LNG JOURNAL PUBLICATION 12 March 2019

LNG Unlimited

Indian Prime Minister NarendraModi has inaugurated the first In-dian East Coast liquefied naturalgas import terminal at KamarajarPort that recently started its com-missioning process with a cargofrom Qatar.

Prime Minister Modi dedicatedthe Ennore LNG terminal at Kama-rajar to the nation as he also laidfoundation stones for national high-way projects at a ceremony nearChennai in the state of Tamil Nadu.

DedicationThe event took place at Kancheep-uram and the Prime Minister usedvideo links to launch various na-tional road projects and dedicatedthe Ennore LNG terminal in Kama-rajar Port to the nation.

The facility owned by IndianOil Corp., the refining and fuelmarketing company, has 5 milliontonnes per annum of import ca-pacity and two tanks each withstorage of 180,000 cubic metres.

“The LNG terminal will help inmeeting the LNG demand in TamilNadu and neighbouring states,”said Modi.

The Prime Minister was joinedon the podium by Edappadi K.Palaniswami, an Indian regionalpolitician and the current ChiefMinister of Tamil Nadu.

A statement said the regasifiedLNG would be transported bypipeline to customers en route to Tuticorin in South Tamil Naduvia Puducherry and Trichy.

A pipeline has been laid to Bengaluru via Hosur to supply industrial customers.

The Kamarajar facility is lo-cated about 25 kilometres north of Chennai Port and initially theimports will supply natural gas toindustry in the Manali area, in-cluding Madras Fertilizers Ltd.,Chennai Petroleum Corp. andTamil Nadu Petroproducts.

The terminal’s commissioningstarted on February 26 with the ar-rival of an LNG cargo from Qatar.

The Qatari shipment was un-loaded from the 160,000 cubicmetres capacity carrier “GolarSnow” after being lifted from theQatargas export complex at RasLaffan terminal on February 17and delivered to Kamarajar.

During the cool-down processall the systems and infrastructureat the newest Indian terminal arebeing made ready to safely re-ceive and handle regular cargoesand regasified LNG.

Indian Oil’s terminal at Kama-rajar, formerly one of India’s maincoal ports and previously calledEnnore, is India’s sixth LNG importterminal and is expected to spurindustrial growth in the area.

Indian Oil is the main stake-holder in the facility, though otherinvestors have been named as the

Indian private equity fund, IDFCAlternatives, and ICICI Bank, partof an Indian multinational bankingand financial services based inMumbai.

Once the Kamarajar terminalbegins commercial operations itwill join the five other facilities onthe West Coast at Dahej, Dabhol,Hazira, Mundra and Kochi to supplyIndia’s growing natural gas needs.

Analysts said the coming onstream of this first regasificationterminal on the East Coast is a land-mark in efforts by Indian Oil andthe government to improve naturalgas infrastructure in the country.

The venture and several othersEast Coast terminals under devel-opment will rebalance the nation’sregasification infrastructure withEast Coast import capability.

Indian Oil is also pursuing city-gas projects and another East CoastLNG terminal with Gas Authorityof India and the Adani Group.

With GAIL and Adani, Indian Oilis developing the Dhamra projectin the state of Odisha. The Dhamraterminal when completed willserve city-gas and power projectsas well as industrial customers

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PM Narendra Modi (second left) conducts LNG terminalceremony at Kancheepuram with main guest Edappadi K.Palaniswami (right), Tamil Nadu Chief Minister

Modi dedicates Ennore

facility at Kamarajar

Port to the nation and

its future prosperity

LNG Journal editor

UNLIMITEDAGENDA

Woodside to back GLX platform withinvestment andsome cargo trades

3

TRADING

DEVELOPMENTS

PROJECTS

Perry praises LNGproject in Louisianaand grants order forlong-term exports

6

Alaska stand-alonegas pipeline given permit ahead of LNG venture

5

Cheniere and EIGstart project to bring feed-gas from Oklahoma

7

RESOURCES

UPSTREAM

JOINT VENTURES

Total signs firm Accord for stake in new Russian Arctic LNG project

9

Indian Prime Minister inaugurates first LNG terminal on East Coast

ExxonMobil and Qatar Petroleum make big Cyprusoffshore gas find

2

Korean Ministryoutlines plans tocut coal power infavour of LNG use

11

FUEL MARKET

ExxonMobil and Qatar Petroleum,the leading global liquefied natu-ral gas stakeholders, have made alarge natural gas discovery offshoreCyprus in the Eastern Mediter-ranean, opening more prospectsfor regional LNG production.

The Glaucus-1 well, located inCyprus’s Block 10, encountered agas-bearing reservoir of around436 feet (133 metres).

ExxonMobil said the well wassafely drilled to 13,780 feet (4,200metres) depth in 6,769 feet (2,063metres) of water.

