle for further sub-cooling of the LNG. This technology has been proposed for expansions in Qatar.
According to APCI, a feature is the possibility to phase the
construction of the third cooling cycle (nitrogen loop), which
allows the phasing of LNG production to match market
build-up;
Shell has developed a portfolio of robust LNG train
designs, with two cycles, covering the full range of 5m8m t/y. At the 5m t/y capacities, choices are between a
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90.4%
Propane-MR
2.6%
Technip
32.8%
Propane-MR
25.1%
3-cycle
3.7%
Cascade
2.6%
Prico
11.2%
Cascade
16.7%
DMR
10.6%
Split-MR
3.5%
% of existing capacity
% of new capacity
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Projects
500
Existing
Under construction
Proposed
400
7
6
5
300
200
1
100
1960
0
1970
1980
1990
2000
2010
Start-up year
*Normalised for ME location
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7.2
W
Brian Price
7.3
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Penuelas LNG/power
project, Puerto Rico
This general relationship can be used to evaluate other
facility integrations. The basic relationship is that for each
100 MW of power generation about 3.5m tonnes a year
(t/y) of LNG can be vaporised. Inlet chilling can be added to
the integration scheme with the same glycol/water loop. To
inlet-chill 100 MW of generation capacity, about 0.25m t/y
of LNG can be vaporised. In most of the installations we
have examined, substantial power plants can provide all the
necessary heat for LNG terminals.
The LNG cold can be used beneficially in many other
process facilities. LNG vaporisation is typically accomplished with a heat medium such as glycol/water. This
medium is then used for process cooling in the adjacent
process facility. Using this heat medium means the seawater intake, large piping and outfall facilities can be eliminated. The heat medium can be designed with a much
larger temperature delta T, such that the flow rates handled
in this type of system are much smaller than a typical seawater ORV system.
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7.3
Al Kaplan
7.4
HERE ARE around 40 LNG regasification terminals operating worldwide, with expansions of several terminals
under way. There are also about 50 new receiving terminals in various stages of discussion, with over 40 proposed
for the North American market alone. The US governments
Energy Information Administration expects LNG imports to
increase at an average rate of 11% a year, to 2.14 trillion
cubic feet (cf) by 2025, from 140bn cf in 2002.
The development of offshore LNG terminals has been discussed for several years as an alternative to onshore developments. Aside from demand, other drivers are combining
to make offshore terminals a viable alternative to onshore
facilities, including: unpopulated land close to demand centres is increasingly scarce; delays in the permitting for
onshore terminals, primarily because of the public perception that LNG is dangerous; and security considerations.
Some planned offshore LNG terminals are well advanced,
such as Rovigo, Italy (ExxonMobil, Qatar Petroleum and
Edison), and Port Pelican, Gulf of Mexico (ChevronTexaco),
and a number of potential projects around the world, proposed by several companies, are waiting in the wings.
A floating
storage and
regasification
unit
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Terminal types
Offshore developments fall into two major classifications,
gravity-base structures (GBS) and floating storage and
regasification units (FSRU). Both offer advantages over an
onshore development: the ability to place the facilities in
close to existing offshore pipeline systems; and the elimination of a need for a new port to receive LNG carriers.
GBSs and FSRUs may be constructed in either steel or
concrete hulls. Each has advantages and disadvantages.
Steel facilities offer lower capital cost, but higher maintenance and operating costs affect operational expenditure.
The total life-cycle cost will probably be similar for either
form. The type of LNG tanks selected is also a consideration, with each option having specific requirements and
resultant effects on facility cost and construction schedule.
GBSs consist of a large steel or concrete substructure resting on the seabed in water depths of less than 30 metres.
GBSs have been used successfully for oilfield development for
over 30 years, many in the harsh environment of the North
Sea, and have proved safe and reliable. Onshore LNG tanks
typically have a concrete outer shell and, therefore, GBSs
unite these two designs. GBSs combine three functions
required for an LNG terminal: LNG tank structural support; a
marine breakwater to provide safe shelter for LNG tankers;
and real estate to support the regasification facilities. This
facility would be constructed in a purpose-built graving dock,
adjacent to a deep-water channel with access to the sea.
With a GBS development, water depth, wave conditions,
soil conditions and environmental requirements are the key
design variables and drive the cost and feasibility of the facility. Optimally, a GBS will be placed in a water depth of 15-20
metres, as this will minimise concrete quantities, while still
providing adequate water depth for LNG carriers. The ships
will require a water depth of about 15-18 metres, depending
on their size, tidal variations and seabed conditions.
The soil conditions at the GBS site will also be a major
cost driver. The preferred soil conditions would be moderately stiff, with a non-rocky and relatively level seabed.
Terminal sites with soft soil to depth require a foundation
structure, known as a skirt, to penetrate the soft soil to an
underlying stiffer layer. Long skirts (greater than 2 metres)
increase the cost and reduce options for construction
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119
7.4
Methodology
7.5
Maintenance
LNG
technology
Gas treating
Brunei LNG,
work in
progress on the
main cryogenic
exchanger
Shell
Civil
Operations
Rotating
Inspection
LNG
plant upgrading and
rejuvenation
Mechanical
Benchmarking
Electrical
Best practice
Pipeline
Shipping
Cost-estimating
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Project mgt.
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Global Solutions is supporting MLNG with an extensive plant rejuvenation programme with the aim of
LNG plant
Number
Year of
Design
Current Capacity increase
securing a continued and reliable supply for at
of trains start-up (million t/y) (million t/y)
(%)
least another 20 years. The first module that was
Brunei
5
1972
5.3
7.2
140
Australia
3 (4)
1987
6.0
7.5
125
rejuvenated was completed in 2003 and the
Malaysia I (Satu)
3
1983
6.0
7.6
125
remainder of the project will be carried out in the
Malaysia II (Dua)
3
1995
7.8
8.7
110
next two years.
Nigeria
3 (4,5)
1999
5.9
6.5
109
The project involves replacement, refurbishOman
2 (3)
2000
6.6
7.2
112
ment
and design changes to the plant equipment
Numbers in brackets indicate trains under construction
and systems to ensure reliability. Hot and cold
Source: Shell Global Solutions International BV
insulation on piping and equipment will be
replaced, the steam boiler and the steam system
Equipment and systems, which are likely to become will be refurbished, as will the gas inlet facilities. The
obsolete during the plants extended lifetime, are upgraded major rotating equipment will be upgraded, the electroor renewed. Labour-intensive processes in maintenance chlorination cells, seawater distillers and some process
and operations are reviewed for efficiency and checked for equipment will be replaced, and there will be an external
which improvements would provide cost reductions over a corrosion abatement campaign.
period of time. This analysis also takes a long-term view on
health, safety and environment issues. Some aspects of a Operating experience counts
plants operations may not be permissible in the future and The improvements at Brunei and Malaysia were made over
the review will strive to identify these and tackle them it is a number of years. However, with the benefit of this experience, similar improvements could be made at other plants
far easier to undertake modifications at this point.
The results can be impressive. Not only can a plants life in a single rejuvenation and/or capacity enhancement probe extended for another 20 years, but capacity can also be ject. Simply replacing worn-out equipment and optimising
increased significantly. Brunei LNG (BLNG), for example, processes is not enough. Apparent weaknesses must be
now operates at 140% of its original design capacity and carefully investigated, the root causes of any problems
much of this increase can be attributed to the plants first identified, and projects and initiatives selected that will
have the maximum impact on performance. This is where
rejuvenation programme.
operating experience counts.
Rejuvenation essential
A long-term view is needed to ensure the plant complies
BLNGs plant, on the coast of Brunei Darussalam, is the with future trends or regulations. For example, a piece of
oldest Shell Group-advised LNG plant, having started up equipment that is likely to have spare parts problems in a
in 1972. When it renewed its first long-term delivery con- few years should be upgraded, and solutions that pre-empt
tract, in 1992, plant rejuvenation was an essential factor, increasingly stringent environmental legislation should be
as BLNG had to demonstrate that the plant was in a con- implemented. Operators benefit by seeing the performance
dition that would guarantee reliable deliveries for an of their ageing plant transformed into the equivalent of a
extended period. During this rejuvenation, the pneumatic new plant, and enjoy smooth and efficient operations for
instrumentation was replaced by a distributed control sys- the next 20 years. It also ensures that they can compete in
tem, insulation was improved and critical electrical equip- the tough gas and LNG markets of the future.
ment was upgraded. New loading
facilities were constructed and two
new storage tanks were also
installed. BLNG is planning its second
rejuvenation, which will take place
around 2010 and extend the life of
the plant to 60 years.
Meanwhile, the plants performance
has improved gradually over the years
as technologists and engineers have
identified improvement projects. A
number of developments have boosted
the plants efficiency. The liquefaction
process has been optimised by shifting
the cooling loads in the liquefaction
cycle, modifications have been made
to the gas-treating section and the
molecular sieves have been upgraded.
There have also been improvements to
utilities such as the instrument air,
water and steam systems, and the
nitrogen plant.
Malaysia LNG (MLNG), one of the
largest Asian LNG producers, has seen
performance increases at its Satu,
Bintulu, plant. It now operates each of
the three liquefaction trains at 125%
Brunei LNG, Lumut
of their design capacity. With MLNGs
Shell
sales contracts expiring in 2003, Shell
Table 1: LNG plants capacity
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121
7.5
Yoshifumi Numata
7.6
Drawn-air rate
Steam rate
0.1
0.2
0.3
0.4
0.5
Steam inlet pressure(MPag)
0.6
0.7
Conventional vaporisers
Conventional LNG vaporisers can be classified into two
types: an open rack-type vaporiser, which uses seawater as
the heating source; and a submerged combustion-type
vaporiser (SCV), which uses the combustion gas of natural
gas as the heating source. The SEV heat exchanger uses
the same hot-water bubbling heat-transfer technology as
the SCV system, with the same heat-transfer tube configuration (shape and required area).
%
50
50
105
25
-160C/0C
Over 20
Steam at over 0.7 MPag pressure
Range from 30-40C
Configurations
Heat transfer tube, as in SCV, one is installed in concrete bath
One small ejector for baseload and two larger ejectors for high LNG load
operation
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Vaporiser operation
At standby, the bath-water temperature can be maintained
at the same level as during load operation, for a quick
start-up. A small amount of steam is introduced into the
bath water through the temperature-control valve. In an
SEV, LNG may be introduced only after steam has been
introduced to the first-stage ejector, which is designed to
satisfy the required water-bath agitating performance.
Steam pressure in the first-stage ejector is kept at 0.2
MPag for base-agitating operation. The later ejectors start
one by one in response to increases in the LNG load, or
changes in the required bath-water temperature. The
steam pressure is generally kept at between 0.2 MPag
and 0.6 MPag.
Water treatment
Steam consumption is about 0.3 tonnes for each tonne of
LNG vaporised. Accumulated condensate is drawn off from
the water bath and is either disposed of, with no water
treatment, or reused for boiler-feed water with a simple
treatment, such as filtering or degassing.
Characteristics
In general, SEV has two or more steam ejectors and a
heat-transfer tube, in the same configuration as for SCV.
The steam ejectors are placed above the bath. Other
types of heat-transfer tube, such as a U-tube bundle,
may also be used.
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main field, at Hassi RMel, is one of the worlds largest with recoverable reserves estimated at up to 35 trillion cubic feet (cf). A 500km pipeline is constructed to link this field with the liquefaction
plant. Initial capacity of the pipeline is 145m cf/d, with a possible
capacity of 400m cf/d. Arzew becomes the first source of natural
gas for regular commercial shipments by LNG tanker.
1961 The UK plans to receive regular imports of LNG from the
Sahara in refrigerated tankers by 1964. Under a 15-year contract
with French gas-producing companies, and with Conch International
Methane, the British Gas Council will take annual deliveries of 35bn
cf, thermally equivalent to over 10% of the UKs demand for town
gas. The French plan for similar LNG shipments.
The LNG will be carried in two specially constructed tankers, each
holding about 12,000 tonnes. Their construction costs will be very
high at least 3.5m each because of the novel design. With a
service speed of 17 knots, the two tankers between them are
expected to complete 56-58 return trips a year over the 2,500-km
route between the Algerian loading port of Arzew and the UK receiving terminal at Canvey Island.
1961 Although the experiments with Methane Pioneer showed
both the technical and economic feasibility of shipping deep-cooled
LNG safely across the oceans, their translation into commercial
practice presented marine engineers with many novel problems of
ship design, construction and operation. These concern primarily
the choice of suitable shapes, configurations of insulating materials
for the cargo tanks, and the best way of using the boil-off gas during the voyage. While balsa wood proves an efficient insulant,
research is directed to developing less-costly methods. Three different materials are tested in a French experimental LNG tanker, the
re-vamped Liberty ship Beauvais, whose conversion was completed
in 1962.
1962 Compagnie Algerienne de Methane Liquide (Camel) established in Paris to operate the methane liquefaction plant at Arzew,
Algeria, with an initial capacity of 1.5bn cubic metres a year (cm/y).
About two-thirds of this output is earmarked for export by refrigerated tankers to the UK. Conch takes a 40% shareholding in Camel
and designs the worlds first two commercial methane tankers,
Methane Princess and Methane Progress. In addition to France,
purchases from Camel are also under consideration in West
Germany and Italy.
1962 Algeria concludes an agreement with GdF. From 1964,
French-built refrigerated methane tankers will ship 335,000 tonnes
a year (t/y) of LNG.
1962 Arzew is to have the worlds first frozen-gas storage facility,
a novel method of low-temperature storage developed by Conch
and applicable to a range of chemical products as well as liquefied
gas. The storage container consists of a large frozen hole in the
earth, covered by an insulated roof hermetically sealed to the
ground.
