JJune

une 20
2017
017

On the Cutting Edge of Mass Transfer

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 ISSN 1747-1826

CONTENTS
03 Comment 37 Solvent solutions
JUNE 2017
Anna Stewart, USA, and Aiguo Zhou, China, Dow Oil, Gas & Mining, outline the
challenges that operators face when designing and operating an amine plant for
05 LNG news acid gas removal.

10 Africa’s LNG safari 41 Growing opportunities

Nick Prowse and Nishant Singh, Norton Rose Fulbright, UK, outline
the exciting times ahead for the natural gas and LNG industry in
Africa as it continues its safari.
Keith Stewart, HEROSE Ltd, Germany, and Lance Looper, Ratermann Cryogenics, USA,
discuss growing opportunities for cryogenic valves in LNG.
43 Actuation in operation
Mike Semens-Flanagan, IMI Critical Engineering, UK, highlights the importance of
selecting the most suitable valve actuator for specific pipeline projects.

46 An inspector calls
John van Voorbergen, Temati BV, The Netherlands, explains why proper installation
and inspection is crucial for ensuring the efficiency of LNG insulation systems.

51 New material
Frédérique Coeuille, Nicolas Thenard and Guillaume De Combarieu, GTT, France, look
at the development of a foam material specially developed for LNG containment
systems.

55 Cast in concrete
Eric Reaman and Sanjay Mehta, Preload Cryogenics, and Markus Wernli, BergerABAM,
USA, look at the benefits of using precast concrete for primary and secondary
containment of LNG storage.

10 61 Working towards the same goal

14 Sweet success
Glenn Shiveler and Harold Wandke, Sulzer Chemtech USA Inc., USA,
look at how to effectively troubleshoot amine sweetening plants.
Peter Keller, SEA\LNG, USA, explains how collaboration, demonstration and
communication will help the widespread adoption of LNG as a marine fuel.
64 15 facts... on Africa

22 Changes in containment
ntainment
Patrick Janssens, ABS, China, looks at how LNG containment systems
ries of innovation.
are continuing to push the boundaries

26 More than justt a licence to ON THIS MONTH’S C

COVER
operate
Carlos Guerrero, Bureau Veritas, France,
nce, outlines how the company is
helping the global LNG transportationon industry move forward with
confidence. Cover image: Although it may
resemble a photograph
photograph, it is
aactually
ctually cutting edge CF
CFD showing
31 The importance of sampling the vapour and liquid dydynamics
Tom Knight, Orbital Gas Systems, USA,
A, looks at the
NG gas pretreatment
importance of sampling systems in LNG on a Sulzer High Perform
Performance tray.
operations. To design the best equipm
equipment, you
have to understand the scie
science of the
equipment and the process.

