February 2017

LNG Solutions
from the
Leader in
Cryogenics
GE Oil & Gas

PROVEN
IN THE SKY
BREAKTHROUGH
FOR LNG

LM9000 is the most competitive gas turbine for LNG

mechanical drive in the 65+ MW class. It offers the highest
availability, dual-fuel capability, reduced emissions, and
best-in-class total cost of ownership.

Derived from the GE90-115B engine thats powered

Boeing 777s since 2004, LM9000 is a perfect example of
the unique advantages possible with the GE Store.

Get the ideal match for your project:

geoilandgas.com/LM9000
 ISSN 1747-1826

CONTENTS FEBRUARY 2017

03 Comment 34 Insulation for all seasons

Carl Davison, Kingspan Industrial Insulation, UK, explains how PIR insulation
05 LNG news can help improve the energy efficiency of LNG facilities.

39 Quench the flare

12 A change of course
Richard Bass, Navigant Consulting Inc., UK, looks at how the
East Mediterranean gas market has changed over the last 10 years,
with particular focus on Egypt, Israel and Cyprus.
Christian Belting-Clar and Leonid Bleicher, Dresser-Rand business, part of
Siemens Power & Gas Division, Germany, explain how to minimise BOG flaring
by LNG quenching.
45 Quench control
Wayne Jacobson, Compressor Controls Corp. (CCC), USA, outlines the
advantages of integrated quench controls for LNG refrigeration compressors.

49 Make a prediction
Nobutaka Umeyama, Japan Marine United Corp., Japan, Kenichi Matsuoka,
Azbil Corp., Japan, and David Hill, Chemstations Inc., USA, look at the
application of dynamic process simulation for LNG vessel gas management
systems.

53 Integration or independence?
Peter Sieber, HIMA Paul Hildebrandt GmbH, Germany, debates the benefits of a
separate approach to functional safety versus an integrated approach.

57 Waste not, want not

12 Arno Brouwer, Cryonorm, the Netherlands, presents a method to recover cold
energy from LNG regasification plants.

59 Cool idea
Augusto Bulte, Amec Foster Wheeler, USA, explains how LNG import terminals
16 Stop the giants can make use of the cold energy generated during the regasification process.
Thibault Marguet, Air Liquide Global E&C Solutions, France, presents
a dual mixed refrigerant liquefaction process that addresses mid scale
LNG projects. 64 15 facts ... on the Mediterrane
Mediterranean
20 High tide for FLNG operations
Martin Van Der Merwe, Emerson Process
rocess Management, Australia,
echnologies can help FLNG
explains how advances in digital technologies
allenges.
operators overcome operational challenges. ON THIS MONTHS C
COVER
25 Achieving cryogenic
ogenic pump
reliability
Yousef Jarrah, Toshi Hayashi, and Daniel
niel McInnis, A unique suite of LNG liqliquefaction
Nikkiso Cryo Inc., USA, review typicall roller bearing profiles. ttechnologies
tec Liquide, the
hnologies by Air Liquid
leading
le cryogenic
operator of cryoge
29 Hold the line plants
p nts worldwide and LNG p
pla pioneer,
Richard Fawcett, Dynaflow Research Group, the will reduce LNG
will enable customers to redu
Netherlands, looks at the importance of designing for
production
production costs and plant emi emissions. Safe,
pressure surges in an LNG bunkering line.
reliable
reliable and simple solutions for small
to large scale plants. Discover mo more at:
https://www.engineering-airliquide.com/LNG
https://www.engineering-airliquide

Copyright Palladian Publications Ltd 2017. All rights reserved. No part of

LNG Industry is audited by the Audit Bureau of Circulations
rculations (ABC).
An audit certificate is available on request from our sales department.
this publication may be reproduced, stored in a retrieval system, or transmitte
transmitted
in any form or by any means, electronic, mechanical
mechanical, photoco
photocopying, recording
or otherwise, without the prior permission of the copyright owner. All views
expressed in this journal are those of the respective contributors and are not
necessarily the opinions of the publisher, neither do the publishers endorse any of
the claims made in the articles or the advertisements. Printed in the UK.
Worldwide Coverage