1964 The worlds first commercial movement of LNG occurs
between Algeria and the UK.
1964 Camel negotiates an $18m loan from the World Bank. The
loan is guaranteed by the Algerian government, which asks for a
20-25% holding in the company.
1964 The liquefaction plant at Arzew is officially inaugurated by
President Ben Bella on 27 September. The plants capacity is now
fully committed under export contracts signed with UK and French
interests. The UK Gas Council has contracted to take the equivalent
of 1bn cm/y of natural gas, which will be delivered by Methane
Progress and Methane Princess, each carrying 30,000 cm.
1964 Frances first LNG tanker, the Jules Verne, is launched with
a carrying capacity of 25,000 cm (in seven insulated cylindrical
alloy-steel tanks). She will make about 30 round trips a year from
Arzew to Le Havre to transport the equivalent of about 450m cm of
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Construction
work at Brunei
LNG. Exports
begin in 1972
Shell
8.1
gas. French engineers work on designs for much larger and more
economical LNG carriers, with capacities of up to 100,000 cm.
1964 After a long period of exhaustive tests, the Findon begins
successful sea-trials in 1964. For its initial voyage to Arzew, the
vessel carries 63 tonnes of liquid ethylene, the first occasion such a
cargo has been carried by sea, while, on the return voyage, 125
tonnes of LNG are carried to Canvey Island. Two further such round
trips are carried out with the Findon.
1965 In the first five months of their service between Algeria and
the UK, both Methane Princess and Methane Progress complete 11
voyages. Each tanker cost 4.8m to build.
1967 Alaska becomes the first contracted LNG supplier to Japan.
Shipments are due to start in 1969 when facilities under construction at Port Nikiski are completed. A 15-year sales contract is
signed in March by Marathon Oil and Phillips Petroleum with Tepco
and Tokyo Gas. The project involves construction of plant capable of
liquefying up to 173m cf/d of gas, three storage tanks each of
225,000 barrels capacity, six loading pumps and a 1,200-foot
dock in Cook Inlet.
Two Swedish-built tankers, designed by Gaz Transport, of France,
will be used. Each will have a capacity of 440,000 barrels of LNG,
equivalent to 1.5bn cf of gas, in six tanks. Because of the unique
weather conditions in Alaska, where the tidal variation in Cook Inlet
is as much as 32 feet and broken ice is a serious hazard, special
steels are to be used to strengthen the hulls, and heating will be
installed to prevent freezing of the water ballast. The cargo tanks
are claimed to be completely different in design from those used in
any existing LNG ships. Using the membrane concept, the tanks
contain the liquid by a very thin metallic sheet formed from strips of
Invar a 35% nickel steel with virtually no expansion or contraction
in the temperature range involved.
1968 Delays in building Algerias new plant, at Skikda, make it
unlikely the target date for the start-up of additional LNG exports to
France will be met. Under a 15-year agreement concluded in 1967,
France undertook to buy 1.5bn cm/y of gas, beginning in 1971, rising to a maximum of 3.5bn cm/y by 1975. This is in addition to the
0.5bn cm/y exported to France from Arzew. The French contract
requires construction of a pipeline from Hassi RMel to a liquefaction plant at Skikda, and two or three methane tankers to carry the
gas to Fos, near Marseilles.
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date a 472,000 barrel ship to be built by Frances Ciotat shipyard, for 1974 delivery.
1970 There are currently only 11 LNG tankers in existence, but
firm LNG export commitments call for 24 to be built within the next
five years, with as many as 70 operating by 1980. Shell has
ordered seven LNG tankers from French shipyards. With a capacity
of 75,000 cm of LNG, these ships will be equivalent in size to
100,000 tonne crude tankers and are estimated to cost between
$27m and $30m each. They are due to be delivered between
1972 and 1975.
There are now three basic types of LNG ships (although within
each type there are variations according to design and materials
used). The first generation featured self-supporting tanks of either
aluminium or a 9%-nickel steel. The second generation, and
recently the most successful in terms of orders, features integrated
membrane tanks supported by the hull of the ship and made of
either corrugated stainless steel or smooth Invar.
A new spherical-tank design eliminates the secondary barrier,
required by classification societies to protect the hull from tank leakage, and reduces costs by a further 10% over the membrane design.
1970 Philadelphia Gas Works plans to import 5bn cm/y of
Venezuelan gas. Exxon says it is seriously considering bringing
Venezuelan gas to the US.
1972 Approval is given for the US first long-term import of
Algerian LNG. The 20-year contract for 50m cf/d is to be shipped to
Bostons Distrigas in the Descartes. Deliveries will come from the
new Skikda liquefaction plant.
1972 Sonatrach signs the worlds biggest individual LNG export
contract in December with a five-company European consortium.
The 20-year deal will supply 260bn cm of gas.
1972 Brunei LNG starts exporting to Japan in December, with a
first shipment to Osaka Gas.
1973 Brunei LNGs main sales contract, with Tepco, kicks in and
exports build to 7m t/y.
1975 By the end of the year, eight LNG projects are in operation,
with a further 25 under discussion or construction.
1976 Belgiums Distrigas signs a 20-year LNG contract with
Sonatrach.
1976 Talks start on Irans Kalingas project, a joint venture
between National Iranian Gas, and US and Norwegian companies.
The proposal is to produce 5.8m t/y of LNG for export to Japan, rising to over 11m t/y at full capacity. The project never materialises.
1976 Abu Dhabi signs a 20-year LNG contract with Tepco to supply 3m t/y of LNG. The plant will be built near the offshore oil terminal on Das Island.
1977 Under a second supplemental agreement, GdF increases
the volume of LNG to be imported to 5.15bn cm/y. The agreement
is for 20 years, starting in 1980. Two earlier contracts, signed in
1964 and 1971, provide for delivery of 4bn cm/y.
1977 Indonesia begins its first shipment of a 20-year LNG contract with Japan in August. The Bontang facility, in East Kalimantan,
has a throughput of 0.53bn cf/d of gas from Huffcos Badak field,
discovered in 1972.
1978 Indonesias second LNG plant, Arun, makes its first deliveries in October. The three-train facility in Aceh, north Sumatra, takes
the gas from Mobils Arun field, found in 1971.
1978 Malaysia LNG incorporates, with Petronas (70%), Shell Gas
(15%), and Mitsubishi (15%) as the shareholders.
1979 The first LNG contract, the 15-year deal between Algeria
and the UK, expires.
1979 Worldwide LNG deliveries rise by one-third and sales
increase by 60%. But the market is shaken by disputes over pricing,
breaches of contract and abrupt cancellations of projects thought
certain to go ahead.
1979 Malaysia LNG signs its first contracts, with Tepco and Tokyo
Gas. The 20-year contract is for 7.4m t/y of LNG.
1981 The US Lake Charles terminal is completed in July. Three
LNG storage tanks, each 196 feet in diameter and 163 feet tall,
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are the most prominent physical features of the facility. The tanks
have a combined capacity of 1.8m barrels (285,000 cm). At peak
capacity, the terminal can regasify LNG and send out natural gas at
a maximum rate of 1.2bn cf/d.
1982 First deliveries of Algerian LNG to Distrigas.
1982 Indonesias energy minister, says the country wants to double LNG exports and announces that it hopes to export to South
Korea, Hong Kong, Taiwan and Singapore.
1983 Malaysia LNG ships its first cargo to Japan, on 29 January,
from the Bintulu plant. The plant liquefies gas from the Central
Luconia basin, offshore Sarawak.
1984 Japan purchases 72% of the worlds LNG and uses threequarters for power generation. France and Japan consume nearly
90% of world production.
1984 Fluor draws up a basic concept for utilisation of gas from
Qatars North Field. Under the scheme, 0.8bn cf/d will be developed in Phase 1 for local use. A second 0.8bn cf/d phase will be
developed for sale to neighbouring countries, while Phase 3 will see
a final 0.8bn cf/d developed as LNG for export.
1985 The go-ahead is given in August for Australias $7bn North
West Shelf project, to be operated by Woodside Petroleum. The
LNG-export scheme will involve construction of a second offshore
production facility in the Goodwyn gasfield and a third in the North
Rankin field. These will be tied into the existing North Rankin A platform so that gas can be piped 135-km to shore to a planned LNG
plant on the Burrup Peninsula. Storage tanks and an LNG shipping
jetty will be installed on the coast near Dampier. Eight Japanese
utilities have contracted for the plants output.
1985 The start of talks on a possible LNG plant in Nigeria.
1985 Indonesias Pertamina begins talks to supply Taiwan with
up to 2m t/y.
1985 Spain agrees to tough terms with Algeria that require it to
take 60bn cm over the years to 2004 with rising deliveries. Under
the 1973 agreement, Spain was meant to take 4.5bn cm/y, of
which no more than 1.5bn cm/y was actually taken. Spain agrees
to pay $0.5bn in compensation for underlifting.
1986 South Koreas first shipment of 59,250 tonnes is delivered
from Indonesia.
1986 Indexing of Algerias LNG price to the official price of eight
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der. Other contracts are for Enagas of Spain (1.6bn cm/y), Botas of
Turkey (1.2bn cm/y) and GdF (0.5bn cm/y).
1998 A consortium led by Kvrner Oil and Gas Australia wins the
contract for the front-end engineering development and design for
the Gorgon LNG project in Western Australia. Meanwhile, the shareholders of the North West Shelf project are considering a two-train
addition based on the Perseus reserves.
1998 The Oman LNG plant, under construction at Qalhat, about
130 km from Muscat, is ahead of schedule. The 6.6m t/y plant is
due to begin production in 2000. Oman LNG is owned 51% by the
state, 30% by Shell, 5.54% by Total, 5% by Korea LNG (which in
turn is owned 24% by Korea Gas, 20% by Daewoo, 20% by
Hyundai, 20% by Samsung and 16% by Yukong), 2.77% by
Mitsubishi, 2.77% by Mitsui, 2% by Partex and 0.92% by Itochu.
1999 The EPC contract for Malaysias MLNG Tiga is awarded to a
consortium that includes Halliburton subsidiary KBR and Japans JCG.
1999 BP and Amoco complete their merger, then BP Amoco buys
Arco. Exxon and Mobil agree to a merger. Franco-Belgian TotalFina
makes a successful take-over bid for Frances Elf.
1999 Nigeria LNGs first two trains come on line and the firm
confirms a third train, with a capacity of 2.9m t/y, will be built,
increasing overall processing capacity to 8.7m t/y. The third train is
scheduled for completion by 2003 and 2.7m t/y of LNG has already
been sold under a 21-year contract to Spains Enagas.
1999 After three years of negotiations, Enron, the US power company, and Qatar cancel plans to build a $4bn LNG facility in Qatar.
1999 An SPA between Total and Oman LNG is signed, covering
the supply of 130,000 tonnes of LNG over an 18-month period,
starting in April 2000.
1999 The first shipment leaves Nigeria LNG. A 122,000 cm
cargo is delivered to Italys Enel at Montoir.
1999 In a filing with Ferc, El Paso says it will spend $26m to
bring the Elba Island regasification plant, mothballed since 1982,
back on stream. The LNG 22bn cf/y from Trinidad is to be
imported and marketed by Sonat Energy Services, an El Paso subsidiary, which wins the bidding for all of Elba Islands capacity.
1999 Abu Dhabi Gas Liquefactions (Adgas) signs an agreement
with Enron, the majority partner in Dabhol Power, to export LNG to
India at a rate of 480,000 t/y, from October 2001, for a 20-year
period. The Indian company will need 2.1m t/y of LNG to fuel
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Construction work
at Oman LNG, June 1998
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Dabhol once the power plants second 1,624-MW phase is operational and the first 826-MW naphtha-fired plant is converted to gas.
2000 An SPA is signed between Oman LNG and Enagas, of
Spain, covering the delivery of 17 cargoes of 125,000 cm each, in
2000 and 2001.
2000 The first shipment leaves Oman LNG for South Korea.
2000 BP Amoco reports the discovery of a major gasfield off the
coast of Trinidad, which may hold 2 trillion cf. The company and its
partners announce a planned expansion of its LNG facility, which
will triple capacity by 2003.
2000 Italys Eni signs a $3.8bn deal with Iran to develop the countrys South Pars gasfield, in the Mideast Gulf. The project will take
five years to come on stream, eventually producing 0.53bn cf/d.
2000 Shell announces its intention to invest in the development
of gas reserves on Russias Sakhalin Island. Marathon transfers its
37.5% interest in the project to Shell.
2000 Chevron merges with Texaco.
2000 Puerto Ricos regasification plant at Punta Guayanilla,
Penuelas, nine miles west of the city of Ponce, begins to import
LNG from Trinidads Atlantic LNG under a 20-year contract. The
EcoElectrica terminal and the accompanying 540-MW gas-fired
power plant are operated and managed by Enron, which owns 50%
of the facilities. Edison Mission owns the other 50%.
2001 Argentinas Pluspetrol, operator of the Camisea consortium,
examines the possibility of building an LNG plant in Peru.
2001 Australias North West Shelf LNG agrees new export contracts. Tohoku Electric will take 400,000 t/y from 2005; Tokyo Gas
and Toho Gas will take 1.37m t/y from 2004; Osaka Gas will take
1m t/y from 2004; Chubu Electric will take 0.6m t/y from 2009;
and Shell agrees to 3.7m tonnes over five years from 2004. Osaka
Gas already imports 0.79m t/y under a 20-year contract that
started in 1989 and final negotiations are under way for Kyushu
Electric to take 0.5m t/y from 2006.
2001 GdF buys 10% of Petronet LNG; the Indian company
launches bids for its second import terminal.
2001 South Koreas Kogas signs an agreement to increase
RasGas LNG purchases from 2.4m t/y to 4.8m t/y for 25 years.