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 JOSEPH GREEN
EDITOR

COMMENT
B
y the time you read this copy of LNG Industry, the
winner of this year’s UEFA Champions League will
have been crowned. The Principality Stadium in
Cardiff plays host to the battle between Spain’s
Real Madrid and the Italians Juventus.
Juventus have won the final twice in their illustrious
history, but it has been 21 years since they last lifted the
trophy. In the meantime, they have lost four finals. Fifth time
lucky perhaps?
Whilst both teams possess squads laden with
internationals and global superstars, it is Real Madrid who
carry the burden of expectation. The dominant force of late,
the Spaniards are looking to become the first team to retain
the title in its modern format. Whilst the team from Turin are
by no means inexperienced in this kind of scenario, they play
the part of the underdogs against eleven time winners Madrid.
In the battle for supremacy in the LNG world, a similar
tussle is underway. Qatar has dominated LNG exportation
since 2006. In 2015, Qatar exported 77.8 million tons of LNG,
maintaining its position at the top of the pile of rival major
exporters. Although Qatar has held onto top spot, the country’s
industry has been troubled by price declines and a tide of new
LNG sources.
In the LNG world, Qatar is Real Madrid. The reigning
champions with the best figures year after year.
Juventus could be played by any number of new pretenders
to the throne. Qatar is currently facing heightened competition
from a number of relatively new faces. This has increased
confidence in buyers as they look for lower prices and more
control via shorter contracts and the rights to divert or resell
unwanted cargoes.
Japanese natural gas buyers in particular are pressing
hard in long-term supply talks. In response, Qatar Petroleum
has warned that Japanese companies could lose out on
Qatar’s upcoming LNG projects if they push too hard.
Qatar Petroleum’s status in Japan is already under threat,
with its market share falling 17% last year while Australia’s
increased by 20%.1
Aside from Australia, Qatar is facing an unlikely source
of competition for Japanese market share – the Juventus of
this analogy – Nigeria.
Facing up against the history and the power of Qatar
is the world’s fourth largest LNG producer. Nigeria is set to
come head-to-head with Qatar in a bid to court Japan’s gas
and power companies as many of its own supply deals with
Europe come to an end in 2021 – 2023.
Up to 8 million tons of annual LNG output from Nigeria
is coming off contract at that time and Japanese buyers
are being targeted. Nigeria has LNG projects that are fully
depreciated, allowing them to offer more flexible terms
such as diversion rights and shorter contracts.
In the fight for Japanese business, Nigeria are
seizing on an opportunity. As Juventus take on the might
of Real Madrid they will need to demonstrate similar
opportunism. Despite the considerable power that Nigeria
possess however, it remains difficult to look beyond the
might of Qatar. My heart says Juventus; my head says
Madrid.
Taking a deeper look into the African LNG market,
Nick Prowse and Nishant Singh from Norton Rose Fullbright
provide this month’s regional report (p. 10). The article aims
to outline the exciting times ahead for an LNG market that
promises much.
Elsewhere we have a range of interesting features
covering LNG as a transportation fuel, gas pretreatment,
ship classification and more. I hope you enjoy this issue!
1. www.reuters.com/article/us-qatar-japan-lng-idUSKBN18Q1W3

