Emirates LNG to replace FSRU by land-based terminal
The Abu Dhabi-based companies Mubadala Petroleum (Mubadala) and the International Petroleum Investment Company (IPIC) have decided to stop the just starting first phase of the Emirates LNG project in Fujairah, United Arab Emirates (UAE), to rethink the whole concept of this liquefied natural gas (LNG) import and regasification terminal.
Originally designed by the French engineering company Technip, the Emirates LNG project was intended to be developed in two phase:
– Phase-1: Floating storage and regasfication unit (FSRU)
– Phase-2: Landed-base regasification and storage terminal
In July 2013, Mubadala and IPIC had awarded the engineering, procurement and construction (EPC) contract for the Emirates LNG Phase-1 to the US-based company Excelerate Energy (Excelerate).
To deliver the FSRU corresponding to this first phase, Excelerate had planned to allocate one of the eight units currently in construction at the Daewoo Shipbuilding and Marine Engineering (DSME) shipyard in South Korea.
According to these FSRU units work in progress, Excelerate should have been able to deliver the Emirates LNG vessel mid 2015.
In the Emirates LNG consortium, Mubadala and IPIC share 50/50 the working interests whereas Mubadala is the Abu Dhabi Sovereign Wealth and IPIC and Abu Dhabi state-owned company.
This concentration of interests coming from Abu Dhabi into a Fujairah project is motivated by the reliance of the Abu Dhabi Emirates economy on the Strait of Hormuz.
With Fujairah giving direct access to the Gulf of Oman and thus to the Indian Ocean without depending from the Strait of Hormuz, Abu Dhabi secures its export of crude oil but also its import of natural gas.
Mubadala and IPIC to retender Emirates LNG in 2014
Abu Dhabi is importing gas from Qatar and needs alternative source of supply to feed its power generation and water desalination facilities and continue to boost its oil production and petrochemical sector.
Because of the increasing threat on the Strait of Hormuz through the tension with Iran, Abu Dhabi had decided to develop its Emirates LNG project on fast track.
Despite all the additional capital expenditure, Mubadala and IPIC in charge of the project decided to phase it with this FSRU option that could guaranty to be in operations in 2015.
Then Mubadala and IPIC had more time to build the second phase in concrete buildings in an adjacent site of the Fujairah combined power generation and water desalination facilities.
The FSRU and land-based terminal were designed with total capacity of 1.2 million cubic feet per day (cf/d) of gas or 9 million tonnes per year (t/y) of LNG.
In the recent context where the USA resume discussions with Iran in the perspective of relaxing tensions in the Gulf, Abu Dhabi may have considered that the degree of urgency that has led to design and build the Emirates LNG project in two phases including the FSRU was not longer so relevant.
Therefore, Mubadala and IPIC are now working to design and build this Emirates LNG project in Fujairah in a single phase, all grounded.
In that perspective, Mubadala and IPIC will invite all the engineering companies in competition for the Fujairah Emirates LNG phase-2 to retender for the whole project in 2014.
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