LNG UPDATE
May 2011
McIlvaine Company
TABLE OF CONTENTS
WorleyParsons Report Says LNG Has Lower GHG-emission Benefit
Encana to Provide Mobile LNG Fueling Stations
Peterbilt to Manufacture 200 LNG Tractor-Trailer Trucks for CA Firm, Heckman Corp.
Gaz Métro and Other Canadian Firms to Demo LNG-Powered Locomotives
Siemens to Supply Compressor Trains for Origin Energy and ConocoPhillips’ APLNG
Wood Group Wins Multi Mln Dollar Browse LNG Pipeline FEED Contract
Woodside Says Pluto LNG Project Delay may be Difficult to Recover
Shell Australia Joins Chevron’s Wheatstone LNG Project
Sinopec Finalizes Origin, ConocoPhillips’ APLNG Deal with $1.5 Bln Stake
BHP Has Long Term Interest in Becoming LNG Operator
Petronet LNG Plans Terminal on India's East Coast with $1.5 Bln Investment
Pertamina Wins Approval to Take Over Arun LNG Plant
Australia's LNG Ltd Seeks $70.9 Mln for Donggi Senoro LNG Project Compensation from Mitsubishi
Air Products Awarded JGC Corp Contract for Donggi-Senoro LNG Project
Golar Announces PT Nusantara Regas $500 Mln West Java FSRU Contract
Japan Backs Insurance for Donggi-Senoro LNG Project
InterOil Announces FLNG Vessel Deal with Samsung Heavy Industries and FLEX LNG
Samsung Heavy Wins $400 Mln LNG Vessel Order from Golar GLNG
Twenty-five Dutch Oil & Gas Firms Eye Pipeline, LNG Opportunities in Vietnam
Foster Wheeler Wins Statoil’s Snøhvit Pre-FEED Contract
Japan, Russia to Double Capacity at Their JV Vladivostok LNG Project
Gazprom, Japanese Consortium Eye Vladivostok LNG Project
Shaw Gets FEED Contract for ADGAS Tanks
Dubai Considering Development of LNG Hub Status
An independent report produced by WorleyParsons Ltd. and released at the Australian Petroleum Production & Exploration Association (APPEA) conference in Perth noted the benefits of LNG in reducing greenhouse gas (GHG) emissions.
The report, entitled “Greenhouse Gas Emissions Study of Australian CSG to LNG,” compared the amount of GHG emissions associated with Chinese electric power generators using Australian LNG derived from coal-seam gas (CSG) with those using imported black coal. It found for every tonne of carbon dioxide emissions associated with CSG-LNG production, as much as 4.3 tonnes of emissions were avoided when the gas was used instead of imported coal.
A CSG-LNG project exporting 10 million tonnes/year of LNG to China could avoid more than 32 million tpy of global CO2 emissions. Over a 30-year life the project could avoid 968 million tonnes of CO2—a figure that is almost double Australia’s total annual greenhouse gas emissions.
APPEA Chief Executive Belinda Robinson said the study’s findings had profound implications for climate policy deliberations. She reiterated the call for Australian gas exporters not to be disadvantaged by a government policy on carbon emissions that is unmatched in competing countries. “The LNG industry has been treated as the problem,” she said. “It’s not. It is the solution.”
She said, “There is significantly more to be achieved by expanding Australia’s LNG industry than by any carbon pricing mechanism in place in Australia.”
At that same conference, Don Voelte, outgoing chief executive of Woodside Petroleum Ltd., told delegates the Australian government’s proposed carbon tax (to be introduced in July 2012) could be the breaking point in deferring or perhaps even cancelling some of the $130 billion (Aus.) gas projects pending in Australia.
Voelte warned Australia would be going it alone in its plans for a carbon tax and would penalize gas as a clean energy source and would push up domestic gas prices and the cost of living. Consequently it will hurt exports and manufacturing. At the moment there is $88 billion (Aus.) worth of LNG projects under construction in Australia and another $130 billion worth on the drawing board.
Other gas industry leaders said a carbon tax in Australia will make local producers less competitive with other LNG suppliers such as Qatar and Malaysia that have no plans to tax emissions. They also pointed out the previous plan to provide LNG producers free carbon credits for 66% of their emissions is out of date. In addition, many of the country’s largest foreign investors have voiced concerns about Australia’s investment reputation. They want the carbon tax to be reconfigured for a fixed 3-year period and move to a flexible market price only under certain conditions.
The Labor government plans to introduce a fixed carbon tax July 1, 2012, before moving to a full emissions trading scheme within 3-5 years.
Australia’s Minister for Resources and Energy Martin Ferguson told the conference the LNG industry will receive greater protection from the proposed carbon tax if it can prove the compensation envisaged under the previous, now abandoned, emissions trading scheme is inadequate. However Ferguson rejected Voelte’s call for LNG to be excluded from the carbon tax.
Ferguson however, acknowledged that the LNG industry has changed since the Carbon Pollution Reduction Scheme was finalized in November 2009. At that time the only operational LNG projects were the North West Shelf and Darwin, and it was on this two-project baseline that LNG companies were to get 66% of their pollution permits free under the CPRS, including a six-point recession buffer.
Ferguson said compensation for the LNG sector would now depend on where the baseline was set. He invited companies to supply appropriate material to his department in support of their case.
Although natural gas is the fastest growing fossil fuel, it is unlikely to reduce emissions enough to reduce climate change, said Christof Ruhl, chief economist at BP. Ruhl told the conference that while the replacement of coal by gas would have some effect, it won’t be enough to stave off greenhouse emissions that can cause climate change. He said BP’s 2030 projections indicate CO2 emissions will continue to increase despite advancements in energy efficiency.
Moreover, he said, “The problem of energy security won’t subside—just shift,” with India and China relying on imports for up to 80% of their oil consumption. Although exponential growth is expected in the gas sector, Ruhl said, it’s not clear what part unconventional gas will play in the future.
He said the key to this uncertainty is China’s energy consumption and the composition in its energy mix. China has made progress in developing coal-seam gas but remains heavily reliant on coal.
Encana Natural Gas Inc., a subsidiary of Encana Corp., has reached an agreement that will see its new mobile liquefied natural gas fueling stations provide fueling services to the newest fleet of LNG heavy-duty trucks in North America.
