BG, Petrobras to use floating LNG for Santos basin

BG Group signed a joint venture agreement with Brazil’s Petroleo Brasileiro SA to develop floating LNG (FLNG) as an additional option to commercialize the associated natural gas in the Santos basin presalt, off Brazil.

By OGJ editors
HOUSTON, Nov. 18
-- BG Group signed a joint venture agreement with Brazil’s Petroleo Brasileiro SA to develop floating LNG (FLNG) as an additional option to commercialize the associated natural gas in the Santos basin presalt, off Brazil.

Under the agreement, frontend engineering and design contracts will be awarded for a new FLNG vessel. It will operate close to the planned Santos basin floating production, storage, and offloading vessels to process and liquefy associated gas from the presalt fields before loading it onto LNG carriers.

FLNG processing capacity is anticipated to be up to 14 million cu m/day of associated gas. The 3 million tonnes/year of LNG produced would be shipped either to Petrobras-operated regasification terminals at Pecem and Guanabara Bay to supply the Brazilian domestic market. Or, it will be exported to other global markets.

BG Group holds a majority interest (60.1%) in Comgas, Brazil's largest gas distribution company. In 2008, Comgas supplied gas to 1,000 industrial, 9,000 commercial, and 650,000 residential customers in Sao Paulo state. Volumes increased almost fivefold between 1999 and 2008, said BG, to 14.6 million cu m/day from 3 million cu m/day.

Timeline
BG says the tender for development of FLNG FEED was issued in August. In October, “several consortia consisting of international suppliers with liquefaction and FPSO construction experience” were invited to initial proposals.

Next month, BG will award FEED contracts to up to three of the consortia invited to bid, in accordance with qualification criteria established for the tender process. The decision to develop separate FEED projects in parallel is intended to foster competition among consortia companies, “contributing to a reduction in the overall cost of the FLNG vessel,” said BG.

Successful bidders will prepare their FEED proposals through 2010. BG Group and Petrobras anticipate making the final investment decision (FID) in 2011. The FID outcome will be based on technical and economic feasibility studies of each of the FLNG FEED projects presented, BG said.

It will also take into account an “assessment of the viability of alternative development options such as the installation of new subsea pipelines” connecting the Santos Basin pre-salt to onshore gas processing facilities.

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