Estimates“Based on preliminary interpreta-tion of the well data, the discov-ery could represent an in-placenatural gas resource of about 5 trillion to 8 trillion cubic feet(142 billion to 227 billion cubicmetres),” stated ExxonMobil.

Analysts said the discoveredvolumes would be enough to sup-port a stand-alone, mid-scale on-

shore LNG plant in Cyprus itself, afloating LNG facility offshore or thegas could be sent by pipeline to thenearest producing nation, Egypt.

ExxonMobil said that furtheranalysis in the coming monthswould be required to determinebetter the resource potential.

“These are encouraging resultsin a frontier exploration area,”said Steve Greenlee, president ofExxonMobil Exploration Company.

“The potential for this newly

discovered resource to serve as anenergy source for regional andglobal markets will be evaluatedfurther,” he added.

Glaucus-1 was the second of atwo-well drilling program in Block10. The first well, Delphyne-1, didnot encounter commercial quanti-ties of hydrocarbons.

Block 10 covers 2,572 squarekilometres with ExxonMobil as op-erator and holding 60 percent in-terest of the licence and Qatar

Petroleum owning 40 percent.Two under-utilized Egyptian

liquefaction plants near the portof Alexandra have been examiningthe future use of East Med gasproduction from Cyprus and Israelto use existing liquefaction capac-ity for 12.7 million tonnes perannum of LNG.

In recent months Israel hasagreed to send pipeline exports toEgypt, while Cyprus has reached a provisional deal for sendingpipeline supplies from itsAphrodite gas field.

Egypt is seeking to build up exports of LNG from the facilitiesat Idku and Damietta.

The Idku plant first came onstream in 2005 and has capacity to export up to 7.2 MTPA from twoliquefaction Trains. It has twostorage tanks with a combined capacity of 280,000 cubic metres.

Idku has been on stream againsince 2017 under the operatorshipof Royal Dutch Shell, which ac-quired original operator BG Group.

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ExxonMobil and Qatar Petroleum make big Cyprusgas find with future LNG production potential

l NEWS LNG Unlimited 12 March 20192

Japanese LNG imports will fall further if nation keeps policy target of 30 nuclear plant restartsJapan has been returning to nu-clear power and now has nine unitsoperating with a total electricitygeneration capacity of 8.7 gi-gawatts and a US report has fore-cast that imported LNG supplies forJapanese gas-fired power plantswould likely decline in 2019.

Power generation produced bynatural gas-fired plants in Japanhas been declining annually fromits peak in 2014 and would nowfall further while the use of nu-clear power plants will rise.

The US report from the EnergyInformation Administration re-called that in response to the 2011Fukushima accident caused by an earthquake and subsequenttsunami, Japan suspended opera-tions at all nuclear reactors formandatory safety inspections andupgrades, leaving the country with

no nuclear generation fromSeptember 2013 to August 2015.

“Existing coal-fired powerplants were already operating nearfull load and so as a consequenceJapan’s power utilities had to im-port larger volumes of LNG to meetelectricity demand,” said the EIA.

“The outlook for further LNGimport displacement is largely de-pendent on the number of nuclearrestarts, assuming trends in otherfactors, such as electricity demandand energy efficiency, remain con-stant,” it added.

“The pace of nuclear restarts hasbeen slow, with the average reactorrequiring nearly four years to comeback online,” stated the report.

Japan relies on imported LNG tomeet all of its natural gas demandand imports more LNG than anycountry, averaging 11 billion cubic

feet per day in 2016 through 2018.Between 2015 and 2018

Japanese LNG imports havedropped from a total of 85.04 mil-lion tonnes to 82.85MT.

“Japan imports LNG from sev-eral countries worldwide and ship-ments from Australia have grown inthe past two years to account formore than one-third of the totalimports, and they have displacedimports primarily from Malaysiaand Qatar,” explained the EIA.

In 2016 through 2018, thesethree suppliers accounted for 60percent of Japan’s LNG imports.

LNG imports from the US cur-rently account for a small per-centage of total imports, but theyincreased from 0.16 Bcf/d in 2017 to0.3 Bcf/d in 2018, according to datafrom Japan’s Ministry of Finance.

“Japan’s LNG importers have

signed long-term contracts withUS LNG export projects such asFreeport, Cameron, and Cove Point.Most of Japan’s LNG imports areunder long-term contract with ex-isting foreign suppliers, and thesecontracts are set to expire duringthe next decade,” noted the EIA.

Japan's long-term energy policycalls for the nuclear share of totalelectricity generation to reach 20percent to 22 percent by 2030,which would require up to 30 re-actors to be in operation.

“Out of the remaining fleet of35 operable reactors, nine arecurrently operating, six have re-ceived initial approval fromJapan’s Nuclear Regulation Au-thority, 12 are under review andeight have yet to file a restart ap-plication,” explained the EIA.

