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Thursday, 20 February 2014

Qatargas Ships Carry Out First LNG Ship-To-Ship Transfer

February 17, 2014

Qatargas chartered LNG ships carry out the first Ship-To-Ship (STS) transfer operation of LNG between two Q-Flex type ships following an incident involving one of the ships while transiting the Singapore straits.  Whilst there were no reported injuries to personnel or impact on the environment, the incident did result in minor damage to the vessel.

Reinforcing Qatargas’ paramount commitment to the safety of people and the protection of the environment; rigorous planning, including formal Risk Assessment, were completed and approved by all concerned parties prior to the start of the STS operations. 

The transfer of 211,000 M3 was conducted at anchor in open waters in Singapore utilizing specialized equipment and a contractor with LNG STS expertise. The operation commenced on 22nd January and completed on 28th January 2014.

In line with our strong commitment to total customer satisfaction, various scenarios options were considered and the STS operation was identified by Qatargas as a key element to ensuring that Qatargas commitments and obligations to their valued customers were met. This was only achievable through the collective and collaborative effort of all parties involved in the operation, and with the cooperation and support of Qatargas’ customers.

The completion of this STS operation reinforces Qatargas’ position as the world’s largest producer and reliable supplier of LNG.

India-Qatar LNG deal at $10-12 poses challenge to Pakistan

Pakistan to respond on Tuesday at Doha meeting
Khalid MustafaMonday, February 17, 2014
From Print Edition
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ISLAMABAD: India has set a benchmark of LNG price from Qatar in the region at $10-12 per MMBTU posing an enormous challenge to Pakistani authorities.

According to Dr Miftah Ismail, Chairman Board of Investment who is also chairman of board of directors of Sui Southern, as per existing international price, the LNG price from Qatar will hover at $17 per MMBTU for Pakistan. After adding other charges it will hover at $18.

Dr Miftah said if the LNG is provided to power houses the sales tax will be re-adjusted. So the cost of LNG price because of GST will not increase.

When his attention was drawn towards the fact that India is importing LNG from Qatar at $10-12 per MMBTU as mentioned in the letter of energy expert Arshad H Abbasi associated with SDPI written to Prime Minister Nawaz Sharif, Dr Miftah said: “I assure that this government will get a better deal with Qatar and we will also look into the Qatar-India deal prior to advancing on LNG deal.”

However, independent sources said that the government has made up its mind to make the delivered cost of imported LNG from Qatar to end consumers at $20 MMBTU which will surely be uneconomical.

Top official of the Ministry of Petroleum and Natural Resources Naeem Malik when contacted said that no price for LNG from Qatar has been so far negotiated.So far, Pakistan has received the draft agreements from Qatar which are being examined by Pakistan’s relevant authorities. Another official said that the LNG price will be settled not at ministry level, but also at top leadership level of both the countries.

Qatar has sought a LNG supply contract for a period of 15 years extendable for to five years with no price reopener. The country wants a penalty of $200 million for termination of the agreement at any stage, reveals a copy of the HoA (Heads of Agreements) made available with The News.

Doha also wants the price to be fixed as a percentage of Brent, it shows. Agreeing to a fixed Brent rate for 15 years will be like mortgaging Pakistan’s future generations.The officials said that the government was committing a sovereign guarantee to cover the obligations under the agreement. This is against the LNG policy, they added.

Pakistan is likely to give its response to Qatar to the draft agreement on February 18 and will ask Doha to do away with the condition of no price opener in LNG supply agreement for 15 years that Doha has suggested.

The Joint Ministerial conference between Pakistan and Qatar will be held in Doha. Managing director of PSO and top officials of PPL (Pakistan Petroleum Limited) and senior officials of the ministry would accompany Federal Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi.

Meanwhile, the letter written by Arshad H Abbasi to prime minister, eminent energy experts associated with SDPI mentions that India has already set the benchmark in pricing in this region, having negotiated a landing price of LNG of 10.5/MMBTU from the USA.

Similarly, looking at India’s LNG price from Qatar between the time period of October 2012 to July 2013, it has ranged between $10-12/MMBTU, and the price that did not rise to more than $11/MMBTU in 2013.

To avoid litigation in the future, it may be wiser if Pakistan renegotiates the prices in advance, especially because base price and price index, once inked in the contract are subject to little or no change. Moreover, there must be a price review clause in the agreement after every year.