A global industry
requires a global
publication

Register for free at:

www.lngindustry.com
 JOSEPH GREEN
EDITOR

COMMENT very year the Mediterranean plays host to

E holidaymakers from around the world. With reliably

hot summers, idyllic beaches, and some fantastic
local cuisine, it is no surprise that the region has
become one of the most desirable destinations for those
seeking a relaxing break.
Visions of flip-flops and siestas in the sun seem a
distant fantasy at the moment however as cold weather
dominates the forecasts in much of Europe. Greece, Italy
and Turkey were among the countries grappling with heavy
snow and freezing temperatures in January. Large swaths
of Greece have been hit by sub-zero temperatures and
heavy snowfall. The normally mild Greece has witnessed
temperatures of -15C in the north.
The LNG picture in the Mediterranean right now is also
decidedly frosty. Cold weather and problems with Algerian
gas supply have pushed up Europes gas prices. Supply from
Algeria has been reduced due to problems at Sonatrachs
Skikda LNG export terminal, just as demand reached its
peak.
French gas grid operator GRTgaz announced in January
that a force majeure in Algeria and tensions in the global
gas market were reducing deliveries of LNG to southern
France. The force majeure is in place after Algerias Skikda
LNG facility, which is used for deliveries to French and
European markets, went into a scheduled maintenance
operation. Deliveries to the Fos-sur-Mer terminal were
at about 40 GWh per day, considerably lower than the
70 GWh per day required to meet increased winter demand
for power and heating.1
Such problems have resulted in US exporters shifting
their focus to Southern Europe from Asia. The prices in
Europe are currently at their highest premiums to US gas
prices for three years. Several cargoes from the US have
already capitalised on this and made their way to
Europe.2
In January 2017, one vessel delivered US gas to
Spain and another arrived on Turkish shores. Two
more vessels transporting US gas were sailing in the
Mediterranean and another was moving across the
Atlantic. Spain, Greece and Turkey would be other
possible destinations for the US LNG cargoes. The flow
would be expected to slow in March, as winter comes
to an end in Europe and the LNG cargoes are gradually
replaced by tourists.
This months regional report focuses on
the changing LNG scene in the Mediterranean.
Richard Bass of Navigant Consulting Inc. considers
how the East Mediterranean gas market has changed
over the past ten years, and how it will continue to do
so in the future. Whilst much of the region continues
to import LNG on a large scale, Bass investigates how
many smaller countries are intent on exploring their
exportation potential, viewing LNG exports as an ideal
route to market. How do you see the picture developing
in the Mediterranean? Do you believe in the long-term
exportation potential of the smaller Mediterranean
players? Please let us know your thoughts.
We hope you enjoy this issue of LNG Industry and if
you picked up a copy at either the US LNG Summit or
the Central & Eastern European Gas Conference, dont
forget to visit www.lngindustry.com to subscribe and
receive more world-class technological updates for the
international LNG industry.
1. http://www.reuters.com/article/france-gas-lng-idUSL5N1F75F0
2. http://uk.reuters.com/article/usa-asia-lng-idUKL1N1FE4BG

Managing Editor Production Manager LNG Industry Subscription rates:

James Little Stephen North Annual subscription: 50 UK including postage
james.little@lngindustry.com stephen.north@lngindustry.com 60 overseas (postage airmail)
Editor Two year discounted rate: 80 UK including postage
Website Manager 96 overseas (postage airmail)
Joseph Green Tom Fullerton
joseph.green@lngindustry.com tom.fullerton@lngindustry.com Subscription claims:
Claims for non receipt of issues must be made within
Editorial Assistant Digital Editorial Assistant 3 months of publication of the issue
David Rowlands Angharad Lock or they will not be honoured without charge.
david.rowlands@lngindustry.com angharad.lock@lngindustry.com Applicable only to USA & Canada.