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 LNGNEWS
The Netherlands
Titan commits to
constructing Europe’s first
LNG bunkering pontoon
T itan LNG has announced that it has taken a final investment
decision (FID) on Europe’s first LNG bunkering pontoon – the
Titan LNG FlexFueler1.
The FlexFueler1, which has been financed with support from
the Province of North-Holland, will be operational from 3Q18, and
will be stationed in the Port of Amsterdam, the Netherlands. It will
act as a stationary delivery location to inland water barges and
small sea-going vessels. Vessels that need bunkers to be delivered
whilst simultaneously loading and discharging their own cargo
will be served by deploying the FlexFueler alongside these larger
vessels throughout the ARA region.
The FlexFueler1 is capable of delivering LNG at 30 – 600 m3/hr,
and will initially feature two 380 m3 tanks, with the option to add
an additional two tanks at a later date.
The CEO of Titan LNG, Niels den Nijs, said: “Since the launch of
the FlexFueler project in 2016, we have continuously incorporated
feedback from key stakeholders resulting in an optimised design
in terms of both functionality and safety. Our team is grateful for
all feedback received during the discussions with customers, ports,
the shipyard and classification society, Bureau Veritas; all of whom
contributed to improving the FlexFueler design. We believe that our
decision to build the Titan LNG FlexFueler1 will contribute to the
adoption of LNG as a marine fuel in this vital bunkering region.
“The FlexFueler offers tremendous versatility when loading and
delivering LNG. On top of the stationary and manoeuvrable delivery
methods she can load LNG from trucks, LNG transport ships or via
the Gate terminal in Rotterdam. This flexibility supports our robust
delivery promise while ensuring long term cost competitiveness.”
Norway
Gondán announces delivery of first European-built dual-fuel
tug
ondán has announced that the DUX – the first dual-fuel tug
G ever built in Europe – has been delivered to its owner, Norway’s
Østensjø Rederi A/S.
The delivery follows the vessel’s successful sea trials
programme. The state-of-the-art tug is the first tugboat in a series
of three, and was designed by Canada’s Robert Allan Ltd. It is
40.2 m long, has a 16 m beam, and will provide tug services for the
Norwegian state-owned energy company, Statoil, at the far-north
terminal located at Melkøya under severe weather conditions.
The vessel has been constructed to withstand harsh
Singapore
Keppel to build two LNG
carriers for Stolt-Nielsen
eppel Offshore & Marine Ltd has announced that –
K through its wholly owned subsidiary Keppel Singmarine
– it has secured a S$103 million contract to construct two
LNG carriers for Stolt-Nielsen Gas B.V. – a subsidiary of
Stolt-Nielsen Ltd.
Under the terms of the contract, Keppel Singmarine
has also secured options construct an additional three
similar units for Stolt-Nielsen Gas. The latter has 6, 12
and 18 months from the effective date of the contract to
exercise the options respectively.
The Managing Director of Keppel Singmarine, Abu Bakar,
said: “We are pleased to be selected by Stolt-Nielsen Gas
to build their first two small scale LNG carriers. Keppel
yards have repaired a number of vessels for Stolt Tankers
previously and we are glad to be able to further support
them with our wide range of products and services.
“This order extends our track record in providing
solutions along the LNG value chain, which includes two
dual-fuel harbour tugs that we are currently building.
We are able to leverage our shipyard’s capabilities and
innovative LNG research and development to meet our
customer’s needs.”
The vessels are expected to completed in 2Q19 and
3Q19, respectively. Each carrier will have a capacity of
7500 m3, and will feature engines that are capable of
operating on both diesel and LNG. The carriers will have a
class notation for bunkering, which adds to their versatility
to not only transport, but also to provide LNG bunkering
services if needed.
environments, and is shaped specifically to grant full operational
availability at temperatures of 20 degrees below zero, and utilises
both LNG and diesel.
The DUX has a free running speed of 15 knots, 107 t bollard
pull, and 167 t steering force. It is capable of comfortably
accommodating a crew of eight people. As part of its duties, it will
conduct approximately 300 LNG ship escorts per year, will assist
in berthing operations, and will be maintained in readiness for
emergency services, such as long line towing, fire-fighting and oil
spill response.
June 2017 5
 LNGNEWS
Australia
Sinwa awarded Prelude
agreements
inwa Ltd has announced that it has won a number of
S new supply agreements for vessels involved in Shell’s
Prelude floating LNG (FLNG) project.
Under the agreements, totaling AUS$8 million, Sinwa
will supply provisions, stores and logistics support to
a number of vessels involved in the FLNG project. The
agreements are expected to commence in August 2017,
with revenue from the agreements flowing through to
FY2018.
Bruce Rann, Group CEO of Sinwa, said: “Against the
backdrop of a highly competitive and challenging business
environment, we are pleased to have secured work for
this landmark project. We look forward to working closely
with our business partners to ensure the success of this
undertaking.”
The Prelude FLNG project will be located in the
Browse Basin, approximately 475 km northeast of Broome,
and over 200 km off the coast of Western Australia. The
group will be servicing its client’s requirements through
its 10 000 m2 Darwin facility, which features complete
warehousing facilities, including freezer, chiller, provision and
general storages, as well as lay down and hard stand areas.
News Highlights
X Consortium reaches deal to
build FLNG unit
X Japan planning deal with US
X Gujarat Gas and Petronet LNG sign deal
Visit our website for more news: www.lngindustry.com
6 June 2017
Global
SEA\LNG welcomes Marubeni
EA\LNG has released a statement welcoming Marubeni Corp.
S into the coalition.
SEA\LNG – a multi-sector industry coalition aiming to accelerate the
widespread adoption of LNG as marine fuel – was launched in July 2016,
and now has 25 members. Marubeni has significant knowledge and
experience of both importing and exporting products, providing services
and business investments for a broad range of sectors, including energy,
chemicals, as well as power, logistics and infrastructure projects. The
company has been involved in LNG industries by equity participation in
liquefaction projects, trading, gas-fired power projects, and owning LNG
carriers. It also has a history of bunker fuel trading for over 40 years.
The Executive Officer and Chief Operating Officer of Energy
Division, Marubeni Corp., Akihiko Sagara, said: “Although our company
has expertise in multiple sectors, we view LNG as a core business field
within our multifaceted service offering. By embracing collaboration with
stakeholders in related industries, we remain committed to safeguarding
the global environment in which we operate, and are privileged to be
partnering with a likeminded organisation. Together with our partners,
we look forward to collaboratively working towards a cleaner, more
efficient shipping environment.”
The SEA\LNG Chairman and Executive Vice President of TOTE Inc.,
Peter Keller, added: “Marubeni has a great wealth and breadth of
expertise in relation to LNG and we welcome their knowledge as we
continue to support the energy transition in shipping. SEA\LNG will
continue to unite organisations that work together to address market
barriers to LNG uptake, and to help transform the use of LNG as a marine
fuel into a global reality.”
 A COLLABORATIVE
APPROACH
CB&I understands our customers’ needs
for economical projects that compete in
today’s competitive, global marketplace.
Our collaborative approach provides a safe,
environmentally responsible and cost-
efficient design and execution strategy
that assures certainty of outcome and a
financeable project.