US shale no 'game changer' for LNG, say Qatar energy minister

Mohammed bin Saleh Al-Sada says the US shale revolution will not change Qatar's strategy of becoming an LNG superpower

Mohammed bin Saleh al Sada has opened door for UK firms to bid for more work in oil-rich sheikhdom
Qatar's Energy and Industry Minister Mohammed bin Saleh Al-Sada says US shale gas no game changer Photo: AFP
Q: What future role does Qatar envisage in supplying gas long-term to the UK and what are the investment opportunities this will create?
Al-Sada: "The UK is an important customer of Qatar’s LNG, and we expect it to remain as such, particularly in light of the large investment we have made in the LNG re-gasification terminal at South Hook near Milford Haven. This was Qatar’s first participation in a foreign downstream terminal, and is viewed as one of the major contributors to the UK’s energy diversity.
South Hook LNG Terminal, part of the Qatargas 2 integrated Value Chain, is one of the largest Liquefied Natural Gas re-gasification terminals in Europe. It plays a major role in strengthening the strategic partnership between the UK and Qatar, one of the most reliable energy suppliers. It provides the UK with a significant proportion of its natural gas requirements, and has the capacity to process 15.6 million tonnes of LNG annually, representing up to 20 per cent of the UK’s natural gas demand.
A new Long-term deal was recently agreed to supply the UK with 3 million tonnes of Qatari LNG per year. This is seen as vital for the future energy security of the UK, contributing to energy diversity of supply in order to meet UK’s energy requirements, and offering investment opportunities to both parties.
We are also evaluating a proposal to install a combined heat and power plant at South Hook in order to use the available heat from the re-gasification process to generate electricity for the grid."
Q: There is a great deal of concern in the UK over rising electricity and energy prices – do you think the country is paying a fair price for natural gas or is gas still cheap compared with other major fuel sources?
Al-Sada: "As a power source, gas remains extremely attractive economically. It is efficient in generating power, and it is very clean compared to coal and oil. Price-wise it remains significantly cheaper than oil in the UK on a thermal basis."
Q: What kind of opportunities in the UK energy industry is Qatar interested in pursuing? Would you look at downstream ventures in terms of distribution/marketing?
Al-Sada: "Qatar is certainly interested in various investment opportunities in the UK, particularly in the LNG and petrochemical businesses. Our international equity participation is looked after by Qatar Petroleum International (QPI), which is Qatar Petroleum’s main vehicle for international activities, and which is entrusted with making strategic commercial investments in the energy sector worldwide. The company aims to acquire assets through exploration & production projects and engage in strategic partnerships and business investments worldwide in the fields of petrochemicals, gas, power, refineries and LNG receiving stations.
QPI is always interested in the wholesale selling and transportation of LNG to the UK, and that is Qatar’s strength as a major LNG producer.
The distribution and marketing of downstream products is currently the responsibility of Qatar Chemical and Petrochemical Marketing and Distribution Company (Muntajat), which holds exclusive rights to purchase, market, distribute and sell Qatar's production of chemical and petrochemical regulated products to the global market."
Q: How has the development of shale gas in the US changed Qatar’s long-term strategy in terms of gas?
Al-Sada: "On the long term, our strategy remains essentially unchanged, thanks to our flexibility and our ability to respond to changes in the global gas market.
When we embarked on the massive expansion of our LNG business some 20 years ago, a key objective was to ensure we could respond to changes in the global gas market. This was essential, in order for us to mitigate the risk exposure of hub-based LNG prices such as in the US. This is something no one else was willing to do at that time. We deliberately set out to have the flexibility to vary the geographic balance of our sales.
Therefore, we do not consider the US shale gas revolution to be a game changer but rather a validation of Qatar’s strategy. Global gas demand has been growing consistently and we have had the flexibility to re-plan our LNG marketing to meet growing demand in Asia and elsewhere.
Qatar’s role as an undisputed leader in the global energy market is set to remain for years to come."
Q: What are the current plans concerning the next round of development of the North Field and what part could British companies hope to play?
Al-Sada: "We have achieved our initial strategy with respect to our North Field, which include achieving our target of 77 million tonnes of LNG export capability, and supplying all the needs of local power and industrial consumers. The commissioning of the Barzan gas project, starting in 2014, will enable us to meet growing local demand for at least the next 20 years.
Currently, the major objective for the North Field is to conduct a comprehensive evaluation of all the reservoir, well data and models in order to develop the optimum strategy for the long-term future of the field.
But even though the North Field will be at plateau production, we still expect to spend around $3 billion of capital expenditure over the next 5 years, excluding Barzan, and we hope that British companies will want to compete for the contracts to deliver these projects."
Q: Could a natural gas version of OPEC work as a mechanism to provide stability to global gas markets?
Al-Sada: "A gas version of OPEC would not work. This is because the industry structures for gas markets and oil markets are very different in terms of supply commitment, costs, liquidity, and competing fuels.
