International Gas Autumn 2019

International Gas October 2019 – March 2020

GAS INNOVATIONS FOR A SUSTAINABLE ENERGY FUTURe

International Gas October 2019 – March 2020 Published by International Systems and Communications Limited (ISC) in conjunction with the International Gas Union (IGU).

Copyright © 2019. The entire content of this publication is protected by copyright, full details of which are available from the publisher. All rights reserved. No part of this publication may be reproduced, stored in retrieval systems or transmitted in any form or by any means – electronic, mechanical, photocopying, recording or otherwise – without the prior permission of the copyright owner.

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Vision and Mission The International Gas Union (IGU) is a worldwide, non-

 IGU works to improve the competitiveness

profit organisation promoting the progress of the gas

of gas in the world energy markets by pro­moting

industry. Through its many member countries and

transparency, public acceptance efforts and the

corporations representing over 95% of the global gas

removal of supply and market access barriers.

market, IGU covers all aspects of the gas industry.

 IGU seeks to collaborate with governmental agencies and multilateral organisations to

Vision

demonstrate the economic, social and

As the global voice of gas, IGU seeks to improve the

environmental benefits of gas in the global

quality of life by advancing gas as a key contributor

energy mix.

to a sustainable energy future.

 IGU supports and facilitates the development of new technologies and best practices, while

Mission

emphasising sound environmental performance,

 IGU is the key and credible advocate of political,

safety, reliability and efficiency across the entire

technical and economic progress of the global gas industry, directly and through its members and in collaboration with other multilateral organisations.

4 Visi o n a n d M i s s i o n

value chain.  IGU maximises the value of its services to members and other stakeholders.

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Contents

october 2019 – march 2020 Introduction Vision and Mission

4

Message from the President and the Secretary General

8

Update on IGU’s current work programme

By Jeongwook Khang

12

Natural gas as a backbone of the Russian energy sector

By Alexey Semenov The gas industry in Indonesia

By Rakhmad Dewanto

LNG2019 Features

17

Gearing up for IGRC 2020

By Mark Blacklock

20

Resilience of integrated energy systems

By Gerhard Schmitz, Carsten Bode and Anne Senkel

24

High level of optimism at LNG2019

By Mark Blacklock

News Reports from the Regional Coordinators

Improving resilience and reducing emissions in residential housing

By Gregory Caldwell

32

Unveiling gas opportunities in Latin America and the Caribbean

By Mauro Chavez and Rodrigo Rosas

36

Improving the air quality of life

By Hansch van der Velden

46

Energy system efficiency and the role of gas

By Barbara Jinks

50

56 66

73 76

93 96

Members’ corner

104

Presenting IGU’s new members

108

Activities of IGU

114

IGU releases latest Wholesale Gas Price Survey 116

IGU Organisation

120

Members of IGU

122

Events and Acknowledgements

124

The opinions and views expressed by the authors in this magazine are not necessarily those of IGU, its members or the publisher. While every care has been taken in the preparation of this magazine, they are not responsible for the authors’ opinions or for any inaccuracies in the articles.

7

INTRODUCTION

MESSAGE FROM THE PRESIDENT AND THE SECRETARY GENERAL Dear Colleagues,

voice to communicate to the decision

key developments that took place in

Welcome to the latest edition of the IGU

makers and key stakeholders that gas

the last six months.

magazine and “Welcome to the start of

has a vital economic and environ­

In April, we successfully completed

the second lap” in our triennium!

mental role in a sustainable future.

one of our co-sponsored flagship events

Amongst other things, we have

– the LNG2019 conference in Shanghai,

well into year two of the Korean Presi­

been raising our voice in a number of

with 40 plenary speakers and over 200

dency. With so much happening in the

platforms, including via social media,

industry experts covering the most

global world of gas and the internal

and if you are not already following

pressing issues in front of the LNG

world of IGU, time just flies. And that is

@IGU_News on Twitter and LinkedIn,

industry now and in the imme­diate

only fitting for such a dynamic, multi-

we encourage you to do so and stay

future. The impressive exhibition space

dimensional, global organisation as ours!

on top of all the action live.

featured an incredible array of over 200

It is hard to believe, but we are now

market participants, and the latest

Your IGU leadership team has been working hard to elevate the long-term

Key developments

technology and service providers. The

role of natural gas in a sustainable

To do a quick recap of our busy first

conference successfully attracted 2,000

energy future, as we raise our global

half of 2019, let us turn to some of the

delegates and 15,000 total attendees.

With the LNG2019 conference as the

c Joo-Myung (Joe) Kang (right) and Luis Bertrán Rafecas.

backdrop, we successfully released the 2019 World LNG Report. This is one of the most sought-after IGU reports, delivered by the LNG Committee. This year’s report release was complete with a robust and greatly effective digital amplification campaign, including a short video of key findings that you can view on our YouTube channel: https://bit.ly/2H2wW7z.

Shortly after, in May at the Flame 2019 Conference in Amsterdam, IGU released our other flagship annual report, the Wholesale Gas Price Survey 2019 Edition. The survey is the 11th to be undertaken in a series that began in 2007. This is another excellent publi­ cation, which is widely used around the globe.

8 Message from the President and the Secretary General

INTRODUCTION

Both reports have been widely cited

Key Asian stakeholders from the

Looking forward

by the world’s top media, from Reuters

energy sector and G20 representatives

As far as this triennium’s work plan is

to the Financial Times, and we would

from 18 countries participated in the

concerned, the committees continue

like to thank everyone who contri­

meeting. The theme of the event was

their work to address important global

buted to making these superb reports

“Securing Transparency, Competitive­

gas topics, aligned with IGU’s strategy

that have been so valuable to IGU

ness and Enhancing Security of Gas

and advocacy priorities. We are very

and the amplification of the global

Markets in Asia”. An incredible success

pleased that we have such a distin­

voice of gas!

on all fronts, the IGU G20 engagement

guished group of committee leaders,

efforts continue to result in positive

supported by talented teams of

tive meeting of the IGU Executive

mentions of natural gas in the official

industry professionals and look

Committee (EXC) in Santiago de

proceedings, as this year’s commu­

forward to learning more about their

Chile, and that was a historic event

niqué that can be found here demon­

projects as they progress throughout

for IGU, as that is where the EXC

strates: https://bit.ly/2IWTzvv.

the triennium. More details of their

Also in May, we held a produc-

endorsed the recommendation to

The IGU leadership has continued

work are shared inside the pages of

transition to the Permanent Secre-

to raise the global voice of gas by

tariat by mid-2021. The recommen­

attending key global and regional

dation will be put in front of the

conferences and events including

IGRC2020 hosted by the Sultanate of

Council for a final vote on date and

CERAWeek 2019, the second meeting

Oman in Muscat, February 24-26, 2020.

location in October at the Indonesia

of the G20 Energy Sustainability

Please check out the latest news at

meeting. So, we encourage all to

Working Group, IEA’s 4th Annual

www.igrc2020.com. It promises to

attend this critical gathering!

Global Conference on Energy

be a fantastic event dedicated to

Efficiency, the International Uzbekistan

celebrate “Gas Innovations for a

opportunity to meet with the Minister

Oil and Gas Conference and the

Sustainable Future”.

of Environment of Chile, Ms Carolina

20th Asia Oil and Gas Conference

Schmidt, and the Minister of Energy,

(AOGC, Malaysia).

In Santiago, we also had the

this issue.

Our next big event will be

Last but not least, we would like to encourage your comments and feed­

Ms Susana Jimenez, and discuss plans

Finally, we would like to draw your

for a joint COP25 event. Stay tuned for

attention to the release of the second

very important to us, as it is our utmost

details as they develop.

edition of the Global Natural Gas

priority to ensure that our members

Insights booklet. It is an invaluable

are being heard. If you have sugges­

Charter Member Asociación de

resource that provides key information

tions related to the IGU magazine,

Empresas de Gas Natural (AGN) for a

on the value of natural gas in the

please submit them to info@igu.org.

memorable week in this beautiful city.

sustainable global energy future. The

We are very grateful to our host,

Next, G20! In June, IGU and the

back. Your thoughts and opinions are

Thank you for your continued

2019 edition also contains a special

support and active engagement as we

Japan Gas Association hosted the

section on methane emissions, and the

work to advance the natural gas

Natural Gas Day 2019 in Tokyo,

opportunities that their further reduc­

industry and enhance IGU’s relevance.

organised on the occasion of the G20

tions present for the industry. I

Energy and Environment Ministerial. It

encourage you to download your copy

Joo-Myung (Joe) Kang

was one of only three events featured

and look forward to sharing printed

IGU President

in the official G20 Japan Presidency

versions of the booklet with you at the

Luis Bertrán Rafecas

side-events listing.

Council meeting in Yogyakarta.

IGU Secretary General

Message from the President and the Secretary General 9

We see possibilities in the sun and wind.

And in natural gas, the smart partner to renewables.

That keeps the lights shining bright.

We see possibilities everywhere.

From renewable energy and cleaner-burning natural gas to advanced fuels and new low carbon businesses, BP is working to make energy cleaner and better.

Visit us at LNG2019 on stand 1653 Natural gas burns 50% cleaner than coal in power generation.

INTRODUCTION

Update on IGU’s current work programme IGU’s committees and task forces are continuing their work under the Korean Presidency.

By Jeongwook Khang IGU’s 2018-2021 work programme is

taken over from Azrina Abdullah as

which will be held in Daegu, Korea,

being carried out under the theme

Chair and on the Marketing and

June 21-25, 2021, and the call for

“A Sustainable Future – Powered by

Communications Committee Pierre

papers will be issued on May 11, 2020.

Gas” and the Union’s 11 committees

Bartholomeus has taken over from

There will be 37 Industry Insight

and three task forces are almost

Hansch van der Velden as Chair.

sessions and 22 Technology and

halfway through the triennium.

There have been two leadership

The committees and task forces

Innovation sessions, which will look

have finalised the guidelines for org­

at commercial, strategic and technical

changes. On the Sustainability

anising the technical sessions at the

issues across the global gas industry

Committee M. Azhar A. Satar has

next World Gas Conference (WGC),

and cover the full gas value chain.

12 Update on IGU’s current work programme

INTRODUCTION

IGU committees and task forces 2018-2021 and chairs

M. Azhar A. Satar is the new Chair of the Sustainability Committee.

Pierre Bartholomeus is the new chair of the Marketing and Commu­ nications Committee.

For the Plenary and Current Debate sessions, the Coordination Committee will work with the Presidency to select the topics and invite high-level speakers.

Exploration and Production

Ekaterina Litvinova, Russian Federation

Storage

John Heer, USA

Transmission

Patrick Pelle, France

Distribution

José Carlos Broisler Oliver, Brazil

Utilisation

Carlos Serrano Tarafa, Spain

Sustainability

M. Azhar A. Satar, Malaysia

Strategy

Dr Gerald Linke, Germany

Gas Markets

Christina, Zhaoyan Liu, China

LNG

Farid Berrahou, Algeria

Marketing and Communications

Pierre Bartholomeus, The Netherlands

R&D and Innovation

Dr Hisataka Yakabe, Japan

Task Force 1: Strategic Communications and Outreach

Mark McCrory, United Kingdom

Task Force 2: Energy for All

Barbara Jinks, Australia

Task Force 3: Energy Policy

Hedayat Omidvar, Iran

As well as preparing for WGC 2021, the committees and task forces are working on deliverables throughout

March 28 with the theme “The Vital

the triennium to help raise the global

Role of Natural Gas towards a Sustain­

voice of gas.

able Energy Future”. The event was

The LNG Committee released IGU’s

organised by the National Organising

2019 World LNG Report during LNG2019

Committee (NOC) of WGC 2021 and

in April. Then, in May, the Strategy Com­

the IGU Secretariat and was attended

mittee released the 2019 edition of IGU’s

by representatives of over 60 embassies.

Wholesale Gas Price Survey. Its key find­

IGU’s President, Joo-Myung (Joe) Kang,

ings are summarised on pages 116-118.

Secretary General, Luis Bertrán Rafecas,

The Marketing and Communi­ cations, Sustainability and Utilisation committees and Task Force 2 – Energy

and Public Affairs Director, Mel Ydreos, gave keynote addresses.

Membership of the committees and

for All have reports lined up for

task forces has reached 892 from 51

publication later in the year and in

countries and it is not too late to join.

early 2020 and we will have more infor­

IGU members can nominate delegates

mation about these in the next issue.

by contacting the Deputy Manager of

Meanwhile, Korea hosted its first

the Korea Presidency Team, Eun Ju Lee

IGU Diplomatic Gas Forum in Seoul on c The Exploration and Production, Gas Markets and Sustainability committees are holding joint meetings throughout the Korean triennium.

Pictured are delegates to the meeting in Shenzhen, China in March.

(ejlee@wgc2021.kr) or me directly (jwkhang@wgc2021.kr).

Jeongwook Khang is the Chair of IGU’s Coordination Committee.

Update on IGU’s current work programme 13

Features This issue’s features section starts with a report on preparations for IGRC 2020 in Muscat. Then we have two articles from IGU’s R&D and Innovation Committee, the first looking at the resilience of integrated energy systems and the second reporting on Canadian projects to improve resilience and reduce emissions in housing.

Next up are a look at gas developments in Latin America and the Caribbean, examples of how greater use of gas can improve urban air quality, an examination of energy system efficiency and the role of gas, a focus on the role of gas in Russia’s energy sector and a review of the gas industry in Indonesia, the host country of IGU’s 2019 Council meeting.

17

A better world With natural gas as the world’s cleanest and most efcient fossil fuel, Oman LNG’s operations near the Omani city of Sur, is helping to make for a better world.

Since starting production in 2000, we have delivered over 2,300 cargoes to customers, remaining a reliable supplier of liqueed natural gas that is helping to reduce carbon emissions and preserve the earth’s natural environment for future generations to enjoy.

For centuries, this beautiful coastbound nation of Oman was a trade centre connecting different parts of the world through vibrant and ourishing commerce relations. Trade that supported lives in far lands. At Oman LNG, we continue that tradition of seafarers and commerce through bringing energy to many corners of the world.

Oman Liqueed Natural Gas LLC (Oman LNG) is a joint venture company established by a Royal Decree in 1994 operating under the laws of the Sultanate of Oman. The company engages in the business of producing and selling liqueed natural gas (LNG), and its by-product, natural gas liquids (NGLs) and operates three liquefaction trains at its plant in Qalhat, serve in Ras al Jinz in the eastern region South Sharqiyah Governorate. of the country boasting one of the world’s largest breeding beaches for Hand-in-hand with our operations Greenback Turtles. comes a strong health, safety and environment performance. Our recent As a company our responsibility to our achievement of over 30 million man- staff, contractors and the community is hours without a Lost-Time Injury (LTI) is to provide a safe environment so that testament to our HSE excellence, and they can come to work and return an exemplary diligence and commit- home to their families, safely every day. ment to the safety of our people, environment, and communities where we Through our empowerment philooperate. Our processes meet the sophy, we continue to develop talent highest of ISO standards, which we are and help remove barriers to reach sucproud to maintain every year and our cess. Our aim is to develop all staff to ceaseless efforts to support the envir- their fullest potential. We support inonment through the sponsoring of country value through focused efforts various initiatives such as the Turtle Re- towards developing local talent and

stimulating local business ventures by enabling Small Medium Enterprises (SMEs), a major cornerstone of Oman’s economy, to ourish and providing equal opportunities to compete for all service contracts.

The company is a corporate and social responsible organisation by maximising benets to the employees, stakeholders and community and has a well-designed alignment between sustainable social development and the business.

From powering large industries, to keeping homes warm and the lights on, Oman LNG is your reliable energy partner.

Perpetual sustainable investments in the society of Oman Corporate Social Responsibility (CSR) has been an integral part of Oman LNG with a focused objective: to deliver tangible value to Oman and its people through social investment by capitalising on the country’s natural gas resource. The company allocates annually 1.5% net income after tax (NIAT) to various social investment and sustainable programmes; a commitment set when the company was founded. In addition, before the rst cargoes left the LNG plant, the company invested in sustainable development projects for the community which speaks volumes about the company’s business principles; that Oman LNG’s initial investment in social development began even before the production line was fully functional.

Today, Oman LNG’s CSR programmes, delivered through Oman LNG Development Foundation, span the entire nation and contribute to the socioeconomic development of the country.

Over the past nineteen years, the com-

pany’s social investment programmes have spanned the length and breadth of the country with thousands of projects ranging from healthcare and education to preserving the environment and road safety; reecting its sincere interest to embed the principles of social responsibility as part of its core existence. Through strengthening the cooperation between the public and private sector, the projects and programmes aim to supplement the national economy and ambitious

omanlng.com

oman-lng-l-l-c-

development plans implemented in the Sultanate.

Oman LNG Development Foundation supports Oman LNG’s ambitious vision and dedication towards CSR. The Foundation champions private sector contribution to the development of Oman and its people, through CSR and citizenship, as an active contributor to social and societal welfare, and through proactively addressing community needs.