Advertisement Director
Rod Hardy
rod.hardy@lngindustry.com
Advertisement Manager
Chris Atkin
chris.atkin@lngindustry.com
Subscriptions LNG Industry (ISSN No: 1747-1826, USPS No: 006-760) is published monthly by
Palladian Publications Ltd, GBR and distributed in the USA by Asendia USA, 17B S
Laura White
Middlesex Ave, Monroe NJ 08831. Periodicals postage paid New Brunswick, NJ and
laura.white@lngindustry.com
additional mailing offices. POSTMASTER: send address changes to LNG Industry, 701C
Administration Ashland Ave, Folcroft PA 19032.
Nicola Fuller Uncaptioned Images courtesy of www.bigstockphoto.com and www.shutterstock.com
nicola.fuller@lngindustry.com

Editorial/Advertisement Offices, Palladian Publications Ltd

15 South Street, Farnham, Surrey, GU9 7QU, ENGLAND, Tel: +44 (0) 1252 718 999 Fax: +44 (0) 1252 718 992 Website: www.lngindustry.com
 Boil-Off Gas Compressor:
Flexibility you can trust
Compliance with standard API 618 and design
codes are our essential premise; technical
performance expectations are objectives that
we always respect.
In addition, our compressor generates trustworthy
efficiency, both in operation and for profit.
Its performance enables the recovery of gas from
liquefied natural gas in the most extreme climatic
and technical conditions, ensuring environmental
quality and full use of the raw material in the
re-gasification process. Also, the optimized design
meets all maintenance and operational ergonomics
requirements.

For further information:

siadmi_compr@siad.eu

SIAD Macchine Impianti. Made in Italy

Compressors, Air Separation Units,
Welding and Services.

