Page 17 - GLNG Week 07

GLNG MIDDLE EAST GLNG
Financial close on the $741mn limited-re- course project loan took another two years and made heavy use of South Korean export credits — as Bahrain’s sovereign credit rating was buf- feted by the mid-decade oil price slump. Com- pletion 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-re- ceiving facility — was, at that time, due in the rst half of 2019.
Technically ready
By August of last year, though, and with no com- missioning 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 completion 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 November 2018 with Abu Dhabi’s ADNOC LNG to supply the commissioning cargo was part of broader discussions that included the potential for a longer-term deal. But Qatar is
precluded by hostile political relations, with Bahrain one of three Mid-East Gulf states sub- jecting its neighbour to an economic blockade since mid-2017.
Pricing is assumed to be the sticking point. But completion of the terminal, the upfront out- lays involved and the urgency of Bahrain’s gas need are expected to galvanise supply talks. e last of these is perhaps most pressing and could encourage the Bahraini side to compromise and to get imports up-and-running before the end of the year. Domestic gas demand is expanding rapidly to meet the power generation needs of a fast-growing population and to fuel industrial expansion, including that of the gas-guzzling Aluminium Bahrain smelter — which doubled in capacity last year to become the world’s largest such facility.
However, the government’s hopes of not having to sign up to long-term imports were delivered a substantial shot in the arm by a dis- covery announced in April 2018 — and some- what overshadowed by a signi cant o shore oil nd revealed simultaneously — of an estimated 13.7tn cubic feet (388bn cubic metres) of deep gas below the onshore Awali oil eld, the coun- try’s sole crude producer since the 1930s.
Noga has yet to enlist international assis- tance to develop the new resource but has been courting Italy’s Eni for several years over wider engagement in the kingdom’s energy sector. e e orts bore some fruit in May last year, when the Bahraini government signed an exploration and production-sharing agreement (EPSA) with Eni for an o shore block in the north, where drill- ing is due to start this quarter. In early February, the Italian rm also signed an MoU with Noga- owned Tatweer Petroleum, the state’s upstream operator, to explore collaboration in various domains, including gas.
The terminal comprises a floating storage unit (FSU), an o shore LNG receiving jetty and breakwater, an adjacent regasi cation platform, subsea gas pipelines from the platform to shore, an onshore gas receiving facility, and an onshore nitrogen production facility.™
Week 07 20•February•2020 w w w. N E W S B A S E . c o m P17