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Yiorgos Lakkotrypis Cypriot Minister of Energy (left) speaksabout discovery with ExxonMobil executives in Nicosia

LNG Journal editor

Santos, the shareholder in twoAustralian liquefied natural gasLNG export plants and in PapuaNew Guinea LNG, has priced aUS$600 million fixed-rate bondand said the transaction was many times over-subscribed with demand from global financial institutions.

The bonds have been priced ata fixed coupon of 5.25 percent fora period of 10 years and maturingon 13 March 2029. The bonds willbe guaranteed by Adelaide-basedparent company Santos Ltd.

“The book was approximatelyfive times over-subscribed and re-ceived strong support from a mixof global asset managers and in-surance companies from Asia, Aus-tralia and Europe,” said Santos.

The use of the proceeds fromthe bonds will include refinancingthe US$500M bridging facility usedto partly-fund the acquisition bySantos of Western Australian natu-ral gas and oil company QuadrantEnergy and for general corporatepurposes.

Santos Chief Executive KevinGallagher said the offering wasconsistent with the company’sstrategy of securing competitivelypriced long-term capital.

“This is an excellent result forSantos, showing strong supportfrom the capital markets anddemonstrating our balance sheetis set up to support our growthstrategy,” added the CEO.

He explained that the bondwould replace an existing two-

year bridging facility and wouldmean that all significant near-term debt maturities have beenaddressed with more efficientlong-term debt funding.

Santos is operator of the Glad-stone LNG plant in Queenslandand whose other shareholders arePetronas of Malaysia, Korea GasCorp. and French major Total.

The company also holds a stakein Darwin LNG, operated by Cono-coPhillips, and in the ExxonMobil-led PNG LNG plant and itsexpansion project.

Santos said joint lead managersof the transaction were Australiaand New Zealand Banking GroupANZ, Citigroup Inc. of the US andCommonwealth Bank of Australia.

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12 March 2019 LNG Unlimited NEWS l 3Australian Woodside invests in two trading and data platforms

Woodside Petroleum, the operatorof North West Shelf and Pluto liq-uefied natural gas plants and astakeholder in the Wheatstone fa-cility, said it had made investmentsin two online LNG trading and dataplatforms in a move to bringgreater price transparency, effi-ciency and compliance to markets.

“The platforms will support theevolution of the LNG trading mar-ket and the provision of precisereal-time information, enablingmarket participants to more effec-tively match supply with demandunder clearly defined governanceframeworks,” said Woodside.

CargoesThe platforms, the existing GLXcompany and newly launchedGastrayda firm, have both beenstarted in Australia and include for-mer employees of Woodside andother regional energy companies.

GLX was launched in 2016 andits LNG trading platform becameoperational the following year.

Damien Criddle, a Perth-basedexecutive and former Royal DutchShell lawyer, launched the GLXplatform with other energy execu-tives, including Rob Cole, an ex-Woodside director.

Woodside became a foundationmember of GLX in July 2017. GLXnow has 55 members from aroundthe world signed up under a clearlydefined governance framework.

“Woodside has now become anequity investor to further supportGLX as it seeks to deepen its trad-ing relationships in the LNG sec-tor,” said the Perth-based

company. The Perth oil and gascompany said it would also look tosupport GLX by facilitating thetrading of LNG cargoes on the GLXplatform where the opportunityarises.

Gastrayda is a start-up that ispreparing for commercial launch.

It is described as an LNG trademanagement and compliance plat-form that caters for the complexpricing associated with LNG car-goes and enables real-time com-parison of competing cargo tradeoptions.

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GLX CEO Damien Criddle had worked as Shell lawyer

Russia shipsmost LNGto Europein FebruaryRussia delivered a recordamount of liquefied natural gasto Europe in February from theYamal export plant in the Arcticregion and became the biggestmonthly supplier to the conti-nent for the first time, overtak-ing Qatar, Nigeria and Algeria.

According to shipping data atotal of 19 cargoes, or 1.41 mil-lion tonnes, were delivered toEuropean regasification termi-nals during the past month.

They were unloaded at themajor European terminals. TheFebruary Russian shipments werethe largest monthly amount ofLNG from the Arctic Yamal plantto arrive in Europe since thefirst cargo departed in Decem-ber 2017 in the presence of Pres-ident Vladimir Putin.

Russia’s deliveries to Europewere used by European cus-tomers instead of being trans-shipped to Asia as the additionalcost of shipping would havemade such trades less profitable.

In February, shipments fromthe US to Europe dropped to ninecargoes, or 0.64MT, the lowestlevel since November 2018.

Qatar delivered 18 cargoes toEurope in February, or 1.33MT,Nigeria unloaded 16 shipmentsand Algeria 18 cargoes, mostlyfrom Medmax vessels with75,000 cubic metres capacity.