Encana has agreed to be the sole fuel supplier to Heckmann Water Resources (HWR), a California company that provides water hauling services to Encana and other producers in Louisiana's Haynesville resource play. Heckmann recently ordered 200 new LNG trucks, from Peterbilt Motors Corporation of Denton, Texas, which are powered by Westport HD Systems from Westport Innovations' Inc. of Vancouver, B.C. Heckmann's purchase represents a major thrust to convert the company's water-hauling truck fleet to LNG from diesel, and will make HWR the operator of the largest fleet of LNG trucks in North America.
"We are very pleased to be part of an innovative North American solution to expand the use of liquefied natural gas in large-freight vehicles in the U.S. This initiative is a major step towards encouraging many companies servicing the energy industry to convert vehicles to run on affordable, environmentally-responsible LNG or compressed natural gas (CNG)," said Eric Marsh, Executive Vice-President, Encana Corp. & Senior Vice-President, USA Division.
"Due to sweeping technological breakthroughs, North American natural gas provides an abundant, affordable fuel alternative at a cost that is 20 to 40 percent lower than gasoline or diesel in many regions. Carbon dioxide emissions from natural gas vehicles are up to 30 percent lower. As part of the emerging transportation switch to natural gas, we are converting a large number of the more than 1,300 trucks and passenger vehicles in our own fleet to run on compressed natural gas," Marsh said.
Encana will initially dispense liquefied natural gas to HWR's truck fleet using mobile fueling stations, which consist of an insulated LNG tank and dispensing equipment built on a trailer that can be parked at key operating locations in the Haynesville resource play. Encana also plans to build its first permanent and public LNG fueling station in the Shreveport, Louisiana area later this year. Last November, Encana opened its first CNG fueling station at Coushatta in Red River Parish, Louisiana. Also, in 2011 Encana plans to open its next four CNG stations, one in each of the states of Wyoming and Colorado and two in Western Canada.
"We are proud to be the first oil and natural gas services provider to offer LNG trucks to our clients and to operate the largest fleet of LNG trucks in North America. Natural gas combustion produces up to 30 percent less greenhouse gases resulting in a much lower carbon footprint per vehicle, and domestic natural gas will provide us with a significant cost savings over the life of the vehicles," said Richard J. Heckmann, Chairman and CEO of Heckmann Corp., parent of HWR.
"This is the first LNG truck order by a natural gas industry service provider," said David Demers, CEO of Westport Innovations. "HWR and Encana are leading the way to leverage clean, abundant, and domestically available natural gas. The fuel is inexpensive relative to diesel and its availability for this application makes an economic win-win for both HWR and Encana."
Natural gas powered cars and trucks are fueled with CNG or LNG and operate similarly to gasoline or diesel-powered vehicles and generally have a longer operating life due to the cleaner combustion. Converting freight trucks and commercial vehicles has an immediate impact on saving fuel costs and reducing carbon emissions. For instance, converting one 18-wheeler from diesel to LNG is equivalent to removing the emissions of about 325 cars from the road.
Encana is a leading North American natural gas producer that is focused on growing its strong portfolio of natural gas resource plays in key basins from northeast British Columbia to east Texas and Louisiana. Encana Natural Gas Inc., a subsidiary of Encana Corp., is focused on expanding the use of natural gas by providing leadership in the technical and commercial acceleration of making abundant natural gas the fuel of choice in the North American power generation and transportation markets.
Heckmann Corp. was created to buy and build companies in the water sector. In 2011, the Company continued the acquisition of additional disposal assets including expansion into the Eagle Ford Shale area in south Texas. In early 2010, the Company completed its 50-mile water disposal pipeline in the Haynesville Shale, and began expanding the line in 2011 to handle additional produced water and fresh water transportation. In February 2010, the Company announced its joint venture with Energy Transfer Partners to provide turnkey pipeline transportation solutions for complex water flows in the Marcellus and Haynesville oil and natural gas fields. The acquisition of an oilfield produced water disposal and transport company in November 2010, recently renamed Heckmann Water Resources, makes the Company one of the largest handlers of produced water in North America.
Westport Innovations Inc. is a global leader in alternative fuel, low-emissions technologies that allow engines to operate on clean-burning fuels such as compressed natural gas (CNG), liquefied natural gas (LNG), hydrogen, and biofuels such as landfill gas. Westport's unique technologies reduce nitrogen oxides (NOx), particulate matter (PM), and greenhouse gas emissions (GHG) while preserving the power, torque, and fuel efficiency of diesel engines. Westport Heavy Duty (Westport HD), the company's proprietary development platform, is engaged in the engineering, design and marketing of natural gas-enabling technology for the heavy-duty diesel engine and truck market.
Peterbilt Motors is manufacturing 200 large trucks powered by liquefied natural gas for sale to a California-based firm and has added a second shift at its Denton plant as a result of growing business volume.
The 200-truck sale is to Heckmann Corp., a Palm Desert, CA-based company that is transitioning its tractor-trailer fleet from traditional diesel-powered trucks to natural gas-fueled trucks, Peterbilt announced April 21.
To transport disposal water from shale gas wells in the Haynesville and Eagle Ford, Heckmann plans to convert its fleet to LNG from diesel. Peterbilt of Denton, Texas will supply the trucks powered by Westport HD Systems from Westport Innovations of Vancouver, B.c. LNG costs from 20-40% less than gasoline or diesel and carbon dioxide emissions can be up to 30% lower.
Heckmann CEO Richard J. Heckmann said the purchase of the 200 LNG-fueled trucks from Peterbilt will provide a “significant cost savings and optimal performance” and that the company wants to lower its "carbon footprint.”
Heckmann provides water-handling operations for oil and gas companies. Heckmann said the Peterbilt trucks will “service its customers’ natural gas wells and provide water- handling services in conjunction with...pipelines and (wastewater) disposal wells.”
Peterbilt spokeswoman Katy Troester said Heckmann will be able to refuel the trucks with LNG because it is teaming up with natural gas producer Encana “to make refueling services available” where Heckmann “operates its fleet of water-transportation vehicles.”
To transport disposal water from shale gas wells in the Haynesville and Eagle Ford, Heckmann plans to convert its fleet to LNG from diesel. Peterbilt of Denton, Texas will supply the trucks powered by Westport HD Systems from Westport Innovations of Vancouver, BC. LNG costs from 20-40% less than gasoline or diesel and carbon dioxide emissions can be up to 30% lower.
Royal Dutch Shell's Malcolm Brinded, chief of the company's China and Europe unit recently noted that consumption of LNG was growing worldwide at a rate of between 6 and 10%/year. Recent news announcements suggest that in the U.S., total natural gas growth is closer to 10% with LNG becoming a larger component.
