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 ISSN 1747-1826

CONTENTS FEBRUARY 2017

03 Comment 34 Insulation for all seasons

Carl Davison, Kingspan Industrial Insulation, UK, explains how PIR insulation
05 LNG news can help improve the energy efficiency of LNG facilities.

39 Quench the flare

Christian Belting-Clar and Leonid Bleicher, Dresser-Rand business, part of
12 A change of course Siemens Power & Gas Division, Germany, explain how to minimise BOG flaring
Richard Bass, Navigant Consulting Inc., UK, looks at how the by LNG quenching.
East Mediterranean gas market has changed over the last 10 years,
with particular focus on Egypt, Israel and Cyprus.
45 Quench control
Wayne Jacobson, Compressor Controls Corp. (CCC), USA, outlines the
advantages of integrated quench controls for LNG refrigeration compressors.

49 Make a prediction
Nobutaka Umeyama, Japan Marine United Corp., Japan, Kenichi Matsuoka,
Azbil Corp., Japan, and David Hill, Chemstations Inc., USA, look at the
application of dynamic process simulation for LNG vessel gas management
systems.

53 Integration or independence?
Peter Sieber, HIMA Paul Hildebrandt GmbH, Germany, debates the benefits of a
separate approach to functional safety versus an integrated approach.

57 Waste not, want not

12 Arno Brouwer, Cryonorm, the Netherlands, presents a method to recover cold
energy from LNG regasification plants.

59 Cool idea
Augusto Bulte, Amec Foster Wheeler, USA, explains how LNG import terminals
16 Stop the giants can make use of the cold energy generated during the regasification process.
Thibault Marguet, Air Liquide Global E&C Solutions, France, presents
a dual mixed refrigerant liquefaction process that addresses mid scale
LNG projects. 64 15 facts ... on the Mediterrane
Mediterranean
20 High tide for FLNG operations
Martin Van Der Merwe, Emerson Process
rocess Management, Australia,
echnologies can help FLNG
explains how advances in digital technologies
allenges.
operators overcome operational challenges. ON THIS MONTHS C
COVER
25 Achieving cryogenic
ogenic pump
reliability
Yousef Jarrah, Toshi Hayashi, and Daniel
niel McInnis, A unique suite of LNG liqliquefaction
Nikkiso Cryo Inc., USA, review typicall roller bearing profiles. ttechnologies
tec Liquide, the
hnologies by Air Liquid
leading
le cryogenic
operator of cryoge
29 Hold the line plants
p nts worldwide and LNG p
pla pioneer,
Richard Fawcett, Dynaflow Research Group, the will reduce LNG
will enable customers to redu
Netherlands, looks at the importance of designing for
production
production costs and plant emi emissions. Safe,
pressure surges in an LNG bunkering line.
reliable
reliable and simple solutions for small
to large scale plants. Discover mo more at:
https://www.engineering-airliquide.com/LNG
https://www.engineering-airliquide