@OmanLNG

Oman LNG

omanlngllc

F E AT U R E S

Gearing up for IGRC 2020 Preparations are gathering pace for the IGU Research Conference 2020 with the theme Gas Innovations for a Sustainable Future. By Mark Blacklock Registration is now open for IGRC 2020,

every three years. IGRC 2020 in Muscat

the latest industry research and

which will be held in Muscat, Sultanate

is the 16th in this series of conferences

innovations which are critical to

of Oman, February 24-26, 2020, and

which are governed by the IGU Execu­

the continued development of

there is an earlybird discount for those

tive Committee under the chairman­

the industry and its contribution

registering before December 16.

ship of the IGU President.

towards economic and environ-

IGRC is the premier global

“We are very pleased that Oman

mental energy sustainability.”

forum devoted to presentation and

will be hosting IGRC 2020,” declares

IGU’s Secretary General, Luis

discussion of gas research, develop­

IGU President Joo-Myung (Joe)

Bertrán Rafecas says that the role

ment and innovation, and attracts gas

Kang. “This important research and

of the IGRC has never been more

company executives, researchers and

innovation conference will gather

important or relevant: “It serves to

others from all over the world. It has

industry experts from around the

facilitate the dis­cussion and debate

been held since 1980, normally once

world to discuss and showcase

around the oppor­tunities and challenges of the industry as well as to display the technological developments becoming available to support our industry’s future.

Oman has a longstanding relationship with IGU and we are honoured to support them as hosts for IGRC 2020.”

Organisation and programme The conference is being organised

by IGU Charter Member Oman LNG and will be held in the Oman Convention and Exhibition Centre which is located in the Madinat Al Irfan district between the airport and the city centre. The JW Marriott Hotel (five stars) is linked to the Convention Centre and the Crowne Plaza Hotel (four stars) is nearby.

Delegates to IGRC 2020 will have the opportunity of taking a technical tour to the Oman LNG plant in Sur.

20 Gearing up for IGRC 2020

The technical programme is being developed by IGU’s R&D and

F E AT U R E S

x The venue for IGRC 2020 is the Oman Convention and Exhibition Centre.

Gearing up for IGRC 2020 21

F E AT U R E S

IGU Events Director Rodney Cox (second left) and Oman LNG’s CEO Harib Al Kitani sign the contract for Oman to host IGRC 2020. They are flanked by Dr Hisataka Yakabe, Chair of IGU’s R&D and Innovation Committee (left) and Khalid bin Abdullah Al Massan, CEO of Oman LNG Development Foundation.

Inno­vation Committee under the

and advanced technologies.

Exhibition and technical tour

chairman­ship of Dr Hisataka Yakabe

Following the momentum of the

of Tokyo Gas, Japan, in conjunction

plenaries, the technical sessions will

advanced gas technology equipment

with the National Organising

not only have common oral, poster and

and services by gas companies and

Committee and the professional

workshop sessions but will also include

manufacturers from around the world.

confer­ence organiser Ubar.

a special session homing in on six

There will also be a technical tour to the

“Under the main theme of Gas

strategic subjects that will be of great

Oman LNG plant in Sur immediately

Innovations for a Sustainable Future,

relevance for delegates. Current and

before the conference on February 23.

we have established five major cate­

compelling topics, such as decarboni­

gories and relevant sub-topics for

sation and renewable natural gas, will

ted following the Call for Abstracts and

the Call for Abstracts reflecting current

be highlighted and notable experts in

the selected papers are expected to be

R&D trends around the world,” says

these fields are preparing interesting

announced on November 14. For the

Dr Yakabe. “We are very pleased

presentations and looking forward to

latest information check the website

with the number of top-notch

deep discussions.

and sign up for regular updates:

abstracts in diversified genres that have been submitted.”

“IGRC 2020 promises its participants

IGRC 2020 will feature an exhibition of

Conference papers are being selec­

www.igrc2020.com. If you require

a unique experience that will excite

additional information please contact

and invigorate the senses,” declares

the IGU Events Director, Rodney Cox at:

sessions revolves around “solutions

Dr Yakabe. “We invite everyone to take

rcox1@outlook.com.au.

from today for the future”, and world-

part in IGRC 2020 and allow us to help

renowned speakers will present global

you realign your compasses towards

Mark Blacklock is the Consulting

perspec­tives on the future of the

the true north of a sustainable energy

Editor of International Systems &

energy mix, gas for transportation

future with gas.”

Communications Ltd.

The concept for the plenary

22 Gearing up for IGRC 2020

F E AT U R E S

Resilience of integrated energy systems There are a number of critical issues related to greater use of renewable energies in energy systems. By Gerhard Schmitz, Carsten Bode and Anne Senkel Energy systems of the future will be

services, such as low-temperature or

In the past, less consideration

characterised by a higher share of

high-temperature heat, should be

was given to the last aspect; however,

renewable energies with different

provided with which kind of energy?

several blackouts and disturbances

energy qualities, by new and different

And most importantly: will we need a

in power and gas grids in Germany

kinds of energy storage technologies

gas distribution system in the future?

and Austria but also in the USA

and, since renewable energies are fluc­

Important criteria for assessing

tuating, by greater dynamic behaviour.

different energy system architectures

To match supply and demand quanti­

over a representative period, for

ta­tively and qualitati­vely, new energy

example one year, are the:

Defining resilience

distribution concepts, that take differ­

 Environmental impact, especially

The term resilience is often used as a

ent energy grids like power, gas and

CO2 emissions;

directed attention to the resilience of energy systems.

synonym for the reliability of a system

district heating into consideration, will

 Economy; and

but to show the difference between

be necessary in the future (see Figure 1).

 Resilience of the system.

these two properties of a system,

Therefore, a number of new ques­ tions arise. Which system architecture should be preferred? In which form should the energy be stored? What size should energy storage units be? Where

vx Energy systems of the future will be characterised by a higher share of renewable energies.

should they be installed? Which energy

both should be explained in more detail. Reliability means a system’s ability to keep its functionality within a given tolerance band for a certain time. Values for reliability are usually failure probabilities.

Resilience (from the Latin word resilire, to jump back) describes the

24 Resilience of integrated energy systems

F E AT U R E S

ability of a system to return to its designed stable state after leaving it due to a disturbance. Since the 1980s, this definition has also been applied to energy systems. However, most

Energy flow chart of an integrated energy system showing the interaction of different kinds of energy using various energy conversion technologies Transport, Transport,Conversion Conversion

Primary PrimaryEnergy Energy

End EndEnergy Energy

Conversion Conversion

Useful UsefulEnergy Energy

Electric ElectricMotor Motor

KIKI/ /PO PO

Heat Heat Pump Pump

LH LH

Chiller Chiller

CO CO

research focuses on a qualitative a quantitative assessment, the duration of the disturbance and its conse­ quences, the size of its impact, and any performance losses, which the system faces, have to be taken into consideration. A disturbance could be the break of a power transmission line

Renewable Renewable Primary PrimaryEnergies Energies Wind Wind Solar Solar Water Water Geothermal Geothermal Biomass Biomass Biogas Biogas

Non-Renewable Non-Renewable Primary PrimaryEnergies Energies

weather conditions or a malfunction of a component or a control device.

To find a value for the resilience,

Electric ElectricStorage Storage

Power-to-Heat Power-to-Heat

Resistant ResistantHeater Heater

LH LH HH HH LH LH

Heat HeatTransformer Transformer

HH HH

Absorption AbsorptionChiller Chiller

CO CO

Engine Engine

KIKI/ /PO PO

Non-Renewables Non-Renewables Renewable RenewableGases Gases

Chiller Chiller

CO CO

Power Power Low LowTemperature TemperatureHeat Heat( (LH LH) )

Boiler Boiler

LH LH

High HighTemperature TemperatureHeat Heat( (HH HH) ) Cooling Cooling( (CO CO) )

Heat HeatPump Pump

LH LH

Absorption AbsorptionChiller Chiller

CO CO

Coal Coal Oil Oil Natural NaturalGas Gas Uranium Uranium

or a gas pipeline, long-lasting extreme

Large Large Scale Scale CHP CHP

Uranium,Coal, Coal, Uranium, NaturalGas Gas Natural

assessment of resilience. To implement

Power-to-Gas Power-to-Gas

Small Small Scale Scale CHP CHP

Thermal ThermalStorage Storage

Natural NaturalGas, Gas,Oil Oil

Natural NaturalGas Gas

Kinetic Kinetic/ /Potential PotentialEnergy Energy( (KIKI/ /PO PO) )

a characteristic variable is chosen which reflects the behaviour of the

Figure 1.

system’s functionality. In the case of a

band and then permanently

the different scales of consumers into

power grid, this can be the frequency

returning into it;

account and therefore the average

and/or voltage; in the case of systems,

 The absorptive capacity is charac­

number of people and industrial

where a fluid transports the energy,

terised by the maximum deviation

companies, who would be affected by

e.g. gas grids or district heating

of the characteristic variable from

the loss of service at the aggregated

networks, the enthalpy flow or the

its tolerance band; and

points of consumption, the resilience

transferred heat flow to the customer

 The adaptive capacity is expressed

are recommended, respectively. If the

by the performance loss of the

characteristic variable remains within

system which is represented by the

the tolerance band, for example

area between the curve and the

50 ± 0.05 Hz in the case of a power

tolerance band.

grid, the system is deemed to be work­

The combination of these three

ing in its designed operation mode.

For the quantification, three aspects of resilience (see Figure 2) are taken into consideration:  The restorative capacity is described

elements leads to the resilience index RI, the values of which will be between

indices are weighted by their energy consumption. Hence, a weighted mean

Behaviour of a system’s characteristic variable after a disturbance Characteristic Characteristic Variable Variable

0 (irresilient) and 1 (reliable).

Disturbance Disturbance

Since the physical values considered

Performance Performance Loss Loss Tolerance Tolerance Band Band

Set SetPoint Point

differ for each consumer in each grid, it Maximum Maximum Deviation Deviation

by the recovery time of the system

is necessary to combine several

which is the time difference

individual resilience indices into one

between first leaving the tolerance

overall index for each sector. To take

Recovery RecoveryTime Time Time Time

Figure 2.

Resilience of integrated energy systems 25

F E AT U R E S

are aggregated. The so- calculated heat

A model example of a complex integrated energy system Gas Consumer NW

demand is scaled to represent the needs Gas Consumer NE

Gas Source

gas boilers (and therefore gas consumers NE and SE) or a central CHP plant. For the

Electrolyser

Biomass Incineration Plant

of several houses supplied by individual

households supplied by the CHP plant,

Disturbance

a storage unit is integrated in the heating system. This decouples supply

Waste Incineration Plant

Gas Consumer SE Heat Consumer DHN

and demand and allows an efficient operation of the CHP plant in its set point, independent of the current heat demand.

CHP Plant

The power produced by the CHP Gas Heat Power

plant is fed into the power grid. Since the operation of the CHP plant is heatled, there have to be other power sup­

Figure 3.

pliers in the grid: while a biomass plant

resilience index RIs is calculated which

ling complex integrated energy

and a garbage incineration plant pro­

represents the resilience of each sector,

systems is the TransiEnt Library

vide the base load, several photo­voltaic

taking into account each consumer.

(www.tuhh.de/transient-ee/en).

(PV) plants and wind turbines generate

To gain the overall resilience index of

In the following, the assessment of

power depending on the current solar

the integrated energy system, RIsys, the

resilience shall be demonstrated using

irradiation and wind speed. During

same approach is used to combine the

an exemplary integrated energy system

periods with high levels of renewable

three sector resilience indices.

(see Figure 3). This system consists of con­

generation, an electro­lyser will use the

sumers, producers and storage units

power to generate hydro­gen which is

Modelling and simulation

which are connected by a gas grid, a

then fed into the gas grid.

The calculation of the curves of the

power grid and a district heating net­

Using the TransiEnt library, a gas pipe­­

char­acteristic variables is carried out by

work (DHN). The different sectors are

line break was simulated by the authors,

means of system simulation. A suitable

coupled by a combined heat and

entailing full closure of the entire pipe­

method for dynamic system simulation

power (CHP) plant and an electrolyser.

line string over a period of 14 hours.

is equation-based modelling. Object-

In the gas grid, one source supplies

This corresponds to the period during

oriented, acausal modelling languages

three consumers: one industrial cus­

which the gas supply was shut down

like Modelica (www.modelica.org) help

tomer and two aggregated customers

due to an explosion at the Baumgarten

to structure a complex physical system.

which use the gas for heating. Further­

gas hub in Austria in December 2017.

Additionally, different time scales must

more, the CHP plant takes gas from the

Contrary to existing quasi-stationary

be taken into account for different

gas grid.

simulations of the n-1 reliability of gas

parts of the energy system. In the case

A low-order physical model of a

systems, this simu­lation is performed

of a power grid, seconds are important

single-family dwelling is used for

dynamically and each of the integrated

whereas for gas and district heating

model­ling the heat demand. Therein, all

sectors is assessed. Figure 4 (over)

grids, changes propagate in minutes or

heat losses and gains due to heat trans­

shows the reactions of the character­

hours. An example of a tool for model­

mission, ventilation and solar irradiation

istic variable in each sector.

26 Resilience of integrated energy systems

NATURAL GAS REDUCES AIR POLLUTION FROM ROAD AND MARINE TRANSPORT WHEN IT REPLACES DIESEL. www.shell.com/roleofnaturalgas

F E AT U R E S

drop shortly after the disturbance,

Reactions of the variables due to the gas pipeline break

thermal consumer DHN’s temperature

400

Pressure (bar)

10 8 6 Consumer NW Consumer NE Consumer SE CHP Plant

4 2 00:00 Feb 4th

12:00

00:00 Feb 5th

12:00

00:00 Feb 6th

12:00

00:00 Feb 7th

Enthalpy Flow (MW)

12

Consumer NW Consumer NE Consumer SE CHP Plant

300

supply for two hours, even when the

100

CHP plant is not operating. When the 12:00

00:00 Feb 5th

Time

12:00

00:00 Feb 6th

24

00:00 Feb 7th

12:00

Heat Flow (MW)

22

Consumer NE Consumer SE Consumer DHN

16

system can be observed to recover Consumer NE Consumer SE Consumer DHN

250 200

12:00

00:00 Feb 5th

12:00

00:00 Feb 6th

12:00

00:00 Feb 7th

00:00 Feb 4th

disturbance in the gas sector.

12:00

00:00 Feb 5th

12:00

00:00 Feb 6th

12:00

00:00 Feb 7th

12:00

the entire simulation. The observable

111.0

dev­iations from the set point of 50 Hz

50.02

Voltage (kV)

Frequency (Hz)

110.5 50.01 50.00 49.99

can be traced back to the CHP plant

110.0

turn­ing on and off. When looking at the

109.5

voltage, no noticeable change can be

49.98 49.97 00:00 Feb 4th

12:00

00:00 Feb 5th

12:00

00:00 Feb 6th

12:00

00:00 Feb 7th

12:00

109.0 00:00 Feb 4th

Time

12:00

00:00 Feb 5th

12:00

00:00 Feb 6th

12:00

00:00 Feb 7th

12:00

Time

Figure 4.

Due to the closure of the pipeline,

In the power sector, the frequency stays within the tolerance band during

Time

Time 50.03

cities of the buildings (and the buffer still continues after the end of the

100 50

12:00

gradually. Because of the heat capa­ storage), the reheating of the buildings

150

0 00:00 Feb 4th

gas pipeline is repaired and the CHP plant resumes operation, the heating

350 300

Room Temperature (ºC)

12:00

Time

18

caused by the installed buffer storage, which is designed to keep up the heat

200

0 00:00 Feb 4th

12:00

20

decline is delayed. This behaviour is

observed during the disturbance as well.

Since the CHP plant is operated heat-led, the power sector is designed not to rely on the CHP plant and the shutdown of

sumer SE is then shut down right after

the plant therefore does not affect the

only one route remains for the gas to

the CHP plant also due to the low pres­

power grid. Of course, this requires

flow from the source to the consumers

sure. Enthalpy flow, i.e. the mass flow

reliable energy sources or stor­age units

and thus the pressure losses increase

multiplied by the gross calorific value

for the power grid. If it is largely supplied

strongly. Therefore, the gas pressure

of the gas, is chosen as the character­

by volatile renewable power producers,

declines rapidly at the start of the dis­

istic variable so that the shutdown of

the situation could change.

turbance (February 5th, 4 am) and does

the consumers can be accounted for.

not recover before the gas pipe­line is

In the heating system, shutting

Assessing resilience

fixed at 6 pm. Right after the initial

down the sole heat suppliers, i.e. the

The following resilience assessment

pressure decrease, a smaller pres­sure

CHP plant for thermal consumer DHN

evaluated the enthalpy flows within

increase can be observed since the CHP

and the gas boiler for thermal con­

the gas sector, the transferred heat

plant shuts down due to the delivered

sumer SE, leads to temperature drops

flows in the heat sector and the

gas pressure falling below the plant’s

in those two. While thermal consumer

frequency and voltage in the power

minimum operating pressure. Gas con­

SE experiences a drastic temperature

sector. Table 1 (over) shows the

28 Resilience of integrated energy systems

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F E AT U R E S

resilience indices for the gas and ther­

The resilience indices of the indivi­

sation values chosen. On the one hand,

mal con­sumers and the three sectors.

dual consumers are weighted by their

this poses the risk of comparing indices

energy consumption during the dis­

that are not comparable. On the other

of the gas consumers NE and NW

turbance and then aggregated into

hand, it provides the flexibility to set the

equal 1 since the enthalpy flows to

one sector resilience index for each

tolerances according to the sys­tems

these points are not affected by the

sector. Since the consumption of

under consideration. Further­more,

pressure drop caused by the pipeline

consumer NE accounts for 47% of the

different system configurations (all-

interruption. However, gas consumer

gas sector and 65% of the heating

electric, all-gas, etc.) and weak spots as

SE and the CHP plant have low resili­

sector, the sector indices for the gas

well as corresponding improvements

ence indices since the enthalpy flows

and heating grid are also fairly high:

such as installing additional storage

were interrupted for almost the entire

0.72 and 0.78, respectively. As expec­

units, producers or pipelines can be

disturbance period. In the recovery

ted, the resilience index of the power

assessed and the resilience gain or loss

phase, the enthalpy flow at gas con­

grid equals 1, since the net frequency

achieved can be judged in combination

sumer SE is used to directly heat the

and the voltage each stayed within

with the necessary additional costs or

supplied buildings, while the heat

their respective tolerance band.