Apache Corp, Chesapeake Energy and Questar have all announced expansions to their compressed natural gas (CNG) refueling stations. But for long distance hauling, LNG is by far the preferred fuel. The announcement by Hackmann suggests that they will continue to expand their LNG fleet as more and more capacity is needed to transport disposal water from wells completed in the several shale gas plays of the U.S. and Canada. Heckmann is also involved in a joint venture with Energy Transfer Partners to move disposal water by pipeline from both the Marcellus and the Haynesville fields. State regulators, particularly in Pennsylvana and New York are concerned both about leakage of water from trucks as well as increased carbon dioxide emissions.
This move by Heckmann is an indication of the steps the major disposal water carriers are taking to improve efficiency and thus gain credibility with the regulators. With demand for all types of natural gas increasing because of its environmental virtues, shale gas drilling will be around for many years and profits will accrue to companies willing to meet the challenges of safe water disposal with low carbon dioxide emissions.
Natural gas currently is a much-cheaper fuel than diesel, which averages $3.99 a gallon in the Fort Worth-Arlington area, according to a report April 21 by auto club AAA, Oil Price Information Service and Wright Express. Aubrey McClendon, CEO of Chesapeake Energy, recently said that the fuel cost for a compressed natural gas (CNG) passenger vehicle is less than $1.50 a gallon.
Gaz Métro Transportation Solutions (GMTS), a wholly owned subsidiary of Gaz Métro whose mandate is to develop the market for natural gas as a fuel in Quebec, is taking part in developing a new liquefied natural gas engine technology for locomotives, a first in Canada with two innovative partners: Westport Innovations and the Canadian National Railways Company (CN). This project, which aims to demonstrate the technical, economic and environmental viability of this technology, from design to supply, will receive $2.3-million in funding from Sustainable Development Technology Canada (SDTC), an arm's-length, not-for-profit corporation created by the Government of Canada.
A new LNG system for locomotives is to be developed by the Westport Innovations-CN-GMTS consortium. The initial stages of the project will consist in designing and testing, both in the plant and in the field, an LNG system for powering a locomotive.
GMTS will provide its LNG expertise during the tests and will be responsible for the logistics of fuel supply. "This demonstration project is important for developing the natural gas market, a cleaner and less expensive fuel. We salute the initiative of our partners, which will ultimately lead to locomotives running on LNG, as well as the vision and confidence shown by SDTC in developing this technology," asserted Jean-Pierre Noël, General Manager of GMTS.
If all goes according to plan, the Consortium expects the prototype of an LNG-powered locomotive to be in operation in 2013.
The interest in natural gas for use in transportation is not surprising. More economical than diesel, it also helps reduce greenhouse gases (GHGs) by 25% as well as cut most of the atmospheric contaminants responsible for acid rain and smog.
The Canadian transportation sector is a significant source of GHG emissions. According to Environment Canada, the transportation sector was the source of 27% of total GHG emissions in Canada in 2007. Given that fuel accounts for one-fifth of the railway industry's expenses, the potential advent of a cleaner and less expensive technology is very promising for reducing GHG production in Canada.
With over $3.6 billion in assets, Gaz Métro is Quebec's leading natural gas distributor. Operating in this regulated industry for over 50 years. Gaz Métro has become the energy provider to more than 180,000 customers in Quebec and 135,000 customers in Vermont while developing the skills and expertise needed to diversify beyond natural gas. In line with its growth strategy, Gaz Métro is present in the electricity distribution market in Vermont and in the development of wind power projects in Quebec.
Siemens Energy has received an order for the supply of up to 10 compressor trains to Australia Pacific LNG (APLNG) in Queensland, Australia. APLNG is a joint venture between Origin Energy and ConocoPhillips.
The APLNG project will involve the development of coal seam gas fields in south central Queensland over a 30-year period and includes construction of upstream gas gathering and processing facilities together with a 450 km main transmission pipeline from the gas fields to the LNG facility being built on Curtis Island near Gladstone. The Siemens´ compression solution will be incorporated into APLNG's upstream gas gathering facilities to compress low pressure coal seam gas for delivery via the main pipeline to the LNG facility, whereupon it will be compressed and cooled into liquefied natural gas (LNG). Delivery of the compressor trains will start in early 2012.
"We see a steadily growing need for innovative technologies capable of tapping new reserves in remote or extremely challenging regions," said Tom Blades, CEO of the Oil and Gas Division. "Our all-electric compressor packages for gas gathering enable an efficient and flexible application coal seam gas extraction. Compared to conventionally driven compressors CO2 emissions can be reduced by up to one-third depending on the means of power generation."
Each compression train consists of two compressor skids, one low pressure and one high pressure, with each skid carrying two compressors with variable speed drives. Each train is designed to transport around 84 MMSCFD (million standard cubic feet per day) of gas. The compressors have to demonstrate a high level of reliability and flexibility to suit the LNG facility requirements. Coal seam gas is a natural gas which is mainly composed of methane. It is a by-product of ancient plant matter that has formed over millions of years by the same natural processes which produce coal.
John Wood Group has won a multi-million dollar contract with Woodside Petroleum to support a major energy project in Australia.
Subsea engineering subsidiary, Wood Group Kenny, will work on pipeline front end engineering design (FEED) for the Browse liquefied natural gas development in Western Australia.
It will also undertake riser FEED work on Browse and support Aker Solutions in delivering design and engineering on the project.
Wood Group Kenny said around 80 employees will manage the new contract, believed to be valued in the tens of millions of (US) dollars.
The Browse gas fields include the Torosa, Brecknock, and Calliance discoveries located offshore north of Broome, Western Australia.
Reserve estimates at Browse as of December 2009 were 13.3 trillion cubic feet of dry gas and 360 million barrels of condensate.
Steve Wayman, CEO of Wood Group Kenny, said: "We are delighted to be working with Woodside on the highly prestigious Browse development.
"This is a technically demanding and complex deepwater development that will enable us to demonstrate our continuing commitment to excellence in international offshore projects."
Morgan Harland, subsea and pipelines manager for Woodside Energy, said: "Browse is one of the largest offshore developments currently being undertaken worldwide.
"Wood Group has significant subsea and pipeline engineering skills and expertise and we look forward to working with Wood Group and our partners on the successful completion of these important engineering contracts."
The FEED project started in February and will run for the next 12 to15 months based at the new Browse project office in Perth.
The first gas from Browse is expected to be delivered in 2017.