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 JOSEPH GREEN
EDITOR

COMMENT very year the Mediterranean plays host to

E holidaymakers from around the world. With reliably

hot summers, idyllic beaches, and some fantastic
local cuisine, it is no surprise that the region has
become one of the most desirable destinations for those
seeking a relaxing break.
already capitalised on this and made their way to
Europe.2
In January 2017, one vessel delivered US gas to
Spain and another arrived on Turkish shores. Two
more vessels transporting US gas were sailing in the
Visions of flip-flops and siestas in the sun seem a Mediterranean and another was moving across the
distant fantasy at the moment however as cold weather Atlantic. Spain, Greece and Turkey would be other
dominates the forecasts in much of Europe. Greece, Italy possible destinations for the US LNG cargoes. The flow
and Turkey were among the countries grappling with heavy would be expected to slow in March, as winter comes
snow and freezing temperatures in January. Large swaths to an end in Europe and the LNG cargoes are gradually
of Greece have been hit by sub-zero temperatures and replaced by tourists.
heavy snowfall. The normally mild Greece has witnessed This months regional report focuses on
temperatures of -15C in the north. the changing LNG scene in the Mediterranean.
The LNG picture in the Mediterranean right now is also Richard Bass of Navigant Consulting Inc. considers
decidedly frosty. Cold weather and problems with Algerian how the East Mediterranean gas market has changed
gas supply have pushed up Europes gas prices. Supply from over the past ten years, and how it will continue to do
Algeria has been reduced due to problems at Sonatrachs so in the future. Whilst much of the region continues
Skikda LNG export terminal, just as demand reached its to import LNG on a large scale, Bass investigates how
peak. many smaller countries are intent on exploring their
French gas grid operator GRTgaz announced in January exportation potential, viewing LNG exports as an ideal
that a force majeure in Algeria and tensions in the global route to market. How do you see the picture developing
gas market were reducing deliveries of LNG to southern in the Mediterranean? Do you believe in the long-term
France. The force majeure is in place after Algerias Skikda exportation potential of the smaller Mediterranean
LNG facility, which is used for deliveries to French and players? Please let us know your thoughts.
European markets, went into a scheduled maintenance We hope you enjoy this issue of LNG Industry and if
operation. Deliveries to the Fos-sur-Mer terminal were you picked up a copy at either the US LNG Summit or
at about 40 GWh per day, considerably lower than the the Central & Eastern European Gas Conference, dont
70 GWh per day required to meet increased winter demand forget to visit www.lngindustry.com to subscribe and
for power and heating.1 receive more world-class technological updates for the
Such problems have resulted in US exporters shifting international LNG industry.
their focus to Southern Europe from Asia. The prices in
Europe are currently at their highest premiums to US gas 1. http://www.reuters.com/article/france-gas-lng-idUSL5N1F75F0
prices for three years. Several cargoes from the US have 2. http://uk.reuters.com/article/usa-asia-lng-idUKL1N1FE4BG

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 LNGNEWS
USA Finland
Eagle LNG files LNG-fuelled ferry delivered
FERC application for S Tallink Grupp has announced that it has taken delivery
Jacksonville LNG project A of Megastar its new LNG fast passenger ferry from
Meyer Turku Oy shipyard in Turku, Finland.
agle LNG Partners has announced that it has filed The vessel is 212 m long, and is capable of carrying
E its formal application with the US Federal Energy
Regulatory Commission (FERC) for authorisation to
2800 passengers and 800 passenger vehicles. It features
modern dual-fuel engines that are capable of operating on
site, construct and operate natural gas liquefaction LNG and marine diesel oil, and will comply with both current
and export facilities at a site located on the and future emission regulations for emission control areas
St. Johns River, Jacksonville, Florida, US. (ECAs), including the Baltic Sea.
The proposed Jacksonville LNG project features The vessel has a service speed of 27 knots and will
three liquefaction trains. At full build-out, it will operate on the existing Tallink shuttle service route from
be able to produce up to 1 million tpy of LNG Tallinn (Estonia) to Helsinki (Finland). It will replace
(1.65 million gal./d). the current fast ferry, Superstar, commencing service on
The LNG will then be transported to markets 29 January 2017.
in both Latin America and the Caribbean, where it The CEO of Tallink Grupp, Janek Stalmeister, said:
will be used for power generation. It will also be Connecting Finland and Estonia, and even further Northern
delivered to local and regional markets, including Europe to the Baltic States and being the preferred hub for
marine bunkering and high horsepower applications that is an important goal for us. With Megastar, this hub
for domestic consumption. becomes the most modern sea-hub in the region. At Tallink
Dick Brown, the CEO of Eagle LNG, said: The we have been researching what our customers want in a next
dramatic growth of natural gas supply in the generation ferry. Then we worked closely with Meyer Turku on
United States has created abundant and affordable a fresh and functional design of the ship and I am sure the
natural gas reserves that make LNG a competitively outcome will please all our customers. We are very thankful
priced fuel alternative to diesel and heavy fuel to Meyer Turku for listening carefully to our wishes and
oil. In addition, natural gas fuel has significant building an excellent ship for us.
environmental benefits, reducing air pollution and Delivering this ship full of latest environmentally
carbon emissions. friendly technologies and exceeding our expectations in fuel
If Eagle LNG receives permission from FERC to efficiency and increased comfort level with low vibrations
begin construction by the first quarter of 2018, we Megastar nicely demonstrates the excellence and quality of
anticipate completion of the project in 2019. Meyer Turku and Finnish shipbuilding.