CO2 emissions. As a result, a relationship between changes in capital spend or

As expected, the resilience indices

produced by the CHP plant reheats

The overall resilience index of the

the thermal consumers as well as the

integrated energy system is calculated

released emissions and subsequent

installed buffer storage. The CHP plant

by summing the weighted sector indi­ces.

resilience gains can be established.

thus has a smaller resilience index due

Winter operation was considered, thus

to a longer recovery time compared

the gas and heating grid have a high

resilience of energy systems with a

to gas consumer SE.

share of the overall energy con­sump­

high share of volatile renewables is to

This relation changes in the heat

tion in the period considered leading

be investigated more in-depth. We

sector. The DHN supplied by the CHP

to an overall resilience index of 0.78.

think an integrated energy system,

plant contains a buffer storage unit,

Research in this field is ongoing; the

which relies on various technologies

allowing it to sustain its heat supply for

Continuing research

from the gas, heat and power sector, is

longer after the disturbance compared

Different energy systems can now be

more resilient compared to a pure all-

to thermal consumer supplied by gas

examined and compared in terms of a

electric energy system. Further detailed

consumer SE. However, since the buffer

quantified resilience. Nevertheless, as

information, the latest developments

storage was designed to bypass only

with many evaluation methods, the

and publications including a more

two hours of CHP plant downtime, the

evaluation conditions are crucial; the

detailed presentation of the resilience

resilience index of the DHN is also

absolute values of the resilience indices

index can be found on our homepage:

rather low.

depend on the tolerance and normali­

www.tuhh.de/transient-ee/en.

c Table 1.

Resilience indices for the integrated energy system during the pipeline break

Professor Gerhard Schmitz is the Head of the Institute of Engineering Thermo­ dynamics at Hamburg University of

RINW

RINE

RISE

RICHP/DHN

RIS

Gas

1

1

0.20

0.17

0.78

Heat

-

1

0.21

0.24

0.72

of IGU’s R&D and Innovation Committee.

Power

-

-

-

-

1

Carsten Bode and Anne Senkel are

Sector

Technology (www.tuhh.de) and a mem­ber

Research Associates in the Institute.

30 Resilience of integrated energy systems

F E AT U R E S

Improving resilience and reducing emissions in residential housing ATCO’s natural gas experts work closely with industry partners to provide environmentally sustainable solutions. By Gregory Caldwell Canada is continually working towards

customers and create solutions that

AISIN has been selling its gas heat

reducing emissions, growing the eco­

support the transition to a lower-

pumps since 2009.

nomy and building its resilience to a

emitting energy system. We believe

mCHP is an energy efficiency

changing climate. With the help of the

natural gas will be part of the energy

technology that uses natural gas to

provinces, territories and consultation

mix for low-carbon homes and build­

generate both heat and electricity for

with Indigenous Peoples, the Pan-

ings. Since 2016, ATCO has been evalu­

homes and other small buildings.

Canadian Framework on Clean Growth

ating micro combined heat and power

mCHP captures the excess thermal

and Climate Change1 was created.

(mCHP) technology and working with

energy that would normally be lost

To ensure Canadian businesses stay

one manufacturer in particular, AISIN

during power generation and instead

competitive in a low-carbon economy,

Seiki Co., Ltd. AISIN started manu­

uses it to heat a home or water,

this plan aims to drive innovation and

factur­ing and selling the mCHP unit

creating greater efficiencies, lowering

growth by increasing technology

in 2011 in Japan and is now seeking

utility costs and reducing greenhouse

development and adoption. The four

overseas markets. In North America,

gas emissions. Since mCHP generates

main pillars of the Pan-Canadian

electricity exactly where it is needed, it

Frame­work are: pricing carbon pollu­

provides reliable, low-emitting energy

tion; reducing emissions across the

production that gives better control of

economy; adapting to the impacts of

the cost and supply of power now and

climate change and building resilience;

in the future.

and taking action to accelerate inno­

The mCHP unit can help reduce CO2

vation, support clean technology and

emissions by up to 31% and can help

create jobs.

the customer achieve net-zero elec­

At ATCO, which provides integrated

tricity and even greater emission

energy, housing, transportation and

reductions because mCHP is compati­

infrastructure solutions, it is a priority

ble with conventional renewables such

to ensure we continue to understand

as solar panels.

the evolving energy needs of our

For the past few years, we have been installing mCHP units in resi­

1 Pan-Canadian Framework on Clean Growth and Climate Change: http://publications.gc.ca/ collections/collection_2017/eccc/En4-294-2016eng.pdf

Two 1.5 kW AISIN mCHP units generating both electricity and heat help make the Effect Home office building completely off grid.

32 Improving resilience and reducing emissions in residential housing

dential homes in the Province of Alberta to help Albertans reduce their greenhouse gas emissions and save on

F E AT U R E S

c The low-carbon Brookfield home is in a developing neighbourhood in Edmonton, Alberta. x Buffer tanks filled with water store thermal energy from the mCHP unit for use in the home.

their utility bills, which in turn helped

solar PV and six 6.6 kWh lithium-ion

it has two mCHP units makes it very

us better understand the potential of

batteries. This office building relies

resilient – even if one mCHP unit goes

this technology and how mCHP units

principally on natural gas and is the

down the other with the solar and

can benefit markets in Alberta.

first commercial building in Edmonton,

batteries will run the building.

Alberta to be completely off the Effect Home

electrical grid. This and the fact that

With the new modern office build­ ing, the community has been revitali­

We had the opportunity to work with Effect Home Builders, a leader in energy-efficient residential construc­ tion, as they were converting a 1940s era two-storey building into a commer­ cial office space. The renovation was funded by Canada’s Natural Gas Innovation Fund and included multiple energy efficiency upgrades including: extensive exterior wall and roof treatment to improve insulation and air-tightness; window and door replacement; and complete heating system renewal by implementing two 1.5 kW AISIN mCHP units, 4.8 kW of

Improving resilience and reducing emissions in residential housing 33

F E AT U R E S

envelope and has an upgraded

HOW MICRO COMBINED HEAT AND POWER UNITS AND SOLAR ARRAYS WORK TOGETHER NATURAL GAS AND SUNLIGHT PROVIDE HEAT AND ELECTRICITY

mechanical system that features a 1.5 kW mCHP, a drain water heat recovery, solar panels and natural gas appliances.

The home is extremely well insu­ lated so it will cool very slowly even in extreme cold should electricity/gas be

A solar array generates electricity on sunny days.

lost. Additional resilience is provided by the solar installation and an electric coil in the furnace, which mean that

1

the home and water can be heated electrically with solar assist if the mCHP goes down.

The home emits 72% less carbon than a comparable home built to industry code with a con­ventional 4

3

5

heating and electrical system.

Additionally, it has 50% lower utility costs, saving the homeowner up to

2

C$1,500 ($1,155) annually.

Two micro combined heat and power (MCHP) units use natural gas to generate electricity when sunlight is not available or the building cools.

Currently, we are monitoring the

A control system routes electricity from both sources to either:

home for a year to analyse the energy

Outlets and lights throughout the building as needed

continue to monitor the home’s energy

Heat created as a byproduct of power generation is used to heat the building.

Batteries for storage of excess electricity

used. After it is sold, the intent is to output with homeowners now occupying it.

Our commitment to sustainability extends beyond the materials we choose; it’s about how we solve

How micro combined heat and power units and solar arrays work together.

challenges in a way that benefits our customers, as well as the environment

sed and there’s an 80% decrease in CO2

agency funded a joint partnership

and communities in which we work

emissions compared to the original

between ATCO, Brookfield Residential

and live.

building (view this link for a video tour:

and Southern Alberta Institute of

https://youtu.be/CyJ6xdLQSt4).

Technology (SAIT) to build an afford­

Greg Caldwell is the Director of

able low-carbon home. This beautiful

Innovation at ATCO (www.atco.com)

Low-carbon home

1,540 ft2 (143 m2) detached single-

and leader of the study group on cross-

In January 2018, the Western Economic

family home is fuelled by natural gas,

cutting technologies of IGU’s R&D and

Diversification Canada development

built with a high-performance building

Innovation Committee.

34 Improving resilience and reducing emissions in residential housing

THIS IS WHAT WE DO Distributing Energy Worldwide

www.bbenergy.com

F E AT U R E S

Unveiling gas opportunities in Latin America and the Caribbean To coincide with the Latin America and Caribbean Gas Conference being organised by IGU, OLADE and ARPEL in partnership with EnergyNet in Lima, November 14-15, this Wood Mackenzie report takes a look at regional gas market developments. By Mauro Chavez and Rodrigo Rosas The common theme across Latin

stimulated its gas markets and in Brazil,

domestic needs, it creates an oppor­

America’s gas markets over the next

gas from the prolific pre-salt fields is

tunity for exports.

few years is one of abundance. Supply

also spurring demand.

looks likely to outstrip domestic

In Mexico, energy reform created an

As supply – especially from

opportunity for Permian producers to

demand. Production in Argentina is

Argentina’s giant Vaca Muerta play –

ship US gas into Mexico. Entrepreneur­

growing, energy reform in Mexico has

may be more than enough to sate

ial LNG developers are now seeking opportunities that would see Mexico

South America: main gas transmission pipelines and gas formations FALCON MARACAIBO

Ballena Barranquilla 20 Cartagena

B.Bermeja

Cali

Quito

Neiva

Margarita

GUTRICO-ORIENTE

programme launched by the current

Golfo de Paria

Anaco Puerto Ordaz

Bucaramanga

administration aims to increase the

VENEZUELA

Bogotá

Coast markets.

And in Brazil, the “new gas market”

CARIACO-PARIA

Caracas

Morón Maracaibo Ulé Casigua La Fría El Piñal

act as a gateway to thirsty Pacific

competitiveness of the Brazilian gas

Pitalito

COLOMBIA

ECUADOR

URUCU

Coari

market, opening up opportunities for

Manaus

Urucu Fortaleza

PERÚ CAMISEA

Recife

BOLIVIA

Lima

mergers and acquisitions and for gas commercialisation.

BRASIL

Salvador

FOOTHILLS

La Paz/BOOMERANG

Pisco

Cochapamba

Arequipa Ilo

Río Grande

Est. Chiquitos Mutún Corumbá 18

Oruro

Tocopilla

9

Mejillones

Potosí Tarija Tupiza Yacuíba Villazón PARAGUAY Madrejones La Quiaca 1011 Durán Bermejo 8 12 Cornejo Asunción Miraflores

NOROESTE

Antofagasta

CHILE

Córdoba

Concepción

7 6

La Mora

Rosario

Buenos Aires

Loma la Lata

Lagoa Parda Vitória

CAMPOS Rio de Janeiro São Paulo Curitibia

SANTOS

Florianopolis Uruguaiana 14

Porto Alegre

Paysandú Casa Blanca

15 16

CUYANA

Belho Horizonte

Posadas

Paso de los Libres

ARGENTINA

Quillota

Santiago

Mexico

Campo Grande

Ciudad del Este

Quimili 13 Resistencia

Tucumán

Brasilia

Cuiaba 19 San Matías

URUGUAY 17

Montevideo

NEUQUÉN Bahía Blanca

significant move and required making a number of constitutional amendments to change the industry.

Initially, reform focused on opening up the upstream sector, but gas had a promoted in the domestic sector. As

SAN JORGE

Projected gas pipelines Gas fields

of energy reform in 2013. It was a

role to play as well, with its use being

Existing gas pipelines Gas pipelines under construction

Mexico kicked off a major programme

AUSTRAL El Cóndor Posesión 4 3 Pla. Dungeness Cabo Negro 5 2 San Sebastián 1 Bandurrias

Source: Latin American Energy Organisation (OLADE)

reform got under way in 2013 and 2014, Mexico needed to import more LNG and expand its pipeline network.

Pipeline capacity of 13 bcf/d (360

Figure 1.

36 Unveiling gas opportunities in Latin America and the Caribbean

F E AT U R E S

mcm/d) was built across the US-Mexico

However, at present there is still a

domestic pipeline network is built

border. At the time, total Mexican

need for LNG imports to meet demand.

out and extends to the country’s major

demand was around 6 bcf/d (168

This is because there has been a lag in

demand centres.

mcm/d). As the pipeline network grew,

piped imports, as the import links

so too did piped imports from the US.

cannot be fully utilised until Mexico’s

z There are plans to add liquefaction capacity to Mexico’s Costa Azul LNG regasification terminal in northern Baja California.

According to Wood Mackenzie’s analysis, over the next decade, piped

Central America In Panama’s Costa Norte project, a joint venture of AES Panama and Inversiones Bahía which started up in 2018, a 381 MW power plant is the anchor customer for an onshore regasification terminal with a capacity of 1.5 mtpa (2 bcm) at Isla Telfers, Colón. The terminal has been designed to make small-scale deliveries to a range of other customers, which were due to start at presstime.

El Salvador has taken the FSRU route for its gas-to-power project in Acajutla promoted by Energía del Pacífico, which is

An artist’s impression of how El Salvador’s gas-fired power plant in Acajutla will look when completed in 2021. It will supply 30% of national demand.

backed by Invenergy and Quantum Energy. The project is expected to be the lowest cost thermal generator in the country which is currently reliant on

heavy fuel oil-fired generators.

Due for start-up in 2021, BW LNG will supply the FSRU and the 378 MW power plant will ultimately supply 30% of national demand.

Unveiling gas opportunities in Latin America and the Caribbean 37

F E AT U R E S

gas will eventually displace LNG in

terms to prevent CFE having to pay

are a stern warning to operators

the country’s supply mix.

such penalties.

from the government. We also believe

Today, the Mexico gas market

This has raised questions regarding

most of the pipelines will be oper­

reform faces a numberof challenges –

the fate of the pipelines. CFE has

and many of those are related to

requested international arbitrations on

By 2020, we forecast an increase

domestic pipeline infrastructure.

seven of the planned links, although a

of 8.3% in US piped imports to Mexico,

resolution may be reached before

reaching 5.7 bcf/d (160 mcm/d).

While the country’s energy reform has generally been successful, legal challenges and local opposition

proceedings get under way.

Based on our assessment, it is

ational by the end of 2019.

Gas prices will continue to decline as the delayed pipelines start

appears to be the new normal. Major

highly unlikely that the Wahalajara

operating. We expect an average price

backbone pipeline expansions,

corridor – a pipeline linking the

of $4.69 per million Btu for 2019,

originating in southern and western

prolific Waha play in the USA’s

reflecting the critical constraints that

Texas, have faced costly, months-

Permian basin with Guadalajara in

some regions are suffering, such as the

long delays.

Mexico – will be operating until the

Yucatán Peninsula. There will be signs

end of 2019.

of improvement at the end of the year.

Mexico’s President Andrés Manuel López Obrador has made public his

On the other side of the country,

Looking ahead, Mexico may

displeasure at the Federal Electricity

even though construction of the Sur de

experience a slowdown in major

Commission (CFE) having to pay

Texas pipeline is completed, the line

pipeline expansion and focus instead

private pipeline operators for non-

has been idle, waiting for CFE to

on developing regional markets. In this

operational contracted infrastructure.

acknowledge its completion.

sense, as regional markets continue to

These payments are required even

While it is unclear whether the

develop, Baja will be the first state to

when delays are due to circumstances

arbitration process prevents the

re-export US gas as Asia-bound LNG.

beyond the companies’ control. He

pipelines commencing operations,

By mid-2025, we expect the Costa Azul

recently proposed revising contractual

we believe the delays in start-up

liquefaction project to be online with a

Caribbean In the Caribbean, Trinidad and Tobago has been an LNG exporter since 1999 and its four-train Atlantic plant shipped 12.23 mt (16.6 bcm) in 2018 making it the world’s number eight exporter. The Dominican Republic and Puerto Rico are long-standing medium-scale LNG importers for gas-to-power projects, and Puerto Rico recently started up a second project with the part conversion of the San Juan plant from oil to gas. They were joined by Jamaica in 2016, while Curaçao is looking at imports.