The Yamal plant is a jointventure owned by Russian natu-ral gas company Novatek, Frenchenergy major Total and Chinesestakeholders, including ChinaNational Petroleum Corp.

Novatek’s Chief Financial Of-ficer Mark Gyetvay told an en-ergy conference in London onFebruary 26 that the Yamal plantcould deliver LNG to Europe foras little as $3.15 per millionBritish thermal units, while USproducers were offering ship-ments for between $7.00 perMMBtu and $8.00 per MMBtu.

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LNG Journal editor

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12 March 2019 LNG Unlimited NEWS l 5

The Alaska Gasline DevelopmentCorp., the US state agency re-sponsible for overseeing theAlaska LNG project, has receiveda major regulatory permit for its$10-billion stand-alone NorthSlope pipeline to supply domesticcustomers and feed-gas for LNG ifneeded.

The permit was jointly issuedby the US Army Corps of Engineersand the US Bureau of Land Man-agement.

City-gas planThe 733-mile pipeline would ini-tially provide natural gas to theAlaskan cities of Anchorage andFairbanks, as well as other com-munities along the project's routefrom the North Slope resourcebase, though it would also providethe opportunity to proceed withLNG exports.

“The federal permit demon-strates ratification of the environ-mental and engineering aspects ofa trans-Alaska natural gas projectand supports AGDC's efforts tobring Alaska's North Slope naturalgas to market,” said AGDC.

“Because the stand-alonepipeline and Alaska LNG share acommon path for 80 percent ofAlaska LNG's pipeline route, thispermit and the underlying datawill help the Alaska LNG projectefficiently advance through thefederal permitting process,”it added.

The pipeline design includes a36-inch diameter mainline and a30-mile, 12-inch diameter lateralconnecting the mainline to Fair-banks, as well as a gas condition-ing facility at its starting point at

Prudhoe Bay on the North Slope.The pipeline decision follows

the recent four-month delay im-posed by the Federal Energy Regu-latory Commission for completionin 2020 of the environmental im-pact statement (EIS) for AlaskaLNG.

AGDC additionally requested atwo-month extension in Januaryfor a decision on the negotiationsbetween Alaska and a group ofChinese companies seeking to in-vest in the project and purchaseLNG supplies.

The AGDC President Joe Dubler,who replaced Keith Meyer in Jan-uary as part of a board overhaul,has called for a decision soon onthe future of the LNG project andits feasibility.

The current Alaska LNG plan isfor spending of up to $45 billion tobuild the pipeline and the plannedliquefaction plant in Nikiski on the Kenai Peninsula, south of Anchorage.

The FERC said on March 1 thatit now expected to issue a finalEIS for Alaska LNG on March 6,2020 and a final order to proceedon June 4, 2020.

AGDC is governed by a seven-member board of directors, fivepublic members and two principaldepartment heads of the State ofAlaska.

Board members are appointedby the governor and subject toconfirmation by the legislature.Republican Governor Mike Dun-leavy named four new members toAGDC in January.

ChangesThe board changes and a projectreview have come as AGDC is ex-pected to decide on a final jointdevelopment agreement with Chi-nese investors by the end of thefirst quarter of 2019.

These include companies suchas China Petroleum & ChemicalCorp., known as Sinopec, and Chinese banks.

AGDC took control of AlaskaLNG from ConocoPhillips, Exxon-Mobil Corp. and BP of the UK in2017, after the producers deter-mined it was no longer economicbecause of lower oil prices andwhen compared with other LNGprojects around the world.

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Alaska’s stand-alone natural gas pipeline given permit ahead of final decisions on the LNG project

NEWSNUDGES

LNG Journal editor

KawasakiLNG planKawasaki Heavy Industries ofJapan is considering plans toconstruct liquefied natural gascarriers at a newly completedshipyard dock in northeast Chinaas the company moves to reducecosts. The Chinese shipyard atDalian in Liaoning Province hasjust completed the building of asecond dock measuring 550 me-tres by 68 metres. The site is op-erated by Dalian Cosco KHI ShipEngineering, an existing jointventure between Kawasaki andChina Cosco Shipping.

PNG decisionon expansionOil Search, a stakeholder in thePapua New Guinea LNG plantoperated by ExxonMobil, saidthe Papua LNG Gas Agreementto underpin PNG LNG expansionis on track to be finalised by theend of March. The company hasalso published the configurationplan for the PNG LNG plant siteshowing three new processingTrains and one new storagetank. Oil Search said the accordwould include an “equitablesplit of value between the stateand the developers” and fiscalarrangements and methods forsmoothing early tax flows to thegovernment if required.