Australia's second-largest oil and gas company Woodside Petroleum said April 19 it may be difficult to recover a four-week delay to the construction timetable of its US$14.7 billion (Australian $14 billion) Pluto liquefied natural gas, LNG, project caused by bad weather.
The delay could raise concern among Woodside's LNG buyers after it hiked its cost estimate for Pluto and extended the construction timetable several times in the last 18 months due to design faults, labor shortages and industrial action by construction workers. Still, Pluto remains on a relatively tight timetable by industry standards following a final investment decision on the project in July, 2007. LNG projects typically take up to five years to build depending on their size.
Woodside, subject to intense takeover speculation, also reported an expected 19% decline in first-quarter production volumes but its revenue only fell 3% due to higher oil prices. Tapping areas containing 5 trillion cubic feet of offshore natural gas, Pluto on the Western Australia state coastline, is Woodside's most important development project. Related sales to Asian utilities stand to boost its revenue substantially this year if it comes on line in August and ships its first cargo in September as planned.
Woodside's warning that cyclonic weather activity since November has put construction four weeks behind schedule isn't far off Chief Executive Don Voelte's mention in February of "around three weeks" of delays that he said at the time may be tough to reign in. "Mitigation plans are in place but it may be hard to recover weather-related delays at this late stage in the project," Woodside said in an April 19 statement.
Back-up LNG supplies from external sources are available to meet scheduled customer deliveries in the event of a delay, Woodside said last year. Production volumes for the three months to March 31 fell to 15.6 million barrels of oil equivalent, or BOE, from 19.2 million BOE a year earlier as revenue slipped to A$998 million from A$1.03 billion.
Lower oil and gas output was caused by cyclonic activity in Western Australia, the sale of a stake in the Otway gas asset, planned outages at oil operations and natural field decline. Woodside maintained its guidance for full-year production of 63-66 million BOE, excluding any contribution from Pluto. It expects Pluto will add another 5 million-9 million BOE.
The Perth, West Australia-based company hasn't drilled any more wells for its Pluto expansion since the Martin-1 discovery reported last month and says the next one, Xeres-1, will spud in the current quarter as expected. Discussions with potential third party gas suppliers into an expanded Pluto continue, Woodside said.
Shell Australia has joined the Wheatstone LNG project as both gas supplier and equity participant following the signing of a unitization agreement with project operator Chevron Australia.
Under the agreement Shell, which held a 33.33% stake in retention lease WA-16-R—one of two permits that contain part of the Iago gas field—will now have an 8% interest in the Wheatstone and Iago fields in the Chevron-operated permits WA-253-P, WA-17-R, and WA-16-R.
Shell also will take a 6.4% interest in the proposed Wheatstone project facilities. Front-end engineering and design work for Wheatstone is nearing completion and a final investment decision is expected during the second half of this year after finalization of environmental approvals and other associated agreements with the government.
China Petrochemical Corp., known as Sinopec Group, signed a binding deal April 21for natural-gas supply and a 15% stake in a proposed A$35 billion gas-export project on Australia's east coast, in the latest move to import more clean-burning fuels.
Sinopec is paying US$1.5 billion for the 15% stake in the Australia Pacific Liquefied Natural Gas project planned by Origin Energy Ltd. and ConocoPhillips in Queensland State, and has agreed to buy 4.3 million metric tons of LNG annually for 20 years.
China--the world's largest energy consumer--is betting big on natural gas as it grapples with widespread pollution caused by a reliance on coal and crude oil in its energy mix. Burning natural gas to generate electricity emits much less carbon dioxide than burning coal.
According to Edinburgh-based energy consulting firm Wood Mackenzie, China will increase natural gas use from nine billion cubic feet a day in 2009 to 43 billion cubic feet a day by 2030. China is building massive infrastructure to funnel in natural gas from overseas, including pipelines from Central and Southeast Asia and multibillion dollar terminals to receive LNG ships along its coast.
Natural gas from Australia is favored by China as it is cheaper to ship than LNG from the Middle East, and there is less risk of supply being disrupted by political unrest. LNG carriers from Australia also don't need to pass through the potential choke point of the Strait of Malacca, near Singapore.
As a result, international energy companies including Conoco, Chevron Corp., Royal Dutch Shell PLC and BG Group PLC. are spending billions of dollars developing Australia's vast gas reserves to tap Asian demand.
Four large developments including Conoco and Origin's APLNG project are planning to chill gas trapped in coal seams for export from the Queensland port of Gladstone.
The stake purchase by Sinopec reduces Conoco and Origin's holdings in APLNG, slated to ship its first cargo in 2015, to 42.5% each.
The LNG sales deal will help underpin the first of APLNG's two foundation LNG processing units, estimated to have a combined production capacity of 9 million tons, and paves the way for an official sign off on construction midway through the year.
Ryan Lance, Conoco's Senior Vice President for Exploration and Production, said other potential customers are showing a keen interest in buying LNG from the venture, particularly since a March 11 earthquake and tsunami crippled a Japanese nuclear power plant.
"Since the tragic events in Japan gas is going to be in greater demand in the Asia Pacific region, and we're finding that with the customer interaction that we have today," Lance said.
Deutsche Bank has forecast the first phase of APLNG to cost US$18.5 billion, although the joint venture partners haven't given an estimate up to now.
The Sinopec deal is another example of Australia's growing trade relationship with China, said Martin Ferguson, federal Minister for Resources and Energy. It comes just days before Australian Prime Minister Julia Gillard makes her first official visit to China.
"China is Australia's second-largest customer for LNG and this deal with Sinopec brings new and existing LNG contracts with China to over 15 million tons per annum," he said.
Australia's Santos Ltd. in December agreed to sell a 15% interest in its LNG joint venture at Gladstone to Korea Gas Corp. and France's Total SA for A$665 million.
Origin and Conoco obtained a higher US$1.5 billion price for a similar stake because of the "high quality" of their project, underpinned by larger gas reserves, Origin Chief Executive Grant King told reporters.
While promising as an energy source, coal seam gas is technically difficult to extract, untried on a major scale and has lower energy content than conventional natural gas supplies.
A rival venture by BG Group last year agreed to sell LNG from coal seam gas to China National Offshore Oil Corp. Shell has also sold 50% of its standalone venture at Gladstone to PetroChina Co., China's largest oil and gas producer by capacity.
China Petrochemical Corp. is the state-owned parent of China Petroleum & Chemical Corp. (SNP), known as Sinopec Corp, which is listed in Hong Kong and Shanghai.