Singapore
MOL launches study of LNG-fuelled Capesize bulker
itsui O.S.K. Lines (MOL) has announced that it has The joint research project is called Green
M reached an agreement to launch a joint study of an
LNG-fuelled Capesize bulker with five other companies.
Corridor and aims to reduce NOx and SOx
emissions from merchant vessels in advance
These companies are: BHP Billiton; DNV GL; Rio Tinto; of international treaties calling for stricter
Shanghai Merchant Ship Design and Research Institute emissions standards. The project will also
(SDARI); and Woodside Energy. A letter of agreement was examine the technological and economic
signed by the parties at a ceremony held in Singapore. feasibility of an LNG-fuelled bulker.

February 2017 5
 LNGNEWS
Norway Belgium
Long-term small scale Ice class LNG carrier docks at
LNG contract for three Zeebrugge LNG terminal
Multigas vessels luxys has released a statement claiming that the worlds

.M. Skaugen SE has announced it signed long-term

F first top category ice class LNG carrier has docked at the
Zeebrugge LNG terminal in Belgium.
I contracts for the time charter of three Multigas (MG)
vessels for a project representing a proof of concept of its
The vessel was recently completed at the shipyard, and is
scheduled for a number of operations at the terminal. These
small scale LNG logistics solutions (SSLNG) on 23 January. include, amongst other things, cooling down its cargo tanks and
The revenues under these SSLNG contracts will be loading a small volume of LNG. The vessel has moored at the
approximately US$42 million/yr and therefore around terminal during its maiden voyage, and will continue its sea trials
US$420 million over 10 years. afterwards, setting off to the Yamal Peninsula in Siberia, Russia, to
The time charter contracts are for two 10 000 m3 undergo ice performance tests.
and one 12 000 m3 MG vessels currently operated by The vessel will be used for the Yamal LNG project, which
the company. The company will provide shuttle/feeder is currently under construction in North Siberia. It has been
services, floating storage support, as well as storage designed to perform year-round navigation through the Arctic to
and offloading of LNG with a client sponsored by two its destination markets, and is capable of breaking through ice up
existing gas fired power plants in Africa. The power to 2.1 m thick.
plants are new and made for burning natural gas and Fluxys claims that this vessels call at the Zeebrugge terminal
have been idle because of lack of gas supply. In addition, will not be its last. Specifically, a 20-year contract was secured in
the company has been requested to perform the 2015 to perform transhipments for the Yamal LNG project at the
complete Project Management of this virtual pipeline facility. Currently, a fifth LNG storage tank and additional process
to be established, encompassing the entire supply chain facilities are under construction to provide these services.
from the sourcing of LNG supply to the delivery of gas to It will join a fleet other 15 similar vessels, which will also
the power plants. serve the Yamal LNG production terminal and regularly call at
Start-up of the contract is planned for in late March the Zeebrugge terminal to perform transhipment operations to
or early April 2017 by our Company arranging delivery of conventional LNG carriers for further redelivery to a number of
first LNG. destinations, including Asia.