Greek GTTtank orderGTT, the French liquefied natu-ral gas storage tank technologycompany, said it received anorder from the South Koreanshipyard, Hyundai Heavy Indus-tries for the tank design for anew LNG carrier on behalf ofGreek ship-owner Capital GasCarriers. The vessel will havestorage capacity of 174,000cubic metres and will be fittedwith the GTT Mark III Flex con-tainment system. The deliveryof the ship is planned for thethird quarter of 2021.”

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Governor Mike Dunleavy weighing North Slope options

...this permit and the underlying data will help the Alaska LNG project efficiently advance through the federal permitting process.“

”- Alaska Gasline Development Corp

l NEWS LNG Unlimited 12 March 20196

The US Department of Energy hasissued a long-term order authoriz-ing the export of domestically pro-duced liquefied natural gas by theVenture Global company, devel-oper of two LNG export projects in Louisiana.

The DoE order concerns theVenture Global plant proposed forCalcasieu Pass in Louisiana andwith export volumes of 12 milliontonnes per annum.

Target 2022The Venture Global plant is ex-pected to come on stream in 2022along with associated facilities,including the TransCameronPipeline.

The Calcasieu Pass facility andthe TransCameron Pipeline re-ceived full construction autho-rizations in February 2019 fromthe Federal Energy RegulatoryCommission.

Venture Global, owned by for-mer investment banker MichaelSabel and lawyer Robert Penderwho act as joint chief executives,is also constructing a second plantat Plaquemines near river mile-marker 55 on the west side of the

Mississippi River, 30 miles south ofNew Orleans.

The Mississippi River project willproduce 20 MTPA of LNG and willalso include small-scale liquefac-tion Trains, four LNG storage tanksand three marine loading berths.

Under the latest DoE order, theCalcasieu Pass plant will be ableto export up to 1.7 billion cubicfeet per day, or 620 Bcf perannum, of natural gas as LNG toany countries that do not have afree trade agreement (FTA) withthe US and that are not prohibitedfrom trading with the US, knownas non-FTA countries.

“Projects such as the Calcasieu

Pass export project represent atremendous opportunity for theUnited States,” said US Secretaryof Energy Rick Perry.

“To secure our place among thetop LNG exporters in the world,brings great benefits to both theUnited States and our tradingpartners around the world,” addedthe Energy Secretary.

The Calcasieu Pass plant hassigned binding 20-year sale andpurchase agreements with compa-nies such as Royal Dutch Shell, BPof the UK, Italian utility Edison,Portugal’s Galp Energia, Repsol ofSpain and Poland’s national oil andgas company.

The DoE pointed out that theCalcasieu Pass authorization hascome less than two weeks afterthe project received its final orderfrom the FERC, demonstratingthat the Energy Department actsexpeditiously after an LNG projectreceives full authorization.

“By continuing to expand ourLNG exports to nations around theworld, we will further cement theUnited States’ role as an energyleader and achieve our goal ofAmerican energy independence,”said US Under Secretary of EnergyMark Menezes.

The US is now in its third yearas a net exporter of natural gasand has so far exported shipmentsto 34 countries.

“Increased natural gas produc-tion in the US is improving globalenergy security while stimulatingeconomic development and jobcreation around the country,”stated the DoE.

The nation expects this in-crease in domestic natural gasproduction to continue, with anaverage production rate of 90.16billion cubic feet per day in 2019and 92.05 Bcf/d in 2020, both newrecords.

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Energy Secretary Perry praises Venture Global LNGproject in Louisiana as he grants long-term export order

Perry: ‘Projects such as the Calcasieu Pass export projectrepresent a tremendous opportunity for the United States’

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12 March 2019 LNG Unlimited NEWS l 7Cheniere and EIG start project to bring feed-gas from Oklahoma

Cheniere Energy, owner of theSabine Pass and Corpus Christi LNGexport plants on the US GulfCoast, has given notice to proceedto builders of the Midship Pipelineproject to enable transportationof feed-gas and domestic volumesfrom the prolific Anadarko Basin inOklahoma to the Gulf Coast.

The $1-billion natural gaspipeline had received environmen-tal approval from the US FederalEnergy Regulatory Commission andthe pipeline financing has also justbeen agreed.

CapacityCheniere is joint owner of the Mid-ship pipeline project along with theUS equity fund, EIG Global Energy.

The Midcontinent Supply HeaderInterstate Pipeline (Midship) pro-ject as it is called was notified inFebruary 2019 by the FERC thatconstruction could proceed.

The Midship pipeline is de-signed to transport 1.44 billioncubic feet per day on almost 200miles of new natural gas pipelineto existing pipelines near Benning-ton in Oklahoma for subsequenttransportation to the Gulf Coastand Southeast markets and hubs.

Binding marketing commitmentstotalling 825 million cubic feet perday are in place for the pipelinewith Devon Gas Services, MarathonOil Co., Gulfport Energy Corp. andCheniere’s own Corpus Christi liq-uefaction and export plant.