From engineering and construction to

commissioning and initial operations, CB&I
helps customers get their gas to market—
delivering consistent results regardless of the
project location. Contact CB&I to learn how
our complete solutions can benefit your next
LNG project.

ONSHORE LIQUEFACTION
FLOATING LNG
REGASIFICATION
PEAK SHAVING
LNG STORAGE
Rio Grande LNG / Image courtesy of NextDecade, LLC

A World of Solutions
Visit www.CBI.com
43M042017H
 LNGNEWS
South Korea
Framo to deliver pumping
systems for new Höegh
FSRU
ramo has announced that it has signed an agreement
F to deliver pumping systems for Höegh LNG’s new
floating storage and regasification unit (FSRU).
The contract is for one unit, with the option for three
further units, which are currently under construction in
South Korea by Samsung Heavy Industries. Framo will
install four pumps in each of the vessels, which are
scheduled for delivery from 2019 to 2021.
Thorbjørn Vågenes, Director, Oil & Gas Pumping
Systems at Framo AS, said: “Global demand for energy is
on the rise, but in many areas the necessary infrastructure
is not in place. FSRU is a highly versatile alternative
as a vessel can be moored at any quay and operate
as a terminal. Furthermore, the investment costs are
significantly lower than for onshore developments.”
The pumping systems that Framo will provide are
based on recognised Framo technology that has previously
been used in offshore operations for many years. For
instance, a similar solution was delivered to Shell’s Prelude
floating LNG (FLNG) unit. The system that will be used on
the Höegh FSRU will eliminate the need for a separate
pump room on a vessel where space is often limited.
Vågenes added: “We are using recognised and
well-proven Framo technology in a new market where there
has been a significant rise in demand the past few years.”
20 - 23 June 2017 12 - 14 September 2017
CWC World LNG & Gas Series Turbomachinery & Pump
15th Americas Summit Symposia
Houston, Texas, USA Houston, Texas, USA
lngamericas.cwclng.com tps.tamu.edu
05 - 08 September 2017 19 - 22 September 2017
SPE Offshore Europe CWC World LNG & Gas
Aberdeen, Scotland Series: Asia Pacific Summit
www.offshore-europe.co.uk Singapore
asiapacific.cwclng.com
8 June 2017
The Netherlands
MAN Rollo to provide LNG
generator sets for crane
vessel
AN Rollo has announced that it will provide three LNG
M generator sets for the Werkendam crane vessel.
Van Oord is currently constructing the vessel at
Neptune Shipyards in Hardinxveld-Giessendam. It is the first
LNG-powered vessel for both Van Oord and the shipyard.
Karel Schuurman, Sales Manager Marine Engines at
MAN Rollo, said: “We want to make a difference in the market
for environmentally friendly applications. Our knowledge
and experience in gas engines will certainly contribute to
the acceptance of LNG in the maritime industry. Van Oord
chose our LNG generator sets for the hybrid propulsion of the
Werkendam. That is an acknowledgment of our leading role in
this area.”
Combined, the three generator sets will provide a 1.425 KW
power supply. A 38 m³ LNG storage tank will be located on
the rear deck, ensuring that there is sufficient fuel to sail and
operate for two weeks without having to stop to refuel.
Michiel Buné, Project Manager at Neptune Shipyards, said:
“This new propulsion created new challenges especially in
terms of space because of the LNG tank and the additional
safety features (Emergency Shutdown System, ESD). Together
with MAN Rollo we’ve been able to solve these issues
effectively.”
The generator sets that MAN Rollo will provide to
Van Oord is the company’s second LNG order. Prior to this,
MAN Rollo supplied three identical LNG generator sets for the
environmentally friendly ferry Helgoland, which is operated by
Cassen Eils and been in service for nearly 1.5 years.
27 - 28 September 2017