www.siadmi.com
 LNGNEWS
USA
Eagle LNG files
FERC application for
Jacksonville LNG project
agle LNG Partners has announced that it has filed
E its formal application with the US Federal Energy
Regulatory Commission (FERC) for authorisation to
site, construct and operate natural gas liquefaction
and export facilities at a site located on the
St. Johns River, Jacksonville, Florida, US.
The proposed Jacksonville LNG project features
three liquefaction trains. At full build-out, it will
be able to produce up to 1 million tpy of LNG
(1.65 million gal./d).
The LNG will then be transported to markets
in both Latin America and the Caribbean, where it
will be used for power generation. It will also be
delivered to local and regional markets, including
marine bunkering and high horsepower applications
for domestic consumption.
Dick Brown, the CEO of Eagle LNG, said: The
dramatic growth of natural gas supply in the
United States has created abundant and affordable
natural gas reserves that make LNG a competitively
priced fuel alternative to diesel and heavy fuel
oil. In addition, natural gas fuel has significant
environmental benefits, reducing air pollution and
carbon emissions.
If Eagle LNG receives permission from FERC to
begin construction by the first quarter of 2018, we
anticipate completion of the project in 2019.
Singapore
MOL launches study of LNG-fuelled Capesize bulker
itsui O.S.K. Lines (MOL) has announced that it has
M reached an agreement to launch a joint study of an
LNG-fuelled Capesize bulker with five other companies.
These companies are: BHP Billiton; DNV GL; Rio Tinto;
Shanghai Merchant Ship Design and Research Institute
(SDARI); and Woodside Energy. A letter of agreement was
signed by the parties at a ceremony held in Singapore.
Finland
LNG-fuelled ferry delivered
S Tallink Grupp has announced that it has taken delivery
A of Megastar its new LNG fast passenger ferry from
Meyer Turku Oy shipyard in Turku, Finland.
The vessel is 212 m long, and is capable of carrying
2800 passengers and 800 passenger vehicles. It features
modern dual-fuel engines that are capable of operating on
LNG and marine diesel oil, and will comply with both current
and future emission regulations for emission control areas
(ECAs), including the Baltic Sea.
The vessel has a service speed of 27 knots and will
operate on the existing Tallink shuttle service route from
Tallinn (Estonia) to Helsinki (Finland). It will replace
the current fast ferry, Superstar, commencing service on
29 January 2017.
The CEO of Tallink Grupp, Janek Stalmeister, said:
Connecting Finland and Estonia, and even further Northern
Europe to the Baltic States and being the preferred hub for
that is an important goal for us. With Megastar, this hub
becomes the most modern sea-hub in the region. At Tallink
we have been researching what our customers want in a next
generation ferry. Then we worked closely with Meyer Turku on
a fresh and functional design of the ship and I am sure the
outcome will please all our customers. We are very thankful
to Meyer Turku for listening carefully to our wishes and
building an excellent ship for us.
Delivering this ship full of latest environmentally
friendly technologies and exceeding our expectations in fuel
efficiency and increased comfort level with low vibrations
Megastar nicely demonstrates the excellence and quality of
Meyer Turku and Finnish shipbuilding.
The joint research project is called Green
Corridor and aims to reduce NOx and SOx
emissions from merchant vessels in advance
of international treaties calling for stricter
emissions standards. The project will also
examine the technological and economic
feasibility of an LNG-fuelled bulker.
February 2017 5
 LNGNEWS
Norway
Long-term small scale
LNG contract for three
Multigas vessels
.M. Skaugen SE has announced it signed long-term
I contracts for the time charter of three Multigas (MG)
vessels for a project representing a proof of concept of its
small scale LNG logistics solutions (SSLNG) on 23 January.
The revenues under these SSLNG contracts will be
approximately US$42 million/yr and therefore around
US$420 million over 10 years.
The time charter contracts are for two 10 000 m3
and one 12 000 m3 MG vessels currently operated by
the company. The company will provide shuttle/feeder
services, floating storage support, as well as storage
and offloading of LNG with a client sponsored by two
existing gas fired power plants in Africa. The power
plants are new and made for burning natural gas and
have been idle because of lack of gas supply. In addition,
the company has been requested to perform the
complete Project Management of this virtual pipeline
to be established, encompassing the entire supply chain
from the sourcing of LNG supply to the delivery of gas to
the power plants.
Start-up of the contract is planned for in late March
or early April 2017 by our Company arranging delivery of
first LNG.
News Highlights
X MAN Cryo to deliver
LNG fuel gas supply system
to Italian ferry
X Houlder and KLAW LNG join forces
X MSC Cruises partners with ARTA to develop LNG
bunkering system
Visit our website for more news: www.lngindustry.com
6 February 2017
Belgium
Ice class LNG carrier docks at
Zeebrugge LNG terminal
luxys has released a statement claiming that the worlds
F first top category ice class LNG carrier has docked at the
Zeebrugge LNG terminal in Belgium.
The vessel was recently completed at the shipyard, and is
scheduled for a number of operations at the terminal. These
include, amongst other things, cooling down its cargo tanks and
loading a small volume of LNG. The vessel has moored at the
terminal during its maiden voyage, and will continue its sea trials
afterwards, setting off to the Yamal Peninsula in Siberia, Russia, to
undergo ice performance tests.
The vessel will be used for the Yamal LNG project, which
is currently under construction in North Siberia. It has been
designed to perform year-round navigation through the Arctic to
its destination markets, and is capable of breaking through ice up
to 2.1 m thick.
Fluxys claims that this vessels call at the Zeebrugge terminal
will not be its last. Specifically, a 20-year contract was secured in
2015 to perform transhipments for the Yamal LNG project at the
facility. Currently, a fifth LNG storage tank and additional process
facilities are under construction to provide these services.
It will join a fleet other 15 similar vessels, which will also
serve the Yamal LNG production terminal and regularly call at
the Zeebrugge terminal to perform transhipment operations to
conventional LNG carriers for further redelivery to a number of
destinations, including Asia.
Clean Meets Clever
With dual fuel exibility

Complete Propulsion Packages Dual Fuel Engines & LNG Fuel Gas Supply Systems Hybrid Power Systems Emission Reduction Technologies PrimeServ