The companies involved in the construction of the Midshippipeline and related compressionand interconnection facilities areM.G. Dyess Inc., TRC Pipeline Ser-vices, Cenergy and Strike LLC.

“The Midship project is ex-pected to be placed in service bythe end of 2019,” said Houston-based Cheniere.

“To complete financing of the

Midship project, Midship Pipelineentered into senior secured creditfacilities with total commitmentsof up to $680 million,” explainedCheniere.

“The credit facilities consist ofa $615 million construction loanfacility and a $65 million revolvingcredit facility,” it added.

“Proceeds from these credit facilities will be used to fund aportion of the costs of developing,constructing, and placing into ser-vice the Midship Project, to fundworking capital requirements andfor related general corporate pur-poses,” stated Cheniere.

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Arup chosento advise onmodular tanks for US plantArup Group, the UK-basedglobal engineering company,has been appointed by a US LNGexport project planned forCameron Parish to advise on theinstallation of the region’s firstmodular LNG storage tanks.

The Arup energy unit hasbeen asked by CommonwealthLNG to provide specialist engi-neering services for the devel-opment of the storage tanks atits project site on the WestBank of the Calcasieu ShipChannel at the entrance to theGulf of Mexico.

The innovative design of themodular tanks, an original con-cept by Arup, allows them to beconstructed offsite at a dedi-cated fabrication yard in paral-lel with foundation constructionat the site itself.

Arup said that this approachsignificantly reduces onsitelabour and shortens completiontime by up to one year.

“These benefits result incapital cost savings and overallproject risk reduction,” said theengineering firm.

Commonwealth LNG has aschedule to construct its facilityin Cameron Parish for exportsto begin by 2024.

The plant will have a totalliquefaction capacity of 8.4 mil-lion tonnes per annum and LNGstorage capacity volumes of240,000 cubic metres.

Arup is also supporting Com-monwealth’s permit processwith the Federal Energy Regula-tory Commission by providingstructural, mechanical andnaval architecture engineeringservices in relation to the designof the modular storage tanks.

“This is a great step for theLNG industry and could lead theway for new mid-scale storageoptions,” said Brian Raine, headof Arup’s Energy Structures unit.

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LNG Journal editor

US-led Puerto Libertad projecton Pacific Coast chooses KBR KBR Inc., the US energy and LNGengineering company said it wasawarded a preliminary engineer-ing and design contract by MexicoPacific Ltd (MPL) for a US-led mid-scale LNG liquefaction and exportproject at Puerto Libertad on thePacific coast of Mexico.

Under the terms of the con-tract, KBR will provide pre-front-end engineering and design workand cost estimates for the project.

This work will be performedby KBR utilizing the Cono-coPhillips Optimized Cascade liq-uefaction technology, leveraging

the midscale LNG joint develop-ment work previously announcedby KBR.

With offices in Houston, Texas,MPL is a venture comprising DKRWEnergy Sonora Holdings and AecomCapital, a New York-based equityfund that invests in energy and in-frastructure projects.

MPL has additional Mexicanregulatory permits for 12 milliontonnes per annum of output andproposes the initial constructionof up to four mid-scale modularprocessing Trains, each producing1 MTPA.

“We are excited to be a part of

this Mexico Pacific Limited LNGproject and to deliver innovativeLNG technology solutions for ourcustomers,” said Farhan Mujib,KBR President for HydrocarbonsDelivery Solutions.

“We believe midscale LNG pro-jects have an important part toplay in the global LNG market,”added Mujib.

The Puerto Libertad projectsite is contained within 1,100coastal acres and the harbourdepths are in excess of 20 metresand capable of accommodatingthe largest LNG carriers.

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The Midship project will interconnect with Gulf pipelines

SUPPORTING ASSOCIATIONS

French energy major Total hassigned agreements with Russiannatural gas company Novatek, operator of the Yamal LNG exportplant, for the acquisition of a direct10 percent stake in the Arctic LNGII joint venture proposed by No-vatek for Russia’s Gydan Peninsula.

Total already owns a 19.4 per-cent stake in the Novatek companyso its 10 percent direct stake givesit 21.6 percent of the Arctic LNG IIproject, while Novatek intends toretain 60 percent of the venture.

Option“Should Novatek decide to reduceits participation below 60 percent,Total will have the possibility to increase its direct share up to 15 percent,” said the French company.

The Arctic LNG II project’s finalinvestment decision is expected tobe taken in the second half of2019, with plans to start up thefirst liquefaction train in 2023.

The Arctic II venture will havethree Trains, each with a capacityto produce around 6.6 milliontonnes per annum.

The Trains will be installed onGravity Based Structures (GBSs)made of concrete and includingLNG storage facilities totalling687,000 cubic metres capacity.

