"“We have lent a huge amount of money to the U.S. Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried.” "

Chinese premier Wen Jiabao 12th March 2009

""We have a financial system that is run by private shareholders, managed by private institutions, and we'd like to do our best to preserve that system."

Timothy Geithner US Secretary of the Treasury, previously President of the Federal Reserve Bank of New York.1/3/2009

Tuesday, March 17, 2009

Floating LNG - the new Power Play for the Major cash rich Oilcos

Offshore oil often involves flaring off gas - now the concept of Floating LNG where the gas is processed offshore for shipment is a major new technology and has lower capital cost to onshore processing.

This not only allows developers to exploit stranded gas reserves, but also give an opportunity to convert the currently large amount of flared gas from different platforms.

Shell is installing floating LNG facilities off the coast of Iraq, giving them a significant strategic asset to convert flared offshore gas into LNG.The gas will supply power plants and some would be exported as LNG through Basra, also Iraq's main oil export terminal. The terminal would be Iraq's first LNG export facility.

Shell is also said to be considering a floating LNG terminal for gas produced from a gas field off Western Australia. That terminal could be larger, with capacity of up to 5 million TPY.

The global market for floating liquefaction and regassification vessels where chilled liquid gas is converted to vapor state is said to be of the order of US$ 8.5 Bn.by 2015.

Floating LNG concepts offer flexibility, shorter construction period and lower overall cost compared to onshore terminals plus a reduction locally on security and safety poblems associated with land based facilities.

Dedicated LNG vessel designs including Floating Storage and Regasification Units (FSRU) are now being developed. Similar in concept to an onshore LNG receiving terminal, they are designed with storage capacities to 300,000 cubic metres.Other LNG facilities may also include Single Point Moorings (SPM) capable of transferring LNG by loading arm or flexible hose and offshore terminals of single or dual berth layout for calmer regions. These berths will replicate onshore LNG terminals and will be capable of mooring carriers of over 200,000 cubic metres.

Samsung Heavy Industries Co. based in Seoul, South Korea already has orders to build by 2012 four floating LNG vessels valued at over $1.2 billion, for Flex LNG Ltd., these are Self supporting Prismatic type B LNG containment systems. The vessels utilize the nitrogen expander liquefaction cycle technology, which enables them to source gas from offshore locations. Delivery was expected by 2012 so they can operate the world’s first floating LNG plant. In Januray they announced a 6 month delivery delay

FLEX LNG Ltd is a British Virgin Islands-based company listed in Norway.

Daewoo Shipbuilding & Marine Engineering Co., Samsung Heavy Industries Co. and Hyundai Heavy Industries Co all in South Korea, made bids for Royal Dutch Shell Plc’s vessel,(ye unplaced) which may cost as much as US$5 Bn. and be the world’s biggest Floating LNG facility.

Petroleo Brasileiro, Brazil’s state oil company, may order at least one floating LNG plant from Schiedam, Netherlands-based SBM Offshore NV, a marine equipment supplier and installer. For each barrel of oil at the deposit, called Tupi, there’s 700 to 1,000 cubic feet of gas that can be liquefied on a floating platform for shipment.

Exxon Mobil Corp. with about US$37 Bn in cash and Shell with US$9.7 Bn. have the backing for such ventures straight off the balance sheet and with curent AAA rating have the ability to finance projects, which smaller ventures cannot.

Such huge ventures will also help the big Korean yards who expct to see shipping orders at least halve this year. Only Samsung Heavy Industries Co., the world's second-largest shipbuilder, has won a single shipbuilding order this year - valued at US$680 million.

Hyundai Heavy, the country's leading shipyard, has diversified and recently started working on a 100-billion won ($67 million) project to build a plant that makes wind power generators.

Daewoo Shipbuilding has established a joint venture shipping company with the Nigerian National Petroleum Co. to carry crude oil. The Joint Venture - Nigeria Daewoo Shipping Ltd, will have a capital base of US$ 10 Mn., with Daewoo Shipbuilding owning 51 pct and Nigerian National Petroleum the rest.

The company is already involved in a solar energy business project. In 2006, the company exported $60 million worth of solar cell-related equipment to Spain.

Floating LNG plants may cost $550 to $700 per ton of capacity, compared with $1,500 for onshore projects. Such ventures may boost supplies by 12 million tons annually by 2015, a little more than growth in global demand last year.

Short development periods for projects and lower capital requirements help provide Floating LNG provide the much sought after energy security.

PS : Hyundai Heavy Industries Co. Ltd. delivered the Q-Flex liquefied natural gas (LNG) carrier Mesaimeer to Qatar-based Qatar Gas Transport Co. Ltd., also known as Nakilat on March 12th.

The 216,000 cubic meter (7.6 MMcf) carrier has been chartered on a long term contract to Qatargas Operating Company Limited. Mesaimeer will be used to ship LNG produced by Qatar Liquefied Gas Company Limited Qatar Liquefied Gas Company Limited (3), known as Qatargas 3, to markets primarily in the United States.

Qatargas 3 shareholders are Qatar Petroleum, ConocoPhillips and Mitsui & Co., Ltd

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