Clean, cost-efcient propulsion is no longer a dream. The MAN 51/60DF engine offers you safe dual fuel
technologies in the 6,000-18,000 kW medium speed range perfect for LNG fueled ships. Our package
solutions include cutting-edge gas and liquid fuel injection, efcient turbochargers and electronic management
systems. You benet from fuel exibility, adaptable operation, low consumption and reduced emissions.
Our MAN Cryo experts provide a one-stop solution for all your marine LNG needs, including supply and
storage. Find out more at www.marine.man.eu
 LNGNEWS
USA
Magnolia LNG and VGS
sign contract
NG Limited has announced that its 100% owned
L subsidiary, Magnolia LNG has signed a Heads of
Agreement (HoA) with Vessel Gasification Solutions
(VGS) in relation to the Magnolia LNG Project, in
Lake Charles, Louisiana, US.
The non-binding HoA provides for a 20-year
Free-on-Board Sale and Purchase Agreement of up
to 4 million tpy. The obligations of the parties are
conditional upon MLNGs satisfaction with or waiver
of conditions precedent including financial close
of the KGLNGT terminal and satisfaction by VGS of
defined credit requirements underpinning their LNG
purchases within agreed timeframes.
LNG Limiteds Managing Director & CEO,
Greg Vesey, said, We look forward to supplying
long-term volumes to the Indian market to meet
their growing needs for clean energy. Overall, this
agreement represents another important step
forward for the MLNG Project.
With the execution of this agreement, VGS
is now in a prime position to execute on the
first- mover advantage we have established on
Indias East Coast, said Gaurav Tiwari, President of
VGS. We are very excited to take this step forward
in our relationship with Magnolia, and we look
forward to working with the Magnolia team to bring
a significant tranche of US-produced LNG to a key
new market on the East Coast of India.
India
AG&P to build LNG terminal
in India
tlantic, Gulf and Pacific Co. (AG&P) and Hindustan LNG
A (HLNG) a Hyderabad-based LNG import terminal development
company have signed a memorandum of understanding (MoU) to
supply tolled gas to power stations in the East Godavari region of
Andhra Pradesh, India.
Under the terms of the MoU, AG&P will provide an integrated
solution to deliver regasified LNG through a new LNG import
terminal. The company will also design and construct the terminal at
the port in Andhra Pradesh.
The agreement was signed at the Partnership Summit 2017
organised by Confederation of Indian Industry (CII). It will ensure
energy supply to power producers, fertiliser plants, cold storage and
other industries in Andhra Pradesh and other markets along the east
coast.
Speaking at the signing ceremony, C. R. Prasad, the Chairman
of HLNG, said: Andhra Pradesh is the ideal place for developing an
LNG import facility to serve the growing energy demands of the east
coast of India where existing gas-fired power projects urgently need
a reliable supply of LNG. The partnership with AG&P will provide
a strong platform to develop a fast-track and low-cost LNG import
solution that enables the region to continue on its growth trajectory.
AG&P will be responsible for the design and construction
of all necessary facilities for the import terminal. These include
a floating storage and mooring system, a regasification terminal,
related utilities, and the provision of tolled gas to power plants
and other users. The company will also carry out any necessary
conversion works and, upon commissioning, ongoing operations and
maintenance activities.

13 - 14 February 2017 22 - 24 February 2017 28 - 30 March 2017

Floating LNG Australasian Oil & Gas (AOG) StocExpo Europe
London, UK Perth, Australia Rotterdam, The Netherlands
www.floating-lng.co.uk www.aogexpo.com.au www.easyfairs.com/stocexpo-rotterdam-2017/
stocexpo-rotterdam-2017

14 - 16 February 2017 23 - 24 February 2017 04 - 07 April 2017

CWC Iran LNG & Gas LNG Summit United States Gastech
Partnerships Summit Houston, US Chiba, Tokyo, Japan
Frankfurt, Germany www.lng-usa.com www.gastechevent.com
www.iranlngandgas.com