RasGas capacity is 6.6m t/y from two trains, but this will rise to over
11m t/y following the commissioning in 2004 of a third 4.7m t/y
train. RasGas also signs an agreement with Petronet, of India, to
supply 5.7m t/y of LNG, for 25 years, starting in 2003. A similar
agreement has been signed with Indias Dakshin Bharat
Consortium, to supply 2.6m t/y of LNG over the same period.
2001 Claiming the power companys prices are too high, the
Maharashtra State Electricity Board Dabhol Powers sole customer
cancels its seven-year contract, so construction stalls on the power
plant and LNG regasification terminal. Dabhols LNG import agreement, with Adgas, is not fulfilled. Meanwhile, TotalFinaElfs Indigas
terminal, at Trombay, and the Dakshin Bharat terminal both stall.
2001 El Paso abandons negotiations with Australias $1.4bn
Bayu-Undan project to import 4.8m t/y of LNG to the US for 20
years from 2005, opting for Indonesian suppliers instead. BPs
Tangguh project receives its first letter of intent for 1.3m t/y of LNG
from Philippines power company, GNPower. BP buys out Cairns
9.7% share in the project and Mitsubishi buys Occidentals 16.3%.
ExxonMobils Arun LNG plant in Aceh, meanwhile, faces protests
that force its temporary closure.
2001 Two partners in Norways Snhvit project decide to market
their shares of the gas-supply basket independently. GdF and
TotalFinaElf own 12% and 18.4%, respectively, of the gasfields that
will feed the liquefaction plant on Melkya. The plant will have a
nominal capacity of 5.7bn cm/y. The remaining six partners sell
their 4bn cm/y to El Paso (2.4bn cm/y) and Iberdrola (1.6bn cm/y).
2001 Qatargas signs a contract with Spains Gas Natural to supply 12.4m tonnes of LNG from 2001 to 2012.
2001 Taiwans state-run Taipower issues a tender for the construction of a receiving terminal to supply its 4 gigawatt (GW) Ta-Tan power
plant for 20 years from 2003. The plant will require 1.7m t/y of LNG.
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The parties say the location has not been formally decided, but will
probably be in Chile. Under a 20-year contract, the LNG would be
shipped to a regasification terminal, in Baja California, Mexico,
being developed by Sempra Energy and CMS Energy. Sempra says
commercial operation of the 1bn cf/d terminal will begin in late
2005 or in 2006. The project would also involve the commissioning
of a suitable shipping fleet.
2002 Frances GdF announces plans to build a third terminal, its
second at Fos-sur-Mer on the Mediterranean, near Marseille. The
8.25bn cm/y terminal will be able to take ships of up to 160,000
cm. The existing 4.5bn cm/y capacity installation at Fos-sur-Mer
can take vessels of up to only 75,000 cm.
2002 Unocal announces a ninth LNG liquefaction train will be
built at Bontang, Indonesia. The $0.7bn project will have a capacity
of 15m cm/d.
2002 BP looks at setting up a receiving terminal in West Java,
Indonesias first.
2002 Brunei Gas Carriers new 135,000 cm LNG vessel begins
operations.
2002 Spains Gas Natural delivers the first cargo of Algerian
LNG to the Italian utility, Enel, at the Panigaglia terminal. Enel has
third-party access to the plant through an agreement with Rete
Gas Italia. BG receives government approval for its receiving terminal at Brindisi. Capacity will be 4bn cm/y in 2006, with the possibility of an increase to 8bn cm/y after two years. Three proposals
from Enel are also under consideration at Taranto, Vado Ligure
and Muggia. Edison sells 90% of its $0.6bn regasification terminal, off the Adriatic coast, to ExxonMobil (45%) and Qatar
Petroleum (45%). RasGas II and Edison also sign an amended
SPA for 4.7m t/y of LNG from 2007.
2003 The Algerian governments plan for the development of
reserves at Gassi Touil for which bids were invited in 2002
includes the construction of an LNG plant with a capacity of about
5.5bn cm/y, probably at Arzew. The authorities are targeting the US
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market to which Algeria was, until 1995, the sole supplier. Algeria
has already ordered two LNG tankers (138,000 cm and 145,000
cm). Three projects alone Ohanet, In Salah and In Amenas
should increase gas output by over 22bn cm/y from 2005.
2003 Violent protests against the Bolivian LNG project, Pacific
LNG, lead to at least 65 deaths and force the Bolivian president,
Gonzalo Snchez de Lozada, from office. The project is cancelled.
2003 ChevronTexaco, Sonangol and Total are pursuing a scheme
for a facility at Luanda, Angola two trains are to be built consecutively, providing 4m t/y of capacity each. ChevronTexaco says markets in the US and Brazil, as well as in Europe, are being targeted.
The company has identified reserves of 9.5 trillion cf. The scheme
will initially take associated gas from Blocks 2, 15, 17, and 18.
2003 LNG from Australias $1.5bn Bayu-Undan project 3m t/y
is sold to Japanese utilities, Tepco and Tokyo Gas. The first LNG
cargo is scheduled for delivery in early 2006. Interests in the project are ConocoPhillips (56.72%), Eni (12.04%), Santos (10.64%),
Inpex (10.52%) and Tokyo Electric Power/Tokyo Gas (10.08%).
2003 Australias Gorgon LNG which is owned by ChevronTexaco
(4/7th interest), Shell (2/7th) and ExxonMobil (1/7th) and Chinas
CNOOC sign a $21bn sales agreement, which will involve CNOOC
taking a 12.5% stake in the project. The Gorgon gasfields contain
12.9 trillion cf of proved reserves, with total gas resources in the
Greater Gorgon area of at least 40 trillion cf. The consortium also
signs a 20-year contract to supply ChevronTexacos proposed Baja
California plant, in Mexico, with 2m t/y from 2008, and letters of
understanding to supply 2m t/y of LNG to Shells Altamira project on
Mexico's Gulf Coast. The state government gives in-principle
approval to the Gorgon development in September.
2003 Australias North West Shelf project, is ramping up capacity. A fourth train should be in operation in mid-2004, bringing total
capacity to 11.7m t/y. A final investment decision on a fifth liquefaction train is imminent. Meanwhile, the venture agrees to sell
0.5m t/y to South Koreas Korea Gas for seven years and 400,000
t/y to Japanese firm, Tohoku Electric, for 15 years. The six equal
partners in the project are BHP Billiton, BP, ChevronTexaco, Japan
Australia LNG, Shell and Woodside.
2003 Belgiums Fluxys announces plans to increase capacity at
its Zeebrugge terminal from 2007.
2003 Brazils Rio de Janeiro state evaluates the construction of
an LNG export plant at Sepetiba. The plant would be fed by the
420bn cm of estimated reserves on the BS-400 block in the
Santos basin and pipeline imports from Bolivia.
2003 Canadas Gaz Metropolitain, the utility serving Montreal,
and TransCanada PipeLines are evaluating an LNG import project at
the port of Gros Cacouna. It would have a capacity of 5m t/y
2003 China agrees an $8.5bn, 25-year contract for the import of
2.6m t/y of LNG from BPs Tangguh liquefaction plant in Indonesia.
The Fujian LNG plant is due for start-up in 2007.
2003 Indonesias Tangguh LNG project is selected as the preferred supplier of LNG to two South Korean private-sector companies SK Power and Posco. The bid process for the purchase of
LNG is the first undertaken by South Koreas private sector.
Posco has two gas-fired power plants with generating capacity of
845 MW, while SK will build a 1.08 GW plant. The deal calls for
the supply of up to 1.35m t/y of LNG for a 20-year period, starting in 2005. The partners in the 7m t/y Tangguh project are BP,
37.16% and operator, MI Berau (Mitsubishi and Inpex), 16.3%,
CNOOC, 12.5%, Nippon Oil Exploration, 12.23%, BG Group,
10.73%, KG Companies (JNOC, Kanematsu and Overseas
Petroleum), 10.0%, and LNG Japan (Nissho Iwai and Sumitomo),
1.07%. BP awards the EPC contract for Tangguh to a consortium
comprising Kellogg Brown & Root, Japanese group JGC and
Indonesias PTC, following a bid of around $1.4bn.
2003 BP and BPMIGAS, Indonesias executive agency for oil and
gas, have signed a heads of agreement with Sempra for a 20-year
supply of LNG from Indonesia to its planned 1bn cf/d regasification
terminal in Ensenada, Baja California, Mexico. Under the agree-
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ment, 3.7m t/y of LNG will be delivered from the Tangguh fields
over 15 years beginning in 2007.
2003 The Cyprus government commits to importing LNG after
plans to bring in gas by pipeline prove too expensive. The $0.5bn
plant and facilities will be in place, on the site of a disused chemicals plant near the Vassiliko power station, by 2008.
2003 Petronas takes Edisons 50% share in Egypts West Delta
Deep Marine (WDDM) licence and its 35% share in the associated
liquefaction plant. In March, production starts from the Scarab and
Saffron fields. Total production from the first train of ELNG (3.6m t/y)
had been sold to GdF, and the entire 3.6m-t/y output from the second train is sold to BG Gas Marketing. LNG from Train 2, due on
stream in 2006, will initially be shipped to the Lake Charles receiving
terminal in Louisiana, US. About a year after start-up, the supply will
be shared between Lake Charles and the Brindisi terminal, Italy, to
be constructed by BG and Enel. A third train, with a capacity of 3.6m
t/y and completion in 2007, is being considered.
2003 Participants in Equatorial Guineas Bioko Island LNG terminal agree terms for the sale of the 3.4m t/y output from 2007.
Feedstock for the project would be sourced primarily from
Marathons offshore Alba field, in which the US firm has a 65%
interest. Marathons partner in the project is state-owned GEPetrol.
The gas is mainly bound for BGs Lake Charles terminal.
2003 BG acquires the 446m cf/d capacity rights at the US Elba
Island terminal from 2004 until 2023. Of this, 159m cf/d is
assigned to Marathon.
2003 ExxonMobil investigates siting an import terminal at Fossur-Mer in the south of France.
2003 The Indonesian government announces plans to build two
receiving terminals in Java before 2007.
2003 Pertamina plans a 2007 start-up for Donggi LNG in Central
Sulawesi, Indonesia. A $1.7bn, two-train plant would be supplied
by 10 trillion cf of reserves. Marathon is interested in taking the 6m
t/y output.
2003 BG investigates the possibility of a $1.4bn LNG plant in
Tombak, Iran, on the Mideast Gulf, in a joint venture with the
National Iranian Oil Company (NIOC). The plant is to comprise two
LNG trains, with capacity of 4.5m-5m t/y each, with possible completion in 2007-2008.
2003 BG concludes the sale to Enel of 50% of its planned LNG
receiving terminal at Brindisi. Enel pays Euro10.9m; the facility, is
expected to cost Euro390m to build and should start receiving gas
in 2007. The two partners will share 80% of the terminals 6m t/y
capacity, with 20% to be made available for third-party users.
2003 Jamaica decides to replace fuel oil with natural gas as the
fuel for its power stations and industrial plants. The country will
require a 1m t/y LNG import and storage terminal, probably on the
south coast a site between the Old Harbour and Salt River areas
has been identified at a cost of about $220m-250m. There is a
possibility that, to serve markets in the countrys north coast tourist
region, a second LNG import facility may have to be constructed
near Montego Bay, using ship-based regasification technology.
2003 Nippon Mitsubishi Oil, the Japanese oil refiner, plans to
build an LNG storage terminal next to its Mizushima refinery in
western Japan. In a joint venture with Chugoku Electric Power,
LNG will be sold to the industrial sector, mainly steel and chemicals manufacturers.
2003 Malaysia is adding substantial capacity. Commissioning
of the two-train 6.8m t/y MLNG Tiga will bring the Bintulu complex up to 23m t/y working capacity, making it the biggest LNG
complex in the world.
2003 Malaysias Petronas signs SPAs worth more than $20bn to
supply LNG to Tepco and Tokyo Gas. The SPA, between MLNG and
the two Japanese companies, is for the supply of up to 7.4m t/y of
LNG for 15 years, from April 2003, with an additional five-year
option. A second SPA is for 0.54m tonnes of LNG from MLNG Tiga
to Tepco over one year, starting in April 2003, renewable annually
given mutual agreement. MLNG Tiga also signs a $1.6bn SPA with
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Japan Petroleum Exploration to supply up to 480,000 t/y of LNG for
20 years, from 2003. MLNG already has one SPA for 0.9m t/y of
LNG with Tohoku Electric Power and another for 1.6m t/y with a
consortium comprising Tokyo Gas, Toho Gas and Osaka Gas. MLNG
is a joint venture between Petronas (60%), Sarawak state (10%),
Shell (15%), Nippon Oil LNG (10%) and Diamond Gas (5%).
2003 MLNG Tiga production starts in May, but is interrupted after
a fire at the plant in August.
2003 Mexicos energy regulatory commission (CRE) approves
applications for four LNG import terminals, involving total capacity
of 33bn cm/y. The 7.5m t/y Altamira project will be at Costa Azul on
the Atlantic coast, while the other projects will be aiming to serve
the US market. Altamira (Shell, 75% and Total 25%) wins a 5bncm/y contract to supply the Comisin Federal de Electricidad (CFE)
for 15 years from 2006. CFE intends to use the natural gas to supply its IPP projects in the Altamira region: Tuxpan V (500 MW),
Altamira V (500 MW) and Tamazunchale I (1,000 MW). Shell and
Sempra combine two proposals into a single 1bn cf/d project, in
Costa Azul, 14 miles north of Ensanada, with half the supplies
intended for Mexico. Marathons proposal is for a 7.75bn cm/y
facility in Tijuana, with supplies imported from Indonesia. Kellogg
Brown and Root wins the EPC contract for Marathons plant.