News Highlights

X MAN Cryo to deliver

LNG fuel gas supply system
to Italian ferry
X Houlder and KLAW LNG join forces
X MSC Cruises partners with ARTA to develop LNG
bunkering system

Visit our website for more news: www.lngindustry.com

6 February 2017
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 LNGNEWS
USA India
Magnolia LNG and VGS AG&P to build LNG terminal
sign contract in India
NG Limited has announced that its 100% owned tlantic, Gulf and Pacific Co. (AG&P) and Hindustan LNG
L subsidiary, Magnolia LNG has signed a Heads of
Agreement (HoA) with Vessel Gasification Solutions
A (HLNG) a Hyderabad-based LNG import terminal development
company have signed a memorandum of understanding (MoU) to
(VGS) in relation to the Magnolia LNG Project, in supply tolled gas to power stations in the East Godavari region of
Lake Charles, Louisiana, US. Andhra Pradesh, India.
The non-binding HoA provides for a 20-year Under the terms of the MoU, AG&P will provide an integrated
Free-on-Board Sale and Purchase Agreement of up solution to deliver regasified LNG through a new LNG import
to 4 million tpy. The obligations of the parties are terminal. The company will also design and construct the terminal at
conditional upon MLNGs satisfaction with or waiver the port in Andhra Pradesh.
of conditions precedent including financial close The agreement was signed at the Partnership Summit 2017
of the KGLNGT terminal and satisfaction by VGS of organised by Confederation of Indian Industry (CII). It will ensure
defined credit requirements underpinning their LNG energy supply to power producers, fertiliser plants, cold storage and
purchases within agreed timeframes. other industries in Andhra Pradesh and other markets along the east
LNG Limiteds Managing Director & CEO, coast.
Greg Vesey, said, We look forward to supplying Speaking at the signing ceremony, C. R. Prasad, the Chairman
long-term volumes to the Indian market to meet of HLNG, said: Andhra Pradesh is the ideal place for developing an
their growing needs for clean energy. Overall, this LNG import facility to serve the growing energy demands of the east
agreement represents another important step coast of India where existing gas-fired power projects urgently need
forward for the MLNG Project. a reliable supply of LNG. The partnership with AG&P will provide
With the execution of this agreement, VGS a strong platform to develop a fast-track and low-cost LNG import
is now in a prime position to execute on the solution that enables the region to continue on its growth trajectory.
first- mover advantage we have established on AG&P will be responsible for the design and construction
Indias East Coast, said Gaurav Tiwari, President of of all necessary facilities for the import terminal. These include
VGS. We are very excited to take this step forward a floating storage and mooring system, a regasification terminal,
in our relationship with Magnolia, and we look related utilities, and the provision of tolled gas to power plants
forward to working with the Magnolia team to bring and other users. The company will also carry out any necessary
a significant tranche of US-produced LNG to a key conversion works and, upon commissioning, ongoing operations and
new market on the East Coast of India. maintenance activities.

13 - 14 February 2017 22 - 24 February 2017 28 - 30 March 2017

Floating LNG Australasian Oil & Gas (AOG) StocExpo Europe
London, UK Perth, Australia Rotterdam, The Netherlands
www.floating-lng.co.uk www.aogexpo.com.au www.easyfairs.com/stocexpo-rotterdam-2017/
stocexpo-rotterdam-2017

14 - 16 February 2017 23 - 24 February 2017 04 - 07 April 2017

CWC Iran LNG & Gas LNG Summit United States Gastech
Partnerships Summit Houston, US Chiba, Tokyo, Japan
Frankfurt, Germany www.lng-usa.com www.gastechevent.com
www.iranlngandgas.com

8 February 2017
 LNGNEWS China
Pakistan
Excelerate to develop Worlds first barge-based
second FSRU for Port FSRU undocks
Qasim ison Offshore & Marine has released a statement claiming