8 February 2017
 LNGNEWS
Pakistan
Excelerate to develop
second FSRU for Port
Qasim
xcelerate Energy has announced that it is prepared
E to help a consortium of Engro, Fatima and Shell to
deliver a proposed floating LNG terminal and second
floating storage and regasification unit (FSRU) to the
Pakistan market.
The company recently commissioned GASCOs
Ruwais floating LNG terminal in the UAE, successfully
implementing it in less than 12 months. In early
2016, Elengy successfully developed Pakistans first
LNG import terminal using Excelerates floating regas
technology.
The consortiums project site is located just across
the Port Qasim channel. When the project comes
online in 2018, the total regasification capacity of
Excelerates two FSRUs at the port will be more than
1 billion ft3/d. This is enough natural gas to support
over 6000 MW of power generation.
Daniel Bustos, Chief Development Officer, said:
Excelerate is extremely excited to work with this
strong partnership of Engro, Fatima, and Shell to
implement this project in what we view as one of the
largest markets for natural gas in the world.
Our project development and operations teams are
aggressively reviewing implementation plans for this
project. We have been very pleased to be involved with
the countrys first floating LNG terminal developed by
Engros subsidiary Elengy over the past 18 months.
USA
Magnolia LNG extends validity of EPC contract with KSJV
NG Limited has announced that Magnolia LNG LLC its
L 100% owned subsidiary has agreed to further extend the
validity period of its engineering, procurement and construction
(EPC) contract with KSJV.
The agreement will now be valid through 30 June 2017. As
announced on 26 April 2016, Magnolia and KSJV a KBR-lead
joint venture (JV) between KBR and SKE&C had extended their
original binding lump sum turnkey (LSTK) EPC contract for four
LNG trains and related facilities until 31 December 2016, with
a subsequent interim extension to 31 January 2017. This latest
extension will ensure that the contract remains valid for an
10 February 2017
China
Worlds first barge-based
FSRU undocks
ison Offshore & Marine has released a statement claiming
W that the worlds first barge-based floating storage and
regasification unit (FSRU) has successfully undocked from the
companys dry-dock in Nantong, China.
Wison provided engineering, procurement and construction
(EPC) services for the Exmar vessel. The FSRU will become the
worlds first such vessel with small scale storage capacity, and
has a regasification capacity of 600 million ft3/d. The vessel
features two SPB cargo tanks installed in the hull for storage.
Each tank has a capacity of 12 500 m3.
The project is the second one that Wison and Exmar have
cooperated on (the other being the Caribbean FLNG project). By
adopting a modularised approach, the FSRUs hull and topside
modules have been fabricated simultaneously, reducing safety
risks, improving construction quality, and helping to reduce
the delivery schedule. In addition to this, Wison developed its
own cargo containment system and cargo handling system for
IHI SPB tanks. The regasification module, meanwhile, has been
successfully applied in Caribbean FLNGs final performance test
as its temporary regasification skid.
The Senior Vice President of Wison Offshore & Marine,
An Wenxin, said: The successful undocking of the FSRU once
again verifies Wisons strong competence in the lump sum
turnkey projects for floating LNG facilities. It further proves
that we are capable of providing the market with the most
cost-effective EPC solutions that are applicable in other LNG
developments, such as the new W-FSRP (Wison Floating
Storage, Regasification and Power generation) series we
launched recently.
additional six months.
Greg Vesey, LNG Limited Managing Director and CEO,
said: We continue to work closely with key contractors
and suppliers such as KSJV to maintain momentum on
the Magnolia LNG project as we continue our marketing
efforts. This further extension of our LSTK EPC contract
with KBR-SKE&C, together with our FERC final order and
Department of Energy non-FTA export approval, further
cements Magnolia LNG as construction-ready and the next US
LNG export project that will move forward into construction
and operation.
 COU A change of

Richard Bass, Navigant Consulting Inc.,

UK, looks at how the East Mediterranean
gas market has changed over the last
10 years, with particular focus on Egypt,
Israel and Cyprus.
12
URSE
RSE
A
discussion held 10 years ago about
East Mediterranean gas would have
focused on Egypt. It would have
concentrated specifically on the quantity
of pipeline gas that Egypt could export
regionally and the capability of its two LNG
terminals to compete for customers in Europe,
North America, and Asia. Fast forward to today,
and any discussion of East Mediterranean
gas would consider when Egypt will cease to
be a significant LNG importer, as well as the
prospects for gas exports from Israel and Cyprus.
So how, in less than a decade, have the regions
circumstances changed so markedly? And what
is the next decade going to look like?