Jamaica Public Service (JPS), the country’s electricity utility, switched from fuel oil to gas at the 120 MW Bogue

power plant in Montego Bay on the north coast under a deal with New Fortress Energy (NFE). The supply chain involved an FSU, a shuttle tanker and an onshore regasification plant.

JPS and NFE are now expanding the use of gas and have replaced the FSU with an FSRU on the south coast. Golar Freeze with a capacity of 3.6 mtpa (4.9 bcm) was stationed offshore Old Harbour Bay at the end of 2018 and delivered its first gas in March 2019. In addition to Bogue via the shuttle tanker, it is supplying the new 190 MW Old Harbour Bay power plant by pipeline.

From 2020 it will supply a 150 MW

38 Unveiling gas opportunities in Latin America and the Caribbean

combined heat and power plant being built for the Jamalco bauxite company in Clarendon. NFE also plans to develop the Jamaican southern coast facility into a bunkering hub.

Curaçao’s water and power company, Aguaelectra, is also looking at switching from fuel oil to gas and there is a proposal for an LNG terminal at the deepwater port of Bullen Bay. This is tied to the refurbishment of the Isla oil refinery for which the government is seeking a new operator and investor when the current contract with Venezuela’s PDVSA expires at the end of 2019.

Transportation and distribution of natural gas 3,200 km of pipelines.

4.3 million users, nearly 40% of the domestic market.

LNG More than 400 Mpcd An strategic hub for the Colombian and the international LNG markets.

Production and distribution of electrical energy Costumers: 367,258 Networks: 26,543 km Integrated solutions for the industry Sustainable energy markets, better quality of life and boosting development.

This is our commitment.

This is our passion.

3,500 employees: Colombia-Peru

Dehydration capacity: 210 Mpcd Compression capacity: 18,100 HP Promisol electricity generation capacity: 42 MW Non-banking finance Loans granted: 2,154,648 Number of users: 2.8 million Portfolio: USD 211 million

F E AT U R E S

ramp-up period of six months –

eration mix. On the industrial side,

Escobar LNG regas terminal for LNG

recording re-export flows of 300 mcf/d

with new infrastructure reaching areas

imports during the winter season (April

(8.4 mcm/d) in 2026 and onward.

without previous access to gas and the

to September).

In the long term, we expect Mexico’s

economic benefits compared to fuel oil

The Vaca Muerta is spurring a host

gas demand to grow at 1.4% (com­

and diesel, demand will increase by

of new infrastructure projects, such as

pound annual growth rate) in the

18% in 2030.

the Neuquén-San Nicolas gas pipeline,

period to 2040. The country’s power

new industrial projects and cheaper

and indus­trial sectors drive this growth,

Argentina

jointly representing 86% of total gas

Turning to Argentina, production

demand by 2040.

from the vast Vaca Muerta shale play

in Vaca Muerta’s liquids window is also

continues to reshape not only the

reflected in cheap associated gas

country, a wave of new, highly-efficient

coun­try’s domestic gas market, but

lowering breakevens for operators. In

combined-cycle power plants are

also its gas trade with its neighbours –

terms of volumes, given Vaca Muerta’s

nearing completion, boosting gas

especi­ally Chile – in the short term.

potential, neither Argentina’s demand,

demand in the power generation

In October 2018, pipeline exports to

nor that in the other Southern Cone

sector to 4 bcf/d (112 mcm/d) in 2021.

Chile restarted. The floating storage

countries, will soak up all the possible

and regasification unit (FSRU)

gas output. It is this lack of domestic

threat in highly-cost competitive

Excelerate Exemplar, located in Bahía

demand, particularly in the summer

renewables as gas, wind and solar

Blanca, sailed off as for now Argentina

season, that is supporting Argentinian

compete for a slice of Mexico’s gen­

is self-sufficient, requiring just the

LNG export projects.

As low-cost gas arrives in the

Yet power burn faces a considerable

Argentina exported its first LNG in June 2019 from Tango FLNG in Bahía Blanca.

40 Unveiling gas opportunities in Latin America and the Caribbean

gas for customers.

On the upstream side, investment

F E AT U R E S

2024, and could grow to as much as

Argentina’s counterseasonal supply surplus enables LNG exports 80 10 mmtpa 2mmtpa

70 60

Many major LNG portfolio players

2mmtpa High case flows available

are already present in the Vaca Muerta

Highflows caseavailable flows available Base case

60 50 mmcmd mmcmd

10 million tpa by 2030.

10 mmtpa

80 70

too. Malaysian national oil company

Base case flows available

50 40

Petronas is participating via a joint

40 30

venture with YPF, while Chinese giant

30 20

CNOOC participates indirectly through

20 10

its subsidiary, Pan American Energy.

Ja n20 Ja n 21 Ja n22 Ja n23 Ja n24 Ja n25 Ja n26 Ja n27 Ja n28 Ja n29 Ja n30 Ja n31 Ja n32 Ja n33 Ja n34 Ja n35 Ja n36 Ja n37 Ja n38 Ja n39 Ja n40

10 0

Meanwhile, Qatar Petroleum recen­tly -4 0

has shown interest in Argentina, buy­ing

Ja n

Ja n

-3 9

-3 8

-3 7

Ja n

Ja n

Ja n

-3 5

-3 6

-3 4

Ja n

-3 3

Ja n

Ja n

-3 1

-3 2

Ja n

-3 0

Ja n

-2 9

Ja n

-2 8

Ja n

-2 7

Ja n

-2 6

Ja n

-2 5

Ja n

Ja n

-2 3

-2 4

Ja n

Ja n

21

-2 2

Ja n

Ja n

Ja n

-2 0

0

Source: Wood Mackenzie Southern Cone Gas and Power Service

a stake in ExxonMobil’s business unit in

Figure 2.

the country; it is also partnering in an

In June 2019, Argentina became an

Associated gas from Vaca Muerta

offshore exploration venture. Chevron,

LNG exporter, with the first cargo from

will represent 15% of Argentina’s gas

Shell and Total are also all active players

the small-scale (500,000 tonnes per

production by 2024, and other projects

in the Vaca Muerta. An LNG facility

annum/0.68 bcm) Tango FLNG vessel.

in the condensate and dry gas window

would offer not only an outlet for

The country’s rising gas production,

with breakevens below $3 per million

Argentinian gas production, but also

coupled with thirsty Asian markets,

Btu will enter into full development

create more diversity in their portfolios.

eager for LNG, is creating an oppor­

in the upcoming years.

tunity for more LNG facilities and an expanding export base.

For buyers too, Argentinian LNG

Supported by the Vaca Muerta,

offers a new supply source away from

Argentina’s production in the

the major growth centres. The season­

Neuquén basin will ramp up over

ality of its output could be also seen

increasing seasonality, and peak

the next few years. If this increased

as a virtue for Asian utilities that are

potential LNG production in Argentina

production is channelled towards

looking to contract additional LNG

during the southern hemisphere

LNG exports, LNG production could

during peak demand in the northern

summer coincides with strong winter

potentially reach 6 million tpa in

hemisphere winter.

Global LNG demand is showing

demand from utilities in Asia. This seasonal dynamic could attract Asian

Projected gas demand in Brazil to 2040 by sector

buyers and presents a strong economic case for Argentinian LNG (see Figure 2).

200

Argentina as a location for lique­

160

0

9

-4

-4 Ja n

9 -3

Ja n

8 -3

Ja n

7 -3

6 -3

Ja n

5 -3

Ja n

4 -3

Ja n

3 -3

Ja n

2 -3

Ja n

1 -3

Ja n

0

Ja n

8

-3 Ja n

7

-3 Ja n

6

-3 Ja n

5

-3 Ja n

4

-3 Ja n

3

-3 Ja n

2

-3 Ja n

1

-3

0 -3

Ja n

9 -2

Ja n

8 -2

Ja n

Ja n

7 -2

6 -2

Ja n

-2

Ja n

Ja n

-2

-2

Ja n

5

Power (Dry)

4

Commercial

NGPP Consumption

3

Industrial

Others

2

Transport

Residential

Source: Wood Mackenzie Southern Cone Gas and Power Service

Figure 3.

Ja n

0

-3 Ja n

9

-3

-2

Ja n

8 -2

Ja n

7 -2

Ja n

6 -2

Ja n

Ja n

5

4

-2

-2

Ja n

3 -2

Ja n

2 -2

Ja n

Power (Average)

-2

0

Ja n

20

1

0

40

Ja n

mmcmd

-2

Ja n

-2

60

1

80

0

Ja n

overall cheaper alternative to US LNG.

20

120 100

-2

factors help make Argentinian LNG an

40

140

Ja n

Panama Canal congestion. These two

60

0

do not have to contend with potential

80

180

160

-2

Asian markets are far lower and they

100

200

Ja n

shipping costs to potentially lucrative

120

mmcmd

advantages over the US Gulf Coast –

140

Ja n

faction plants also has a number of

180

Power (Average)

Transport

Industrial

Commercial

Residential

Others

NGPP Consumption

Power (Dry)

42 Unveiling gas opportunities in Latin America and the Caribbean

F E AT U R E S

Brazil

Brazil’s projected gas supply to 2040 by source

In Brazil, ongoing energy reform will result in a reduction of Petrobras’s

160 140

foot­print in the gas market as the

120 mmcmd

company has committed to divest its transport and distribution assets. The rationale behind the move is to

100 80 60 40

promote com­petition in the Brazilian

20

Domestic Production

consumers, rather than selling their

LNG

0

9

Ja n

-4

8

-3 Ja n

7

-3 Ja n

6

-3 Ja n

5

-3 Ja n

4

-3 Ja n

3

-3 Ja n

2

-3 Ja n

1

-3 Ja n

0

Ja n

-3

9

-3

8

Ja n

Ja n

Ja n

Flows from Bolivia

Flows from Argentina

Source: Wood Mackenzie Southern Cone Gas and Power Service

gas production to Petro­bras, which then acts as an aggregator.

-2

7

ducers can also direc­tly supply gas

-2

6

-2 Ja n

5

-2 Ja n

4

Ja n

-2

3

-2 Ja n

2

-2 Ja n

Ja n

-2

0 -2

-2 Ja n

Ja n

1

0

gas market, so other pre-salt pro-

Figure 4.

Gas demand has fallen in recent

We believe that the transition to a

and 4). Nevertheless, the Brazilian

competitive market will take at least

years due to a two-year recession in

market will represent a chal­lenge for

five years, as there are many supply

2015-16 and an expansion of hydro

LNG suppliers due to its strong

agreements with gas distribution

and renewables. This, together with

hydropower perfor­mance causality,

companies and thermal power plants

higher pre-salt production, led to

and the stochastic nature of hydrology.

that will remain in force in that period.

Petrobras ending the lease of one of its

In the meantime, the negotiation of a

three FSRUs in 2017. However, with the

Mauro Chavez is a Principal Analyst

new contract for Bolivian gas supplies

increasing capacity additions of thermal

covering Latin American Gas and LNG

will be the main spur for competition

power plants, we still see Brazil as one

and Rodrigo Rosas is an Analyst covering

in the centre-west, south-east and

of the major growth markets for LNG

Mexico Gas and LNG, both with Wood

south of Brazil.

demand in Latin America (see Figures 3

Mackenzie (www.woodmac.com).

New Brazilian LNG-to-power projects An import terminal serving a new 1.5 GW power plant is set to enter service in Barra dos Coqueiros, Sergipe State in January 2020. Centrais Elétricas de Sergipe (CELSE) is developing the $1.74 billion project. CELSE is a joint venture between EBrasil and Golar Power (itself a joint venture of Golar LNG and Stonepeak Infrastructure Partners). The project will use the Golar Nanook FSRU with a capacity of 5.5 mtpa (7.5 bcm).

This will be followed by a further new terminal and two power plants at Açu, Rio de Janeiro State, promoted by Gás Natural Açu, which is a joint venture of Prumo Logística and BP, and Siemens. BW LNG will supply the BW Magna FSRU with a capacity of 5.6 mtpa (7.6 bcm). The first 1.3 GW power plant representing an investment of $1.1 billion is due to start up in 2021 and the second 1.7 GW plant in 2023. When completed, Açu will be the biggest and one of the most efficient gas-fired power facilities in Latin America.

The BW Magna FSRU will serve the Açu project in Brazil which is due to start up in 2021

Unveiling gas opportunities in Latin America and the Caribbean 43

NGC – A valued partner in energy The National Gas Company of Trinidad

devise feasible strategies for bringing more

Supporting the country

and Tobago Limited (NGC) is far from the

gas to market. At the same time, the Company

through growth

company it was 44 years ago. Change –

has been in dialogue with downstream

NGC and its subsidiaries have been an

both reactive and anticipatory – has been a

customers to align supply with demand.

anchor of national growth for over four

cornerstone of business strategy. Whereas in

decades. As the business landscape changes,

its early history the Company was primarily a

Supporting energy sustainability

the Group has had to evolve with it to

midstream player, today, NGC leads a Group

The world today is facing a shared existential

continue generating value for the country.

of Companies with profitable investments

threat in the form of climate change. For its

along the entire value chain. Through

contribution to greenhouse gas emissions,

programme, a campaign is unfolding to take

subsidiaries and investments, NGC is now

the energy sector must accept its share of

the business beyond Trinidad and Tobago.

engaged in industrial site and port develop­

the burden of change. As part of the system,

Since 2015, the Company and Group sub­

ment, natural gas liquids (NGLs) processing

the NGC Group proactively embarked on

sidiaries have signed partnership agreements

and export, energy marketing and trading,

a programme of energy efficiency (EE) and

with state entities in Venezuela, Grenada,

compressed natural gas (CNG) marketing as

renewable energy (RE) initiatives. These

Jamaica, Ghana, Tanzania and Mozambique,

well as upstream exploration and production.

include education campaigns, RE industry

while advancing discussions on opportunities

development, introduction of an Energy

in Guyana, Chile and the USA.

For this state enterprise, underpinning every business objective and growth initiative

Services Company (ESCO) pilot project and

is a desire to be of service as a valued partner

a lobby for action at the national level.

in energy.

The Group views this clean energy

Astride changes in NGC’s domestic work

In April 2019, the Company extended this internationalisation campaign into Asia, signing a Memorandum of Understanding

agenda through two lenses. On the one

to cooperate with China. Whereas other

Supporting the sector

hand, leading national initiatives will help the

bilateral arrangements largely pivot around

Trinidad and Tobago’s comparative advan­tage

country meet its commitments to the global

gas acquisition or exporting expertise, NGC’s

as a destination for investment in down­stream

community in the matter of emissions

latest collaboration will explore several

manufacturing has been relatively cheap

reduction. This will in turn benefit the planet.

avenues for partnership, beginning with

energy. In recent years, diminishing output

At the same time, reducing gas-powered

LNG marketing.

from the country’s offshore gas fields has made

electricity consumption will liberate more gas

it incrementally scarcer and more expensive.

for downstream use, shoring up the revenues

NGC has fully embraced the need for change

As a result, NGC’s work in energy marketing

and sustainability of the entire NGC Group

as a premise for growth and will continue to

and trading has assumed greater importance.

and its customers. In the process, the Group

build on its solid business foundations. Beyond

Although widely known for its role as

is cultivating new skill sets which can further

seeking company interests, its growth strategy

transporter and merchant of natural gas,

strengthen its value proposition to inter­

ultimately pursues sustain­ability for the

one of NGC’s most critical functions is

national business partners.

industry and country as a whole.

aggregation. The Company’s gas supply is an amalgamation of purchases from all the major upstream gas producers which enables NGC to minimise the adverse impact of shortages in supply from any one producer.

NGC has also been leveraging its position in the middle of the value chain to broker collaboration across the energy sector. The Company acknowledges that its long-term viability, and that of the NGC Group, depends on the health of the entire energy ecosystem – from producer to consumer. An appreciation of this symbiotic relationship has led the Group to take a leadership role in addressing some of the immediate challenges facing the sector. NGC has been particularly active, working with upstream operators to

NGC’s Head Office, Point Lisas Industrial Estate.

F E AT U R E S

Improving the air quality of life Air pollution is a serious threat to human health, with premature deaths worldwide estimated to reach up to 9 million a year by 2060. Among the array of solutions available, major cities around the globe are turning to natural gas. By Hansch van der Velden I’m optimistic about tackling the

trillion annually – due to sick days and

pressing issue of bad air. It is doable

medical bills.

to have mega-cities be mega-clean – as long as we join forces.

This trend will be unacceptable to citizens. Public protests against

Natural gas solutions in cities are plentiful. And we have the cities to prove it:  Berlin, Germany: Berlin is one

bad air are on the rise. I suspect it will

of Europe’s cleanest major cities

serious threat to human health. Air

reach a tipping point where no local

thanks to the remarkable trans­

pollution cuts average life expectancy

government that wants to be

formation of its energy system

of a global citizen by almost two

re-elected can do so without a serious

after Germany’s reunification.

years – more than tuberculosis, malaria,

clean air plan.