2003 El Paso evaluates the potential of an LNG gasification plant
at Eemshaven, in the Netherlands.
2003 Three new LNG facilities are being considered for Nigeria.
The 6.9bn cm/y Brass River facility (ConocoPhillips and Agip), originally an offshore scheme, will now be onshore near the oil terminal.
ChevronTexaco, ConocoPhillips and ExxonMobil are planning a facility in the western delta. Start-up for both projects is targeted for
2008, to meet the flares-out deadline. Statoil and Shell are evaluating a project at Nnwa-Doro. Meanwhile, BG agrees to buy 2.5m
t/y of LNG for 20 years, beginning in 2005 or early 2006, from the
NLNGPlus project (Trains 4 and 5). Once the sixth train is operational, capacity at the plant will increase by 4m t/y to 21m t/y.
2003 A new company, Qalhat LNG, is set up to handle the construction and operation of a 3.3m t/y train near the existing Oman
LNG plant. Shareholders are the Omani state (52%), Oman LNG
(40%) and Unin Fenosa (8%).
2003 Oman LNG agrees four short-term contracts to supply
Tractebel with 0.6m tonnes of LNG, which is then shipped to buyers
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in North America, Europe and Asia. The gas had been earmarked
for Indias Dabhol Power. Another contract, with Shell, will deliver
0.7m t/y to Spain for five years from 2002. BP will also take 4m t/y,
for the Spanish market, over a six-year period beginning in 2004.
2003 Tractebel announces that it has signed an MOU with Peru
LNG, a consortium consisting of Hunt Oil and SK. Under the agreement, which covers supply of some 2.7m t/y, for a period of 18
years, Tractebel will ship LNG from a proposed liquefaction plant at
Pampa Melchorita, 169 km south of Lima, to its proposed LNG
receiving terminal in Lazaro Cardenas, Mexico. The plant will produce
approximately 4.4m t/y of LNG and first delivery is planned for late
2007 or early 2008. The gas will come from the Camisea fields.
2003 Portugals 2.6bn cm/y Sines LNG terminal receives its first
cargo, from Nigeria LNG.
2003 Shell announces Indias first private-sector LNG receiving
terminal, in Hazira (Surat) in Gujarat. Upon completion, the terminal
will have a capacity of 2.5m t/y, rising to 5m t/y, with the possibility
of expansion to 10m t/y. Commercial operations will begin towards
the end of 2004.
2003 RasGas finalises a 25-year supply agreement with Indias
Petronet LNG. Its Dahej terminal will receive 2.5m tonnes in 2004
and 5.0m t/y from 2005.
2003 Sakhalin Energy receives the green light from shareholders
Shell (55%), Mitsui (25%), and Mitsubishi (20%) to launch the
second phase of the Sakhalin II project. The development represents the largest single foreign direct investment project in Russia,
approximately $10bn, and includes the construction of a 9.6m t/y,
two-train LNG plant.
Sakhalin Energy signs a sales deal with Japans Kyushu Electric for
up to 0.5m t/y of LNG for 21 years, starting in 2010. Two other deals
with Tokyo Gas, for 1.1m t/y of LNG for 24 years and another with
Tepco, for 1.2m t/y over 22 years will begin in 2007. The LNG plant
will be built in Prigorodnoye, on the southern tip of the island.
2003 Norways Statoil proposes a joint venture with Russias
Gazprom to develop the Schtokmanovskoye gas reserves in the
Barents Sea. The proposal includes construction of an LNG plant.
Meanwhile, Bechtel examines the possibility of an LNG export facility in Arkhangelsk. Gazproms Yamal fields would supply the gas.
2003 Singapore investigates the possibility of building an LNG
import facility.
2003 Spains Gas Natural buys Enrons 50% share in Puerto
Ricos Penuelas import terminal.
Construction is
under way on the
Sakhalin-2
project the
9.6m t/y LNG
plant will come
on stream in 2007
Shell
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Arzew
Sfax
Tiaret
Arzew
RABAT
Madeira
(Port.)
Yamal
Peninsula
Skikda
Gabes
Mohammedia
TUNISIA
MOROCCO
ALGERIA
Tenerife
Canary I (Sp.)
In Amenas
In Salah
La Aiun
WESTERN SAHARA
Sahara
MAURITANIA
NIGER
MALI
NOUAKCHOTT
DE
BANJUL
SENEGAL
THE GAMBIA
BAMAKO
BISSAU
GUINEA-BISSAU
NIAMEY
BURKINA FASO
OUAGADOUGOU
GUINEA
CONAKRY
SIERRA LEONE
YAMOUSSOUKRO
MONROVIA
LIBERIA
Abidjan
Kaduna
ABUJA
TOGO
COTE
D'IVOIRE
FREETOWN
BEN
IN
DAKAR
PORTO NOVO
LOME
ACCRA
NIGERIA
Lagos
CAMERO
Warri
Limbe
Port Harcourt
YAOUN
NLNG (Bonny Island)
EQUA
EQUATORIAL
GUINEA
GUIN
LIBREVILLE
LIBRE
GULF OF GUINEA
Port Gentil
GABON
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NORWEGIAN
SEA
North Cape
Fugloybanken
Snhvit LNG
(Melkya Island)
Hammerfest
Murmansk
Kola P
Haltenbanken
WHI
ICELAND
NORWAY
Trondheim
SWEDEN
Faroe I
(Den.)
LF
GU
Mongstad
OSLO
Turku
DUBLIN
Teesside
AMSTERDAM
LONDON
Fawley
Milford Haven
Dragon LNG (Milford Haven)
BEL.
Le Havre
Antwerpen
North
Karlsruhe
Adriatic
Brest
BERN
ERN
Montoir
Donges
Dong
Bilbao
Mugardos
BRATISLAVA
BUDAPEST
AUSTR
SWITZ. AUSTRIA
Fos-sur-Mer
Ravenna
Genova
Nice
MOLDOVA
Timisoara
BUCHAREST
Nis
BULGARIA
Bilbao
Barcelona
Porto
PORTUGAL
Sines
MADRID
LISBON
ITALY
La Spezia
Barcelona
ROME
SOFIYA
Brindisi
SKOPJE
TIRANA
Bari
ri
Tarragona
Tarrag
GREECE
Huelva
Cartagena
SPAIN
Skikda
TUNIS
Arzew
Madeira
(Port.)
Yumurtalik
Sfax
Tiaret
Arzew
Skikda
Mohammedia
TRIPOLI
TERRA
NEAN
Tenerife
JERUSALEM
Alexandria
Idku
Marsa el-Brega
In Salah
CAIRO
AIRO
In Amenas
Marsa el Brega
Libyan
Desert
EGYPT
Asyut
Suez
HOME
Elat
Ras Shukheir
Qena
Map 1: LNG export plants and import terminals of Europe, North Africa and central Asia
136
AMMA
LIBYA
L
WESTERN SAHARA
BACK
Zar
JORD
ALGERIA
Canary I (Sp.)
La Aiun
LEBANON
ISRAEL
Marsa el-Hariga
TUNISIA
BEIRUT
SEA
Benghazi
MOROCCO
NICOSIA
CYPRUS
Crete
MEDI
Gabes
TUR
Izmir
Revythoussa
ALGIERSS
Algeciras
RABAT
ANKARA
Aliaga
Izmir
Sicily
Samsun
IIzmit
it
ATHENS
Sines
Huelva
Marmara Ereglisi
Istanbul
Can
Sarroch
Novoros
BLACK SEA
Constanta
Burgas
ALBANIA
Sagunto
Cartagena
Berdya
Odessa
Rosignano
Marittimo
La Spezia
CHISINAU
HUNGARY
Milano
Lyon
KIEV
SLOVAK REP.
Pecs
FRANCE
Mozyr
MOLDOVA
POLAND
PRAGUE
BRUXELLES
PARIS
Plock
WARSAW
GERMANY
LUX.
Cherbourg
BELARUS
MINSK
Hamburg
Rotterdam
Isle of Grain
VILNIUS
Gdansk
Olsztyn
NETHS.
aven/Pembroke
Milford Haven/Pembroke
LITHUANIA
Kaliningrad
Zeebrugge
Stanlow
Novopolotsk
Mazheikiai
Killingholme
Kill
IRELAND
Torzhok
RIGA
Fredericia
SEA
Isle of Grain
LATVIA
SEA
DENMARK
NORTH
Kirishi
ESTONIA
Ventspils
St Fergus
Grangemouth
St Petersburg
HELSINKI
BALTIC
Goteborg
UNITED
KINGDOM
Petrozavods
LAKE
LADOGA
TALLINN
Lysekil
Nigg Bay
9.1
LAKE O
Tampere
STOCKHOLM
Slagen
Sola
FINLAND
Gavle
Karsto
Flotta
OF
A
NI
TH
O
B
NEXT
Yamal
Peninsula
Gydan
Peninsula
Kolguyev I
Norilsk
Kanin Pen
Yamburg
Timan Pechora
Peninsula
Vorkuta
Urengoy
HITE SEA
Synya
URAL MOUNTA
INS
Arkhangel'sk
Ukhta
E ONEGA
odsk
Syktyvkar
Kotlas
Ob Basin
Surgut
Perm
Nizhnevartovsk
Raskino
Tobolsk
A T
Yaroslavl'
Izhevsk
Tyumen
Yekaterinburg
MOSCOW
Tomsk
Achinsk
Kurgan
Kazan
Ufa
Ryazan
Tula
9.1
Nizhniy Novgorod
Chelyabinsk
Kemerovo
Novosibirsk
Omsk
Krasnoyarsk
Ul'yanovsk
Novokuznetsk
Samara
Michurinsk
Pavlodar
Orsk
ASTANA
Karaganda
Volgograd
Rostov-na-Donu
ai
Atyrau
dyansk
ARAL
Krasnodar
rossiysk
SEA
Tuapse
EA
BAKU
YEREVAN
ARMENIA
RKEY
Tabriz
PI
AN
SE
Chardzhou
Homs
Kirkuk
DAMASCUS
Mashhad
Herat
AFGHANISTAN
Peshawar
C H I N A
Lahore
Kerman
Basra
KUWAIT
Kharg I
KUWAIT
CITY
LF
GU
ARABIA
AL MANAMAH
QATAR
BACK
LNG
H import terminal planned or proposed
Quetta
im
ala
Muzaffargarh
Shiraz
DELHI
E
TH
SAUDI
IRAQ
Damietta
Golmud
ISLAMABAD
Esfahan
MAN
Qaidam Basin
KABUL
IRAN
Arak
Zarqa
ORDAN
Kunlun Shan
Mazar-e-Sharif
TEHRAN
BAGHDAD
Lenghu
Map Symbols
Kholm
Bakhtaran
Baiji
planned or proposed
Kashi
DUSHANBE
ASHKHABAD
A
Neka
SYRIA
Gas pipeline/s
Tarim Basin
Gas pipeline/s under construction,
Fergana
Samarkand
AZERBAIJAN
CA
TURKMENISTAN
S
Hami
Korla
TASHKENT
UZBEKISTAN
Turkmenbashi
Rasht
Banias
Shanshan
KYRGYZSTAN
Batumi
Erzurum
ns
Urumqi
LEGEND:
BISHKEK
Chimkent
T'BILISI
tai
Karamay
Grozny
GEORGIA
un
Kzyl-Orda
Almaty
Mo
LAKE
BALKHASH
Astrakhan
Tikhoretsk
Alt
KAZAKHSTAN
Bandar `Abbas
PAKISTAN
Mathura
Lavan I
UAE
DOHA Dubai
Aonla
Kanpur
Karachi
Hyderabad
HOME
ya
Lhasa
s
NOTE:
Countries KATHMANDU
with a red tint are:
Exporting LNG countries Dibrugarh
Countries with a green tint are:
THIMPHU
Importing LNG countries
Bongaigon
NEPAL
Jagdishpur
Barauni
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Qena
Lavan I
Kanpur
UAE
DOHA Dubai
QATAR
Karachi
Al Madinah
Yanbu
RIYADH
ABU DHABI
Barauni
IN D IA
Sohar
Sur
OMAN
Jeddah
BANGLADESH
DHAKA
Ahmadabad
MUSCAT
Rabigh
g g
Jagdishpur
Hyderabad
Dahej (Gujarat)
Jamnagar
Calcutta
Chittagong
MYANMAR
Hazira
Oman LNG
Port Sudan
Mand
BAY OF
Mumbai
Vishakhapatnam
Dabhol
Salalah
BENGAL
RANGOON
ERITREA
KHARTOUM
SAN'A
ASMARA
YEMEN
Bir Ali
SUDAN
Bangalore
Socotra
S
Adan
DJIBOUTI
Ennore
Mangalore
DJIBOUTI
Cochin
Jonglei Canal
Kochi
ADDIS ABABA
SRI LANKA
ETHIOPIA
Qatargas 1
Verkhoyansk
SOMALIA
KENYA
Ras Laffan
LAKE
Japanese LNG Importing Terminals
VICTORIA
NAIROBI
RWANDA
KIGALI
Higashi-Niigata
BUJUMBURA
Dar es Salaam
NE
L
CH
TOKYO
MO
HARARE
ANTANANARIVO
Hailar
Mutare
Okha
Kagoshima
Komsomolsk-na-Amure
MOZAMBIQUE
Korsakov
Yilan
Sakhalin II
Harbin
Jilin
NE
PRETORIA
Witbank
hannesburg
Sasolburg
Ordos
Basin
MAPUTO
Sapporo
Fushun
Shenyang
Unggi
MBABANE
NORTH
KOREA
Inchon
SWAZILANDBEIJING
la
Yokkaichi (Works)
Yokkaichi (LNG Centre)
Sakhalin Island
Daqing
MADAGASCAR
Anda
TSWANA
su
Hatsukaichi
YanaiKhabarovsk
Manchuria
Beira
Mizushima
Sodegaura
U.A.E.
