PLANS FOR THREE LNG EXPORT PROJECTS ADVANCE

Liquefied natural gas export capacity in the Eastern Hemisphere is poised for a boost, with details being worked out on several key projects. Here's what's happening: Plans for Nigeria's LNG plant at Finima, Rivers state, took a major jump with Nigeria LNG Ltd. wrapping up terms for sale of the plant's entire production. Sources said although behind schedule, exports of Nigerian LNG to Europe and the U.S. appear to be possible within the next 6 years.

Sept. 23, 1991

6 min read

Liquefied natural gas export capacity in the Eastern Hemisphere is poised for a boost, with details being worked out on several key projects.

Here's what's happening:

Plans for Nigeria's LNG plant at Finima, Rivers state, took a major jump with Nigeria LNG Ltd. wrapping up terms for sale of the plant's entire production. Sources said although behind schedule, exports of Nigerian LNG to Europe and the U.S. appear to be possible within the next 6 years.
Qatar General Petroleum Corp. (QGPC) let contract for an LNG export terminal at Ras Laffan on the country's northeast coast to help serve a 25 year supply contract.
Indonesia's Pertamina obtained financing for another train at the Bontang LNG complex in East Kalimantan. The expansion is to aid Pertamina in supplying LNG to three Japanese companies under 20 year contracts.

Meantime, Japan's Toho Gas Co. agreed to a test purchase of LNG from Malaysia, which could lead to a long term contract.

NIGERIA'S PROJECT

Lined up as buyers for Nigerian LNG are the Italian state electricity generation company ENEL, Spain's Enagas, Gaz de France, and Distrigas Corp. of the U.S. The four buyers will take all the plant's 4.6 million metric tons/year for 221/2 years, which includes the initial supply and buildup periods.

Pierre Gadonneix general manager of Gaz de France, said the Nigerian contract will amount to only 1.85% of the company's imports. But it is in line with the policy of diversifying sources of supply. They now include Holland, the U.S.S.R., and Algeria in addition to domestic gas.

He said Gaz de France is prepared to extend the contract if and when Nigeria decides to expand the project.

The initial schedule called for sales contracts to be in place by fourth quarter 1989.

This was expected to provide the necessary backup to arrange external financing for the project, targeted for first quarter 1991.

Nigeria LNG, a joint venture among Nigerian National Petroleum Corp. 60%, Shell Gas BY 20%, Agip International BY 10%, and Ste. Nationale Elf Aquitaine unit Cleag Ltd. 10%, said it needs to complete project financing, which could take about a year. This places first deliveries from the $4 billion project early in 1997, 2 years behind the original start-up date.

Ahmed Joda, chairman of Nigeria LNG, said France's Technip and M.W. Kellogg completed a $17 million design specification for the plant last year, which led to the $4 billion cost estimate.

He said the project will be financed by shareholders equity and loans on a 40-60 basis. The 2 year delay in start-up for gas delivery is partly due to long marketing negotiations and to "a rather optimistic project schedule" established when the project was disclosed in 1989.

The liquefaction plant will require about 5.7 billion cu m/year of gas, which will be delivered from local sources through a new 125 mile pipeline network included in the overall project.

Later this month tender documents for the next phase of work-engineering, procurement, and construction of the plant, gas pipelines, telecommunications system, and residential area-will be released to two groups of companies that emerged from a prequalification process involving about 26 companies.

Technip and Kellogg will be bidding in partnership with Italy's Snamprogetti SpA and Japan's JGC Corp. Ranged against them will be Bechtel Corp., Japan's Chiyoda Corp., Germany's Thyssen, and France's Spie Batignolles.

Joda said the contract will be let next year.

Four LNG vessels have been acquired for the project.

The LNG Finima and LNG Bonny are chartered to Malaysian LNG and Pertamina for work in the Far East. The two other vessels, LNG Lagos and LNG Port Harcourt are laid up.

QATAR'S TERMINAL

Development of an LNG terminal at Ras Laffan on the northeast coast of Qatar will be undertaken by Societa Italiana per Condotte d'Acqua under a contract with QGPC.

Qatargas, a joint venture among QGPC 70% and BP Exploration, Total, Misui & Co., and Marubeni Corp. 7.5% each, holds a contract to begin LNG deliveries to Japan's Chubu Electric Power Co. in January 1997 (OGJ, Mar. 4, Newsletter). The 25 year contract calls for 4 million tons/year.

QGPC said the LNG terminal will be contained by a 3.7 mile northern breakwater and a 2.5 mile breakwater to the south. There will be a 2 sq km inner basin with two berths of LNG carriers, two for condensate and methanol carriers, and a fifth berth for container and bulk cargo vessels.

The terminal is to be the mainspring of a new industrial area at Ras Laffan in addition to the LNG plant. Space has been zoned for gas treatment, fertilizer, and petrochemical plants, and refineries.

ASIA-PACIFIC REGION

A group of international banks has agreed to provide a syndicated loan for an additional LNG train at Pertamina's Bontang complex.

The Jakarta Post quoted A. Sidik Nitikusuma, a spokesman for Pertamina, as saying the $750 million loan was being coordinated by Chase Manhattan Bank and the Mitsubishi Bank of Japan.

The train is being added to supply 2.1 million tons/year of LNG to Japan's Osaka Gas Co., Tokyo Gas, and Toho Gas Co. under 20 year contracts. Deliveries are to begin early in 1994.

Pertamina Pres. Faisal Abda'oe said his company will be able to repay the loan in 10 years using only 60% of the value of LNG exports from the project.

The loan has a 13 year maturity, including a 3 year grace period, and will have an interest rate of 1.25%/year above the London interbank offered rate.

An Indonesian firm, Inti Karya Persada Teknik, is building the train, designed by the Chiyoda Corporation of Japan.

Pertamina is operating five LNG trains, each with a design capacity of 2.3 million tons/year, at Bontang on Borneo Island and six others, each rated at 2 million tons/year, at Arun on Sumatra Island.

The sixth LNG train at Bontang will increase Indonesia's LNG exports to Japan, South Korea, and Taiwan to 24 million tons in 1994 from 20-63 million tons last year.

Meantime, Japan's Toho Gas Co. has signed a spot contract with Malaysian LNG Sdn. Bhd. in a move to diversify its gas supply source. The contract calls for about 57,000 tons of LNG, supplied from a field off Bintulu, Sarawak, to be delivered Sept. 21 to an LNG base in Central Japan's Chita City.

Japan's Kyodo News Service reported Toho has purchased LNG from Indonesia and Australia and plans to add Malaysia to its suppliers after 1995.