“We are delighted to have con-cluded the definitive agreementsfor our entry into this new world-class LNG project based on thevast Russian gas resources along-side our partner Novatek,” saidPatrick Pouyanne, Chairman and

Chief Executive of Total.“Arctic LNG II builds on the suc-

cess of Yamal LNG and will intro-duce several innovative solutionsto further increase competitive-ness,” added the Total CEO.

“It fits into our strategy ofgrowing our LNG portfolio throughcompetitive developments basedon giant low-cost resources pri-marily destined for the fast grow-ing Asian markets,” statedPouyanne.

With total production capacityof 19.8 million tonnes per annum,or 535,000 barrels of oil equiva-

lent per day, Arctic LNG II will de-velop huge resources in the Utren-neye onshore gas and condensatefield.

The developers have said thatArctic LNG II production would bedelivered to international marketsby a fleet of ice-class LNG carriersusing the Northern Sea Route anda trans-shipment terminal in Kam-chatka for cargoes destined forAsia and one close to Murmanskfor those cargoes destined for Europe.

Novatek started operations atthe Yamal plant in December 2017and already has all three LNGTrains in operation to produce itsnameplate capacity of 16.5 MTPA.

It has also made progress on itssecond venture with the awardingof equipment contracts for ArcticLNG II.

German power equipment-maker Siemens signed a contracton providing compressors for threeliquefaction Trains planned for thenew plant.

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Total signs firm agreement for stake in Russian Arctic LNG II with option to increase holding

Oman will see gas output overtake oil becauseof growing LNG demand and domestic needsOman is planning to increase itsnatural gas production for domes-tic use and LNG exports to such anextent that the sultanate in theArabian peninsula will see gas out-put levels overtaking oil by around2025.

This boost in natural gas re-sources has come about becauseof large natural gas discoveriesand their development by compa-nies such as BP of the UK.

Transition“Gas is on the rise in Oman andthis transition is very timely,” saida report from Norwegian energyresearch and consulting firm Rys-tad Energy.

“Amidst rising global LNG de-mand and the increasingly lucra-tive domestic gas market,

international players are favoringgas developments in Oman,”stated the report.

“The strengthened gas marketwill help gas production levels tooutshine Oman’s dwindling oil pro-duction, with gas output pro-jected to overtake oil,” it added.

The Omani Ministry of Oil andGas agreed in January to workjointly towards a significant newexploration opportunity with BPand Italy’s Eni to build on BP’s on-shore Khazzan natural gas discov-ery credited with revitalizing LNGproduction.

The two companies are nowworking with Oman towards theaward of a new exploration andproduction sharing agreement forBlock 77 in central Oman.

The country’s three existing LNG

liquefaction Trains at the facilitiesnear the town of Sur have been atfull capacity since 2017 after previ-ously suffering from a lack of feed-gas as supplies were diverted to filldomestic gas shortages.

The Omani government allo-cates Oman LNG supplies fromvarious gas fields and the Khazzanfield production has ended allfeed-gas concerns for the near future.

The three Omani LNG process-ing Trains currently producearound 10.4 million tonnes perannum and supply nations such as South Korea, Japan India andKuwait.

Oman LNG has also invitedlong-term contract holders tostart negotiations on renewingcontracts that expire in 2025 for 8

MTPA of Omani deliveries to Koreaand Japan.

The new gas exploration targetBlock 77, with a total area of al-most 3,100 square kilometre, is located in central Oman, 30kmeast of the BP-operated Block 61,which contains the Khazzan gasfield as well as the Ghazeer pro-ject currently under development.

“Oil output declines over thelast two years may indicate apoint of no return for Omani oil,but the country’s sliding oil pro-duction is set to be replaced bygas,” explained the Norwegian report.

At peak production in 2016,Oman’s oil output reached 900,000barrels per day (bpd), declining to870,000 bpd by 2018.

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Yamal LNG will be repeated with project on Gydan Peninsula

LNG Journal editor

12 March 2019 LNG Unlimited NEWS l9

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South Korea is seeking to reducethe operation of coal power plantsbecause of rising levels of pollu-tion and convert them to gas-firedplants using imported LNG ship-ments, though is being cautiousabout the timetable because ofthe higher fuel costs.

The Korean Trade, Industry andEnergy Ministry announced it wouldregulate the operation of coal-firedpower plants to reduce emissionsof fine dust from coal as the coun-try has faced its worst levels ofpollution since early March.

Scaling downThe Ministry explained that itwould move to have 60 coal-firedpower plants scale down their op-erations to 80 percent of their ca-pacity, an increase in restrictionscurrently imposed at 40 plants.

“Due to the disaster-level den-sity of fine dust over recent days,the inconvenience and damagesuffered by the people are becom-ing unbearable,” said Vice MinisterCheong Seung-il during a visit to theYeongheung coal-fired power stationlocated west of the capital Seoul.