13
 Egypts change of fortunes independent power projects, developed by a consortia led
By 2006, Egypts gas sector was highly successful. The by both KEPCO and AES, were built as efficient combined
LNG liquefaction plants at Idku and Damietta had been cycle gas turbines (CCGTs). In 2006, authorities were
operating for several years, having been constructed considering the development of gas distribution
at a low cost per t of capacity and rapid schedule that businesses in both Aqaba and Amman to deliver low cost
were close to industry-leading. Pipeline gas exports had Egyptian gas to residential, commercial, and industrial
been negotiated with Israel and an offshore pipeline consumers.
constructed to deliver gas into Ashkelon. This was a In Egypt, gas was supplied to new power plants and a
politically significant and valuable commercial agreement growing petrochemical industry. However, all was not well
between the two countries. This gas supply supplemented in the Egyptian gas industry; production declines at older
Israels own modest gas production and allowed it to fields were starting to bite. The low price offered by
continue expanding its power generation fleets reliance Egypt for domestic gas production in a world of
on gas. US$140/bbl of oil did little to incentivise exploration
During that time period, Navigant Consulting Inc. was activities. Meanwhile, highly subsidised gas prices
helping the Jordanian government to negotiate pipeline encouraged rapid increases in domestic consumption, and
gas imports from Egypt. An agreement to import up to the commercial structure of the production-sharing
3 billion m3/yr was realised in 2003, with first gas being agreements offered to energy companies were looking
delivered to the steam turbine power plant in Aqaba. The increasingly uncompetitive.
gas pipeline crossed Egypts Sinai Peninsula. An offshore By 2010, these issues were beginning to create
segment then headed to Israel, whilst the Jordan-destined problems for Egypt and its gas customers, with deliveries
branch turned south toward the Gulf of Aqaba. Despite to Jordan and Israel becoming somewhat unreliable.
the relatively short distance to Jordan, the crossing of the However, the serious problems kicked off in 2011. With
Gulf of Aqaba was technically complex, requiring one of the Arab Spring spreading across North Africa, the
the worlds largest pipe-lay vessels due to the steep government of Egypt was overthrown. The new regime
offshore gradient. The geography of the Gulf of Aqaba had different priorities to that of its predecessor; gas
would also come to affect the construction of Jordans supply to domestic consumers was ranked above exports,
LNG import terminal approximately 10 years later. Like which declined rapidly. As a result, the LNG liquefaction
Israel, Jordan converted its power plants to gas; the facility at Damietta was mothballed almost immediately.
The Idku facility continued to
export cargoes for some time,
as it was supplied directly
from a producing gas field,
but eventually even that
supply was diverted for
domestic consumption.
Pipeline supplies to Jordan
became highly intermittent
and effectively ceased by the
middle of 2012. This created
massive problems for the
Jordanian government, as it
was forced to buy expensive
gasoil to operate its new fleet
of CCGTs. The gas supply deal
with Israel was cancelled.
Although substantial, the
impact in Israel was mitigated
to some extent by its rising
gas production.
By 2013, Egypts gas
shortage had become so
severe that it had to rapidly
implement an LNG import
facility on the Red Sea. At the
same time, Navigant was
assisting Jordan in
implementing its own LNG
import terminal at Aqaba to
replace the now absent
Figure 1. Multiple options exist for the monetisation of East Mediterranean gas. Egyptian gas supplies. Jordan
later signed a deal to allow

