Page 9 - DMEA Week 07 2020

DMEA TRANSPORT DMEA
Bahrain’s LNG facility completed but its gas plans remain in flux
BAHRAIN
Bahrain’s LNG import journey began more than a decade ago.
COMPLETION of an import terminal is a sign of progress but has not ended the kingdom’s gas dilemma.
A commercial start-up date for Bahrain’s new LNG facility remains un xed despite it achieving a technical commissioning milestone, as lengthy discussions with potential LNG suppliers rum- ble on. Meanwhile, the cash-strapped kingdom — ill-placed nancially to become dependent on costly foreign energy — is stepping up dec- ades-long e orts to nd and develop indigenous gas resources, with hopes buoyed by a discovery deep below the country’s sole oil eld a few years back.
Bahrain’s LNG import journey began more than a decade ago, when an increasingly acute domestic gas shortage prompted the government to look overseas to plug the gap. Years of debate over the capacity and form of the import facilities — interspersed with periods of political turmoil — followed and delayed concrete progress until December 2015. At that point Nogaholding, the investment arm of the government’s national oil and gas authority (Noga), signed a 20-year build-own-operate-transfer (BOOT) contract with a consortium of Bermuda-registered Teekay LNG (30%), Kuwait-based Gulf Investment Corp. (20%) and South Korea’s Samsung C&T (20%) to execute the project as a regionally novel public-private partnership (PPP), with the state rm holding the remaining shares in the project company and providing o -take guarantees.
Financial close on the $741mn limited-re- course project loan took another two years and made heavy use of South Korean export cred- its — as Bahrain’s sovereign credit rating was buffeted by the mid-decade oil price slump.
Completion of the import facilities — which have a send-out capacity of 800mn cubic feet (22.6mn cubic metres) per day and comprise a oating storage unit (FSU), an o shore receiving jetty, a regasi cation platform and an onshore gas-receiving facility — was, at that time, due in the rst half of 2019.
Technically ready
By August of last year, though, and with no commissioning in sight, Teekay admitted start-up was slipping into the year’s nal quarter. But it was not until late January that the public/ private consortium announced belated comple- tion of commissioning.
Unfortunately for all four project sponsors, the announcement was accompanied by disclo- sure that the Bahrain Spirit FSU, having received the nal commissioning cargo, would hence- forth be redeployed under short-term charter — rather than being used for its intended import purpose. No reason was given for the further delay to commercial start-up, but is thought to indicate an inability to reach agreements with LNG suppliers.
is failure is somewhat glaring given that the Bahraini government has very publicly trum- peted discussions with potential sellers for many years. Russia was long talked-up as the likeli- est source, and memoranda of understanding (MoUs) to co-operate with Russia’s Gazprom in the LNG sector were signed in 2016 and 2017.
Years of debate over the capacity and form of import facilities — interspersed with periods of political turmoil — have delayed progress.
Lower transport costs would in theory make regional supplies cheaper, and an agreement in
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