We currently have the Gas Exporting Countries Forum, which is a gathering of producers working together to advance the gas industry, and to promote the use of gas and the development of resources.
The Forum has no provisions or intentions to influence or interfere in gas markets, including production volumes and prices."
Q: What structure do you advocate in terms of gas pricing – should this be somehow linked to oil?
Al-Sada: "The international natural gas trade is geographically divided between three regional markets: the US, Europe (which is supplied mainly by pipelines), and Asia (which is supplied by LNG).
These regional markets determine natural gas prices differently, depending on the sources of supply, geographical and political factors, and the level of market liquidity and maturity.
The discussion about the relationship between the prices of natural gas and oil is not new, however it has intensified over the last few years as the ratio of oil to natural gas prices in certain markets reached high levels and distorted the overall market stability.
As for LNG pricing mechanisms, Qatar has always supported the view that long term contracts based on oil indexation are a more predictable and reliable mechanism for all concerned in the industry. What the industry needs is a stable and fair price to justify the level of investment needed to meet future demand for natural gas. In our view, it is the investments we make today that will determine the resources to be available in the market tomorrow."
Q: How much of a concern is the security of LNG supply routes out of the Gulf via the Strait of Hormuz? Are there contingencies in place if it were shut off for any reason?
Al-Sada: "I believe that no single party has an interest in closing the Straits of Hormuz, through which 17 million barrels of crude oil is shipped every day.
Throughout several decades of geo-political turmoil and three Gulf wars, never was this strategic waterway ever closed.
Any conflict that would hinder the free flow of energy supplies does not concern us in this region alone, but would concern the entire world, which fully understands the ramifications of any action affecting the straits.
The government of the State of Qatar maintains a policy of seeking peaceful resolution to differences and conflicts in this region and on the global level. This, among other things, will mitigate any risks or dangers posed to international trade routes, particularly energy supplies."
Q: What are the opportunities for oil in Qatar – will you be opening up new acreage?
Al-Sada: "Qatar has been and remains a relatively small producer of crude oil, compared to its neighbors. During the 1970s, Qatar's oil production peaked at around 500,000 bpd. As fields aged, production started to decline until it reached around 300,000 bpd in 1987. In the early 1990's, a number of production sharing agreements were signed with various international oil companies which resulted in Qatar's total crude oil production to exceed 800,000 bpd in 2006, before it settled in 2008 at its current level of 700,000 bpd.
The results of exploration activities were initially disappointing and some exploration blocks were relinquished for lack of potential. However, during the last few years, a number of new exploration and production sharing agreements were signed to explore for both oil and gas. QP is currently evaluating the possibility of opening up new areas for further exploration.
Although Qatar's petroleum production has grown steadily for many years, its oil fields are maturing. We look to offset further declines by the use of Improved and Enhanced Oil Recovery Techniques, which are currently being used in several fields.
A major strategy rethink took place on the fields under Qatar Petroleum's direct operation. Major reservoir and field-wide studies have been initiated to re-assess the reserves, and the long term production prospects for each field. Re-development will be pursued in light of the outcome of the studies."
Q: Qatar has been an innovator in terms of LNG and most recently GTL – will we see more in terms of making strategic investments in terms of how you monetize the gas downstream?
Al-Sada: "Qatar Petroleum has embarked on an ambitious plan to further develop Qatar’s downstream sector, consolidating its position as a major player in the industry. Our long term hydrocarbon development strategy is opening new opportunities for further downstream development, which includes raising Qatar’s petrochemical output to 23 million tones per year by 2020.
We are investing in mega-expansion schemes that are designed to add further value to our natural hydrocarbon wealth. Such projects include Al-Karaana Petrochemical Project, a QP-Shell joint venture. This world-scale steam cracker will mainly produce mono-ethylene glycol, LAO and OXO alcohol, and is projected to start in 2018.
Another project to mention is AL-Sejeel, a JV between QP and QAPCO, which will use ethane, butane and GTL naphtha as feedstock to produce Ethylene (1.5 million tonnes per year), High Density Polyethylene (1 million tonnes per year), Linear Low Density Polyethylene (550 thousand tonnes per year), and Poly Propylene (540 thousand tonnes per year).
Qatar’s downstream development includes the Gasoline and Aromatics project (with a capacity of 1 million tonnes per year of Paraxylene, 500,000 tonnes per year of Benzene, and 60,000 barrels per day of gasoline); the Linear Alkyl Benzene (LAB) Project (with a capacity of 100,000 metric tons per year of LAB); and the Butadiene Synthetic Rubber plant (with an approximate capacity of 170,000 tonnes per year of butadiene and rubber derivatives).
The Laffan Condensate Refinery Project Phase 2 (LR2) is one of the important downstream projects in Qatar. The new condensate refinery is similar to the existing LR1 refinery, and has a processing capacity of 146,000 barrels per day. The additional product capacity will feed other downstream projects, in addition to increasing the quantity of refined products like diesel and jet fuel for the local consumption as well as for exports."