xcelerate Energy has announced that it is prepared

W that the worlds first barge-based floating storage and
regasification unit (FSRU) has successfully undocked from the
E to help a consortium of Engro, Fatima and Shell to
deliver a proposed floating LNG terminal and second
companys dry-dock in Nantong, China.
Wison provided engineering, procurement and construction
floating storage and regasification unit (FSRU) to the (EPC) services for the Exmar vessel. The FSRU will become the
Pakistan market. worlds first such vessel with small scale storage capacity, and
The company recently commissioned GASCOs has a regasification capacity of 600 million ft3/d. The vessel
Ruwais floating LNG terminal in the UAE, successfully features two SPB cargo tanks installed in the hull for storage.
implementing it in less than 12 months. In early Each tank has a capacity of 12 500 m3.
2016, Elengy successfully developed Pakistans first The project is the second one that Wison and Exmar have
LNG import terminal using Excelerates floating regas cooperated on (the other being the Caribbean FLNG project). By
technology. adopting a modularised approach, the FSRUs hull and topside
The consortiums project site is located just across modules have been fabricated simultaneously, reducing safety
the Port Qasim channel. When the project comes risks, improving construction quality, and helping to reduce
online in 2018, the total regasification capacity of the delivery schedule. In addition to this, Wison developed its
Excelerates two FSRUs at the port will be more than own cargo containment system and cargo handling system for
1 billion ft3/d. This is enough natural gas to support IHI SPB tanks. The regasification module, meanwhile, has been
over 6000 MW of power generation. successfully applied in Caribbean FLNGs final performance test
Daniel Bustos, Chief Development Officer, said: as its temporary regasification skid.
Excelerate is extremely excited to work with this The Senior Vice President of Wison Offshore & Marine,
strong partnership of Engro, Fatima, and Shell to An Wenxin, said: The successful undocking of the FSRU once
implement this project in what we view as one of the again verifies Wisons strong competence in the lump sum
largest markets for natural gas in the world. turnkey projects for floating LNG facilities. It further proves
Our project development and operations teams are that we are capable of providing the market with the most
aggressively reviewing implementation plans for this cost-effective EPC solutions that are applicable in other LNG
project. We have been very pleased to be involved with developments, such as the new W-FSRP (Wison Floating
the countrys first floating LNG terminal developed by Storage, Regasification and Power generation) series we
Engros subsidiary Elengy over the past 18 months. launched recently.

USA
Magnolia LNG extends validity of EPC contract with KSJV
NG Limited has announced that Magnolia LNG LLC its additional six months.
L 100% owned subsidiary has agreed to further extend the
validity period of its engineering, procurement and construction
Greg Vesey, LNG Limited Managing Director and CEO,
said: We continue to work closely with key contractors
(EPC) contract with KSJV. and suppliers such as KSJV to maintain momentum on
The agreement will now be valid through 30 June 2017. As the Magnolia LNG project as we continue our marketing
announced on 26 April 2016, Magnolia and KSJV a KBR-lead efforts. This further extension of our LSTK EPC contract
joint venture (JV) between KBR and SKE&C had extended their with KBR-SKE&C, together with our FERC final order and
original binding lump sum turnkey (LSTK) EPC contract for four Department of Energy non-FTA export approval, further
LNG trains and related facilities until 31 December 2016, with cements Magnolia LNG as construction-ready and the next US
a subsequent interim extension to 31 January 2017. This latest LNG export project that will move forward into construction
extension will ensure that the contract remains valid for an and operation.

10 February 2017
 COU A change of

Richard Bass, Navigant Consulting Inc.,

UK, looks at how the East Mediterranean
gas market has changed over the last
10 years, with particular focus on Egypt,
Israel and Cyprus.
12
URSE
RSE
A
discussion held 10 years ago about
East Mediterranean gas would have
focused on Egypt. It would have
concentrated specifically on the quantity
of pipeline gas that Egypt could export
regionally and the capability of its two LNG
terminals to compete for customers in Europe,
North America, and Asia. Fast forward to today,
and any discussion of East Mediterranean
gas would consider when Egypt will cease to
be a significant LNG importer, as well as the
prospects for gas exports from Israel and Cyprus.
So how, in less than a decade, have the regions
circumstances changed so markedly? And what
is the next decade going to look like?