"This will help Sinopec diversify its natural gas supply and meet the rapidly increasing demand of customers in China," Sinopec Group Vice President Zhang Yaocang said in a statement. He said the company is looking for more opportunities in Australia.
BHP Billiton would be interested in becoming a liquefied natural gas operator in the long term; its chief said in an Australian media interview, amid speculation the top global miner was eyeing Woodside Petroleum.
BHP quashed talk earlier in April that it was getting set to buy Shell's 24 percent stake in Woodside as a precursor to bidding for Australia's top LNG operator.
Analysts interpreted that to mean that no deal was imminent and not that BHP wasn’t interested.
In an interview with the Australian Financial Review from Beijing, BHP Chief Executive Marius Kloppers signaled Woodside would remain on its radar, saying that being an LNG operator was one element missing from the company's energy portfolio.
"That would be something that long term would be a useful thing to have, but I don't think you should read into that there is a burning feeling that the tool kit is light and that that is missing today," Kloppers was quoted saying.
"But it is something that on balance, given that we want to be in all of the energy sources and given that we want -- in the hydrocarbon space -- to be in the various mechanisms that hydrocarbons are produced and transported, it will be something that will be useful in due course."
Kloppers said high iron ore prices and a switch to shorter-term pricing, while a sensitive issue in China, had not hurt the company's ties in its biggest market, which he has visited twice in the past two months.
Kloppers said he was confident that China's moves to curb inflation would not slow the country's economic growth sharply.
"You should be happy about any action that they take before the inflation hits double digits."
"The institutions are very strong, the analytical capabilities are very strong, and any action that is taken early in an inflation cycle is very unlikely to be an overreaction."
He said China's iron ore import needs would outstrip supplies, helping to keep iron ore prices high over the next one or two years. Spot iron ore prices .IO62-CNI=SI are around $179 a tonne.
"Over the next two years, in all likelihood, profitability is going to stay high," Kloppers was quoted saying in a separate interview with The Age newspaper. "Possibly even as high as it is."
Kloppers said he did not expect Japan's nuclear crisis to affect BHP's plans to expand the massive Olympic Dam copper and uranium mine in South Australia.
"I think it is a good thing the world is going to take a look at how do we make standards even higher and more onerous," he said.
Petronet LNG, India's biggest gas importer, is eyeing the Sri Lankan market, planning a new terminal on the east coast and aims to double imports of the fuel as its braces for serious competition from the proposed gas marketing joint venture of global major BP and Reliance Industries.
Petronet, which set up India's first LNG terminal about a decade ago, also plans to sell gas using cryogenic trucks directly to consumers in regions not connected by pipelines of GAIL India, one of its promoters, to boost profitability of the company, the company's managing director and CEO AK Balyan told ET.
"Our board has approved a strategic vision for the company. It includes direct marketing to customers in regions without interfering with the marketing arrangements of our promoters," he said. Its promoters are gas transmission firm GAIL India, explorer Oil and Natural Gas Corp and refiners Indian Oil Corp and Bharat Petroleum Corp Ltd - each with a 12.5 percent stake, while GDF Suez, Europe's largest LNG importer is the strategic partner with a 10 percent stake.
Petronet's new initiatives come at a time when BP has bought stakes in 23 blocks of Reliance and decided to set up a 50:50 joint venture for sourcing and marketing natural gas in India. BP's global presence and access to large gas reserves including LNG, together with Reliance's strong domestic presence is expected to pose a serious challenge for existing players such as Petronet.
Balyan said the vast gas market in India was likely to remain short-supplied, giving enough room for more players to operate in the country. He said demand was likely to far exceed supply for a long time. Petronet is upbeat about expanding into new markets such as Sri Lanka. "We have request from Sri Lanka. We are looking at the opportunity," he said, adding that Petronet's upcoming Kochi terminal was strategically located to serve the promising new market.
The company targets to double its liquefied natural gas (LNG) business in the next five years from current about 8 million tonne per annum by expanding existing infrastructure and adding new capacities, he said. To cater to future demand, Petronet has decided to set up a 2.5 million tonne LNG terminal in the east coast with an investment of $1.5 billion, he said.
It has already engaged a consultant to find a suitable location to build the east coast's first LNG terminal. "The consultant will submit its report by the end of this month. But, 2.5 million tonne initial capacity is ideal for optimal utilization of infrastructure," he said. He said that the project could be commissioned in 36-40 months given company's prior experience.
Petronet has already operating a 10 million tonne per annum capacity LNG facility at Dahej in Gujarat. But the company has 7.5 million tonne per annum long-term assured supply for the terminal from Qatar. Petronet has been able to operate almost 9.5 million tonne volume from its Dahej terminal last month through LNG purchased in spot market and plans to expand the capacity further.
It is investing Rs 936 crore to set up a second jetty for the facility and expending its storage facilities with an investment of $150 million that would help it in expending terminal capacity by 2.5 million tonne annually. The jetty project, which will be ready by 2013, will entertain bigger LNG cargoes and also help in anchoring two ships at a time.
The company has already decided to double the capacity of its second terminal at Kochi to 5 million tonne per annum. "We are implementing both phases simultaneously and hope to complete the facility by 2012-13. About 72 percent work is already complete," Mr Balyan said.
Petronet is also planning to direct market LNG as auto fuel in cryogenic containers, set up stand-alone gas stations in highways and waterways where pipeline-lines are not available. "Our entry in direct marketing will be subject to meeting requirements of our long-term bulk consumers," Mr Balyan said. Most of Petronet's bulk consumers are its promoters.
The Indonesian government has given approval for state oil and gas company PT Pertamina to take over the operation of the liquefied natural gas plant in Arun, Aceh.
The old facility, now operated by ExxonMobil, could be converted into an LNG receiving terminal with a capacity of 200 million cubic feet per day, an official said.
The approval from the minister of finance will be issued early next month, said Mashudianto, the president of state fertilizer company PT Pupuk Iskandar Muda (PIM), which is located in the same district with the LNG plant.
With the decision conversion of the LNP plant into LNG receiving terminal could be a reality early 2013, Mashudianto said. He said the government has agreed with the conversion plan with Pertamina as the operator.
Pertamina and state gas distributor PNG earlier planned to build an LNG receiving terminal in North Sumatra but implementation of the project has been delayed.
Northern regions of Sumatra badly need the facility to facilitate gas shipments to that area to feed local industries including fertilizer plants
Shortage in gas supply has once forced PIM to suspend operation of one of its factories and another fertilizer plant in Aceh, Asean Aceh Fertilizer (AAF), was already liquidated after long years lying idle for the same reason.
