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UAE's Emirates LNG consortium drops FSRU to focus on land-based terminal

14 Nov 2013 13:38:41 | glm

The Emirates LNG consortium has dropped plans to install a fast-track floating storage regasification unit (FSRU) at the port of Fujairah, in the United Arab Emirates (UAE), in favour of focusing development on a 9mtpa land-based terminal, a company spokesman told ICIS on 14 November.

The Abu Dhabi Executive Council, which recently approved the land-based project, has reviewed regional natural gas demand and decided that the fast-track option at this stage would not be the priority, he said.

Emirates LNG had been working towards a two-phase project which would include an FSRU by US-based Excelerate Energy, a floating storage unit (FSU), and land-based regasification. The initial plan had been to target a 2015 start-up with a fast-track FSRU before scaling up the import facilities to 9mtpa in the second and final land-based phase towards the end of the decade ( see GLM 28 February 2013 ).

The spokesman, however, declined to comment on any new timeline for commercial start-up, other than to say the project would now focus on awarding the engineering procurement and construction (EPC) contract for the land-based infrastructure in a tender process.

Paris-headquartered Technip has completed the front-end engineering design (FEED) phase and is expected to remain involved in the project. Emirates LNG meanwhile has integrated its project team with a number of contractors from third parties including South Korean wholesale gas monopoly KOGAS and the Abu Dhabi National Oil Company (ADNOC), the company said in a press release on 11 November.

FSRU provider Excelerate Energy, which had been awarded a role in the project through a tender process, is understood to have stopped short of firming a preliminary agreement for a newbuild FSRU, with its relationship with Emirates LNG now in doubt. This could not be confirmed before publication, but Excelerate holds only options for eight 174,300cbm FSRUs at Korean shipyard Daewoo Shipbuilding and Marine Engineering, and had not exercised the option for the one it had earmarked to deliver to Emirates LNG by the second or third quarter of 2015.

The Emirates LNG spokesman said there is still scope “to revert to an FSRU at some point in the future if we want to accelerate the project”, but reiterated the fast-track option had for the moment been sidelined.

LNG supply

Once the land-based EPC is awarded, work can begin on sourcing LNG on “a consistent and valued basis”, the spokesman said. With terminal plans geared up to accept Q-Max vessels, Emirates LNG is keen to be open to the widest possible offer of cargoes on the market.

However, the decision to concentrate on developing permanent land-based facilities rather than the fast-track option may mean that the project would have to forgo up to 1mtpa of initial supplies it had initially earmarked from Abu Dhabi’s ADGAS LNG venture.

The 1mtpa is understood to be available following the expiration of a short-term contract between ADGAS and Japan’s TEPCO in 2014.

Of the seven emirates, the Emirate of Fujairah has the least gas reserves and sits to the east of the Strait of Hormuz, which lends it strategic importance in the UAE’s quest for security of supply.

Neighbouring emirate Abu Dhabi continues to export LNG, but it can only meet its export commitments by currently importing 929 million cubic feet/day of Qatari gas through the Dolphin pipeline, in which state-owned Mubadala holds a 51% stake.

Emirates LNG is a 50:50 joint venture between Abu Dhabi sovereign wealth fund Mubadala Group and state-owned International Petroleum Investment Company.

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