Between 1989 and 2015, Berlin’s

Air pollution is the world’s most

There’s no one silver bullet, but

SOx emissions decreased by 95%,

according to the Air Quality Life Index

there is an array of options for cities

NOx emissions by 76% and PM10

(https://aqli.epic.uchicago.edu).

to reduce air pollution. They include

emissions by 83% with the key

Particulate pollution is actually a

better city planning with walkways,

factor being a widespread shift

bigger problem than smoking. And as

bike lanes and public infrastructure;

from coal to natural gas in power

more people move to cities, deaths

better use of natural and renewable

and heat generation, as well as in

from urban air pollution will increase

gas; use of electric cars and motor­

residential heating.

substantially unless we take action.

bikes; and promotion of shared driving.

road injuries and HIV combined,

 Bogota, Columbia: The city has

By 2050, 70% of global citizens are

All solutions strengthen our joint effort

the world’s largest rapid transit bus

expected to live in a city. Most of these

to clean the air in cities and make them

system, called TransMilenio. It is

mega-cities will be in Asia. Yet the rest

a great place to work, live and laugh.

now replacing its old buses with

of the world has its share of big cities

That, for me, is air quality of life.

with big-city problems. In its 2016

new buses powered by natural gas.  Rotterdam, The Netherlands:

report, The Economic Consequences of

Mission possible

The number of premature deaths

Outdoor Air Pollution, OECD estimates

Our contribution as a natural gas

per 10,000 inhabitants puts the

that if we don’t take action, the num­

industry is most impactful when we

city in the top 10 worldwide. Mov­

ber of premature deaths a year by 2060

displace other fuels, such as coal,

ing ships to LNG as a fuel is a major

will be 6 to 9 million. Moreover, the

heavy fuels or diesel, and use gas in

contributor to better air, as are

economic costs of air pollution are

city power generation, gas in city

greater use of electrification and

staggering. The OECD report forecasts

heating, gas in small generators, gas

bikes, and better public transport.

that air pollution could cost 1% of

for indoor cooking and gas for heavy-

 Seoul, Korea: Here, the air pollution

global GDP – approximately $2.6

duty transportation.

46 Improving the air quality of life

level is the worst among the OECD

F E AT U R E S

countries. The government has

replacing coal with renewables and

numbers are a drop in the ocean

put in place an extensive plan for

natural gas.

compared to what is ahead of us,

improvement, including closing

 In the IGU reports on clean air

if cities don’t take action now.

coal plants, increasing renewable

and big cities (see box), we also

energy and promoting natural gas

see tremendous progress in

Hansch van der Velden was until recently

for transport with LNG trucks, CNG

other cities including Istanbul

the Corporate Communications Director

buses and LPG in vehicles.

and Toronto.

of Gasunie. He was also the Secretary

Air pollution is not a new problem.

General of the Dutch Gas Association

 Nairobi, Kenya: Indoor pollution is a significant contributor to poor

The Great Smog of London in 1952

(KVGN) and Chair of IGU’s Marketing

air quality in Nairobi. People mostly

killed 4,000 people in five days, and

and Communications Committee.

use biomass burning and charcoal

the UK passed the Clean Air Act in

He has now set up Strindberg Consult­

for food preparation, which

1956 in response. Of course, 4,000

ancy which specialises in communi­

impacts their health. This is

immediate deaths prompt more action

cations and leadership development

especially true for very low-income

than a slower impact. But these

(strindbergconsultancy.com).

people. This is a huge burden to the public health system and accelerates deforestation. In 2016, the government set out on a path to shift Kenyan household energy to LPG, which can eliminate indoor air pollution.  New York, USA: The city noted that it would try to accelerate heating oil phase-out by aiding in the dev­elopment of natural gas transmission pipelines and working with utilities and neighbour­ hoods to try to cluster buildings in underserved neighbourhoods, where additional gas distribution could have the greatest airquality benefits.  Beijing, China: The goal for the Beijing-Tianjin-Hebei region was to reduce PM2.5 levels by 25% by 2017. The specific action plan included decommissioning the highest-emitting vehicles, pro­ hibiting construction of any new

A common solution IGU has looked at big cities around the world to find clean air solutions in which natural gas plays an important role, and has published a series of reports.

The first report, CASE STUDIE released at COP 21 in S IN IMPROV ING URBAN AIR Paris in 2015, presented QUALITY case studies of efforts in four cities – Beijing, 2018 Istanbul, New York and Toronto – to improve urban air quality.

The second report was released in Strasbourg, during the 2016 Gas Week at the European Parliament and featured efforts to improve air quality in four European cities: Berlin, Dublin, Krakow and Rotterdam.

The third report published in March 2018 provided an update on efforts in Beijing and included two additional examples of major actions in the Chinese cities of Urumqi and Shanghai. It also extended to South America, with an example of air quality improvements in Santiago.

For more information, visit: www.igu.org/promotes-clean-air.

Case Studies

in Improving

Urban Air Qua

lity

1

heavy polluting industries and

Improving the air quality of life 47

F E AT U R E S

Energy system efficiency and the role of gas Decarbonisation and electrification are often seen as going hand-in-hand but energy systems using gases score highly when considering overall system efficiency. By Barbara Jinks Greater efficiency is an integral part

For example, when comparing

driven vehicles can lead to larger CO2

of moving towards a sustainable future

systems using fossil or renewable

emission reductions than e-mobility;

with the decarbonisation of energy.

energy for the transport of goods to

sector coupling with power-to-gas

The combination of gas and electricity

arrive at an overall figure for emissions

technology provides energy optimi­

networks will also play a vital role.

per transported tonne-kilometre, it is

sation compared with total electrifi­

When looking at different energy

important to include the manufacture

cation; direct use of natural gas for

carriers, though, it is all too easy to

of the vehicles as well as their oper­

energy is significantly more efficient

focus on a specific area where one is

ation. On this basis the very high

than electricity; and decarbonisation

more efficient than another and lose

efficiency of an electric motor may be

policies that include a fuel switch from

sight of the wider picture that may

outweighed by the cost of production,

coal to gas are more efficient in terms

show a better overall outcome.

in particular the battery.

of emissions saved and time to market.

It is essential to assess an energy

In the context of the energy tran­

solution in terms of its impact on the

sition to decarbonisation, the term

Gas storage as partner with

entire efficiency chain, known as

system efficiency is used to compare

batteries

system efficiency.

different approaches to decarbonise

Due to the increase in electricity

through improvement. The indicator of

production from renewable sources

system efficiency of an integrated gas

relevance can be technical, comparing

and the mismatch between production

and electricity system that we will

in- and output of a change of technical

and demand, the issue of storage is

reach the optimal way to decarbonise

components, or related to cost per

becoming increasingly important.

and deliver an affordable, sustainable

commodity (for example, the cost to

Means of storing power:

energy transition.

be spent per saved tonne of CO2

 Have to balance the difference

It is only by optimising the overall

In a technical context, the term

emissions) or time to market or other

system efficiency is commonly used to

commercial issues such as flexibility

describe the overall efficiency of an

and security of energy supply.

between production and demand;  Deliver peak load from the transmission and distribution grid; and

entire interlinked system of technical

Applying the methodology of

components in a commercial environ­

system efficiency assessment shows

ment. These are interconnected to con­

that energy systems using gases can

vert an energetic input into a requested

score highly compared to other energy

a large scale there is a need to:

output. (When efficiency is used to

sources. The five case studies in this

 Provide sufficient capacity; and

describe the fraction of remaining

article highlight that: gas storage is

 Be able to store power over a long

output in comparison to input, it is

more efficient than batteries to store

time with a range of many days if

usually expressed as a percentage.)

large quantities of power; light gas-

not weeks.

50 Energy system efficiency and the role of gas

 Should be highly efficient.

Moreover, when storing power on

F E AT U R E S

Batteries can be charged and drawn

ency. In other words, the fuel cell

Light NGVs vs e-mobility

down quickly and relatively efficiently.

does not only produce power but

On a well-to-wheel basis electric

Other storage, such as storage through

provides heat too;

vehicles score highly, notably because a

gas, where electricity is used to pro­duce

 The efficiency of the battery drops

typical electric motor has an effici­ency

hydrogen or synthetic gas (methane),

to zero if the power needs to be

of 85% whereas a combustion engine

has the drawback that the chemical

stored for a longer period of several

can only reach 30%. However, the veh­

ele­ment has to be combusted to gen­

weeks or months whereas the

icle production costs and the invest­

erate electricity again and that these

chem­ical storage keeps the poten­

ment costs for building up the fuel

conversions involve loss of energy.

tial power for an indefinite time;

production and fuelling infra­structure

Comparing the two different systems: A Power ➜ rectifier ➜ charging a

 Batteries cannot provide the

should be included in the assessment

required capacity of many TWh for

too – especially if the power for an

battery ➜ discharging 24 hr later

regional storage management or

electric vehicle needs to be stored in

➜ power electronics ➜ power;

seasonal balancing.

the power grid.

B Power ➜ rectifier ➜ electrolyser ➜

Figure 1 shows that gas storage is

hydrogen ➜ fuel cell combustion

more efficient than batteries by a factor

backs in efficiency of the drive assembly

➜ power electronics ➜ power.

of up to one million. Based on the fact

because the vehicle itself can be manu­

Process A is often considered to

that batteries lose the amount of stored

factured more efficiently. This is due to

have a system efficiency of above 90%.

energy over time and that they cannot

the high emissions related to the produc­

However, the charging efficiency of

be made large enough in terms of

tion of the battery (see Figure 2 over).

commonly used batteries drops rapidly

capacity, it becomes clear that energy

when charged above 80% of their

storage in the form of gases (such as

compared different traditional fossil

capacity. In addition, other elements

through power-to-gas tech­nology)

fuels (gasoline and CNG), “e-gas” from

like the rectifier, with additional losses,

provides the highest storage efficiency.

wind power and batteries in an Audi

Thus, NGVs can compensate for draw­

Research by Volkswagen has

need to be included.

Promoters of batteries consider process B to be less efficient, because conventional electrolysers operate

Comparison of different power storage technologies, quantity and discharge time 10,000

typically with an efficiency of 80% it is said that the entire system cannot

100

reach an overall efficiency above 48%.

10

Discharge time (h)

following reasons:

CAES H2

1

pathway with the battery. two systems is not accurate for the

PHS

Batteries

This is roughly half the efficiency of the However, this assessment of the

SNG

1,000

while fuel cells achieve 60%. Therefore,

0.1 Fly Wheels 0.01 0.001 1 kWh

 The accuracy is rule of thumb;  It ignores the fact that overall fuel

10 kWh 100 kWh 1 MWh

10 MWh 100 MWh 1 GWh

CAES: Compressed Air Energy Storage PHS: Pumped Hydro Storage H2 / SNG: Hydrogen, Synthetic Natural Gas

cell efficiency is the sum of the

10 GWh 100 GWh

1 TWh

10 TWh 100 TWh

Source: DVGW

electrical and the thermal effici­ Figure 1.

Energy system efficiency and the role of gas 51

F E AT U R E S

could transport peak and excess power

Cradle-to-grave CO2 emissions of different means of transport Gas (CNG)

and even larger quantities of power.

This “sector coupling” requires the

24

Natural gas

11

Biomethane Audi e-gas

15

Electric vehicle

47

power to be converted into a gas.

127

92 24

A closer look at comparing the two

48 39

options of power transport is shown in

Battery

Renewable energies

Figure 3 via a power transmission grid

1 48

EU

60

USA

or via sector coupling.

107 81

128

China

123

Diesel

25

Gasoline

24

10

99 24

0

account that the average loss of energy

134 11

50

In the former case it is taken into

170

transported via power lines is 1% over

161 100

150

200

This loss can be higher depending on

CO2 emissions (g/km)

Vehicle manufacture (Cradle-to-Gate)

100km or roughly 10% over 1,000km.

Fuel supply (Well-to-Tank)

the quality of transformers for alter­

Usage (Tank-to-Wheel) Source: DVGW

nating current and on the humidity.

In the latter case the efficiency of

Figure 2.

the conversion of power to gas and

A3 vehicle. The “e-gas” was methane

Power grid extension is costly, takes

later of gas to power has to be con­

produced in an Audi pilot plant in

time and increasingly fails to be

sidered. This is roughly 80% and 60%,

Emsland, Germany, which combines

accepted by the public.

showing that the overall efficiency is

CO2 from a waste-processing biogas plant with hydrogen produced from

Therefore, gas grid operators have proposed that the existing gas grid

approximately 48%. Transmission losses can be ignored as gas can be

water by electrolysis using green electricity. It was found that e-gas from wind power produced the

Comparison of energy transport via cable or pipeline

Infrastructure power and gas

lowest overall CO2 emissions.

Power-to-gas enables energy optimisation Renewable (hydro, solar and wind)

H2

electricity is seen as one of the most valuable forms of energy that should

Power transport via gas grid

be used directly – without any con­ version – at end users’ sites. However, electricity has to be brought to the customers and in many places in the

Power transport via power grid

world the new feed-in capacity from renewable sources like wind and solar is growing so fast that the power grid

H2 Source: DVGW

itself turns out to be the bottleneck.

Figure 3.

52 Energy system efficiency and the role of gas

fuel cell

F E AT U R E S

shipped over large distances nearly loss-free (1% over 1,000km).

Comparing the 90% efficiency of the

Comparison of efficiency between direct gas and conversion to electricity for buildings

power grid and 48% using the gas grid makes sector coupling look less des­ irable. However, this is not the case if it is considered that:  The efficiency of an electrolyser can be 96%;  The heat that is generated from gas-to-power conversion should be included – if the gas-to-power conversion is carried out in a customer’s fuel cell the overall efficiency can be 90%; and  The power grid provides no means to store the power whereas the gas grid does – the integrated use of the two systems provides signifi­

Source: American Gas Association

cantly higher efficiencies.

Figure 4.

Sector coupling with overall power-

Direct use of natural gas is more

buildings is more than 2.5 times more

to-gas-to-power efficiency of 48% is

efficient than electricity

efficient than converting it to power

the better overall option as it provides

The conversion of any energy form

comparable end-use products, at 91%

sev­eral additional inherent benefits:

to another inherently involves losses.

efficiency for gas and 36% for elec­tri­

 The coupling of two markets,

A study conducted by the Gas Techno­

city (see Figure 4).

power and gas, with more cross-

logy Institute for the American Gas

selling and trading options;

Association in January 2019 looked at

Fuel switch from coal to gas

the full-fuel-cycle energy efficiency for

scores highly

gas and electricity as end-use fuels. The

Another definition of energy system

aim was to look at the efficiency of red­

efficiency is the speed at which the

(sector coupling) with minimal

ucing emissions from primary energy

system can be decarbonised. Under

losses within the gas grid and

as gas or electricity where comparable.

energy policies that do not support

higher transport capacities (one

The issue of emissions is significant;

gas, renewable power is seen as the

gas pipeline with a diameter of

according to the Inter­national Energy

one-and-only solution for this.

1.2m transports the same amount

Agency, buildings were responsible for

of energy as eight parallel high-

39% of primary energy use, 73% of

Germany has made significant invest­

voltage pylons, each at 3GW); and

electricity generated and 36% of CO2

ments – based on non-official esti­

emissions in the USA in 2017.

mates more than €500 billion – to

 Associated redundancy, flexibility and reliability benefits;  Access to other transport paths

 The option to store power for an unlimited period in the form of molecules.

The conclusion is that direct use of gas as a fuel for heating and cooking in

As an example, over the last 20 years

ramp-up the numbers of windmills and photovoltaic panels to replace fossil

Energy system efficiency and the role of gas 53

F E AT U R E S

Comparison of German and US climate strategies over a period of 10 years

Comparison of the US and Germany

CO2 intensity gains favour the US

Share of electricity generation

Grams CO2/kWh generation

case and showed that savings of more than 100 million tonnes of CO2 emis­ sions could be generated immediately through a substitution of gas-fired for lignite-fired power generation. As an alternative, the impact and speed of

— Oil

100

utilisation of more renewable energy

600

— Other renewables 80

— Wind/Solar

— Nuclear

60

— Gas

was studied. The results showed that

500

it would take more than 20 years to

400

achieve the same annual emissions reduction via an accelerated ramp-

300

40

up programme for more windmills

200

in Germany.

— Coal

20

100

0

Based on these findings, in 2019 a

0 2005

2015

United States

2005

2015

Germany

2005

2015

United States

2005

2015

Germany

Sources: German Environment Agency (UBA), US Energy Information Administration (EIA)

German semi-governmental expert group prepared the coal exit plan for Germany. The fuel switch to gas is bringing Germany’s decarbonisation

Figure 5.

policy back on target.

fuels by renewable power. However,

fired power station are only one-third

against all odds, the effect on the

of those from a gas-fired power plant.

Towards zero carbon

country’s CO2 reduction has been

Thus a fuel switch offers enormous

The carbon saving by the fuel switch is

rather small as a comparison between

decarbonisation potential.

key to fast decarbonisation and will

Germany and the US, which increased

Gas-fired installations (in the order

gain prominence over time. However,

gas-fired power generation over the

of 1GW) are by far larger power gener­

the story will continue not only through

same period, shows (see Figure 5). For

ators than windmills (in the order of

the fuel switch and more optimal sec­

this reason, different think-tanks and

MW) or solar panels (in the order of

tor coupling, but also through growth

institutes in Europe have started to

kW) and allow a more rapid decarboni­

in the share of renewable and decar­

assess more closely the effect of

sation. In addition, they are distributed

bonised gases (biogas, bio­methane

decarbonisation through an extended

and do not need the installation of a

and hydrogen). As these measures are

use of natural gas. This is also appli­

collector-power system.

increasingly adopted as part of

cable in other regions of the world.