Australia-based Liquefied Natural Gas Ltd has requested US$70.9 million of compensation from Japan's Mitsubishi Corp. in relation to an LNG project in Indonesia.
In a statement on April 12, LNG Ltd said the Indonesian Commission for the Supervision of Business Competition had ruled that Mitsubishi and local firms had violated laws against monopolistic and unfair business competition.
The finding, now being appealed by Mitsubishi and the Indonesian companies Pertamina and Medco Energi, came after the Indonesian firms awarded Mitsubishi the rights to develop the Donggi Senoro LNG Project despite LNG Ltd's protests.
LNG Ltd had already significantly advanced the project, in partnership with Pertamina and Medco.
Air Products has signed an agreement with JGC Corporation to supply its proprietary propane pre-cooled mixed refrigerant process and MCR® main heat exchanger for a two-million-ton-per-year LNG project in Luwuk, Central Sulawesi, Indonesia.The Donggi-Senoro LNG project, a joint venture between Indonesia's state-owned oil and gas company, Pertamina, along with Mitsubishi Corporation, Korea Gas Corporation and PT Medco Energi Internasional, is targeted for a 2014 start-up.
"We have a long history of working on LNG projects in Indonesia and are pleased to continue to build on our experience and position in the region. Our technology continues to be the leader when it comes to the development of LNG projects around the world," said Bill Merlini, director, LNG Indonesia at Air Products. "This is a very important project for Indonesia's LNG industry and is a key to its continued substantial LNG supply to Japan and East Asia."
The Donggi-Senoro plant will use the region's gas fields located in the Senoro-Toili Block and the Matindok Area as feed gas for what will be the fourth LNG project located in Indonesia. Air Products' LNG technology has been involved with all four projects, including: PT Arun and PT Badak, originally started-up in the late 1970s, and Tangguh LNG which began operations in 2009.
Golar LNG Energy has announced that the long term Floating Storage and Regasification (FSRU) and mooring time charter with PT Nusantara Regas, a joint venture between Pertamina and PGN ("West Java FSRU Project "), has been concluded and was executed on April 20, 2011.
The contract duration is for an initial term of approximately eleven years with automatic conditional extension options up to 2025. The West Java FSRU Project contract value for the initial period is approximately US$500 million.
Since the execution of the Letter of Intent in November 2010, Golar has ordered the long lead items, carried out conversion engineering and the vessel nominated for this contract, "KHANNUR" has been positioned to Singapore where the physical conversion works are now underway at Jurong Shipyard in Singapore.
Upon completion of conversion and delivery in the first quarter of 2012, "KHANNUR" will be permanently moored at a purpose built mooring structure located 15 km offshore West Java. The converted "KHANNUR" will be capable of storing approximately 125,000 cubic meters of LNG and delivering up to 500 MMSCFD (~3.8 MTA) of regasified LNG via Nusantara Regas's pipeline to fuel for two Power Plants owned and operated by Perusahaan Listrik Negara ("PLN"), Indonesia's national power company.
The Golar group has already completed three FSRU conversions over the last three years. The FSRU for the West Java FSRU Project will be similar in design to the latest of these three projects, the "GOLAR FREEZE", which recently delivered under a long term contract in Dubai. The West Java FSRU Project will be Indonesia's first LNG regasification terminal and significantly, the first FSRU project in Asia. Golar is currently bidding on PGN's FSRU, Mooring and Pipeline tender to be located offshore Medan, Sumatra.
Golar Energy's FSRU technology offers reliable and cost effective solutions to fast track the import and regasification of LNG.
Golar Energy's CEO, Doug Arnell said "We are very proud to have executed this foundation agreement for the West Java project. We also wish to express our appreciation to the Nusantara Regas team for their dedication in finalizing the contract. We believe this contract for Indonesia and Asia's first FSRU will be the catalyst for the development of additional floating LNG projects within the Asia Pacific region. Indonesia has announced plans for more FSRU projects to include small scale LNG projects and we look forward to having the opportunity to deliver more fast track and low cost solutions."
Japan’s state-run Nippon Export & Investment Insurance plans to provide an insurance policy for JGC Corp. to cover an engineering, procurement, and construction contract that the firm was awarded in January from Indonesia’s Donggi-Senoro LNG project.
The Donggi-Senoro partners made a final investment decision in January on the $2.8 billion project, which is scheduled to come online in second-half 2014, producing 2 million tonnes/year of LNG.
Preliminary agreements to buy the total output of Donggi-Senoro gas have been signed by Chubu Electric Power Co. for 1 million tonnes, Korea Gas Corp. (Kogas) for 700,000 tonnes, and Kyushu Electric Power Co. for 300,000 tonnes.
NEXI’s award to JGC came on the heels of an earlier announcement stating that it would also provide insurance for Mitsubishi Corp. to cover its $1.25 billion investment in the Donggi-Senoro project.
Japan is looking to secure as many alternative sources of energy as possible following the earthquake and tsunami which earlier this year created a disruption in the country’s power supply from nuclear sources.
Reports at the end of April said Donggi-Senoro LNG will receive a propane pre-cooled mixed refrigerant process and MCR main heat exchanger from a partnership between licensor Air Products, Lehigh Valley, Pa., and JGC.
Mitsubishi holds a 45% stake in Donggi-Senoro, Indonesia's state-owned PT Pertamina owns 29%, Kogas has 15%, and PT Medco Energi holds 11%.
InterOil Corp. announced April 11 that InterOil and Pacific LNG Operations Ltd., have executed agreements, conditional upon Flex shareholder approval and final FID, with Samsung Heavy Industries and FLEX LNG Ltd. related to the construction and operation of a 2 million tonne per annum (mtpa) floating liquefied natural gas processing vessel (FLNG).
The FLNG project is intended to integrate with and augment proposed infrastructure to liquefy natural gas from the onshore Elk and Antelope gas fields in the Gulf Province of Papua New Guinea pursuant to preliminary arrangements with Energy World Corporation and to link with InterOil's proposed condensate stripping plant (CSP) being pursued in joint venture with the Mitsui Group and to accelerate the intended monetization of the Elk and Antelope fields. Commencement of the FLNG vessel's operations is targeted for mid 2014.