Qarnayn Is.
Futtsu, Higashi-Ohgishima,
Negishi, Ohgishima
Zirku Is.
Arzanah Is.
Chita (Kyodo)
Chita
Is
MB
ZA
Shin Oita
Dayina Is.
tka
SEA OF
Sodeshi
/ Shimizu
OKHOTSK
Das Is.
UE
Fukuoka
Pe
Shin-Minato
AN
Tobata
nin
A TWakayama
A R
Himeji
Himeji II
Chita
Ulan-Ude
Chita-Midorihama
DOHA
IQ
LILONGWE
Magadan
Okhotsk
Senboku I
Senboku II
Dukhan
MALAWI
LUSAKA
Sakai
Zanzibar
MBIA
Kawagoe
Yelanka
ha
TANZANIA
DODOMA
LAKE
BAIKAL
Halul Is.
Yakutsk
BURUNDI
Mombasa
Ku
ril
e
9.1
Bela
mc
KAMPALA
Pangkalan Branda
Ka
BAHRAIN
UGANDA
COLOMBO
Kolyma Plain
AL MANAMAH
Dandong
YONGYANG
P'YONGYANG
Dalian
Cangzhou
Inchon
Qingdao
SOUTH
KOREA
Niigata
Tong Yeong
Pusan
Kobe
JAPAN
TOKYO
Ulsan
Onsan
Yosu
Xi'an
Pyeong Taek
SEOUL
Linyi
Ansai
Hakodate
SEA OF
JAPAN
Nagoya
Yokohama
Osaka
Gwangyang
Nagasaki
Nanjing
Shanghai
Jingmen
Jiujiang
Anqing
Hangzhou
Jinjing
Fujian
Fuzhou
Taoyuan
TAIPEI
AIPEI
TAIWAN
Tatan
(Tao Yuan)
Map 2: LNG export plants and import terminals of the Indian Ocean rim and east Asia (inset)
138
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HOME
NEXT
Qili
Myitkyina
Fuzhou
Taoyuan
Kunming
AIPEI
TAIPEI
Tatan
(Tao Yuan)
TAIWAN
Guangzhou
Shenzh
Shenzhen
Mandalay
AR
PHILIPPINE
SEA
Guangdong
(Pearl River Delta)
LAOS
Hong Kon
Kong
Maoming
HANOI
LEGEND:
Kao-hsiung
Gas pipeline/s
Yung-An
Chiang Mai
Hainan Dao
VIENTIANE
Nakhon Ratchasima
VIETNAM
CAMBODIA
Rayong
MANILA
Limay
BANGKOK
Si Racha
Map Symbols
Luzon
SOUTH
CHINA SEA
THAILAND
PHILIPPINES
PHNOM PENH
Tab Sakae
Palawan
Khanom
Arun
Samar
Ho Chi Minh
Kompong Son
P A C I F I C
O C E A N
Batangas
SULU
SEA
MALAYSIA
Natuna Sea
Zamboanga
BRUNEI
Mindanao
Davao
Labuan
Arun
andan
Belawan
KUALA LUMPUR
Lumut
Bintulu
Portt Dickson
Dumai
NOTE:
Countries with a red tint are:
Exporting LNG countries
Countries with a green tint are:
Importing LNG countries
Kerteh
Halmahera
Halma
neo
Bor
Borneo
SINGAPORE
Sungai Pakning
Bontang
Bontang
Bintulu MLNG
Sumatra
Sulawesi
K
li
t
Kalimantan
Palembang
Buru
Irian Jaya
West Java
Balongan
Cilacap
BANDA SEA
East Java
Surabaya
Java
9.1
Seram
I N D O N E S I A
JAKARTA
TA
Tangguh
Sorong
ng
Balikpapan
Bali
Sumbawa Flores
Lombok
Sumba
SOLOMON
ISLANDS
Kumul Terminal
Timor Gap
Australia-Indonesia
Zone of Co-operation
Timor
PORT MORESBY
HONIARA
ARAFURA SEA
Bamaga
Cape York
Darwin
Trial Bay
TIMOR SEA
Weipa
Darwin LNG
Northwest Shelf
VANUATU
Broome
Great
Sandy
Townsville
Mount Isa
Alice Springs
Artesian
Basin
IDIN
NOUMEA
DIV
Great
Gladstone
GR
n
Carnarvon
EAT
GR
Desert
Dampier
GE
AN
Gibson
Gib
Desert
Kalgoorlie
Perth
Fremantle
Bourke
Nullarbor
GREAT
AUSTRALIAN BIGHT
Bunbury
Brisbane
Cooper/Eromanga
Basin
A U S T R A L I A
Geraldton
Stony Point
Orange
Port Pirie
Newcastle
Sydney
Adelaide
Albany
Wagga Wagga
Albury
Bendigo
CANBERRA
SEA
Melbourne
Portland
Geelong
TASMAN
Altona
Bass Strait
Tasmania
Hobart
BACK
HOME
139
NEXT
Savannah
MOROCCO
Elba Island
AL
Tenerife
Canary I (Sp.)
BAHAMAS
Freeport
La Aiun
WESTERN SAHARA
Bahamas
Miami
NASSAU
A T L A N T I C
LA HABANA
Santiago de Cuba
DOMINICAN REP.
HAITI
PORT-AU-PRINCE
KINGSTON
Virgin Is (US)
Amuay/Cardon
CARACAS
La Salina
PANAMA
PANAMA
VENEZUELA
BAMAKO
BISSAU
GUINEA-BISSAU
BURKINA FAS
OUAGADOUGOU
GUINEA
CONAKRY
Atlantic LNG
Mariscal
Sucre LNG
Chiriqui Grande
SENEGAL
THE GAMBIA
BANJUL
PORT OF SPAIN
Cartagena
muelles
DAKAR
BARBADOS
TRINIDAD &
TOBAGO
MALI
NOUAKCHOTT
CAPE VERDE
Martinique (Fr.)
ST LUCIA
CARIBBEAN SEA
ICARAGUA
MAURITANIA
Penuelas
Puerto Cortes
Puerto Moin
O C E A N
Andres
CUBA
COTE
D'IVOIRE
FREETOWN
SIERRA LEONE
GEORGETOWN
Medellin
YAMOUSSOUKRO
MONROVIA
BOGOTA
Abidjan
LIBERIA
COLOMBIA
GUYANA
Tumaco
NLNG (
Esmeraldas
9.1
Baeza
QUITO
GULF OF GUINEA
ECUADOR
La Libertad
Guayaquil
Manaus
Coari
Fortaleza
Labrador
Talara
Prince Rupert
Bayovar
Edmonton
Trujillo
LAKE
WINNIPEG
Prince Albert
Natal
Pucallpa
Calgary
Suape
Porto Velho
Ro
PERU
Aracaju
cky
Ferndale
unt
Seattle
Anacortes
Salvador
Bismarck
ain
Cusco
B RLAKE
A Z I L
LA PAZ
Peru LNG
Arica
Sucre
Casper
BOLIVIA
Potosi
Salt Lake City
Chicago
Corumba
Omaha
Belo Horizonte
Betim
Vitoria
F I C
A N
Denver
Salta
WASHINGTON
Rio de Janeiro
Cubatao
Santa Fe
San Diego
Tijuana
Mexicali
Catamarca
Campos Basin
Araucaria
Memphis
O C E A N
Canoas
Hackberry
Uruguaiana
Porto Alegre
Houston
lifo
Ca
Cordoba
Hermosillo
rnia
San Lorenzo
Guaymas
Rosario
La Mora
Chihuahua
Piedras
ed as Negras
eg as
URUGUAY
Port Arthur
Galveston
Elba Island
New Orleans
Rio Grande
Corpuss Christi
Corp
Freeport
Campana
Freeport
BAHAMAS
Port Isabel
BUENOS AIRES
ARGENTINA
Concepcion/Talcahuano
Savannah
El Paso
Naco
Baja
A T L A N T I C
Wilmington
Dallas
Rosarito
Ensenada
Lujan de Cuyo
San Luis
SANTIAGO
Raleigh
Atlanta
Phoenix
Cove Point
mond
Richmond
Lake Charles
Los Angeles
La Rioja
Valparaiso
Baltimore
St. Louis
Sao Paulo
ASUNCION
Las Vegas
Bakersfield
Tijuana
(Baja California)
Paulinia
PARAGUAY
Antofagasta
New York
Philadelphia
Campos
Indianapolis
Duque de Caxias
Mejillones
San Francisco
Irving Canaport,
New Brunswick
Providence
Pittsburgh
Ribeirao Preto
Tarija
Reno
Tocopilla
St. John's
Portland
Boston
IE
L ER
Detroit
Newfoundland
St. John
ronto
Toronto
Sao Mateus
Santa Cruz
Oruro
Eureka
Montreal
OTTAWA
L ONTARIO
Goiania
Rapid City
Cochabamba
GULF OF ST
LAWRENCE
Quebec
LAKE
HURON
MICHIGAN
BRASILIA
Minneapolis
Cuiaba
Puerto Villaroel
ce
ren
Law
Everett
Superior
Billings
Portland
Arequipa
St
LAKE SUPERIOR
Thunder Bay
Mo
Victoria
Recife
Regina
Winnipeg
Vancouver
LIMA
La Plata
Monterrey
MONTEVIDEO
Offshore Louisiana,
Port Pelican
MEXICO
Bahamas
Miami
NASSAU
LA HABANA
CHILE
Bahia Blanca
Salamanca
Guadalajara
Plaza Huincul
MEXICO CITY
Viedma
Veracruz
Minatitlan
Lazaro Cardenas
I de
Chiloe
Santiago de Cuba
PORT-AU-PRINCE
Caleta Olivia
( )
Puerto Rico (US)
SANTO DOMINGO
Virgin Is (US)
SAN SALVADOR
CARIBBEAN SEA
TEGUCIGALPA
MANAGUA
NICARAGUA
P
t M i
Penuelas
Martinique (Fr.)
ST LUCIA
HONDURAS
GUATEMALA
EL SALVADOR
Comodoro Rivadavia
DOMINICAN REP.
Puerto Cortes
BELMOPAN
Puerto Barrios
GUATEMALA
HAITI
KINGSTON
BELIZE
Salina Cruz
Andres
CUBA
Merida
Tuxpan
tan
Neuquen
Tampico
Yu
ca
Amuay/Cardon
La Salina
CARACAS
BARBADOS
TRINIDAD &
TOBAGO
PORT OF SPAIN
Map 3: LNG export plants and import terminals in the Caribbean, North America (inset), Africa and the Middle East
140
BACK
PORTO N
LOME
ACCRA
SURINAME
Cali
Neiva
CAYENNE
PARAMARIBO
HOME
NEXT
SAO TO
Benghazi
ISRAEL
Marsa el-Hariga
TUNISIA
AIRO
CAIRO
Suez
Lahore
KUWAIT
Kharg I
Muzaffargarh
Shiraz
DELHI
TH
Ras Shukheir
Asyut
ARABIA
SAUDI
KUWAIT
CITY
LF
AL MANAMAH
Qena
PAKISTAN
Bandar `Abbas
GU
EGYPT
Libyan
Desert
QATAR
RIYADH
Lavan I
Kanpur
UAE
DOHA Dubai
Sahara
ABU DHABI
Karachi
Ba
INDIA
Sohar
OMAN
Jeddah
Jagdishpur
Hyderabad
Ahmadabad
MUSCAT
Rabigh
NEPAL
Aonla
Mathura
Al Madinah
Yanbu
Quetta
Kerman
Basra
Damietta
Elat
L
LIBYA
Marsa el Brega
In Amenas
IRAQ
AMMAN
JORDAN
ALGERIA
In Salah
Zarqa
JERUSALEM
Alexandria
Idku
Marsa el-Brega
Sur
Dahej (Gujarat)
Jamnagar
Hazira
Oman LNG
Port Sudan
NIGER
LI
Vishakhapatnam
Dabhol
Salalah
ERITREA
KHARTOUM
CHAD
SAN'A
ASMARA
NIAMEY
Bir Ali
DJIBOUTI
BEN
IN
Cochin
ABUJA
Jonglei Canal
NIGERIA
Kochi
ADDIS ABABA
Lagos
CAMEROON
Warri
COLOMBO
AL MANAMAH
BANGUI
Limbe
SRI LANKA
ETHIOPIA
CENTRAL AFRICAN
REPUBLIC
Qatargas 1
Port Harcourt
BAHRAIN
YAOUNDE
UGANDA
EQUATORIAL
EQUA
GUINEA
GUIN
LIBREVILLE
LIBRE
CONGO
Port Gentil
GABON
DEMOCRATIC
REPUBLIC
of CONGO
BRAZZAVILLE
Pointe Noire
KAMPALA
KENYA
LAKE
VICTORIA
RWANDA
KIGALI
NAIROBI
Ras Laffan
BUJUMBURA
Halul Is.
BURUNDI
KINSHASA
Mombasa
TANZANIA
CABINDA
DODOMA
Soya
Zanzibar
Dar es Salaam
Dukhan
LUANDA
LU
DOHA
A T A
Angola LNG
UE
LILONGWE
Dayina Is.
U.A.E.
Qarnayn Is.
MB
IQ
LUSAKA
ANGOLA
Arzanah Is.
Zirku Is.
ANTANANARIVO
Mutare
ZIMBABWE
Beira
NAMIBIA
Swakopmund
MADAGASCAR
MOZAMBIQUE
BOTSWANA
WINDHOEK
LEGEND:
GABORONE
PRETORIA
Witbank
Johannesburg
Sasolburg
MAPUTO
Gas pipeline/s
MBABANE
SWAZILAND
SOUTH AFRICA
CAPE TOWN
Das Is.