Gas-fired installations can be

national energy strategies, the shift

switched to biomethane (with zero

towards lower-emission gas-driven

a fossil fuel may not seem to be the

emissions) and can therefore provide a

power production will not be limited

first choice to lower emissions and its

long-term gateway to a zero-emission

by the carbon footprint of natural gas

decarbonisation potential might be

economy without further disruption.

on the road to net zero carbon.

At a first glance, natural gas being

limited. However, several factors need to be taken into account.

Different fossil fuels differ signifi­ cantly; the emissions from a lignite-

Studies conducted by the German Technical and Scientific Association for

Barbara Jinks is the leader of Study

Gas and Water (DVGW) in 2018 applied

Group 1 (Efficiency of Gas) of IGU’s

these general findings to the German

Strategy Committee.

54 Energy system efficiency and the role of gas

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F E AT U R E S

Natural gas as a backbone of the Russian energy sector Russia is updating its energy policies and domestic gas market regulations while collaborating with the members of the Eurasian Economic Union to create a common natural gas market. By Alexey Semenov Russia’s hydrocarbon reserves play a

Strategic Planning in the Russian

key role in terms of global scale and a

Federation”, while four main strategic

fundamental role in the country’s

documents cover the development of

economy. Based on the Cedigaz 2018

the energy sector and the gas industry.

statistics, Russia’s proven gas reserves

The general conditions, threats and

Currently these strategic documents are being reviewed and updated.

On May 13, 2019, the President of the Russian Federation approved the new Energy Security Doctrine of the

are the largest in the world, amounting

challenges for energy development,

Russian Federation (Decree № 216),

to approximately 25% of the global

together with risks and ways to pre­vent

which is the fundamental document

total, and it is the world’s second

them, are set out in the “Energy Security

for updating the Energy Strategy of

largest producer of natural gas.

Doctrine of the Russian Federation” and

Russia, as well as other strategic plan­

the “Strategy for Social and Economic

ning documents and energy regulations.

In 2018, Russia’s total gas consump­ tion was 493.2 bcm, up 5.3% year-on-

Development”. The main development

The provisions of the Energy Security

year, and natural gas accounted for 53%

trends and their detailed description,

Doctrine are based on the country’s

of the country’s energy mix, a share

interrelations of the fuel and energy

national interests, resource and intel­

that has remained relatively stable over

sectors, and forecasts of the fuel and

lec­tual potential, and corres­pond with

the past few years (see Figure 1).

energy balance are presented in

the sustainable develop­ment goals

the “Energy Strategy of the Russian

defined by the UN General Assembly,

Strategic planning documents

Federation”. The “General Scheme of

including access to energy and the dev­

The basic principles of strategic

Gas Industry Development” focuses

elopment of clean energy technologies.

planning for all industries in Russia are

on detailed plans and scenarios related

determined by the Federal Law “On

to development of the gas industry.

The unsustainable use of energy resources is indicated as the key energy security risk. One of the main

c Figure 1.

Russia’s gas consumption, 2014-2018, bcm 500

the Energy Security Doctrine is to limit 100

negative impacts on the environment

80

and ensure the environmental safety of

60

the energy companies’ economic acti­

40

400

2014

2015

Gas consumption (bcm)

2016

2017

Other fuels share (%)

2018

goals of energy security according to

vi­ties. This goal is pursued through the predominant use of the cleanest type

20

of fossil fuel – natural gas. Another

0

goal stated in the document is the

Gas share (%)

Source: Gazprom Annual Report 2018

56 Natural gas as a backbone of the Russian energy sector

reliable and sustainable supply of highquality energy resources and energy

F E AT U R E S

services to consumers. This goal has

The Law “On Strategic Planning

upcoming decade. The share of natural

been successfully implemented by

in the Russian Federation” defines

gas in Russia’s energy mix will not

PJSC Gazprom for many years.

the General Scheme of Gas Industry

change significantly due to the funda­

Development as a regulatory document

mental role of natural gas in the coun­

following the Energy Strategy.

try’s economy, ensuring the achieve­

The current version of the Energy Strategy of the Russian Federation for the period to 2030 was approved by

The current version of the Scheme

ment of sustainable development

Government Resolution №. 1715-p

(until 2030) was adopted in 2011 by

(dated November 13, 2009). The Energy

the Ministry of Energy. The advance

Strategy determines the goals of the

version of the document for the period

Legislative framework

long-term development of the whole

to 2035 will include: a new scenario

Unified Gas Supply System

energy sector including the gas ind­

of socio-economic development of

One of the key components of the

ustry. It defines economically feasible

the country; recent proposals for the

Russian domestic market is the UGSS,

strategic directions for the develop­

development of gas exports (including

which is the centralised system for

ment of the gas industry to ensure:

LNG); the development of gas refining

natural gas production, transportation,

 A reliable gas supply for Russian

and processing; optimal solutions for

storage and supply.

consumers;

the development of the Unified Gas

goals and energy security.

Under the Federal Law “On Gas

Supply System (UGSS); using gas as a

Supply in the Russian Federation”

intergovernmental agreements

motor fuel; the helium programme;

(dated March 31, 1999), Gazprom is

and long-term supply contracts;

and methane-hydrogen mixtures.

the sole owner and operator of Russia’s

 The fulfilment of obligations under

and

Thus, the state strategic planning

gas pipeline network. According to

documents provide for stable gas

the Natural Monopolies Law the trans­

markets.

consumption in the Russian Federation

portation of natural gas through pipe­

The basic scenario of the Energy

and even a slight increase in the

lines is considered a monopolistic

 New gas supplies to foreign

Strategy presents a model of the development of the energy sector.

According to the Energy Strategy forecasts (taking into account the principles of inter-fuel competition and optimal balance of energy use) gas consumption in 2030 is expected to be between 605 and 645 bcm and have a share of approximately 50% in Russia’s energy mix.

The updated version of the Energy Strategy for the period to 2035 was submitted by the Russian Ministry of Energy to the Government of the Russian Federation on February 1, 2017 but has not been approved yet.

Approval is expected soon.

Russia’s UGSS is the centralised system for natural gas production, transportation, storage and supply – pipelines bringing gas from the Bovanenkovo field in the Yamal Peninsula for processing.

Natural gas as a backbone of the Russian energy sector 57

F E AT U R E S

Russia’s UGSS – the Baidaratskaya compressor station on the Bovanenkovo-Ukhta 2 pipeline.

activity and the entities engaged in

Price regulation and exchange-

regulated, but those prices are closely

it are deemed natural monopolies.

based trading

aligned to the prices at which gas is

In Russia, gas is sold and purchased

supplied by Gazprom and its affiliates.

Gazprom is required to provide independent suppliers access to the

using two different pricing approaches

In order to create a level playing

UGSS. This obligation is subject to:

– with prices fixed by the Government

field in the domestic market, deregu­la­

 The availability of spare capacity

or unregulated prices.

tion (at least partial) of wholesale gas

in the UGSS;  Certain quality specifications for natural gas; and  The availability of connections

In accordance with applicable

prices is required and certain steps have

Russian laws, wholesale prices of gas

already been taken in this direction:

produced by PJSC Gazprom and its

 PJSC Gazprom and its affiliates are

affiliates are subject to regulation.

allowed to use unregulated

between consumer and supplier

These prices are differentiated bet­

wholesale prices in respect of

pipelines at the date of

ween consumer groups (house­holds

natural gas produced by these

commencement of supply.

vs industrial consumers), as well as

entities (as of January 1, 2018)

Thus, a gas pipeline network is a

by price zone, based on the relative

when selling it in a gaseous state

natural monopoly in the Russian

distance from the gas production

to LNG producers for liquefaction

Federation and all market participants

region to the consumer.

and export;

have access to the grid on a nondiscriminatory basis.

The prices charged for the supply of gas by independent producers are not

58 Natural gas as a backbone of the Russian energy sector

 PJSC Gazprom and its affiliates are allowed to use unregulated whole­

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applies in Russia to the gas industry (and petroleum industry in general) consists of a combination of mineral extraction tax (MET), corporate profits tax, export duty and tax on additional income (from 2019):  The profit tax rate is 20%;  MET for natural gas and gas condensate is calculated on the basis of a special formula;  The tax on additional income is 50% (for specific projects); and  Export duty is 30% for pipeline gas Russia’s overland Power of Siberia pipeline is expected to start supplying China at the end of 2019.

and 0 for LNG. For natural gas and gas conden-

sale prices when gas is provided to

resource rent, due to the fact that the

sate, MET is payable considering the

methanol producers for the pro­

subsoil within the country’s borders is

base rates (set in accordance with the

duc­tion of methanol from natural

state property, and the exploration and

calorific value of the fuels – RUB 42

gas in a gaseous state for exports;

production of subsoil resources (inc­

($0.67) per tonne for gas condensate

luding gas) are administered through

and RUB 35 ($0.56) per 1,000m3 for

was ended for natural gas supplied

the granting of subsoil use licences.

gas) adjusted by coefficients, which

to industrial consumers if lique­fac­

There are two kinds of tax regime

 Government regulation of gas prices

tion and/or regasification technology

provided for under Russian law:

are used in a gas supply chain.

 Conventional tax regime – the

Exchange-based gas trade in the Russian market has been developed by the St Petersburg International

dominant regime governing oil and gas extraction in Russia; and  Production sharing regime – the

reflect:  A base value of a unit of standard fuel;  A coefficient reflecting the diffi­ culty of the extraction of gas or gas condensate; and

Mercantile Exchange (SPIMEX), which

provisions related to production

was launched in October 2014 for nat­

sharing regimes are set out in the

transportation costs of gas.

ural gas sales on the domestic market.

Federal Law on Production Sharing

As the coefficients applied for

In 2018, the natural gas purchased

Agreements (PSAs), dated

Gazprom (and Gazprom-affiliated com­

through SPIMEX was supplied to

December 30, 1995, which has

panies) and non-Gazprom-affiliated

42 Russian regions with total volumes

been substantially amended.

companies vary considerably, the MET

of 15.1 bcm. There were 86 trading

However, all existing PSAs in Russia

rates for Gazprom (and Gazprom-

members and 316 customers.

were concluded before the entry

affiliated companies) are much higher.

 An adjustment linked to the

into force of the PSA Law and The fiscal regime

therefore due to grandfather

Gas export regulation

The fiscal regime in the Russian

clauses are governed by the

Russia is the world’s top gas exporter

Federation is the fundamental govern­

provisions of the PSAs concluded.

with sales of pipeline gas and LNG

mental mechanism related to the

The conventional tax regime that

totalling approximately 270 bcm in

60 Natural gas as a backbone of the Russian energy sector

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F E AT U R E S

under such subsoil use licence for liquefaction at an LNG plant; and  State-controlled companies (at least 50% of their charter capital) or their subsidiaries in respect of the LNG export projects.

Sakhalin 2 (two trains totalling 10 mtpa) and Yamal LNG (currently three trains totalling 16.5 mtpa with a fourth train of 0.9 mtpa due to enter service in 2020) are the large-scale LNG projects at the operational stage. There is also the small-scale (660,000 tpa) Cryogas-Vysotsk project. Other LNG projects are expected in service from 2022/3 (e.g. Arctic LNG 2 with 19.8 mtpa, 2018 (see Figure 2). The gas export

sidiary (Gazprom Export) holds the

Ust-Luga with 13 mtpa and a third train

regulation plays a very important

exclusive right to export natural gas.

of 5 mtpa for Sakhalin 2).

role in the context of national energy

Due to amendments (dated

Development of LNG projects is

policy, which considers the need to

December 2013) which partially

one of Russia’s strategic goals and the

protect Russia’s economic interests.

liberalised the export of LNG, the right

country is currently the world’s sixth

to export LNG has been given to:

largest LNG exporter (see Figure 3).

The fundamentals of the state regu­ lation of gas exports are laid down in the

 Companies that, as of January 1,

Federal Law № 117-FZ “On the Export

2013, have provisions in their

The common gas market of the

of Gas” (dated July 18, 2006). According

subsoil use licence that presume

Eurasian Economic Union

to the Law the operator of the UGSS

construction of an LNG plant, and/

The agreement to establish the

(Gazprom) or its wholly owned sub­

or transportation of gas extracted

Eurasian Economic Union (EAEU) was signed on May 29, 2014. The creation of the EAEU launched the process of

150

z The offshore TurkStream pipeline to Turkey, seen here being laid by the Pioneering Spirit, is also expected to enter service in late 2019.

100

c Figure 2.

positions in the world. According to

bcm

Russia’s gas exports, 2015-2018, bcm 300 250 200

50

unifying the energy markets of Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia.

The gas segment of the EAEU member states occupies one of the key Cedigaz, the gas reserves of the EAEU

0 1

2 LNG export

3

4

Natural gas pipeline export

Source: Gazprom Export, IHS

member states are estimated at 26% of the world total.

If we compare the production and consumption of natural gas

62 Natural gas as a backbone of the Russian energy sector

F E AT U R E S

in the EAEU countries and the EU 28 (including the UK for the time being), it is clearly seen that the emerging market of the EAEU member states is comparable to the EU market by consumption and significantly exceeds it in terms of gas reserves and gas extraction capabilities (see Figure 4).

The authority to regulate general issues in the energy sector, including the issues of interaction of the EAEU member states, is attributed to the Union’s permanent executive body – the Eurasian Economic Commission (EEC). The EEC’s competence covers

Gazprom and RusGazDobycha are working on an integrated gas processing complex with annual production of up to 13 mt of LNG, 3.8 mt of ethane fraction, 2.4 mt of LPG and 0.2 mt of pentanehexane fraction. The plant will be adjacent to the port of Ust-Luga (pictured) in the Leningrad Region and the first trains will come onstream in late 2023.

such areas as the regime of mutual trade, access to infrastructure, technical regulation, information exchange and harmonisation of legislation. The long-

the Concept (May 31, 2016) and the

or approval stage and should be

term objective of the EEC in the energy

Programme (December 6, 2018) for

adopted by 2025 – the date for

sector is to create common markets for

the creation of a common gas market.

launching a common gas market.

The core documents clarifying

the different types of energy including

the provisions of the Concept and

Alexey Semenov is the Deputy Head of

Programme and defining specific

Gazprom’s Expert and Analysis

ised bodies of the EAEU member

parameters for the common gas

Directorate and a member of IGU’s Task

states, has developed and approved

market are mainly at the development

Force 3 – Energy Policy.

natural gas.

The EEC, together with the author­

The top 10 LNG producers, 2018, million tonnes

800 700 600 500 400 300

& id

ad

Figure 3.

Tr in

Source: IGU 2019 World LNG Report

an

ria

Om

go

ge Al

ba

To

ia

ne sia

ss

do In

Ru

Ni ge

A

ria

200

US

Qa ta r Au st ra lia M al ay sia

90 80 70 60 50 40 30 20 10 0

Natural gas production and consumption in the EU 28 and EAEU, bcm

100 2013

2014

EU-28 Production

2015

EU-28 Consumption

2016

2017

EAEU Production

2018 EAEU Consumption

Source: EEC, Eurostat

Figure 4.

Natural gas as a backbone of the Russian energy sector 63

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built, deli­vered and maintained more than

compression, while IGVs help regulate inlet

compressors of its kind. The 27 MW MRC is

8,000 turbo­machines, and they apply that

flow to provide more accurate process

highly engineered to bring unrivaled efficiency

expertise to design solutions that reflect all

control and deliver a constant discharge

to single mixed refrigerant (SMR) processes –

key process needs.

pressure. IGVs are standard with all Atlas

and it’s the first in the world to do so at such a small size.

Integral gearing makes all the difference.

Our design engineers can help determine

Copco compressors, and they increase

whether open or closed impellers are right

compressor efficiency by 9% compared to

for the process needs, and then select the

other inlet assemblies.

Integrally-geared compressors can support up

best seals for your application – whether dry

Variable IGVs also offer a wide operating

to eight stages mounted on a single gearbox,

gas, floating carbon ring, or labyrinth seals in

range and excellent partial-load performance

shrinking the overall footprint while boosting

single, double, or tandem arrangements. In

over a wide range of conditions. When

reliability. The smarter design of the Atlas

fact, Atlas Copco Gas and Process was the

combined with the efficiency gains inherent

Copco integrally-geared compressor ensures

first compressor manufacturer to implement

to the compressor’s multi-section design,

that the individual compressor stages are

dry gas seals on integrally-geared

these enhancements also promote significant

running at optimal speed for better efficiency,

compressors to pack maximum efficiency,

energy savings.

with lower seal leakage rates than an inline

high machine availability and superb process

compressor. High-speed rotors are supported

control into a small footprint.

by radial tilting pad bearings that eliminate

Atlas Copco Gas and Process offers the

Handling the pressure in LNG Over the last four years, Atlas Copco Gas

virtually all vibration for optimal stability and

shop testing to ensure optimal performance

and Process has helped a variety of projects

smooth rotation.

and reliability that won’t let you down.

with its groundbreaking compressor. But its MRC is just one example of the company’s

The result is that the MRC’s rotors are designed to keep secure ongoing production,

Efficiencies at every phase

many innovative solutions. Around the globe,

delivering 99.8% reliability and excellent

The MRC is built for flexible plant design,

Atlas Copco Gas and Process compressors

efficiency and stability for SMR processes.

with design efficiencies like customised

and expanders support some of the LNG

Improved process control enhancements, as

aerodynamics and a low-leakage seal design

industry’s most critical applications through­

well as stage intercooling, help to reduce

that help reduce both initial investment and

out the value chain.

