WEC: ExxonMobil to start LNG terminal off Italy next year

The 6 million-tonne/year North Adriatic LNG terminal off Italy is expected to start up next year, according to Rex Tillerson, ExxonMobil Corp. chairman and chief executive officer.

Nov 13th, 2007

Uchenna Izundu
International Editor

ROME, Nov. 13 -- The 6 million-tonne/year North Adriatic LNG terminal off Italy is expected to start up next year, according to Rex Tillerson, ExxonMobil Corp. chairman and chief executive officer.

The terminal, which was expected to start up by yearend, will deliver gas from the RasGas II Train 4 in Qatar to Italy (OGJ Online, May 3, 2005).

Tillerson told reporters at the World Energy Congress that it was a "challenging project" because it will be the first use of a gravity-base structure for an LNG terminal. Five LNG tankers will supply the terminal, which is also known as Isola di Porto Levante.

The terminal will sit in 15 km off northern Italy in 30 m of water in the North Adriatic Sea. The terminal is a strategic venture between ExxonMobil, Qatar Petroleum, and Edison LNG, which is majority owned by ExxonMobil.

While fossil fuels will remain dominant in the energy mix because they are reliable and affordable, Tillerson said, their advantages do not rule out other sources of energy provided they are economic. Through 2030, according to ExxonMobil's estimates, hydrocarbons will continue to account for about 80% of energy demand; oil and gas alone will account for about 60%.

Open dialogue
Tillerson called on energy producers and consumers to communicate with one another and ensure markets and trade remain open. "Achieving [global production of] 116 million b/d is achievable on open markets," he said. "Countries blessed with these resources need to make them available. The world has plenty of oil resources. The question is whether technology and investment is going to bring these to bear."

Criticizing US energy policy, Tillerson said more than 100 tcf of gas is unavailable to the industry and yet there is a shortfall between domestic energy consumption and production of 15 million boe/d. "If the US is serious, it needs to be efficient and have positive trade rules with other resource holders."

Sakhalin-1 developments
Talks are progressing with China and other parties about buying gas from ExxonMobil's Sakhalin-1 project in Russia. "The question is to determine the value of the gas," Tillerson said.

Last year the company signed a memorandum of understanding to sell 8 billion cu m/year to China National Petroleum Corp. ExxonMobil plans to deliver the gas by pipeline, but this proposal competes with OAO Gazprom's intentions to pursue Chinese gas sales. Previously, Gazprom said that increasing domestic demand in Russia means Sakhalin gas cannot be exported.

According to ExxonMobil's energy outlook, published on Nov. 5, energy demand growth is expected to average 1.3%/year during 2005-30 due to growing economic prosperity, improving living standards in the developing world, and population growth.

Tillerson said, "Sufficient hydrocarbon resources exist to play their role in meeting this growing global demand if industry is allowed to access them. The US Geological Survey, to cite just one authority, estimates that twice the total conventional oil resources consumed in human history to date still remain to be tapped. Unconventional resources are likely to significantly add to this total."

Developing countries are expected to count for the largest spurt in demand growth because of rapid economic and population growth. Tillerson stressed the importance of trading relationships between developed and developing nations, noting that developing countries will also be the new energy suppliers over the next 20 years.

Resource nationalism
Tillerson warned that resource nationalism is threatening the global economy and energy security in the long term. "The key to innovation and creativity needed to address global energy challenges lies in free markets and strong international partnerships," he said.

Tillerson said ExxonMobil is on track to eliminate gas-flaring in Nigeria, which the Nigerian government wants all operators to stop in 2008. The government has signaled that it wants to revise contracts with international oil companies, but Tillerson said ExxonMobil has not received any statements on changing its position.

Contact Uchenna Izundu at uchennai@pennwell.com.

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