NE
CH
AN
MALAWI
ZAMBIA
9.1
ZA
SOMALIA
MO
NG (Bonny Island)
Ennore
Mangalore
DJIBOUTI
Kaduna
Bangalore
S
Socotra
Adan
NDJAMENA
TOGO
TO NOVO
OME
YEMEN
SUDAN
LAKE CHAD
FASO
U
Mumbai
Map Symbols
LNG export plant
Mossel Bay
Cape Agulhas
NOTE:
Countries with a red tint are:
Exporting LNG countries
Countries with a green tint are:
Importing LNG countries
BACK
HOME
141
NEXT
EL SALVADOR
SAN SALVADOR
TEGUCIGALPA
COSTA RICA
CARACAS
PORT OF SPAIN
Cartagena
PANAMA
SAN JOSE
Puerto Mogos
Puerto Armuelles
Amuay/Cardon
La Salina
Puerto Moin
BARBADOS
TRINIDAD &
TOBAGO
NICARAGUA
MANAGUA
Atlantic LNG
Mariscal
Sucre LNG
Chiriqui Grande
PANAMA
VENEZUELA
GEORGETOWN
Medellin
PARAMARIBO
BOGOTA
COLOMBIA
Neiva
CAYENNE
SURINAME
Cali
GUYANA
Tumaco
Esmeraldas
Baeza
QUITO
ECUADOR
La Libertad
Guayaquil
Manaus
Fortaleza
Coari
Talara
Bayovar
Natal
Trujillo
Pucallpa
Suape
Porto Velho
PERU
Recife
Aracaju
LIMA
Salvador
B R A Z I L
Cusco
9.1
LA PAZ
Arequipa
Peru LNG
Cochabamba
Goiania
Sao Mateus
Santa Cruz
Oruro
Arica
BRASILIA
Cuiaba
Puerto Villaroel
BOLIVIA
Sucre
Corumba
Betim
Potosi
Belo Horizonte
Vitoria
Ribeirao Preto
Tarija
P A C I F I C
O C E A N
Campos
Tocopilla
Duque de Caxias
Mejillones
Paulinia
PARAGUAY
Antofagasta
Salta
Sao Paulo
Cubatao
ASUNCION
Rio de Janeiro
Campos Basin
Araucaria
A
Catamarca
Canoas
La Rioja
Uruguaiana
Porto Alegre
Cordoba
Lujan de Cuyo
San Luis
Valparaiso
San Lorenzo
Rosario
SANTIAGO
URUGUAY
Rio Grande
Campana
La Mora
BUENOS AIRES
ARGENTINA
Concepcion/Talcahuano
La Plata
MONTEVIDEO
CHILE
Bahia Blanca
Plaza Huincul
LEGEND:
Gas or gas/condensate field/s
Gas pipeline/s
Gas pipeline/s under construction,
planned or proposed
Viedma
I de
Chiloe
Map Symbols
LNG export plant
Comodoro Rivadavia
Caleta Olivia
San Julian
Punta Arenas
Punta Percy
Ushuaia
Cape Horn
142
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HOME
NOTE:
South Georgia (UK)
Countries with a red tint are:
Exporting LNG countries
Countries with a green tint are:
Importing LNG countries
HOME
NEXT
LNG Statistics
10.1
Name
Owner
Abadi
Al Bidda
Al Hamra
Al Jasra
Al Khaznah
Al Khor
Al Rayyan
Al Wajbah
Al Wakrah
Al Zubarah
Aman Bintulu
Aman Hakata
Aman Sendai
Annabella
Arctic Sun
Bachir Chihani
Banshu Maru
Bebatik
Bekalang
Bekulan
Belais
Belanak
Berge Boston
Berge Everett
Bilis
Bishu Maru
British Innovator
British Merchant
British Trader
Broog
Bubuk
Castillo De Villalba
Century
Cinderella
Descartes
Dewa Maru
Disha
Doha
Dwiputra
Echigo Maru
Edouard LD
Ekaputra
Energy Frontier
Excalibur
Excel
Fernando Tapias
Galea
Galeomma
Gallina
Ghasha
Gimi
Golar Freeze
Golar Mazo
Golar Spirit
Granatina
Hanjin Muscat
Hanjin Pyeong Taek
Hanjin Ras Laffan
Hanjin Sur
Hassi RMel
Havfru
Hilli
Hoegh Galleon
Hoegh Gandria
Hyundai Aquapia
Hyundai Cosmopia
Hyundai Greenpia
Hyundai Oceanpia
Hyundai Technopia
Hyundai Utopia
Inigo Tapias
Isabella
Ish
K Acacia
K Freesia
Khannur
Kotowaka Maru
Laieta
Mitsui OSK
Mitsui OSK/NYK/K Line/Iino
Abu Dhabi Commercial
Mitsui OSK/NYK/K Line/Iino
Abu Dhabi Commercial
Mitsui OSK/NYK/K Line/Iino
Mitsui OSK/NYK/K Line/Iino
Mitsui OSK/NYK/K Line/Iino
Mitsui OSK/NYK/K Line/Iino
Mitsui OSK/NYK/K Line/Iino
Asia LNG Transport
Asia LNG Transport
Asia LNG Transport
Chemikalien Seetrans
Phillips/Marathon
Hyproc
NYK/Mitsui OSK/K Line
Brunei Shell Tankers
Brunei Shell Tankers
Brunei Shell Tankers
Brunei Shell Tankers
Brunei Shell Tankers
Bergesen
Bergesen
Brunei Shell Tankers
NYK/Mitsui OSK/K Line
BP
BP
BP
Mitsui OSK/NYK/K Line/Iino
Brunei Shell Tankers
Elcano
Bergesen
Chemikalien Seetrans
Gazocean
NYK/Mitsui OSK/K Line
Petronet LNG
Mitsui OSK/NYK/K Line/Iino
Humpuss
NYK/Mitsui OSK/K Line
Dreyfus
Humpuss
Tokyo LNG Tanker
Exmar
Exmar
Tapias
Shell
Argent Marine
Shell
Abu Dhabi Commercial
Golar LNG
Golar LNG
Golar LNG
Golar LNG
Shell
Hanjin Shipping Co.
Hanjin Shipping Co.
Hanjin Shipping Co.
Hanjin Shipping Co.
Hyproc
Bergesen
Golar LNG
Hoegh
Mitsui OSK/Hoegh
Hyundai Merchant Marine
Hyundai Merchant Marine
Hyundai Merchant Marine
Hyundai Merchant Marine
Hyundai Merchant Marine
Hyundai Merchant Marine
Tapias
Chemikalien Seetrans
Abu Dhabi Commercial
Korea Line Corp.
Korea Line Corp.
Golar LNG
NYK/Mitsui OSK/K Line
Maritima del Norte
144
BACK
Capacity
(cm)
Year
Loa
(metres)
Beam
(metres)
Draft
(metres)
Tanks
136,912
137,339
137,000
135,169
137,540
137,354
137,420
137,308
137,568
137,573
18,927
18,942
18,928
35,491
89,089
129,767
126,885
75,056
75,078
75,072
75,040
75,000
138,059
138,028
77,731
125,915
138,000
138,000
138,000
137,529
77,679
138,000
29,588
25,500
50,240
126,975
138,000
137,262
127,386
125,568
129,323
136,400
145,385
135,273
138,000
138,517
135,000
126,540
135,000
137,100
124,872
125,862
135,225
129,013
140,500
138,366
138,366
138,214
138,333
40,109
29,388
124,890
87,603
125,904
137,415
137,415
125,000
137,415
137,415
125,182
138,000
35,491
137,512
138,017
138,015
125,003
125,454
39,782
2002
1999
1997
2000
1994
1996
1997
1997
1998
1996
1993
1998
1997
1975
1993
1979
1983
1972
1973
1973
1974
1975
2003
2003
1975
1983
2003
2003
2002
1998
1975
2003
1974
1965
1971
1984
2004
1999
1994
1983
1977
1990
2003
2002
2003
2002
2002
1978
2002
1995
1976
1977
1999
1981
2003
1999
1995
2000
2000
1971
1973
1975
1974
1977
2000
2000
1996
2000
1999
1994
2003
1975
1995
2000
2000
1977
1984
1970
290.00
297.50
289.14
297.50
293.00
297.50
297.50
297.50
297.50
297.50
130.00
130.00
130.00
198.48
239.00
281.72
283.00
256.70
248.43
247.25
256.70
257.23
277.00
277.00
258.90
281.00
278.80
278.80
278.80
297.50
248.30
284.40
181.55
201.00
220.00
283.00
277.00
297.50
272.00
283.00
280.60
290.00
289.50
277.00
277.00
279.80
290.00
289.10
290.00
293.00
293.76
287.55
290.00
289.00
279.80
280.00
264.31
280.00
280.00
199.54
181.54
293.00
249.54
287.54
288.71
288.77
274.00
288.71
288.77
274.00
284.40
198.48
293.00
277.00
277.00
293.00
281.00
207.88
46.00
45.75
48.10
45.75
45.75
45.75
45.75
45.75
45.75
45.75
25.70
25.70
25.70
26.50
40.00
41.60
44.50
34.75
34.75
34.75
34.75
34.75
43.30
43.30
34.75
44.20
42.60
42.60
42.60
45.75
34.80
42.50
29.00
24.80
31.85
44.50
43.30
45.75
47.20
44.50
41.60
46.00
49.00
43.40
43.40
43.40
46.00
41.17
46.00
45.84
41.60
43.40
46.00
44.60
43.40
43.00
43.00
43.00
43.00
29.28
29.00
41.60
40.00
43.40
48.20
48.20
47.20
48.20
48.20
47.20
42.50
26.50
45.75
43.40
43.40
41.60
44.20
29.30
11.38
11.25
11.80
11.25
11.24
11.25
11.25
11.25
10.95
11.25
7.12
7.12
7.12
10.47
11.02
11.33
11.50
9.45
9.45
9.45
9.45
9.45
11.40
11.40
9.45
11.46
11.30
11.30
11.30
11.25
9.45
12.30
9.42
7.82
9.22
11.50
11.40
10.95
17.83
11.50
11.22
11.83
11.40
11.40
12.10
12.12
11.00
11.91
11.00
11.27
11.70
11.52
11.68
12.52
11.50
11.30
12.02
11.30
12.02
9.30
9.42
11.68
10.64
11.52
12.02
12.02
11.77
12.02
12.02
11.77
11.38
10.47
11.27
12.02
12.02
11.73
11.52
9.17
5
5
4
5
5
5
5
5
5
5
3
3
3
5
4
5
5
5
5
5
5
5
4
4
5
5
4
4
4
5
5
4
4
7
6
5
4
5
4
5
5
5
4
4
4
4
5
6
5
5
6
5
5
5
4
4
4
4
4
6
4
6
5
5
4
4
4
4
4
4
4
5
5
4
4
6
5
4
HOME
NEXT
LNG Statistics
Owner
BACK
Capacity
(cm)
Year
Loa
(metres)
Beam
(metres)
Draft
(metres)
Tanks
129,500
126,750
126,750
126,750
137,500
132,588
126,750
126,540
126,750
41,005
132,588
125,637
126,750
136,977
122,255
126,750
65,000
126,750
41,005
122,255
56,095
137,500
137,500
126,750
127,547
126,750
126,540
71,500
71,500
138,000
131,235
125,260
126,190
135,000
135,000
87,994
125,452
125,500
125,541
127,500
127,747
125,525
127,544
127,580
137,006
1,100
88,996
130,405
137,489
130,358
130,405
137,489
130,405
137,489
130,358
126,190
127,167
137,756
2,513
138,370
138,395
138,003
138,270
138,248
137,248
19,538
23,096
40,081
130,000
130,000
130,000
130,000
130,000
137,000
127,209
127,125
137,482
1977
1980
1977
1977
2003
1981
1978
1978
1980
1970
1984
1993
1978
2000
1976
1978
1998
1979
1969
1977
1996
2002
2002
1979
1994
1979
1979
1969
1969
2003
1978
1976
1980
1996
1996
1973
1989
1993
1992
1991
1990
1994
1989
1989
2003
2003
1993
1995
2002
1997
1994
2002
1995
2003
1996
1981
1984
1994
2003
2000
2000
1999
2003
2000
2001
1996
2000
1973
1981
1981
1981
1982
1981
1997
1985
1994
1998
281.72
285.30
285.30
285.30
288.75
286.85
285.30
289.10
285.35
207.73
286.83
272.00
285.30
290.00
275.00
285.30
215.00
285.30
207.70
274.42
216.20
288.00
288.00
285.30
272.00
285.30
289.12
243.30
243.30
277.00
280.00
278.80
274.40
290.14
290.10
249.50
272.00
272.00
272.00
272.00
272.00
272.00
272.00
272.00
290.00
68.87
239.00
274.30
276.00
274.30
274.30
276.00
274.30
276.00
274.30
274.42
283.00
293.00
86.25
278.85
278.85
277.00
278.85
278.85
297.50
151.00
151.03
196.80
280.60
280.60
280.60
280.60
280.60
290.14
283.00
274.00
297.50
41.60
43.74
43.74
45.74
48.00
41.80
43.74
41.15
43.74
29.30
41.80
47.20
43.74
46.00
42.00
43.90
33.90
43.74
29.30
42.00
33.90
48.20
48.20
43.90
47.20
43.90
42.15
34.00
34.00
43.30
41.60
41.00
42.00
48.10
48.10
40.00
47.20
47.20
47.20
47.20
47.20
47.20
47.20
47.20
46.00
11.80
40.00
43.30
43.40
43.30
43.30
43.40
43.30
43.40
43.30
42.00
44.80
45.75
15.10
42.60
42.60
43.40
42.60
42.60
45.75
28.00
28.00
29.20
41.60
41.60
41.60
41.60
41.60
48.10
44.80
47.20
45.75
10.85
11.53
11.50
11.50
12.32
13.50
11.51
11.91
11.53
9.17
11.22
10.85
11.97
10.95
12.90
10.97
9.15
10.97
9.17
11.80
9.48
11.15
11.15
10.97
11.45
10.97
10.97
10.03
10.03
11.15
10.22
12.20
13.30
11.30
11.77
10.62
11.39
11.37
11.37
11.37
11.37
11.37
11.40
11.40
11.00
3.30
11.02
12.00
11.06
12.00
12.00
11.06
12.00
11.06
12.00
13.32
11.52
10.95
4.17
12.02
11.30
12.02
11.30
11.30
11.25
7.60
7.06
8.11
11.72
11.72
11.72
11.72
11.72
12.30
11.52
11.77
10.95
5
5
5
5
4
5
5
6
5
4
5
4
5
5
6
5
4
5
4
6
4
4
4
5
4
5
6
6
6
4
5
6
5
4
4
5
4
4
4
4
4
4
4
4
5
2
4
4
4
4
4
4
4
HOME
4
5
5
5
2
4
4
4
4
4
5
3
3
5
5
5
5
5
5
4
5
4
5
145
NEXT
10.1
LNG Statistics
10.1
Owner
Capacity
(cm)
Atlantique 32
Berge Arzew
Bilbao Knutsen
Cadiz Knutsen
Daewoo 2218
Daewoo 2219
Daewoo 2220
Daewoo 2221
Daewoo 2222
Daewoo 2223
Daewoo 2224
Daewoo 2226
Daewoo 2227
Daewoo 2228
Dukhan
Elvira Tapias
Energy Advance
Excelsior
Fuwairit
Gaz de France Energy
Gemmata
Golar Frost
Hudong Zhonghua 1401A
Hudong Zhonghua 1402A
Hyundai 1460
Hyundai 1469
Hyundai 1470
Hyundai 1471
Hyundai 1472
Indhan
Izar Puerto Real 105
Kawasaki 1532
Kawasaki 1534
Kawasaki 1540
Kawasaki 1545
Kawasaki 1562
Maersk Ras Laffan
Methane Kari
Mitsubishi 2184
Mitsubishi 2185
Mitsubishi 2187
Mitsui 1562
Mitsui 1564
Muscat LNG
Northwest Swan
Puteri Firus Satu
Puteri Zamrud Satu
Samsung 1440
Samsung 1441
Samsung 1502
Samsung 1503
Samsung 1536
Samsung 1553
Samsung 1554
Samsung 1555
Gaz de France
Bergesen
Knutsen
Knutsen
Exmar
Exmar
Golar LNG
Bergesen
Bergesen
Bergesen
Bergesen
Golar LNG
Kristen Navigation
Kristen Navigation
Qatargas
Tapias
Tokyo LNG Tanker
Exmar
Exmar
Gaz de France
Shell
Golar LNG
COSCO
COSCO
Golar LNG
Nigeria LNG
Nigeria LNG
Nigeria LNG
Nigeria LNG
Petronet LNG
Tapias
Statoil
Algeria Nippon Gas
Tokyo LNG Tanker
Osaka Gas / NYK
Oman Govt.