Tank Storage Asia 2017
Singapore
www.easyfairs.com/
tank-storage-asia-2017/
16 - 17 October 2017
3rd International LNG Congress
Barcelona, Spain
lngcongress.com
 LNGNEWS
Greece
Wärtsilä to contribute to
the reliable operations LNG
carrier fleet
ärtsilä and Maran Gas Maritime (MGM) have extended their
W current cooperation with a five-year maintenance agreement.
The agreement covers the maintenance of MGM’s 21 tri-fuel diesel
electric (TFDE) LNG carriers that are equipped with Wärtsilä 50DF
engines.
MGM is the LNG shipping unit of the Angelicoussis
Shipping Group and one of the major players in the worldwide
LNG transportation. The group company operates a fleet of
approximately 130 merchant vessels globally with 33 of these
being LNG vessels – 21 of which are TFDE.
The new agreement includes dynamic maintenance planning
(DMP), condition-based maintenance (CBM) services and remote
operational support. These are part of the digital Wärtsilä Genius
services portfolio. Remote product support in technical and
operational issues and remote monitoring of equipment
performance will allow MGM to further enhance the reliability
of the Wärtsilä 50DF tri-fuel engines installed on their vessels.
The new agreement also includes supply of spare parts for
maintenance along with technical expertise and workshop services
to execute overhauls.
The Wärtsilä 50DF tri-fuel engines installed on the MGM
vessels can be operated with heavy fuel oil (HFO), marine diesel
oil (MDO) or natural gas. With Wärtsilä’s support in maintaining
these technically advanced engines, maintenance planning will
be better controlled and streamlined to meet the demanding
schedule of the vessels. Dynamic maintenance based on the actual
condition of the engines will enhance this effort.
Qatar
Nakilat transitions another LNG carrier to in-house
management
akilat has announced that it has assumed full ship
N management and operations of the Al Ghashamiya LNG
carrier from Shell Trading and Shipping Co. Ltd (STASCo).
Nakilat claims that this is part of the planned and phased
transition that was originally announced on 19 October 2016.
The vessel has a cargo carrying capacity of 217 591 m3, and is
wholly owned by Nakilat. It is chartered by Qatargas, and was
Norway
Rolls-Royce to supply 15 gas
engines for five new ferries
olls-Royce has announced that it has signed
R an agreement to provide 15 gas engines to
Torghatten Nord AS to power five Multi Maritime
designed LNG ferries operating between Bergen and
Stord (Norway).
All of these engines are C26:33L9AGs – a
generating set with nine cylinders in line. The engine
is able to operate on variable speed to decrease
emissions and fuel consumption. The C-gas engine
has an operating speed of 1000 RPM and a power of
2430 kW.
Two of these vessels will be constructed in Norway
at the VARD Brevik yard. The remaining three will be
built in Turkey at the Tersan Shipyard. All of the vessels
are expected to commence service in January 2019.
Kjell Harloff, Rolls-Royce, Vice President, Engines
– Marine, said: “Since the introduction of our first
marine gas engines 10 years ago, Rolls-Royce has
delivered more than 700 gas engines on land and
at sea accumulating over 25 million running hours
of operating experience. We have proved that the
Bergen lean-burn, pure gas, medium-speed engine
range, combined with efficient hull designs, can
help customers, like Torghatten Nord, cut their ships’
emissions and fuel bills significantly.”
constructed by Samsung Heavy Industries in South Korea. It was
delivered in April 2009, and has been in service ever since.
The Al Ghashamiya is the eighth wholly owned
LNG vessel that will come under the management of
Nakilat Shipping Qatar Ltd (NSQL). This brings the total number
of vessels managed by NSQL to 16, which consists of four LPG
carriers and 12 LNG carriers.
June 2017 9
 Africa’s LNG

