Flex LNG plans FLNG terminal for Thailand's PTTEP
Japanese shipping line Kawasaki Kisen Kaisha Ltd. (K-Line), on behalf of Flex LNG Ltd., plans to launch the world's first floating LNG (FLNG) production platform in 2014 for Thailand’s state-owned PTT Exploration & Production PCL (PTTEP).
OGJ Oil Diplomacy Editor
LOS ANGELES, Apr. 29 -- Japanese shipping line Kawasaki Kisen Kaisha Ltd. (K-Line), on behalf of Flex LNG Ltd., plans to launch the world's first floating LNG (FLNG) production platform in 2014 for Thailand’s state-owned PTT Exploration & Production PCL (PTTEP).
K-Line will operate the offshore facility in a natural gas field in northwest Australian waters through Flex LNG, which is based in the British Virgin Islands.
K-Line is the largest single shareholder in Flex LNG, with a 15% stake. Additional stakeholders include JP Morgan Clearing Group, Credit Suisse Securities (USA), B Schulte Investment Holding, Bank of New York Mello SA/NV, and JP Morgan Chase Bank.
Japan’s Nikkei business daily reported Flex LNG has already placed an order for four floating LNG production bases with South Korea's Samsung Heavy Industries Co.
“We are confident that the work undertaken to date by Flex LNG and Samsung Heavy Industries to develop one of the world’s first LNG [floating production, storage, and offloading vessels] will enable this project to move ahead and achieve its near term goal of producing LNG as soon as practically possible,” said Flex LNG Chief Executive Philip Fjeld.
Although just one facility will be used in conjunction with PTTEP, FLex LNG has ordered three more to prepare for future expansion. The final tab for the four facilities may reach as high as ¥500 billion.
Without the need to build a pipeline to deliver gas from the offshore field to an onshore LNG plant hundreds of kilometers away, production costs are expected to be slashed by as much as two-thirds.
According to the Nikkei report, a conventional setup in the same area would cost up to $2,000 for each ton of LNG produced, while use of an offshore facility is expected to lower the figure to $700/ton.
Such a drastic reduction would make developing gas fields with output of 1-2 million tons/year economically viable. It is estimated that more than 2,000 of these small and midsize gas fields exist worldwide.
The paper noted that bolstering supplies and lowering prices would be highly beneficial for Japan, which is the world's biggest importer of LNG.
The announcement follows an earlier decision by Golar LNG Energy Ltd., Bermuda, and PTTEP to cancel their heads of agreement and joint study agreement signed last year to develop an FLNG project off northwest Australia.
In February, the two companies also announced termination of a memorandum of understanding for global cooperation to identify and develop other FLNG projects.
The Australian part of the agreement to enter into front-end engineering and design studies for the FLNG project on a 50-50 basis was signed in July 2009 (OGJ Online Feb. 2, 2010).
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