“Energy is a major cost driver in running an LNG plant. But with efficient Atlas Copco mixedrefrigerant compressors, we’re using less energy and saving more money.”

Zhang Jia-Hua, Operations Team Leader Baotou Lu Ding Natural Gas Co. Ltd. Inner Mongolia, China

Handle the Pressure

Although balancing the mechanics of your LNG plant can put a lot of stress on your budget, Atlas Copco Gas and Process can help you handle the pressure with highly efficient, integrally geared centrifugal compressor solutions that help keep costs under control.

Learn more about Atlas Copco Gas and Process at www.atlascopco-gap.com

F E AT U R E S

The gas industry in Indonesia Indonesia has ambitious plans to increase the share of gas in its energy mix. To mark the country’s hosting of IGU’s 2019 Council meeting, we take a look at the development of the gas industry in ASEAN’s largest economy. By Rakhmad Dewanto In the gas world Indonesia is known as

enhanced oil recovery (EOR) was

one of the pioneers of the LNG indus­

launched by Standard Vacuum

PT Pupuk Sriwijaya (Pusri) led the way

try, starting exports in 1977, becoming

Petroleum Maatschappij (later

with the first commercial utilisation

the world’s top exporter in 1984 and

PT Stanvac Indonesia) in 1927. The

of gas in its urea fertiliser plant in

holding that position until 2005. But

produced gas was re-injected to

Palembang in 1963. The feed gas was

the country’s gas industry started

maintain reservoir pressure in the

piped 80km from the Raja field in

operations in 1863, when manu­

Benakat, Jirak, Pendopo and Talang

South Sumatra.

factured gas was introduced for street

Akar fields in South Sumatra and the

lighting in Jakarta, while natural gas

project continued until 1956.

use dates back to 1927.

Outside the petroleum industry,

From the second half of the 1960s, the government made it a priority to

A second EOR project in South

increase the use of natural gas and

Sumatra was started in 1950 by

reduce flaring. During the 1970s and

Early use of natural gas

Shell using a gas-lift process in the

1980s, the Pusri plant was expanded

Indonesia started oil production in

Prabumulih field and the excess

with additional units and new fertiliser

1885 and associated gas was flared

gas was piped 100km to the Plaju

plants were built in West Java, East

until an innovative project to use it for

refinery to be used as fuel.

Kalimantan and Aceh. Carbon black,

Indonesian gas reserves, new upstream projects, LNG plants and regas terminals Arun LNG (regas)

Tuna

Block A Aceh East Natuna

Badak LNG

Indonesia Deepwater Development Merakes

Donggi Senoro LNG

Sakakemang

Tangguh LNG Asap, Kido, Merah Sengkang LNG

PGN FSRU Lampung Nusantara Regas Satu Jawa Satu Regas

Jakarta

Jambaran-Tiung Biru

Saumlaki (proposed LNG plant for Abadi)

Yogyakarta Karunia Dewata

Abadi

Region I

Region II

Region III

Region IV

Region V

Region VI

187 bcm

2,119 bcm

19 bcm

132 bcm

435 bcm

1,150 bcm

66 The gas industry in Indonesia

Sources: Indonesia National Gas Balance 2018-27, Directorate General of Oil and Gas

F E AT U R E S

Badak LNG in Bontang, East Kalimantan (and thus sometimes referred to as Bontang LNG) was the first to start up. It shipped its first cargo to Japan in August 1977 and initially had a capacity of 5.24 mtpa with two trains. Indonesia was the sixth country to enter the LNG business following Algeria, the USA, Libya, Brunei and Abu Dhabi in the UAE. Arun LNG with an initial capacity of 4.5 mtpa and three trains shipped its first cargo in October 1978. c The Badak LNG plant in Bontang, East Kalimantan was Indonesia’s first with production starting in 1977.

In 1982, Pertamina requested that the operators of two oil blocks in East Kalimantan (Total for the Mahakam block and Union Oil, later acquired

by Chevron, for the East Kalimantan and Attaka block) stop flaring asso­

LPG and methanol plants were also

Minyak dan Gas Bumi Negara (State Oil

ciated gas and instead supply it to

built, while the 220km West Java

and Natural Gas Mining Company)

Badak LNG to meet growing LNG

pipeline supplied industrial and

known as Pertamina had overall

demand and optimise the use of

domestic consumers allowing city

management of operations and

gas systems to start switching from

worked with foreign companies which

manufactured to natural gas. Gas also

provided technical assistance and bore

started to be used by the state-owned

all exploration risks, production and

electricity company Perusahaan Listrik

development costs in return for a share

Negara (PLN) for power generation in

of profits. The PSC partners responsible

Palembang in 1983. And, in a key

for the large gas discoveries were

development following the discovery

Mobil Oil Indonesia, which found the

of the Arun field in Aceh in 1971 and

Arun field, and Roy M. Huffington Inc.

the Badak field in East Kalimantan in

(Huffco), which found the Badak field

1972, the decision was made to enter

in the Sanga Sanga block.

the LNG business.

Contracts with foreign buyers were negotiated, Japanese electric utilities

The first LNG plants

being among the first customers, and

As the basis for developing its petro­

then work started on two liquefaction

leum resources, Indonesia was an early

plants both using the Air Products

user of production sharing contracts

propane-precooled mixed refrigerant

(PSCs) whereby PN Pertambangan

(C3MR) cycle.

Indonesia and IGU Indonesia joined IGU in 1980 and the Charter Member is the Indonesian Gas Association. The Indonesian Gas Society and Pertamina joined as Associate Members in 2014, with Pertamina becoming a Premium Associate Member in 2015.

Indonesia hosted LNG7 in Jakarta in May 1983, the meetings of the IGU Council in October 1984 and September 1993, and of the Executive Committee in April 2010, which were all held in Bali. The 2019 Council meeting is being hosted in Yogyakarta. The latter two events were organised by the professional conference organiser PT Indomedia Gemilang Komunikasi (IEEC).

The gas industry in Indonesia 67

F E AT U R E S

petroleum resources. This resulted in

ablishment of two more LNG plants

from the Senoro-Toili (operated jointly

the con­struction of two additional

and the start of exports to China,

by Pertamina and Medco) and Matindok

trains (5.2 mtpa) at Badak LNG.

Mexico and other markets. Tangguh

(operated by Pertamina) blocks.

The continuous discovery of giant

in Papua shipped its first cargo in July

Production at the new plants

gas fields, particularly Tambora, Tunu,

2009 and has a current capacity of

partly compensated for lower output

Peciko, Sisi, Nubi and South Mahakam in

7.6 mtpa with two trains. A third train

at Arun and Badak due to declining gas

the Mahakam block in East Kalimantan,

of 3.8 mtpa is set to start up at the end

supplies. Arun gradually closed down

enabled the further expansion and

of 2021. Donggi Senoro in Sulawesi

trains with the final two being taken

debottlenecking of the two LNG pro­

has a single 2.5 mtpa train and started

offline in 2014 and was converted into

jects to reach a nameplate capacity of

up in August 2015. Tangguh uses Air

a regasification terminal. Today it is

22.5 mtpa for Badak LNG with a total of

Products’ C3MR process with a split

owned by Pertamina and the Aceh

eight trains, the last of which started up

MR machinery configuration; the

Regional Government.

in 1999, and 12.5 mtpa for Arun LNG

smaller Donggi Senoro uses the

with a total of six trains, the last of which

AP-C3MR process.

Production at Badak peaked in 2001 and declined to 8.5 mt in 2018. Adding

started up in 1986. LNG cargoes were

The regulator’s PSC partner for

delivered to Japan, Korea and Taiwan.

the Tangguh discovery was Atlantic

output, Indonesia produced a total of

For decades, gas producers in East

Richfield (subsequently acquired by

18.4 mt of LNG in 2018 of which

Kalimantan and Aceh succeeded in

BP). The six fields include the two

15.5 mt (21 bcm) was exported.

maintaining Indonesia’s contribution to

super-giant gas fields of Wiriagar Deep

the LNG market. After the expiration of

and Vorwata as well as the smaller

accounted for 29% of overall gas

all PSCs in East Kalimantan in 2017-18,

adjacent fields of Roabiba, Ofaweri,

production. A further 11% (7.6 bcm)

Pertamina Hulu Indonesia, wholly

Wos and Ubadari. Their operations are

was exported by pipeline to Singapore

owned by Pertamina, took over the

covered by three PSCs. BP is the oper­

and Malaysia, principally from three

operatorship of the Mahakam, Sanga

ator of the Tangguh project with MI

blocks in the West Natuna Sea.

Sanga, East Kalimantan and Attaka

Berau (held by Mitsubishi and Inpex),

blocks through its subsidiaries

CNOOC, Nippon Oil Exploration (held

Premier Oil with Kufpec, Petronas,

(Pertamina Hulu Mahakam, Pertamina

by JX Nippon Oil & Gas Exploration and

Pertamina and PTTEP as partners

Hulu Sanga-Sanga and Pertamina Hulu

Jogmec), KG Berau Petroleum and

consists of four separate producing

Kalimantan Timur).

KG Wiriagar Petroleum (held by

fields (Anoa, Gajah Baru, Naga and

Jogmec, Mitsui, MI Berau and

Pelikan) which have been developed

More LNG plants and pipeline

JX Nippon Oil & Gas Exploration) and

via a combination of platforms and

exports

Indonesia Natural Gas Resources (held

subsea tie-backs to the Anoa facility

In 2001, the Government of Indonesia

by LNG Japan which in turn is held by

and the Gajah Baru wellhead platform

through Law 22/2001 established

Sojitz and Sumitomo) as partners.

and central processing platform.

BP Migas, whose responsibilities are

Pertamina is a direct shareholder in

in the Tangguh and Donggi Senoro

Indonesia’s LNG exports in 2018

Natuna Sea Block A operated by

Natuna Sea Block B is operated by PT

now carried out by SKK Migas, as

Donggi Senoro LNG through its sub­

Medco with Prime Natuna as a partner

the upstream regulator taking over

sidiary PT Pertamina Hulu Energi along

and Kakap is operated by Star Energy

Pertamina’s previous role.

with Sulawesi LNG Development (held

with Batavia Oil, PetroChina and

by Mitsubishi and KOGAS) and PT

Pertamina as partners. The gas is

Medco. The plant’s gas feedstock comes

exported to Singapore via the 654km

The discovery of sizeable gas fields in Papua and Sulawesi led to the est­

68 The gas industry in Indonesia

F E AT U R E S

Tangguh LNG in West Papua started up in 2009 with two trains and a third is due online in 2021.

The Anoa gas export platform in Natuna Sea Block A.

West Natuna Transportation System,

(mostly in wes­tern areas such as Bali,

Lampung started up in July 2014 and has

which entered service in 2001. Exports

Java and Sumatra).

an annual capacity of 3.7 bcm (2.7 mt).

to Malaysia started in 2002 via a 96km

Indonesia’s gas industry has met the

The converted Arun LNG plant

pipeline to the Duyong gas offshore

challenges of developing transmission

started its new life as a regasification

facilities in Malaysian waters from

infrastructure and the country now has

terminal in February 2015. Operated

Natuna Sea Block B.

approximately 16,450km of pipelines

by Perta Arun Gas, a unit of Pertamina

together with a network of four regasi­

Gas, it has an annual capacity of

Singapore from South Sumatra via the

fication terminals allowing domestic

4 bcm (3 mt) and supplies industrial

468km Grissik-Batam-Singapore pipe­

use of LNG.

customers and power plants in

Indonesia also exports gas to

line, which entered service in 2003.

The development of the regasifi­ cation terminals has enabled greater

North Sumatra via the 340km ArunBelawan pipeline.

Increased focus on domestic

use of gas in the power sector. The first

The fourth terminal is a small-scale

consumption

started operations in West Java in May

project with an annual capacity of 0.5

At the time Indonesia became the

2012 and is a floating regasification

bcm (0.37 mt) in Benoa, Bali. This is

world’s largest LNG producer in 1984,

and storage unit (FSRU) called

operated by JSK Shipping/Humpuss

exports accounted for more than 80%

Nusantara Regas Satu chartered from

under charter to Pelindo Energi

of gas production. Domestic demand

Golar LNG by a joint venture of

Logistik (PEL) and supplies PEL’s power

was predominantly driven by captive

Pertamina and Perusahaan Gas Negara

plant. The project started up in May

buyers such as fertiliser, petro­chemical

(PGN). The vessel is stationed 15km

2016 with separate regasification and

and other industrial plants. Moreover,

offshore in Jakarta Bay to supply the

storage vessels which were replaced in

Indonesia’s geography hindered the

Muara Karang and Tanjung Priok power

November 2018 by an FSRU called

development of gas infra­structure.

stations and has an annual capacity of

Karunia Dewata.

The country is an archipelago with

5 bcm (3.7 mt).

large distances between the major

PGN went it alone to charter a second

A fifth terminal is planned to enter service in December 2021. The Jawa

supply areas (mostly located in

FSRU from Höegh LNG which is

Satu Regas project, jointly owned by

eastern areas such as Kalimantan

stationed 16km offshore Maringgai in

Pertamina, Marubeni and Sojitz, will

and Papua) and centres of demand

Lampung Province, Sumatra. PGN FSRU

use an FSRU chartered from Mitsui OSK

The gas industry in Indonesia 69

F E AT U R E S

v The floating production unit for the West Seno field off Kalimantan, Indonesia’s first deepwater develop­ ment, which is oper­ ated by Chevron.

Lines with an annual capacity of 3 bcm

Growing demand

(2.2 mt). Moored 14km offshore in the

Indonesia currently has around 1.4%

operated by PT Medco started

Cilamaya Sea east of Jakarta, the gas

of proven global gas reserves (2.8 tcm)

production. Meanwhile, the first train

will supply a new power plant.

with a further 1.2 tcm of potential gas

of Energy World Corporation’s delayed

Indonesia’s wellhead gas produc-

reserves. The country will also import

Sengkang LNG project in Sulawesi is

tion peaked in 2010 at 90.5 bcm and

LNG to meet growing demand in the

expected to start soon. The plant has

declined to 80 bcm in 2018. Of the

near future.

been designed on a modular basis with

marketed volume domestic consump­

In December 2018, Block A Aceh

New supplies will support grow-

up to four 0.5 mtpa trains using Chart

tion accounts for 60% of gas production

ing demand to fuel oil refineries as

Industries’ integrated pre-cooled single

and the share of gas in the primary

they are upgraded (Pertamina has

mixed refrigerant process.

energy mix is 18%. The biggest gas

a refinery development master

consumers are the industry (25%),

plan for the Balikpapan, Balongan,

Pertamina’s Jambaran-Tiung Biru

power (19%) and fertiliser (11%)

Cilacap and Dumai plants), the

project in East Java, the Merakes field

sectors. Smaller shares are accounted

expansion of gas-fired power

offshore East Kalimantan in the

for by the EOR, LPG production, trans­

generation and new fertiliser and

Makassar Strait, operated by Eni with

portation and city gas sectors.

petrochemical plants.

Neptune Energy and Pertamina as

Expected onstream in 2021 are

partners, the Asap, Kido and Merah c Indonesia’s first FSRU Nusantara Regas Satu started operations in West Java in May 2012

fields in West Papua operated by Genting and additional feedstock at Tangguh to supply Train 3.

Subject to final investment decisions are: phase two of the Indonesia Deep­ water Development (IDD) offshore Kalimantan (operated by Chevron with Eni and Tip Top as partners – possible start-up 2023); the Tuna development which would export

70 The gas industry in Indonesia

F E AT U R E S

by pipeline to Vietnam (Premier Oil with Mitsui and GS Energy, 2023); the Sakakemang block in South Sumatra (Repsol with Petronas and Mitsui, 2025); the Abadi LNG project with offshore production from the Maslea Block in the Arafura Sea and the LNG plant in Saumlaki (Inpex with Shell for 2027); and the East Natuna project (Pertamina, 2027).

The target is to increase the share of gas in the energy mix to 22% by 2025 and gas production to 82 bcm by 2027.

Rakhmad Dewanto is the Secretary General of the Indonesian Gas Society (www. indonesiangassociety.com).

v PGN FSRU Lampung started operations in 2014.

The vessel is stationed 16km off­shore and uses a tower yoke mooring system.