Nick Prowse and Nishant Singh, Norton Rose Fulbright, UK,

outline the exciting times ahead for the natural gas and LNG
industry in Africa as it continues its safari.
“20 years from now you will be more disappointed
by the things you didn’t do than by the ones you did
do. So throw off the bowlines, sail away from the safe
harbour. Catch the trade winds in your sails. Explore.
Dream. Discover.” – Mark Twain
Safari Njema!1
Referring to the quote above, this is exactly what
various countries in Africa have been doing in the
LNG industry since its earliest days. Still a major
player in the LNG business, Algeria first set sail on
its LNG adventure in 1964, when the Arzew GL4-Z
plant enabled Algeria to become the first country in
the world to export LNG. Since then, Sonatrach, the
state-owned oil and gas company, has expanded its
LNG facilities. It now owns and operates LNG plants in
Bethioua, Arzew and Skikda. Nigeria LNG (NLNG), also
a relatively early player in the LNG industry, started
operating 35 years later – in 1999 – after a long
development period (some commentators suggesting

10
11
 30 years). NLNG now has six trains producing 22 million tpy of
LNG. More recently in Africa, further LNG export projects have
started-up in 2004 (Damietta LNG, Egypt), 2005 (Egyptian LNG),
2007 (Equatorial Guinea LNG), 2013 (Angola LNG and Skikda
(GL1K), Algeria) and 2014 (Arzew (GL3Z), Algeria).
Since 1964, the LNG industry has changed in ways that
nobody could have foreseen. African natural gas has been sold
to markets as diverse as Japan, South Korea, Taiwan, China,
India, Kuwait, Brazil, Spain, France, Portugal, Italy, UK, Turkey,
Mexico and the US. Africa has witnessed a number of major
achievements in the LNG industry, and it is clear that
complicated long-term natural gas projects can succeed in
Africa. Indeed, some of the current LNG projects being
developed in Africa are leading the world in seeking to
monetise offshore natural gas reserves using floating
liquefaction facilities (for example, eni’s Coral South floating
LNG (FLNG) development in Mozambique, Perenco’s and
Golar LNG’s FLNG project in Cameroon, and Ophir’s and
OneLNG’s FLNG project in Equatorial Guinea).
However, it has not all been plain sailing. This article
looks at some of the challenges that existing LNG export
projects in Africa have faced and some issues on the horizon.
Pole na safari!2
Algeria
The need for a new LNG train at Skikda arose following an
incident on 19 January 2004, when an explosion at the Skikda
LNG export terminal caused the death of at least 27 people
and injured 74. Half of the production units were destroyed
and the nearby port sustained considerable damage. Three out
of the six LNG trains were heavily damaged and the remaining
three were also affected. At the time, the blast severely affected
Algeria’s LNG production capacity, and added weight to
opposition to new LNG plants. However, Skikda had some of the
oldest LNG plants in the world, and since the early trains were
built, safety standards have improved considerably. This paved
the way for a new LNG train at Skikda with the engineering,
procurement and construction (EPC) contract being awarded to
KBR in 2007, and completion then expected in 2009. Following
considerable delays, a new 4.5 million tpy LNG train (GL1K) was
commissioned at Skikda by Sonatrach in 2013.
A new LNG train has also been constructed by Sonatrach
at Arzew (GL3Z); this was commissioned in November 2014.
Interestingly, it was constructed without securing any
long-term, take-or-pay contract for the LNG offtake. This
Sonatrach LNG train (required to liquefy gas produced from
Gassi-Touil), replaced the LNG facilities which were planned to
be developed by Repsol and Gas Natural, following the
termination by Sonatrach in 2007 of the integrated Gassi-Touil
LNG project which was awarded to Repsol and Gas Natural in
2004. These delays pushed back first gas from Gassi-Touil
until February 2014. Reports suggest that to compensate for
Gassi-Touil’s long-deferred output, cycling at Hassi R’Mel (the
largest natural gas field in Algeria, discovered in 1956, located
about 400 km south of Algiers, with estimated reserves of
more than 2.4 trillion m³) was performed outside its optimal
ranges (overproduction of marketable gas to the detriment of
re-injection), with some producing wells starting to yield
water and adversely affecting production levels.
Security is a consideration in Algeria. On 16 January 2013,
militants attacked the Tiguentourine (In Amenas) natural gas
12 June 2017
facility, killing at least 37 hostages. Approximately three years
later, Statoil reported that on 18 March 2016 the In Salah gas
asset in Krechba was hit by explosive munitions fired from a
distance.
Some commentators have suggested that the natural gas
sector in Algeria is facing serious challenges, potentially