FLEX LNG has informed InterOil that it has already completed the generic Front-End Engineering and Design (FEED) in 2009. The project specific FEED is targeted to start in May 2011, with all parties working towards reaching a final investment decision (FID) before the end of 2011. The agreements represent a continuation of the over 12 month collaboration between Samsung Heavy Industries, FLEX LNG, InterOil, Pacific LNG and Liquid Niugini Gas Ltd. (LNGL), InterOil's joint venture LNG project company with Pacific LNG, to work together to develop the first floating facility to produce LNG.
FLEX LNG and Samsung Heavy Industries will be responsible for the design, engineering, construction and commissioning of the FLNG vessel. FLEX LNG will also be joint operator of the FLNG vessel together with LNGL. Construction of the FLNG unit will be fully financed by FLEX LNG and Samsung Heavy Industries.
The FLNG vessel is expected to be moored alongside the proposed jetty located in the Gulf Province, which will be shared with InterOil's proposed land-based LNG facilities, and have a production capacity of up to 2 million tons of LNG per annum and to process an estimated 2.25 trillion cubic feet of gas over a firm 25-year period. FLEX LNG will receive 14.5% of the revenue, less agreed deductions and premiums, from the sale of LNG from the FLNG vessel for an initial 15-year period. Thereafter, for the next 5 years FLEX LNG will receive 12.5% of the revenue and 10% of the revenue for the last 5-year period. During the 25 year term of the contract, LNGL will become a part owner of the FLNG vessel.
As a part of the arrangements, InterOil and Pacific LNG will receive options, exercisable no later than 15 days after Flex LNG shareholder approval of this equity transaction, to acquire 11,315,080 common shares of FLEX LNG at an average strike price of 4.5909 NOK. This is approximately a 12% premium to the average FLEX LNG share price during October 2010 when an initial non-binding agreement was executed between FLEX LNG, InterOil and Pacific LNG.
Additionally, upon the project reaching FID, InterOil and Pacific LNG will receive FLEX LNG shares at par value equivalent to 5% of FLEX LNG. An additional amount of shares equalling up to 15% ownership in FLEX LNG may be issued to InterOil and Pacific LNG for $0.01 per share in three 5% tranches during the period from FID until 9 months after FID.
The agreements signed with InterOil, Pacific LNG, LNGL and Samsung Heavy Industries are all conditional upon FLEX LNG's shareholders approving the proposed equity transaction with InterOil and Pacific LNG and achieving a positive project FID. Such approval is targeted for April/May 2011 and FID by the end of 2011.
Commenting on the agreements, the Chairman of InterOil, Phil Mulacek stated: "InterOil is proud to be partners with Samsung Heavy Industries, FLEX LNG, and Pacific LNG in a proposed project utilizing a FLNG vessel to accelerate the commercialization of our natural gas resources in PNG. The confidence of Samsung, the largest Korean conglomerate, to be the undisputed leader in FLNG, with a full completion guarantee, solidified our participation. All stakeholders benefit from higher utilization of the core infrastructure and high quality gas assets required for the project. The additional time required to increase upstream capacity and integrate the proposed marine facility to accommodate the FLNG vessel is warranted by the increased scale of the entire project and the incorporation of additional respected industry partners. In less than one year, we have negotiated agreements, contingent on FID, to construct facilities for the processing and sale of 5 mtpa of LNG (4.5 Tcf of natural gas) in addition to our expanded CSP project."
InterOil Corp. is developing a vertically integrated energy business whose primary focus is Papua New Guinea and the surrounding region. InterOil's assets consist of petroleum licenses covering about 3.9 million acres, an oil refinery, and retail and commercial distribution facilities, all located in Papua New Guinea. In addition, InterOil is a shareholder in a joint venture established to construct an LNG plant on a site adjacent to InterOil's refinery in Port Moresby, Papua New Guinea.
South Korea's Samsung Heavy Industries has won a $400 million order to build two LNG carriers from Norway's Golar GLNG.OL in addition to an earlier order announced on April 12, Golar said on April 20.
The two latest vessels are to be delivered in 2013 and 2014.
"In addition to the announced new building program, Golar is in final discussions regarding firm commitments for construction of multiple FSRU carriers," Golar said in a statement.
Twenty-five major Dutch enterprises operating in the oil and gas sector and the Vietnam National Oil and Gas Group (PetroVietnam) discussed investment opportunities in the field at a seminar in Hanoi on March 29.
The event was held within the framework of the visit to Vietnam by a Dutch business delegation.
During the seminar, Dutch businesses raised queries regarding areas that they could invest in.
According to Alex Enthoven, President of the Association of Dutch Suppliers in the Oil and Gas Industry (IRO), the Netherlands is the world's second largest exporter of petroleum-related products.
The country provides nearly 20 percent of the gas for the European market and accounts for 30 percent of natural gas in Europe, Alex Enthoven said, adding that the Netherlands set up the most dense gas distribution network in the continent, with a total length of pipeline reaching 136,000 km.
With strengths in finance and technology, IRO's member businesses desire to invest in all steps included in the oil and gas industry such as exploration, exploitation, consumption, equipment supply, oil and gas services, and technological solutions in petrochemistry, he said.
PetroVietnam Deputy General Director Do Van Hau said PetroVietnam aims to raise gas output from the current 8-9 billion cubic meters to 14 billion cubic meters by 2015 to meet demands of power generation and fertilizer production. Thus, the group wishes to cooperate with foreign partners, especially Dutch businesses, in the exploration and exploitation of oil and gas in Phu Khanh and the Red River.
The company also hopes to work with Dutch enterprises in constructing pipelines transporting gas from exploitation sites towards onshore service ports in Cam Ranh and Hon La of the central provinces of Ninh Thuan and Quang Binh, and ports for importing liquefied gas in Thi Vai, in the southern province of Vung Tau, as well as other petrochemical projects, Hau said.
Foster Wheeler AG announced April 14 that a subsidiary of its Global Engineering and Construction Group has received a contract from Statoil Petroleum AS for the pre-front-end engineering (pre-FEED) for the Snøhvit Future Development Project at Statoil's Melkøya-based LNG facility on Melkøya Island approximately 450 km north of the Arctic Circle, Hammerfest, Norway.
The Foster Wheeler contract value for this project was not disclosed and the first release of work will be included in the company's first-quarter 2011 results. Statoil has informed Foster Wheeler that further releases of pre-FEED work to Foster Wheeler under the existing contract are likely to be made during 2011, depending upon the development option(s) selected by Statoil.
