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UAE’s Mubadala lays foundations for Fujairah FSRU

23 Mar 2012 10:44:49

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An Abu Dhabi joint venture between sovereign wealth fund Mubadala Group and state-owned International Petroleum Investment Company (IPIC) has advanced plans for a floating storage and regasification unit (FSRU) in the port of Fujairah, Mubadala said in a statement on Thursday.

"The project engineering phase has now commenced, following completion of a feasibility study last year," said a spokesman from the sovereign wealth fund, adding that the terminal is expected to start operations in the "next two or three years."

The scope of the project, which will be the United Arab Emirates' second FSRU, would be similar to the Dubai Supply Authority's (DUSUP) existing 3 million tonne per annum (mtpa) facility, according to Siamak Adibi, senior Middle East Gas consultant at FACTS Global Energy.

Situated on the UAE's east coast, away from the highly politicised Straits of Hormuz, Fujairah has the least gas reserves of the seven emirates.

Abu Dhabi, in contrast holds the most, and its ADGAS LNG venture - a consortium comprising Abu Dhabi National Oil Company (70%), Mitsui (15%); BP (10%) and Total (5%) - that has been cited as a possible supply source to Fujairah. The Mubadala-IPIC joint venture has earmarked around 1mtpa from ADGAS once an existing agreement to supply an additional cargo a month to Japan's TEPCO expires in 2013-2014, sources familiar with the project told ICIS Heren.

Abu Dhabi currently imports 929 million cubic feet/day - or 9.6 billion cubic metres (Gm³)/year - of Qatari gas via the Dolphin pipeline, in which Mubadala holds a 51% stake. However, concerns that Qatar's gas moratorium could be extended past 2014, coupled with a political impasse over contractual terms to flow Iranian gas through a pipeline to the northern emirate of Sharjah, has shifted the focus to LNG imports.

The power sector would be the first to line up for offtake gas from the proposed FSRU, according to Adibi. Resurgent growth rates among gas-intensive industries across the UAE that have benefitted from long-running government subsidies - pegging gas prices around $1/MMBtu - continue to fuel a growing imbalance between domestic production and consumption, which is estimated to grow to 29.4Gm³ by 2020 according to the latest BP Statistical Review.

In addition to supplying the growing needs of state-owned Abu Dhabi Water and Electricity Company (ADWEC), which has gas-fired electricity generation facilities in Fujairah, the terminal may also support some of the supply needs for IPIC which is constructing a 200,000 bbl/day refinery in Fujairah, expected to start operations in 2016.

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