resulting in the old and more recent liquefaction facilities not
operating to the full extent of their economic life – i.e.
becoming stranded assets. Decreasing gas production,
increasing domestic demand for gas, and a movement by
Sonatrach to market its LNG volumes on a short-term basis
(turning away from long-term, take-or-pay contracts)
seemingly resulting in loss of market share for exports by
pipeline and as LNG, are all having a significant negative
impact on the amount of Algerian LNG and pipeline gas being
exported. In May 2016, Ali Aissaoui3 stated that “Sonatrach is
increasingly being perceived as structurally short on gas
supply. Looking ahead, we have challengingly assumed that
gas production will be stagnating at best. Therefore, in a
moderate demand scenario, Algeria would be left with only
15 billion m3/yr to export by 2030. In a lower production or
high demand scenarios, it will cease exporting all together,
therefore importing gas beyond any such a point.”
Perhaps there are now signs of a more positive direction. In
December 2016, JGC confirmed that it had been awarded a
US$1.05 billion contract by Sonatrach for design, procurement
and construction of compressors and other equipment to
increase natural gas reservoir pressure at the Hassi R’Mel gas
field, scheduled for completion in 2020. On 18 March 2016,
Reuters reported that eni’s Chief Executive Claudio Descalzi had
attended a board meeting at the Bir Rebaa North (BRN) oilfield
in the southeast of Algeria, showing eni’s commitment to its
partnership with Sonatrach. The report quotes Descalzi as saying
“This is a symbolic Eni meeting to show how important Algeria is
to us” … “We have invested €11 billion (US$11.8 billion) in
Algeria since 2010, it represents 30% of our investment abroad.”
Nigeria
Nigeria LNG was developed on the understanding that the project
would benefit from an agreed and stable fiscal regime. Reports
suggest that the relevant authorities in Nigeria now want to
change some of the fiscal terms. This issue appears to be holding
back further expansion of the LNG plant, the final investment
decision (FID) still not having been taken for Nigeria LNG Train 7.
A country always has the ability to change tax and other laws and
regulations, although doing so may deter future investments. Two
other proposed LNG export projects in Nigeria, Brass LNG and
OKLNG, have also yet to reach a final investment decision (FID).
Angola
Angola embarked on a laudable initiative to capture associated
gas and liquefy and export it rather than flare the gas. In
achieving the goal of being the world’s first LNG project supplied
with associated gas, the Angola LNG project has repeatedly
suffered from delays and setbacks. The first LNG cargo was
shipped in June 2013, but the plant has suffered a number of
shutdowns, including from April 2014 to June 2016 after a major
rupture on a flare line and, according to reports, to fix design
flaws. The latest shutdown occurred in December 2016, but the
plant was back up and running in early January 2017. Hopefully
LNG production will stabilise at more normal operating levels
going forward.
Egypt
Egypt’s LNG industry has swung from one extreme to the
other. According to Egyptian LNG, the two liquefaction trains
which started up in 2005 are “one of the lowest cost facilities
worldwide”, “set a record in speed-to-market” and “took less
than six years from gas discovery to first LNG production which
places it at the forefront of world LNG projects”. These were
outstanding achievements for any LNG export project, wherever
located in the world. Egypt also has a second liquefaction
plant at Damietta, a 5 million tpy facility which started up in
December 2004, using excess domestic gas production. In 2006
Egyptian LNG and Damietta LNG supplied approximately 7%
of global LNG production (10.5 million tpy). However, following
political upheaval in 2011 and power shortages, Egypt diverted
gas away from LNG, requiring it for its own use, and by 2015, only
10 years after the start-up of Egyptian LNG, Egypt had started
importing LNG cargoes, becoming a net importer of gas. Egypt
now has two floating storage and regasification units (FSRUs)
and had plans to add a third facility, but these were put on hold
in December 2016. Reports estimate that Egypt will import up to
108 cargoes of LNG in 2017. Having seen a dramatic swing from
exporter to importer, the future for the Egyptian gas industry
looks set to change again. In August 2015, eni discovered
the Zohr field, located in the Shorouk Concession, the largest
natural gas field ever found in the Mediterranean, with a total
potential of 850 billion m3 of gas in place. Eni has confirmed
that the authorisation process for the development of the field
is complete, and first gas is expected by the end of 2017. The