“Although state-run power firmshave been making efforts to cut

fine dust emissions by 25 percentover the past three years throughinvesting in facilities, more mustbe done to meet the demands ofthe people,” stated Cheong.

Analysts point out that finedust particles are more likely topenetrate deeper into the lungs,while ultra-fine particles can beabsorbed directly into the bloodstream, posing serious health risks.

One additional problem forSeoul and its residents is theheavy pollution also broughtacross the border by winds fromNorth Korea, which is just 50 kilo-metres away.

South Korean LNG imports rose17.3 percent in 2018 to a record44 million tonnes as shipments increased from traditional MiddleEast supplier Qatar and from new

projects in Australia and the US.The country already has ample

LNG import capacity to replacecoal and access to global LNG vol-umes as the current biggest recipi-ent of growing US exports.

Korea Gas Corp. is the domi-nant LNG importer, though othercompanies also receive shipmentsat two of the nation’s six importterminals.

South Korea’s previous annualrecord of LNG shipments was setin 2013 when it faced a series ofnuclear reactor shutdowns due toa safety scandal over faulty parts,leading to an increase in gas-firedpower generation.

Four of Korea’s import terminalsat Incheon, Pyeong-Taek, Sam-cheok and Tong-Yeong are oper-ated by state-controlled Kogas and

have huge storage tank capacity.The two other terminals are

owned by a utility and an indus-trial company. The Boryyeong ter-minal is operated by GS Energyand the Kwangyang facility by thesteelmaker POSCO, whose ship-ments are organized by tradingunit POSCO Daewoo.

The Industry Ministry said itwould also be examining a plan topersuade existing coal plants to beconverted to gas-fired plants usingregasified LNG as fuel.

The Ministry believes that whileSouth Korea can maintain a stablesupply of power through 2026, itwill have no choice but to buildmore plants beyond that period.

In the coming months the Min-istry added that it would also par-tially suspend the operation of 48coal-fired power plants from atleast a week to 45 days over theMarch-June period, and fully shutdown six other plants over the period.

“The Ministry will moreoverpromote the use of low-sulfur coalat local stations in order to reducethe emission of sulfur oxide, whichaccounts for three quarters of finedust created from coal plants,”said the statement.

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Korean Ministry outlines plans to cut coal powerand switch to more LNG amid pollution crisis

Thailand advances with its LNG supplies and domestic gas contract and price for Erawan fieldThailand is securing its domesticproduction of natural gas in theGulf of Thailand, as well as itspricing, while expecting more LNGvolumes from Mozambique andelsewhere and constructing a newLNG import terminal.

Thai state energy company PTT Exploration and Production(PTTEP) said its development sub-sidiary was on track to take overoperatorship from Chevron Corp.of the Erawan natural gas field inthe Gulf of Thailand and has pro-posed a consumer price to thegovernment equivalent to $3.70

per million British thermal units.PTTEP takes over the Erawan

field in 2022 to add to its opera-torship of the nearby Bongkot nat-ural gas field.

“The company is confident thatits proposals will deliver benefitsto all parties and ensure energysecurity to the country,” saidPhongsthorn Thavisin, PTTEP Presi-dent and Chief Executive, after thesigning ceremony just held for theProduction Sharing Contracts (PSCs)for the G1/61 field (Erawan) andthe G2/61 field (Bongkot).

For its LNG supplies, PTTEP is a

10 percent shareholder in the Area 1 licence of the RovumaBasin offshore Mozambique heldby Anadarko Petroleum of the US.

The Thai company said the firstphase of LNG production in thesoutheast African nation is plannedfor 2024 with initial volumes of 12 million tonnes per annum.

Thailand is planning a secondimport terminal not far from its ex-isting import facility at Map Ta Phutin the eastern province of Rayong.

The new Nong Fab terminal willhave a maximum receiving capac-ity of 9 MTPA.

PTTEP said initial investmentsin the Gulf of Thailand domesticproduction would be around $320million and would ensure produc-tion volumes from both fields.

The company plans to safeguardproduction volumes in the Bongkotand Erawan fields of at least 700 mil-lion cubic feet per day and 800 mil-lion cubic feet per day respectively.

The investment includes thedrilling campaign of the explo-ration and production wells andthe construction of additionalwellhead platforms.

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Terminals like Pyeongtaek can help in campaign for clean air

LNG Journal editor

12 March 2019 LNG Unlimited NEWS l 11

The Premier Event for the

Delivering Real Solutions To Industry Challenges

What are the regulatory changes needed to support the rapid evolution of the industry and facilitate the new capital

Positioning in the Energy System:

gas as a vital

Securing market position:

with new demand

How can players create the necessary operational, commercial and

Project and operational innovation:

What are the innovative

needed across all parts of the gas value chain that

and demand

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