14 February 2017
Egypt to import additional LNG cargoes via the
Aqaba terminal, to be delivered to Egypt using the now
reversed pipeline across the Sinai. A second Egyptian
LNG import facility followed and a third facility is being
considered.
Gas developments in Israel and
Cyprus
While Egypt was struggling with growing gas demand
and declining production, Israels gas industry was
developing rapidly. A consortium led by Noble Energy
discovered Tamar, Leviathan, and other smaller gas
fields. Tamar was developed quickly to meet domestic
demand as Egyptian supplies faltered. Israel also
implemented an LNG import terminal to supplement
domestic production, especially during the summer peak
demand months.
Noble and its partners began searching for
development options for the much larger Leviathan gas
field, initially focusing on LNG exports to Asia or Europe
(The North American market that had originally been
targeted by Egypts LNG terminals had long since
vanished as a result of North Americas shale gas
revolution).
Then, Israeli domestic politics intervened. Nobles
successful exploration programme had transformed
Israels energy sector. A consequence, however, was that
a single consortium now controlled the vast majority of
Israels newly discovered gas resources. That fact caused
Israels monopoly commission to review the status of the
gas industry and, in particular, the status of Nobles
consortium. The review turned out to be a long and
protracted process, during which the development of
Leviathan was essentially put on hold.
In Cyprus, Nobles consortium had discovered
another large gas field: Aphrodite. Once again, LNG
exports seemed like an ideal route to market. However, a
combination of economics and geopolitics has held back
Cyprus gas ambitions. Although Aphrodite is a
substantial resource, it is not big enough by itself to
justify a world scale LNG liquefaction plant. Noble
needed to find more gas or others active in Cyprus
(e.g. Eni and Total) needed to do the same.
Unfortunately, that has not yet happened. One factor is
that the domestic energy market in Cyprus is very small.
Unlike in Israel, Noble was not able to develop
Aphrodite initially for domestic consumption and then
consider further export opportunities.
Geopolitics also complicates any gas development in
Cyprus. Whilst the Cypriot government had identified a
number of exploration blocks to the south of the island,
Turkey (which controls the north of the island) had also
identified a number of blocks. Many of these blocks
overlapped, including those held by Noble and Total.
Gaza Marine
Well before the discovery of significant gas resources
in either Cyprus or Israel, BG Group discovered
the Gaza Marine field offshore from Gaza in 1999.
Development of the resource was complicated by the
political relationship between the Palestinian Authority
and Israel. BG negotiated for several years to supply gas
to Israel and Gaza. A CCGT power plant was developed
(initially by Enron and completed by CCC) in Gaza
with a view to utilise the gas from Gaza Marine. That
process essentially came to a halt when Hamas came
to power in 2007. As a result, Gazas power plant has
never received any gas and has had to burn expensive
gasoil instead. BG tried again in 2012 after the Egyptian
pipeline contract to Israel was cancelled, but Nobles
development of Israels own Tamar field meant that
Gaza Marine remained undeveloped. Shells recent
takeover of BG is unlikely to aid the development of
Gaza Marine, as Shell is seeking to divest US$30 billion
of assets Gaza Marine is probably on the disposal list.
Now and the future
The Egyptian gas sector may be about to take another
change in direction. Enis recent discovery of the giant
Zohr gas field may, along with other recent discoveries,
bring Egypts gas supply and demand back into balance.
The fast-track implementation of Egypts two LNG
import projects and the progress being reported on Zohr
suggest that a turnaround in Egypts fortunes could be
reasonably rapid. A pause in the execution of the third
LNG import facility may be further indication that Egypt
is heading back on track. The Zohr discovery, just to the
south of Cyprus maritime border with Egypt, has also
increased interest in Cyprus recent licensing round.
Will Egypt return to exporting significant quantities
of gas? Yes, but the source of the exported gas is
unlikely to be Egypts own gas fields. Shells recent
agreement with Cyprus and its investment in Cypriot gas
resources suggest the probable import of Cypriot gas for
re-export as LNG from Egypts mothballed Idku
liquefaction terminal. Both Idku and Damietta have
reportedly been running at bare minimum throughput
and exporting a cargo occasionally to keep the units
cold. With the supply of Cypriot gas, these facilities
could return to something close to full capacity. The
economics of this approach should be attractive for all
of the companies and governments involved because
investment in the export terminals has already been
made and Cypriot gas is looking for an economically
viable route to market. Development of Aphrodite for
export via Egypt should also enable gas to be supplied
to Cyprus domestic market, lowering its high electricity
costs.
Leviathan also appears to be moving forward.
Nobles recent announcement of two agreements to
supply customers in Jordan, as well as possible further
gas sales in Israel, should enable a final investment
decision (FID) to be made in 2017. Like Cyprus, interest
in Israels latest licensing round appears strong.
Domestic Israeli gas consumption has the potential to
grow and access to Egypts other LNG terminal at
Damietta may provide a cost-effective export route.
There is no doubt that the East Mediterranean is a
challenging place to do business, where economics take
a back seat to geopolitics more often than not. However,
after a tumultuous decade, recent developments point to
a brighter future for the regions gas sector.
February 2017 15
 THAT WAS A SAMPLE OF

FEBRUARY ISSUE

DONT WANT TO MISS OUT?

You will need to register to read the full edition.
Please log in to www.lngindustry.com
or alternatively click here to register for free!
For more information about
LNG Industry, please contact us:
www.lngindustry.com
E: subscriptions@lngindustry.com
T: +44 (0)1252 718999