future now looks more promising for LNG exports from Egypt. In
September 2016, Egypt started to export limited amounts of LNG
from the Egyptian LNG plant at Idku (to keep equipment at the
terminal running), and reports suggest that the facility will run at
full capacity from 2020 or 2021.
Equatorial Guinea
Equatorial Guinea LNG is another African success story in
terms of speed-to-market. The FID for EG LNG was approved
in June 2004 and the first LNG cargo was delivered just under
three years later in May 2007. According to EG LNG, this makes
“EG LNG one of the world’s fastest LNG projects from FID to
first cargo.”
Libya
Libya was the third country in the world to export LNG
following commissioning of the 3.2 million tpy plant at
Marsa El Brega in 1970. The ageing liquefaction facilities
were due for refurbishment and plans were developed with
Shell to facilitate such work and to develop new liquefaction
facilities pursuant to an LNG development agreement which
was signed in May 2005. Everything looked promising for
the Libyan LNG industry at that time. However, the conflict in
Libya following the Arab Spring protests of 2011 resulted in
damage to the plant in February 2011 and the Marsa El Brega
facility has not exported LNG since early 2011.
Lala salama!4
There are exciting but also challenging times ahead for the
natural gas and LNG industry in Africa as it continues its
safari.
Demand for gas in Africa is forecast to increase. The
impact of projected domestic gas demands needs to be
carefully considered. As explained above, such domestic
requirements have had a major impact in Egypt and Algeria.
This is also an issue elsewhere. In Trinidad, security of gas
supply for the domestic market was a major concern for the
government when Trinidad embarked on its LNG exports.
Currently, Australia is set to be the world’s largest exporter of
LNG,5 but recent reports highlight concerns regarding a
shortage of domestic gas from 2019, and associated industry
supply cuts and power outages. Resources Minister
Matt Canavan was reported as saying on 19 March that “If the
commitments are not met, if we don’t see more gas, we’ll act,
we’ll take decisions in our national interest to secure our
nation’s energy supplies.”
Meeting domestic gas requirements can be achievable,
providing the project is robust from an economic perspective.
One example of successful development of domestic gas
reserves and supply to local markets is Ghana, where the
Jubilee, TEN and Sankofa fields have been developed partly in
order to supply gas to the domestic market. The Sankofa-Gye
Nyame field in the Offshore Cape Three Points area is
expected to produce first gas in February 2018. The Sankofa
project is expected to deliver 30 000 bpd of oil and
180 million standard ft3 (5.07 million m3) of gas per day to
Ghana – enough gas to increase the country’s electricity
supply by 50%. The World Bank has supported the gas
development with US$700 million of guarantees.
As we look to the future, perhaps we will see significant
markets for gas and LNG growing in Africa. This will of course
require creditworthy buyers and robust economics. Will the
current low natural gas prices around the world act as an
brake on new investment in LNG exports in Africa and how
many projects will be economic to develop in the current
price environment? As the market tightens, and assuming we
see an increase in natural gas prices, will we see a similar
scale of investment in Africa to that which has taken place in
the LNG industry in other parts of the world?
With the surge of LNG production from Qatar, Australia
and now potentially the US, is it now time for governments in
Africa to approve LNG export projects and capture their own
share of the market?
Hopefully, 20 years from now, more African countries will
have developed their natural gas resources and connected
them with natural gas markets. The question now for African
governments with discoveries of significant natural gas
reserves, is when and how they should develop these
resources. Now could be the right time again to “Catch the
trade winds in your sails. Explore. Dream. Discover.” Indeed,
Cameroon, Mozambique, Equatorial Guinea and Tanzania
already look set to be able to monetise their gas reserves and
embark on their own long term natural gas and LNG
adventures.
Much like climbing Mt. Kilimanjaro, with a “pole pole!”6
approach, anything is achievable.
References
1. Have a good journey! – Swahili.
2. Be careful (on a journey)! – Swahili.
3. Algerian Gas: Troubling Trends, Troubled Policies, by Senior
Visiting Research Fellow at the Oxford Institute For Energy
Studies, in a paper entitled
4. Sweet dreams (when going to sleep)! – Swahili.
5. Although it may be overtaken by the US.
6. Slowly, slowly! – Swahili.
June 2017 13
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