13
 Egypts change of fortunes independent power projects, developed by a consortia led
By 2006, Egypts gas sector was highly successful. The by both KEPCO and AES, were built as efficient combined
LNG liquefaction plants at Idku and Damietta had been cycle gas turbines (CCGTs). In 2006, authorities were
operating for several years, having been constructed considering the development of gas distribution
at a low cost per t of capacity and rapid schedule that businesses in both Aqaba and Amman to deliver low cost
were close to industry-leading. Pipeline gas exports had Egyptian gas to residential, commercial, and industrial
been negotiated with Israel and an offshore pipeline consumers.
constructed to deliver gas into Ashkelon. This was a In Egypt, gas was supplied to new power plants and a
politically significant and valuable commercial agreement growing petrochemical industry. However, all was not well
between the two countries. This gas supply supplemented in the Egyptian gas industry; production declines at older
Israels own modest gas production and allowed it to fields were starting to bite. The low price offered by
continue expanding its power generation fleets reliance Egypt for domestic gas production in a world of
on gas. US$140/bbl of oil did little to incentivise exploration
During that time period, Navigant Consulting Inc. was activities. Meanwhile, highly subsidised gas prices
helping the Jordanian government to negotiate pipeline encouraged rapid increases in domestic consumption, and
gas imports from Egypt. An agreement to import up to the commercial structure of the production-sharing
3 billion m3/yr was realised in 2003, with first gas being agreements offered to energy companies were looking
delivered to the steam turbine power plant in Aqaba. The increasingly uncompetitive.
gas pipeline crossed Egypts Sinai Peninsula. An offshore By 2010, these issues were beginning to create
segment then headed to Israel, whilst the Jordan-destined problems for Egypt and its gas customers, with deliveries
branch turned south toward the Gulf of Aqaba. Despite to Jordan and Israel becoming somewhat unreliable.
the relatively short distance to Jordan, the crossing of the However, the serious problems kicked off in 2011. With
Gulf of Aqaba was technically complex, requiring one of the Arab Spring spreading across North Africa, the
the worlds largest pipe-lay vessels due to the steep government of Egypt was overthrown. The new regime
offshore gradient. The geography of the Gulf of Aqaba had different priorities to that of its predecessor; gas
would also come to affect the construction of Jordans supply to domestic consumers was ranked above exports,
LNG import terminal approximately 10 years later. Like which declined rapidly. As a result, the LNG liquefaction
Israel, Jordan converted its power plants to gas; the facility at Damietta was mothballed almost immediately.
The Idku facility continued to
export cargoes for some time,
as it was supplied directly
from a producing gas field,
but eventually even that
supply was diverted for
domestic consumption.
Pipeline supplies to Jordan
became highly intermittent
and effectively ceased by the
middle of 2012. This created
massive problems for the
Jordanian government, as it
was forced to buy expensive
gasoil to operate its new fleet
of CCGTs. The gas supply deal
with Israel was cancelled.
Although substantial, the
impact in Israel was mitigated
to some extent by its rising
gas production.
By 2013, Egypts gas
shortage had become so
severe that it had to rapidly
implement an LNG import
facility on the Red Sea. At the
same time, Navigant was
assisting Jordan in
implementing its own LNG
import terminal at Aqaba to
replace the now absent
Figure 1. Multiple options exist for the monetisation of East Mediterranean gas. Egyptian gas supplies. Jordan
later signed a deal to allow