Foster Wheeler's scope of work will include concept design activities in order to support the finalization of the development concept and of the plant capacity for the expansion of LNG production at the Melkøya LNG facility, as well as energy optimization investigations. Foster Wheeler's involvement through this contract will continue through 2011.
"We have been working with Statoil for some time on a number of studies for the expansion of the Melkøya LNG facility," said Umberto della Sala, interim chief executive officer, Foster Wheeler AG. "This latest award reflects Statoil's confidence in our in-depth LNG expertise and the combined added value delivered by our specialist studies team in our Business Solutions Group and by our engineering, procurement and construction experts in developing execution strategies to underpin the concept development, including modularization. Delivering technically complex projects in challenging locations is an area in which we specialize and have a long and proven track record."
The existing Snøhvit LNG facility is the world's northernmost LNG facility and has a design capacity of 4.2 million tonnes per annum (mtpa). Commissioned in 2007, it processes gas transported through 143-km pipeline from the subsea facilities on the Snøhvit and Albatross fields, which comprise the first offshore developments in the Barents Sea.
Japan and Russia will double the production capacity for their joint liquefied natural gas project in Vladivostok from the initially planned 5 million tons to 10 million tons per year, it has been learned.
Demand for LNG to fuel power plants and turbines in Japan has increased because of the ongoing troubles at Tokyo Electric Power Co.'s Fukushima No. 1 nuclear power plant, which have compromised the stability of the electricity supply in some areas.
Japan and Russia inked a detailed agreement on April 25 in Moscow on carrying out feasibility studies for commercialization of the gas field.
They plan to begin construction of a gas plant in 2013 and begin operating it in 2017.
In January, Japan and Russia agreed to produce 5 million tons of LNG a year through the project. Doubling the production capacity would boost the total project cost to about 1 trillion yen, from the initially estimated several hundred billion yen.
A feasibility research body set up by Japanese trading firms, including Itochu Corp. and Marubeni Corp., and Russia's state-run Gazprom judged the project would be able to supply more than 5 million tons of LNG to Japan per year.
Compared to oil-fired thermal power plants, LNG thermal plants emit less carbon dioxide, and thus cause less harm to the environment.
Worldwide reassessments of the use of nuclear power are expected to push up global demand for LNG in the near future, and Japan has been working to secure a stable supply of the resource as domestic demand is also expected to increase.
TEPCO aims to make up for a decline in the power-supply capacity of its nuclear reactors by operating LNG thermal power plants.
Japan has been importing more than 6 million tons of LNG annually from the Sakhalin II project off Sakhalin, Russia. When the Vladivostok plant begins operating, Japan will be able to source about 20 percent of its total LNG imports from Russia.
Gazprom announced April 26 that it hosted a working meeting between Alexander Ananenkov, Deputy Chairman of the Company's Management Committee and Yoshio Matsukawa, President and CEO of Japan Far East Gas Co., Ltd (Japan).
The parties signed the agreement on the joint feasibility study for deployment of a gas liquefaction plant (LNG plant) and a gas chemical complex near Vladivostok.
The document also envisages investigation of the opportunities for executing a pilot project on natural gas compression near Vladivostok for further marine transportation.
"The feasibility study will make an important contribution in building up natural gas deliveries from Russia to Asia-Pacific countries by Gazprom in future as well as in reliable energy supply to Japan," said Ananenkov summarizing the meeting results.
The Shaw Group Inc. on April 21 announced it has been awarded a contract to provide front-end engineering and design (FEED) for the replacement of two liquid storage tanks by Abu Dhabi Gas Liquefaction Company (ADGAS).
The tanks are part of the ADGAS liquefied natural gas and liquefied petroleum gas facilities on Das Island, the center of storage and export operations for oil and gas extracted from the offshore fields of Abu Dhabi, United Arab Emirates. The tanks hold paraffinic naphtha, a by-product of the island's processing facilities. ADGAS is a subsidiary of Abu Dhabi National Oil Company (ADNOC).
The FEED work will help ADGAS increase the capacity of the tanks and loading systems to match modern naphtha tankers capacities.
"Shaw is a leading competitive FEED contractor," said Lou Pucher, president of Shaw's Energy & Chemicals Group. "This award expands our credentials in the Middle East, which is an active region of projects for us today and a prominent part of our strategic plan for growth."
Shaw has numerous projects underway in the Middle East. Most recently, Shaw announced construction of a new state-of-the-art pipe prefabrication facility in the United Arab Emirates. It also is providing project management consultancy services for a base oils plant and technology licensing and engineering services for its Residue Fluid Catalytic Cracking technology for Abu Dhabi Oil Refining Company (Takreer).
Shaw recently announced full commercial operation of a grassroots 1.3 million metric ton per year ethylene plant for Eastern Petrochemical Company (SHARQ) in Al-Jubail, Saudi Arabia, and has operated an ASME certified pipe fabrication facility in Bahrain since 1994. It opened an office in Abu Dhabi in 2009.
The undisclosed value of the contract was included in Shaw's Energy & Chemicals segment's backlog of unfilled orders in the second quarter of fiscal year 2011.
Dubai is considering developing liquefied natural gas export capacity with the aim of becoming a gas trading and distribution hub, according to the manager of state-owned gas company Dubai Supply Authority (Dusup), Paul Mason. Speaking to Emirati newspaper The National on April 20, Mason said that since the country has the ability to import LNG adding capacity to export would be a logical next step. The National added that Dubai could subsequently look into trading gas-based derivatives such as gas futures contracts.
Formerly an important oil producer, Dubai has historically purchased gas from the neighboring emirate of Abu Dhabi, and started gas purchases from Qatar via the Dolphin pipeline in 2007. Rising energy demand has led Dubai to source a floating LNG regasification vessel, the Golar Freeze, through which it imports LNG mainly from Qatar under a 15-year agreement with Anglo-Dutch major Royal Dutch Shell.
Despite being a significant net gas importer, there are factors that could help Dubai become an important gas exporter. As well as its LNG-import terminal, Dubai has developed gas storage capacity using a depleted oil field. It is also in the process of developing up to 1.8bn cubic meters (bcm) of LNG storage through a project known as the Dubai Multi Commodities Centre (DMCC), which is scheduled for completion by 2013. The emirate is also linked by gas pipelines to Abu Dhabi and the other states of the UAE and to Qatar via the Dolphin pipeline, allowing it to play an important role in regional gas transport. Nevertheless, Dubai's lack of any significant domestic gas production means that it is at a natural disadvantage in promoting itself as a gas hub, compared with Qatar or Abu Dhabi.
McIlvaine Company,
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