A P Moller
British Gas Corp.
Hoegh
Hoegh
Tokyo Electric
Petronas
Statoil
Oman Govt.
Woodside Petroleum
Petronas
Petronas
NYK
NYK
Petronas
Petronas
Oman Govt.
British Gas Corp.
British Gas Corp.
British Gas Corp.
153,500
138,000
138,000
138,000
138,000
138,000
138,000
140,500
140,500
140,500
140,500
145,700
145,700
145,700
135,000
140,500
145,000
138,000
138,200
74,000
135,000
137,500
145,000
145,000
137,500
141,500
141,500
141,500
141,000
138,000
138,000
140,000
145,000
145,000
145,000
145,000
138,200
138,200
145,000
145,000
135,000
138,000
140,000
145,000
140,500
137,489
138,000
145,000
145,000
145,000
145,000
145,000
145,000
145,000
145,000
Year
Loa
(metres)
Beam
(metres)
Draft
(metres)
Tanks
2005/10
2004/7
2004/2
2004/6
2005/4
2005/4
2004/3
2005/3
2005/7
2005/11
2006/3
2005/12
2005/10
2005/11
2004/9
2004/5
2005/6
2004/11
2004/1
2004/10
2004/3
2004/1
2005/9
2006/1
2004/10
2004/11
2005/3
2005/7
2005/12
2004/12
2005/3
2006/4
2004/12
2006/12
2006/9
2005/11
2004/3
2004/5
2005/10
2006/1
2006/3
2005/3
2005/11
2004/4
2004/4
2004/9
2004/3
2005/5
2005/12
2006/2
2006/3
2006/10
2006
2006
2006
na
277.00
284.40
284.40
277.00
277.00
277.00
285.40
285.40
285.40
285.40
285.40
285.40
285.40
283.00
277.00
289.50
277.00
278.80
219.95
290.00
288.00
277.00
277.00
288.00
288.00
288.00
288.00
288.00
277.00
284.40
289.50
289.50
289.50
289.50
289.50
278.80
278.80
289.50
289.50
290.00
276.00
289.50
289.50
277.00
276.00
276.00
278.80
278.80
278.80
278.80
278.80
278.80
278.80
278.80
na
43.30
42.50
42.50
43.30
43.30
43.30
43.40
43.40
43.40
43.40
43.40
43.40
43.40
45.75
43.30
49.00
43.30
42.60
34.95
46.00
48.00
43.30
43.30
48.00
48.00
48.00
48.00
48.00
43.30
42.50
49.00
49.00
49.00
49.00
49.00
42.60
42.60
49.00
49.00
46.00
43.40
48.40
49.00
43.30
43.40
43.40
42.60
42.60
42.60
42.60
42.60
42.60
42.60
42.60
na
12.10
12.30
12.30
11.40
11.40
11.15
11.35
11.35
11.35
11.35
11.35
11.35
11.35
11.10
11.40
11.40
11.40
12.30
9.70
11.00
11.15
12.10
12.10
11.15
11.15
11.15
11.15
11.15
11.40
12.30
11.40
11.40
11.40
11.40
11.40
11.35
12.30
11.95
11.95
11.00
11.01
11.95
11.40
11.40
11.06
11.01
12.30
12.30
12.30
12.30
12.30
12.30
12.30
12.30
na
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
na
5
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
$ million
250
20
200
15
150
150
10
100
100
50
50
1972 1976 1980 1984 1988 1992 1996 2000
0
1965
146
250
Vessels built each year (L-H scale)
Cumulative total (R-H scale)
BACK
200
0
1970
1975
1980
1985
1990
1995
2000
2005
HOME
NEXT
LNG Statistics
Europe
Puerto
Rico
US
0.58
0.58
4.28
4.28
4.86
4.86
Exporting
countries
US
T & Tobago
Americas total
Total Belgium
France
Greece
Asia-Oceania
Italy Portugal
Spain
Turkey
Total
0.00
0.46
0.46
1.70
0.00
0.00
0.00
0.00
Algeria
Libya
Nigeria
Africa total
0.76
0.76
3.20
10.20
0.50
2.20
0.23
0.99
0.23
0.99
3.20
0.80
11.00
0.50
3.50
5.70
Abu Dhabi
Oman
Qatar
Middle East total
0.09
0.99
1.08
0.09
1.04
1.13
0.16
0.16
0.32
0.07
0.07
0.05
0.05
Australia
Brunei
Indonesia
Japan
Malaysia
S. Korea
Asia-Pacific total
Tanker imports
0.63
0.07
0.07
0.14
0.14
6.49
7.12
0.00
0.46
0.46
0.43
0.43
5.95
0.63
1.61
8.19
0.54
0.02
0.02
0.54
4.08
1.27
5.35
0.50
5.72
0.43
0.00
0.00
1.70
1.70
5.32
7.02
26.89
0.63
7.84
35.36
26.13
0.63
7.61
34.37
0.90
1.61
1.87
4.38
5.93
1.09
8.43
15.45
0.32
5.48
6.95
12.75
6.25
6.57
15.38
28.20
7.15
8.27
18.29
33.71
0.07
0.12
0.07
0.12
9.72
7.95
23.50
2.52
0.27
14.43
0.05
55.65
0.24
1.04
6.78
0.15
3.10
11.31
7.20
9.96
8.99
34.96
0.15
20.05
0.05
74.16
10.03
9.18
34.96
0.15
20.20
0.05
74.57
39.48
72.80
24.06
7.20
104.06
150.66
0.08
0.27
11.54
1.70
0.90
0.91
1.69
3.50
0.08
3.52
1.70
Total
Total exports
12.42
5.35
4.68
Flows on a contractual basis. 1 cm liquid = 0.45 tonnes = 561 normal cm = 593 standard cm
Source: Cedigaz
million t/y
200
1985
2002
150
100
50
North America
Latin America
Europe
Asia-Pacific
Middle East
By country
million t/y
80
1985
2002
70
60
50
40
30
20
10
0
US
Mexico
Belgium
France
Italy
Portugal
Spain
Turkey
UK
Japan
South
Korea
Taiwan
India
China
Others
Source: Cedigaz
BACK
HOME
147
NEXT
10.1
LNG Statistics
LNG contracts
10.1
Amount
(million t/y)
Country
Purchaser
Abu Dhabi
Abu Dhabi
Abu Dhabi
Algeria
Algeria
Algeria
Algeria
Algeria
Algeria
Algeria
Algeria
Algeria
Algeria
Algeria
Algeria
Algeria
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Brunei
Tokyo Electric
Dabhol
BP Gas Marketing
Distrigas
GdF
GdF
GdF
Enagas
Botas
Distrigas
Panhandle
Snam
Depa
Iberdrola
Endesa
BP/Sonatrach
Chubu Electric
Chugoku Electric
Kansai Electric
Kyushu Electric
Osaka Gas
Toho Gas
Tokyo Electric
Tokyo Gas
Chugoku Electric
Kansai Electric
Osaka Gas
Toho Gas
Tokyo Electric
Tokyo Gas
Shell Int
Osaka Gas
Osaka Gas
Tohoku Gas
Toho Gas; Tokyo Gas
Kyushu Electric
Chubu Electric
Tokyo Electric ; Tokyo Gas
Shizuoka
Kogas
Shell Gas And Power
Chevrontexaco
Kansai Electric
Tokyo Electric
Brunei
Brunei
Brunei
Egypt
Egypt
Egypt
Equatorial Guinea
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Tokyo Gas
Osaka Gas
Kogas
GdF
BG Gas Marketing
Union Fenosa
BG
Chubu Electric
Kansai Electric
Osaka Gas
Kyushu Electric
Nippon Steel
Toho Gas
Chubu Electric
Kansai Electric
Osaka Gas
Toho Gas
Tokyo Electric
Tohoku Electric
Osaka Gas
Tokyo Gas
Toho Gas
Hnt Gas
Kogas
Kogas
Kogas
CPC
CPC
Kogas
Hiroshima Gas
Nippon Gas
Tohoku Electric ;
El Paso
Cnooc (Fujian)
Posco; Sk Corp
Marathon
Sempra Energy
148
BACK
4.70
0.50
0.75
3.33
3.70
2.55
1.30
2.40
2.96
0.89
0.59
1.33
0.52
0.75
0.75
3.30
1.05
1.05
1.05
1.05
0.68
0.21
1.05
0.79
0.11
0.11
0.07
0.02
0.11
0.07
3.70
0.50
1.00
0.40
1.37
0.50
0.60
3.00
0.13
0.50
2.00
2.00
0.50
4.03
1.24
0.74
0.70
3.60
3.60
3.00
3.40
2.15
2.57
1.30
1.56
0.55
0.05
1.68
0.89
0.45
0.56
0.52
3.00
1.10
0.80
0.10
0.20
2.30
2.00
1.00
1.50
1.84
1.00
0.08
0.05
1.00
5.00
2.60
1.35
6.00
6.00-10.00
Contract
length
Start
Signed
15
21
19
16
16
15
15
15
20
20
13
13
13
13
13
13
5
17
24
7
20
20
-
1977
2002
1982
1982
1976
1992
1978
1994
1978
1989
1997
1998
2002
2002
2005
1989
1989
1989
1989
1989
1989
1989
1989
1996
1996
1996
1996
1996
1996
2004
2009
2004
2005
2004
2006
2009
2006
2005
2003
2008
2008
2009
1973
1994
1999
2001
1975
1991
1998
1988
1988
1994
1988
2002
2002
2003
1991
1991
1991
1991
1991
1991
1991
1991
1994
1994
1994
1994
1994
1994
2001
16
20
17
20
20
20
20
20
20
3
20
20
20
20
5
25
20
20
-
1973
1973
1997
2005
2006
2004
2007
1977
1977
1977
1977
1977
1977
1983
1983
1983
1983
1984
1984
1994
1994
1994
1996
1986
1994
1996
1990
1998
1999
1996
1996
2004
2003
2007
2005
2007
2002
2003
2001
2003
1991
1996
1995
1995
2001
2002
2003
2003
2003
2003
4
25
HOME
2001
2001
2001
2001
2001
2002
2003
2003
2003
2003
2003
-
Remarks
Revised 1994 +2m t/y; 25 years
Cancelled
Option to 2013
Plus 10 years in 1991 (to 2013)
Plus 15 years in 1991 (to 2013)
Contract extended 11 years in 2000 (to 2013)
Up To 2.8m t/y in 2002 (Option 2013)
Plus 0.72m t/y in 1996
Extension (in 2002) to 2008
Up to 2.92m t/y in total
Agreement to take capacity at Grain LNG, UK
Plus 0.15m t/y beginning 1995
Plus 0.15m t/y beginning 1995
Plus 0.15m t/y beginning 1995
Plus 0.15m t/y beginning 1995
0.1m t/y beginning 1995
0.03m t/y beginning 1995
0.15m t/y beginning 1995
0.1m t/y beginning 1995
Sunrise, Key Terms Agreement
Sunrise
Northwest Shelf LNG
Northwest Shelf LNG
Northwest Shelf LNG
Northwest Shelf LNG
Northwest Shelf LNG, Key Terms Agreement
Bayu-Undan LNG, HOA
Northwest Shelf LNG, SPA
SPA
Gorgon LNG, MOU
Gorgon LNG, MOU
Northwest Shelf LNG, HOA (0.925m t/y from 2015)
Contract extended in 1993 for further 3 years and Letter Of Intent 1997 to
buy 0.47m t/y more in 2000. eXTENDED TO 2013
As above
As above
ELNG Train 1
ELNG Train 2, SPA
Damietta LNG (Segas)
Letter Of Understanding
Arun/Badak (Cif), Plus 0.45m t/y since 1983, plus 11 years since 1995
Arun/Badak (Cif), Plus 0.17m t/y since 1983, plus 11 years since 1995
Arun/Badak (Cif), Plus 11 years since 1995
Arun/Badak (Cif), Plus 0.06m t/y since 1983, plus 11 years since 1995
Arun/Badak (Cif), Plus 11 years since 1995