14 February 2017
Egypt to import additional LNG cargoes via the and Israel. BG negotiated for several years to supply gas
Aqaba terminal, to be delivered to Egypt using the now to Israel and Gaza. A CCGT power plant was developed
reversed pipeline across the Sinai. A second Egyptian (initially by Enron and completed by CCC) in Gaza
LNG import facility followed and a third facility is being with a view to utilise the gas from Gaza Marine. That
considered. process essentially came to a halt when Hamas came
to power in 2007. As a result, Gazas power plant has
Gas developments in Israel and never received any gas and has had to burn expensive
Cyprus gasoil instead. BG tried again in 2012 after the Egyptian
While Egypt was struggling with growing gas demand pipeline contract to Israel was cancelled, but Nobles
and declining production, Israels gas industry was development of Israels own Tamar field meant that
developing rapidly. A consortium led by Noble Energy Gaza Marine remained undeveloped. Shells recent
discovered Tamar, Leviathan, and other smaller gas takeover of BG is unlikely to aid the development of
fields. Tamar was developed quickly to meet domestic Gaza Marine, as Shell is seeking to divest US$30 billion
demand as Egyptian supplies faltered. Israel also of assets Gaza Marine is probably on the disposal list.
implemented an LNG import terminal to supplement
domestic production, especially during the summer peak Now and the future
demand months. The Egyptian gas sector may be about to take another
Noble and its partners began searching for change in direction. Enis recent discovery of the giant
development options for the much larger Leviathan gas Zohr gas field may, along with other recent discoveries,
field, initially focusing on LNG exports to Asia or Europe bring Egypts gas supply and demand back into balance.
(The North American market that had originally been The fast-track implementation of Egypts two LNG
targeted by Egypts LNG terminals had long since import projects and the progress being reported on Zohr
vanished as a result of North Americas shale gas suggest that a turnaround in Egypts fortunes could be
revolution). reasonably rapid. A pause in the execution of the third
Then, Israeli domestic politics intervened. Nobles LNG import facility may be further indication that Egypt
successful exploration programme had transformed is heading back on track. The Zohr discovery, just to the
Israels energy sector. A consequence, however, was that south of Cyprus maritime border with Egypt, has also
a single consortium now controlled the vast majority of increased interest in Cyprus recent licensing round.
Israels newly discovered gas resources. That fact caused Will Egypt return to exporting significant quantities
Israels monopoly commission to review the status of the of gas? Yes, but the source of the exported gas is
gas industry and, in particular, the status of Nobles unlikely to be Egypts own gas fields. Shells recent
consortium. The review turned out to be a long and agreement with Cyprus and its investment in Cypriot gas
protracted process, during which the development of resources suggest the probable import of Cypriot gas for
Leviathan was essentially put on hold. re-export as LNG from Egypts mothballed Idku
In Cyprus, Nobles consortium had discovered liquefaction terminal. Both Idku and Damietta have
another large gas field: Aphrodite. Once again, LNG reportedly been running at bare minimum throughput
exports seemed like an ideal route to market. However, a and exporting a cargo occasionally to keep the units
combination of economics and geopolitics has held back cold. With the supply of Cypriot gas, these facilities
Cyprus gas ambitions. Although Aphrodite is a could return to something close to full capacity. The
substantial resource, it is not big enough by itself to economics of this approach should be attractive for all
justify a world scale LNG liquefaction plant. Noble of the companies and governments involved because
needed to find more gas or others active in Cyprus investment in the export terminals has already been
(e.g. Eni and Total) needed to do the same. made and Cypriot gas is looking for an economically
Unfortunately, that has not yet happened. One factor is viable route to market. Development of Aphrodite for
that the domestic energy market in Cyprus is very small. export via Egypt should also enable gas to be supplied
Unlike in Israel, Noble was not able to develop to Cyprus domestic market, lowering its high electricity
Aphrodite initially for domestic consumption and then costs.
consider further export opportunities. Leviathan also appears to be moving forward.
Geopolitics also complicates any gas development in Nobles recent announcement of two agreements to
Cyprus. Whilst the Cypriot government had identified a supply customers in Jordan, as well as possible further
number of exploration blocks to the south of the island, gas sales in Israel, should enable a final investment
Turkey (which controls the north of the island) had also decision (FID) to be made in 2017. Like Cyprus, interest
identified a number of blocks. Many of these blocks in Israels latest licensing round appears strong.
overlapped, including those held by Noble and Total. Domestic Israeli gas consumption has the potential to
grow and access to Egypts other LNG terminal at
Gaza Marine Damietta may provide a cost-effective export route.
Well before the discovery of significant gas resources There is no doubt that the East Mediterranean is a
in either Cyprus or Israel, BG Group discovered challenging place to do business, where economics take
the Gaza Marine field offshore from Gaza in 1999. a back seat to geopolitics more often than not. However,
Development of the resource was complicated by the after a tumultuous decade, recent developments point to
political relationship between the Palestinian Authority a brighter future for the regions gas sector.

February 2017 15
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