Arun/Badak (Cif), Plus 11 years since 1995
Plus 8 years since 1995
Plus 8 years since 1995
Plus 8 years since 1995
Plus 8 years since 1995
Plus 1.0m t/y, extended 2004-9; cut to 0.83m t/y
1993
Badak (Fob), 1993
1993
1992 Hiroshima, Nihon, Toho Gas (Plus 0.2m t/y In 2000)
Arun III, Plus 0.3m t/y since 1991 (Cif)
Arun/Badak (Fob)
Badak V
Badak (Cif), Option to increase imports after 1996
Badak (Cif),
Badak V (Fob)
MOU
Tangguh
Tangguh
MOU
MOU
NEXT
LNG Statistics
Purchaser
Amount
(million t/y)
Contract
length
Start
Signed
Indonesia
Libya
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Gnpower
1.30
Enagas
1.10
Tokyo Electric
4.80
Tokyo Gas
2.60
Saibu Gas
0.42
Tokyo Gas
0.80
Osaka Gas
0.60
Kansai Electric
0.42
Toho Gas
0.28
Tohoku Electric
0.50
Shizouka Gas
0.45
Kogas
2.00
Kogas
0.74
CPC
2.25
Sendai
0.15
Japex
0.48
Osaka Gas; Toho Gas;
1.16
Tokyo Gas
Tohoku Electric
0.90
Tokyo Gas; Tokyo Electric
7.40
Kogas
2.00
Enel
2.59
Enagas
1.19
Gas de France
0.37
Botas
0.89
Transgas
0.26
Enagas
2.00
Transgas
0.74
Iberdrola
0.36
Eni
1.10
Shell Western LNG
1.10
Transgas
1.50
BG LNG
2.50
Total Gas & Power
0.86
Endesa Generacion
0.75
Shell Western LNG
1.40
El Paso
1.30
Iberdrola
1.10
GdF
0.50
Kogas
4.10
Osaka Gas
0.70
Dabhol
1.60
Shell Western LNG
0.88
Union Fenosa
0.75
Union Fenosa
0.60
BP Gas Marketing (at plateau) 0.70
Tractebel LNG
2.70
Chubu Electric
4.00
Tokyo Gas
0.35
Osaka Gas
0.35
Tohoku Electric
0.52
Kansai Electric
0.29
Tokyo Electric
0.20
Chugoku Electric
0.12
Toho Gas
0.17
Kogas
4.92
Gas Natural
1.50
Gas Natural
0.58
Petronet LNG
7.50
Edison Gas
4.70
Kogas
2.00
Eni
0.90
Endesa Generacion
0.80
Taipower (CPC)
1.70
ExxonMobil
7.80
ExxonMobil
7.80
ConocoPhillips
7.50
ExxonMobil
15.60
Tokyo Gas
1.10
Tokyo Electric
1.20
Kyushu Electric
0.50
Cabot
1.80
Gas Natural
1.20
Gas Natural
0.70
Gas D'Euskadi
0.70
Repsol YPF
2.10
BG
2.10
Cabot
0.30
AES Group
0.75
Tokyo Electric
0.92
Tokyo Gas
0.31
20
20
1971
1983
1983
1993
1995
1995
1995
1995
1996
1996
1995
1995
1995
1997
2003
2004
1990
1994
1994
1994
1994
1994
1996
1993
1994
1994
1996
2002
2000
20
15
7
20
20
20
20
19
20
20
20
20
20
20
20
10
20
18
20
2005
2003
2003
1999
1999
1999
1999
2000
2002
2002
2005
2005
2005
2005
2007
2006
2005
25
25
20
5
2
2
6
25
24
24
23
23
23
23
22
25
8
5
25
25
1
20
20
20
25
24
22
21
20
20
25
25
2000
2000
2001
2002
2006
2004
2004
1997
1998
1998
1999
1999
1999
1999
2000
1999
2001
2002
2003
2007
2003
2004
2005
2008
2007
2007
2010
2009
2007
2007
2010
1999
1999
1969
1969
2001
2002
2003
1992
1992
1992
1995
1997
1999
1999
2001
2001
2002
2003
2003
2003
2003
2001
1996
1998
1998
2001
2002
2002
2003
2003
1992
1994
1994
1994
1994
1994
1994
1994
1995/1997
2001
2001
1998
2001
2003
2003
2003
2003
2003
2003
2003
2003
2003
2003
2003
1995
1995
1992
1992
Malaysia
Malaysia
Malaysia
Nigeria
Nigeria
Nigeria
Nigeria
Nigeria
Nigeria
Nigeria
Nigeria
Nigeria
Nigeria
Nigeria
Nigeria
Nigeria
Nigeria
Nigeria
Norway
Norway
Norway
Oman
Oman
Oman
Oman
Oman
Oman
Oman
Peru
Qatar
Qatar
Qatar
Qatar
Qatar
Qatar
Qatar
Qatar
Qatar
Qatar
Qatar
Qatar
Qatar
Qatar
Qatar
Qatar
Qatar
Qatar
Qatar
Qatar
Qatar
Russian Federation
Russian Federation
Russian Federation
Trinidad & Tobago
Trinidad & Tobago
Trinidad & Tobago
Trinidad & Tobago
Trinidad & Tobago
Trinidad & Tobago
Trinidad & Tobago
Trinidad & Tobago
US
US
Remarks
Letter Of Intent, 2001
Extended in 1990 up to 1.48m t/y
Plus 0.8m t/y In 1990
Plus 0.6m t/y In 1990
Plateau 1997
5.26m t/y
Plateau 1997
SPA
MLNG Tiga, Tokyo Gas (0.34m t/y); Toho Gas (0.22m t/y); Osaka Gas
(0.12m t/y), plus option of 0.44m t/y
Tiga, SPA
Poss 5 year extension (partial Fob transactions)
Option 252,000 t/y
Plus 432,000 t/y in 1996
Up to 360,000 t/y
T3
T3
SPA (T4)
SPA (T4)
SPA (T4)
SPA (T4 & T5)
SPA (T4 & T5); Plus excess from T1-3
SPA (T4 & T5)
Agreement in principle
SPA (T6)
GdF owns 12% of the Snhvit project
Fob
Fob
Non-operational
MOU (2002), SPA (2003)
MOU, destined for Mexico
Qatargas, Plus option 2m t/y/2-4m t/y 1997-2000
Qatargas
Qatargas
Qatargas
Qatargas
Qatargas
Qatargas
RasGas, Fob
Qatargas
Qatargas, Option to convert to medium-term contract 3-5 years
RasGas, Final Agreement 1999; SPA 2003
RasGas, Amended 2003
10.1
HOA
RasGas, SPA
RasGas, HOA
HOA
HOA
HOA
HOA
Sakhalin Energy, HOA, Fob
Sakhalin Energy, HOA
Sakhalin Energy, HOA
Revised 1992 plus 0.06m t/y and option of additional 5 years
Revised 1992 plus 0.06m t/y and option of additional 5 years
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149
NEXT
LNG Statistics
LNG importers
10.1
Country
Project
Start-Up
Belgium
Dominican Rep
France
France
Greece
Italy
Japan
Japan
Japan
Japan
Japan
Zeebrugge
Dominican Republic, Andres
Fos-Sur-Mer
Montoir-De-Bretagne
Revythoussa
Panigaglia, La Spezia
Chita
Chita (Kyodo)
Chita-Midorihama
Fukuoka
Futtsu
1987
2003
1972
1980
2000
1971
1983
1977
2001
1993
1985
Japan
Japan
Japan
Hatsukaichi
Higashi-Niigata
Higashi-Ohgishima
1995
1984
1984
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Himeji
Himeji II
Kagoshima
Kawagoe
Negishi
Ohgishima
Senboku I
Senboku II
Shin-Minato
Shin-Oita
Sodegaura
1979
1984
1996
1997
1969
1998
1972
1977
1997
1990
1973
Japan
Sodeshi/Shimizu
1996
Japan
Tobata
1977
Japan
Japan
Japan
Portugal
Puerto Rico
South Korea
South Korea
South Korea
Spain
Yanai
Yokkaichi (LNG Centre)
Yokkaichi (Works)
Sines
Penuelas
Inchon
Pyeong Taek
Tong Yeong
Barcelona
1990
1987
1991
2003
2000
1996
1986
2002
1968
Spain
Spain
Cartagena
Huelva
1989
1988
Spain
Taiwan
Turkey
Turkey
US
US
US
Bilbao
Yung-An
Marmara Ereglisi
Izmir
Cove Point
Elba Island
Everett
US
Lake Charles
2003
1990
1994
2003
1978/2003
1978/2002
1971
1982
Promoter
Operator
Fluxys LNG
AES
GdF
GdF
Depa
Snam Rete Gas
Chita LNG (Toho Gas; Chubu Electric)
Toho Gas; Chubu Electric
Toho Gas; Chubu Electric
Saibu Gas
Tokyo Electric
Fluxys LNG
AES
GdF
GdF
Depa
GNL Italia
Chita LNG
Toho Gas
Toho Gas
Saibu Gas
Tokyo Electric
Source
Capacity Storage
(million t/y) ('000 cm)
261
160
150
360
144
100
780
300
200
70
1,110
170
540
540
1,080
740
36
480
1,180
600
180
1,585
80
460
2,660
177
480
480
320
160
240
160
1,680
1,000
420
240
160
160
300
690
255
280
240
118
154
330
* Korean Electric 24.46%; South Korea (State) 28.86%; Local Government 9.86%; Institutional/Individual 38.82% BP 25%; Iberdrola 25%; Repsol YPF 25%; Ente Vasco de La Energia
25% Including spot cargoes
150
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Tel: + 33 1 47 52 60 12
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HOME
1983
1995
2003
1999
2002
2000
1997
1999
1999
Nigeria
NLNG (Bonny Island) T1 & T2
T2 2002; T3 2003
Malaysia
Bintulu MLNG I
Bintulu MLNG II (Dua)
Bintulu MLNG III (Tiga)
Oman
OLNG (Qalhat)
Qatar
Qatargas 1 T1-3
Nigeria LNG
Nigeria LNG
MLNG I
MLNG II
MLNG III
Brunei LNG
ConocoPhillips
Atlantic LNG
Atlantic LNG
RasGas
Qatargas
6
6
3
6
3
5
6*
8
3
3
325
3 As above
2 As above
1 As above
3
2
2 As above
1
7.95
8.4
0.9
4.7
7.5
7.2
6.8
22.59
2.3
8.1
7.8
6.8
5.9
2.9
6.6
8
6.6
3.3
6.6
1.5
105
204
420
340
240
240
96
636
634
130
260
900
900
71
1,540
8.0
240
Sonatrach
Sonatrach
Sonatrach
Sonatrach
Adgas
Operator
Government of Oman 51%; Shell 30%; Total 5.54%; Korea LNG 5% (Korea Oman LNG
Gas 24%; Daewoo 20%; Hyundai 20%; Samsung 20%; Sk 16%); Partex 2%;
Itochu 0.92%; Mitsubishi 2.77%; Mitsui 2.77%
NOC
Pertamina
Pertamina
Sonatrach
Sonatrach
Sonatrach
Sonatrach
Share holders
1969
1970
Libya
Marsa el-Brega
US
Kenai, Alaska
1978/83/86
1977/86/89/93/98/99
1972
Brunei
Lumut
Indonesia
Arun Phase I-VI
Bontang A-H
1989
1977
1981
1964
1972/78/81
Australia
NWS Australia LNG
1977/1994
Algeria
Arzew GL1Z
Arzew GL2Z
Arzew GL4Z (Camel)
Skikda GL1K Phase I&II
Start up
Project
LNG exporters
Phillips Cascade
POCP
POCP
APCI
APCI
APCI
APCI
APCI
APCI
APCI
APCI
APCI
APCI
APCI
APCI
APCI
APCI
APCI
Classic Cascade
Teal (1-3), Prico (4-6)
APCI
Process method
Japan
Japan; South Korea; Taiwan
Japan; South Korea; Taiwan
Enagas, Spain
Europe; US
Europe; US
Europe
Europe
Asia; Europe; US
Exports to
LNG Statistics
10.1
151