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LNG2019 This special section reports on LNG2019, which was held in Shanghai, April 1-5. Over 15,000 people from more than 80 countries attended the event, which brought together speakers from the world’s biggest LNG players, the heads of China’s “big three” energy giants, leading contractors and shipping companies together with senior government representatives, policy makers and LNG professionals from across the industry to discuss the growing importance of LNG on the global stage and the trends impacting its growth.

73

A TRANSFORMATIONAL OPPORTUNITY Project Sanctioned June 2019

Golfinho/Atum

AQUIFER ORCA LNG Facility Site

Prosperidade

MOZAMBIQUE

AFRICA

TUBARÃO TUBARÃO TIGRE

APC Working Interest Block

AREA 1 | OVERVIEW

Initial Development

Natural Gas Field

Area 1 | Project Sponsors

~75

Trillion Cubic Feet

1st

Mover Distinction For Onshore

2

Train Project With Scope

~2

Bcf/d Feedgas

France

1.2 MTPA

China

1.5 MTPA EDF

Japan/UK/ Taiwan

CNOOC

4.5 MTPA

India

1 MTPA

TOHOKU ELECTRIC BHARAT

TOKYO GAS / CENTRICA JERA / CPC

PERTAMINA

Indonesia Global Portfolio Player

2 MTPA

1 MTPA SHELL

Markets of Global Customers

Mozambique LNG is transformative in terms of…

Revenue

Opportunities

Steady, long-term revenue and reliable source of domestic gas for Mozambique

Supporting thousands of jobs and opportunities for sustainable training and education

The Environment and Cleaner Source of Energy

Investment

Mozambique LNG is ideally positioned to meet the needs of customers in rapidly growing Asian and European markets

The largest foreign investment in the history of Mozambique and will likely more than double the country’s current GDP

LNG2019

High level of optimism at LNG2019 The consensus at LNG2019 was that global LNG trade could double by 2040 to over 600 mt provided the challenges facing sustainable growth are met. By Mark Blacklock The triennial LNG X conferences owned

ation with the support of the Shanghai

by IGU, the Gas Technology Institute

Municipal People’s Government.

(GTI) and the International Institute of

The Chinese hosts led calls for cost-

He highlighted the need to reduce costs to make LNG more affordable and this message was underscored by

Refrigeration (IIR) alternate between

competitive, flexible LNG and more

senior executives of the major Chinese

importing and exporting countries

investment in infrastructure, while the

energy companies.

with LNG2019 being held in China,

major producers acknowledged the

the world’s number two LNG importer

need to tackle costs, improve efficiency

enhanced by shorter contracts,

after Japan.

and reduce methane emissions.

reduced costs and improved efficiency,”

The event was hosted by IGU

“While there is a promising future for

“The global LNG trade will be

said Yang Hua, Chairman of CNOOC

Charter Member the China Gas Society,

the LNG industry there are also chal­

and Honorary President of the LNG2019

IGU Associate Member the China LNG

lenges,” said Zhang Jianhua, Director of

National Organising Committee (NOC).

Association, the Chinese Association of

China’s National Energy Administration,

“CNOOC adheres to the strategy of

Refrigeration and the China Gas Asso­ci­

during the opening ceremony.

innovation-driven development.”

Representatives of the owners and hosts at the LNG2019 opening ceremony.

76 High level of optimism at LNG2019

LNG2019

Ying Yong, Mayor of Shanghai addressing the opening ceremony.

Zhang Jianhua, Director of China’s National Energy Administration: Promising future for the LNG industry but also challenges.

“The key challenges to sustain-

The messages were received loud

able development of the LNG market

Yang Hua, Chairman of CNOOC and Honorary President of the LNG2019 NOC: CNOOC adheres to the strategy of innovation-driven development.

“If we want to convince new cus­

and clear.

tomers energy needs to be affordable

are price constraints on demand and

and competitive which means

the need for more flexible terms to

Cutting costs

controlling costs in each segment

enhance liquidity,” said Wang Yilin,

“Affordability is something we are all

of the LNG value chain,” said Patrick

Chairman of CNPC. “We need to

going to have to focus on,” said Ron

Pouyanné, Chairman & CEO of Total,

promote technological and busi-

Snedic, Chairman of the LNG2019

who was echoed by Ben van

ness innovation.”

Steering Committee and Senior Vice

Beurden, CEO of Royal Dutch Shell:

President, Corporate Development

“Gas must be affordable; that means

at GTI.

we must control costs”. He pointed to

In his address to the opening ceremony IGU President Joo-Myung (Joe) Kang was succinct, declaring the

“We need to find ways to be more

the company’s latest project to reach

challenge is to get “more energy to

cost-competitive when developing

FID (in October 2018), the 14 mtpa

more people with less carbon at a

projects,” said Mike Wirth, Chairman

LNG Canada, which is being developed

lower cost”.

& CEO of Chevron.

with partners Petronas, PetroChina,

Wang Yilin, Chairman of CNPC called for affordable LNG prices and more flexible contract terms.

IGU President Joo-Myung (Joe) Kang: Challenge is to get more energy to more people with less carbon at a lower cost.

Mike Wirth, Chairman & CEO of Chevron: Need to find ways to be more cost-competitive.

High level of optimism at LNG2019 77

An interview with Justin Bird, President, Sempra LNG You’ve recently started

Sempra Energy one of North America’s

commercial operations from

largest developers of LNG projects.

the first train of your first

As you noted, the first train of our first

liquefaction export project,

liquefaction project, Cameron LNG Phase 1,

what lessons did you learn

began commercial operations in August. At

developing Cameron LNG?

the same site, we are also working with our

Experience is everything when you develop

partners to develop a potential Phase 2 of

nearly 50%. This reduction in time represents

multi-billion-dollar projects such as Cameron

the project. The expansion already received

significant cost savings for customers, as

LNG. Sempra Energy has over 150 years

its Federal Energy Regulatory Commission

shipping costs account for approximately

of experience in gas supply, transmission

(FERC) authorisation and is anticipated to

20% of total delivered cost of LNG.

and distribution that we were able to

include two additional liquefaction trains and

leverage for the development of our first

up to two additional LNG storage tanks.

liquefaction train.

Port Arthur LNG is an approximately

Justin Bird, President, Sempra LNG

Last November, affiliates of Total, Mitsui & Co. and Tokyo Gas signed preliminary agreements for the full export capacity of

11-Mtpa fully-permitted project in Texas.

Phase 1 of the ECA LNG project, which

in operation, we will be able to apply

Last December, we signed a definitive

includes approximately 2.4 Mtpa of export

lessons learned from the Cameron LNG

20-year sale-and-purchase agreement with

capacity. By building a Phase 1 project and

project into our other world-class LNG

the Polish Oil & Gas Company (PGNiG) for

utilising existing marine and storage facilities,

development opportunities.

2 Mtpa of LNG, and we also signed a

LNG could potentially become available to

preliminary agreement with a subsidiary of

market as early as 2023.

Now, with the first liquefaction train

I should also add that we have gained invaluable experience in forming joint

Saudi Aramco for 5 Mtpa of LNG offtake.

ventures and alliances with world-class LNG

We have great commercial momentum going

project which could provide an additional

Industry players that will help us continue to

for this proposed project.

12 Mtpa export capacity.

improve our projects as we move forward.

We are also developing a Phase 2 of the

Together with IEnova, Sempra Energy’s Mexican subsidiary, we are also developing

Where do you see Sempra LNG

What are the next development

the proposed ECA LNG export project in

in the years ahead?

plans for Sempra LNG?

Mexico. Its unique location on the West

Sempra Energy has a clear vision to be North

We are currently developing one of the

Coast of North America is a true

America’s premier energy infrastructure

largest LNG export infrastructure portfolios in

differentiator and has the potential to be a

company. We continue to expect significant

the US. Our portfolio includes five strategi­

game changer for isolated markets in Mexico

growth in LNG demand as nations transition

cally located multi-billion-dollar liquefaction

and customers in Asia. ECA could provide its

to cleaner natural gas and search for energy

facilities with the goal to develop 45 Mtpa of

customers with a competitive advantage,

security and reliability. The US will be at the

liquefaction capacity, which would make

reducing shipping times to Asian markets by

center of this transition as a world leader in natural gas production. We believe that Sempra is in a privileged position to capitalise on this market opportunity.

We believe North American natural gas has an opportunity to be a game changer for European, Middle East and Asian markets by offering long-term, low-cost LNG supply sources that could increase reliability and provide greater energy security while supporting the US economy and creating more American jobs.

With our projects in development, we have the opportunity to unlock North America’s energy potential and play a leader­

Cameron LNG ships the first commissioning cargo of US LNG from the first liquefaction train of the export project in Hackberry, Louisiana – May 2019.

ship role in supporting America’s energy renaissance as a major global gas supplier.

UNLOCKING NORTH AMERICA’S ENERGY POTENTIAL

Sempra LNG develops, builds and invests in natural gas liquefaction facilities. We are pursuing five strategically located LNG opportunities in North America, with a goal of delivering 45 million tonnes per annum (Mtpa) of clean natural gas to the largest world markets, which would make Sempra Energy one of North America’s largest exporters of LNG.

Sempra LNG, LLC is not the same companies as the California utilities, San Diego Gas & Electric company (SDG&E) or Southern California Gas Company (SoCalGas), and Sempra LNG, LLC is not regulated by the California Public Utilities Commission. ©2019 Sempra LNG, LLC. All copyright and trademark rights reserved.

LNG2019

c Yamal LNG was on time with Train 1, which shipped its first cargo in December 2017, and ahead of schedule with Trains 2 and 3.

Mitsubishi and KOGAS for start-up

and project owners to learn lessons.

(0.9 mtpa) is due in service in 2020.

in 2024.

“First and foremost the front-end

Novatek is also evaluating the 4.8 mtpa

“We are reducing costs by using

engineering and design studies must

Ob LNG project which would share

tried and tested modular construction

be of very high quality,” he said. “Then

some of Yamal LNG’s infrastructure

methods,” explained van Beurden.

you have to have a very strong risk

but draw on different resources.

Other plus factors are a favourable

assessment and it has to be done in

Ob LNG is based on the resources of

fiscal framework and the fact that the

a collaborative way.”

the Verkhnetiuteyskoye and Zapadno-

site in Kitimat, British Columbia has

Pilenko cited Yamal LNG in north-

Seyakhinskoye fields located in the

good existing infrastructure, including

west Siberia, Russia as an example,

central part of the Yamal Peninsula,

a port, roads, railway and power

where TechnipFMC in joint-venture

whereas Yamal is fed by the South

supply, and is only 10 days sailing time

with JGC and Chiyoda carried out the

Tambeyskoye field in the north-east

from major markets in North Asia.

engineering, procurement, supply,

of the Yamal Peninsula.

The adoption of modularisation,

construction and commissioning

TechnipFMC has also been awarded

allowing construction in the controlled

(EPSCC) of the plant: “We agreed how

the EPSCC contract for Novatek’s Arctic

environment of a factory or fabrication

to manage risk and share contin­

2 LNG project with Total, CNPC sub­

yard before installation on site, and

gencies together.”

sidiary China National Oil and Gas

standardisation rather than bespoke

Yamal LNG, led by Novatek with

Exploration and Development Company,

project designs are helping to cut

Total, CNPC and the Silk Road Fund as

CNOOC, Mitsui and Jogmec as part­

costs, while bringing in a project on

partners, was on time with Train 1,

ners, which was expected to reach FID

time helps avoid budget over-runs.

which shipped its first cargo in

at presstime. The project will have

December 2017, six months ahead of

three 6.6 mtpa trains using resources

of TechnipFMC, noted how few LNG

the initial schedule with Train 2 (August

of the Salmanovskoye (also known as

projects around the world in the last

2018) and a year early with Train 3

Utrenneye) field and is located on the

25 years have been completed on time

(December 2018). Each train has a

Gydan Peninsula, facing Yamal. The first

and said it is important for contractors

capacity of 5.5 mtpa. A smaller Train 4

train is scheduled to start up in 2023.

Thierry Pilenko, Executive Chairman

80 High level of optimism at LNG2019

LNG2019

coming with new business models and innovative ideas on how to deliver projects,” said TechnipFMC’s Pilenko.

“The industry has invested on a boom and bust cycle,” said Hendrik Gordenker, Senior Corporate Vice President of JERA. “We can build our projects faster and in phases so supply is more responsive to demand.”

Mark Gyetvay, CFO & Deputy Chairman of Novatek: Arctic LNG 2 will have lower costs and a smaller environmental footprint than Yamal LNG.

Mark Gyetvay, CFO and Deputy

“Our business model is to capture market share by driving on costs,” said Michael Sabel, co-CEO, co-Chairman and founder of Venture Global LNG, which is planning three projects in

Hendrik Gordenker, Senior Corporate Vice President of JERA: We can build our projects faster and in phases so supply is more responsive to demand.

The second and third projects,

Chairman of the Management Board of

Louisiana, USA using midscale trains

Plaquemines and Delta on the

Novatek, told LNG2019 delegates that

fabricated off site and arranged in

Mississippi River south of New Orleans,

Arctic LNG 2 will have lower lique­

pairs. Each pair or “block” will have a

will be twice the size of Calcasieu Pass

faction costs and a smaller environ­

capacity of 1.2 mtpa and be able to

with 18 blocks and four storage tanks.

mental footprint than Yamal LNG by

operate independently. Venture Global

FID for Plaquemines is expected in late

using the company’s Arctic Cascade

LNG has contracted with Baker Hughes,

2019 with the first phase of nine blocks

process and three concrete gravity-

a GE company, to supply the modular

starting up in late 2022 and the

based structures (GBS), one for each

liquefaction trains plus power gener­

remain­ing nine in late 2023. No time­

train. They will be fabricated in

ation and electrical distribution equip­

line for Delta has been announced yet.

Murmansk by a joint venture of Saipem

ment that will be standardised across

and Renaissance, towed to Gydan and

the company’s sites. “We believe we

also in Louisiana – on the Calcasieu

anchored approximately 500m from

have achieved the lowest cost of lique­

River, south of Lake Charles – and also

the shoreline. Each GBS will accommo­

faction in the world,” declared Sabel.

modular but based on larger trains

date the liquefaction unit, LNG and gas

Construction of Venture Global LNG’s

Tellurian’s Driftwood LNG project is

using Chart’s process technology and

condensate storage tanks, power unit

first project, Calcasieu Pass, is underway

and offloading arms. “They will be self-

with Kiewit having been awarded the

The approach is to have 20 1.38

contained for liquefaction and power

engineering, procurement and con­

mtpa trains grouped into five plants

which will be unique for the industry

struction (EPC) contract. Located at

each made up of one pre-treatment

and a game changer going forward,”

the intersection of the Calcasieu Ship

unit and four trains for a project total

declared Gyetvay.

Channel and the Gulf of Mexico, the

of 27.6 mtpa. Tellurian would market

plant will have nine 1.2 mtpa blocks

13.6 mtpa and equity partners the

Game changing

and two 200,000m3 full containment

balance. Total, which is a shareholder in

Other projects presented at LNG2019

storage tanks. Venture Global signed up

Tellurian, signed to become the first

also claimed to be game changing.

Stonepeak Infra­structure Partners as an

equity par­tner in Driftwood at

equity partner in Calcasieu Pass in May

LNG2019. Tellurian is negotiating

and operations are due to start in 2022.

equity partnerships with other parties

“What is striking about the current wave is the diversity of the players

82 High level of optimism at LNG2019

GE compressors.

INNOV TING

TO PROVIDE LOW-COST LNG TO THE WORLD > Safely delivering low-cost, long-term LNG > Leveraging a pre-assembled unit approach > Providing optimal gas sourcing > Exceptional maritime locations Today’s energy customers need affordable LNG to stay competitive. That’s why Venture Global LNG has created an innovative engineering approach to delivering North American LNG. Our three world-class LNG projects have cost-effective access to America’s lowest cost production basins. Our method of pre-assembled liquefaction units allows for faster implementation and lower labor requirements, both yielding lower LNG prices.

VentureGlobalLNG.com Lake Charles

LOUISIANA

Lake Charles

New Orleans

Plaquemines Delta LNG

Calcasieu Pass Gulf of Mexico

LNG2019

c The commissioning cargo from Sempra’s Cameron LNG in Hackberry, Louisiana was shipped in May aboard the Marvel Crane.

including Petronet. FID on the first

Also nearing FID is Sempra Energy’s

ation and NYK), was shipped in May.

phase of three plants is expected in

Port Arthur project in Jefferson County,

late 2019 with production starting in

Texas. “The tolling model was most

projects is how long the US-China

2023. Start-up of the second phase with

common for the first wave of US

trade dispute continues. China

two more plants is envis­aged in 2026.

projects,” said Sempra LNG’s President

imposed a 10% tariff on LNG imports

Bechtel has the EPC contract.

Justin Bird, giving Cameron LNG in

from the USA in September 2018 and

Hackberry, Louisiana as an example.

increased it to 25% in June. The current

tiple pricing options is a new and dis­

“We have transited from a tolling

US producers only supplied 2.26 mt to

ruptive model,” said Matt Schatzman,

to an SPA model.” Phase 1 of Port

China in 2018 and can find other

President & CEO of NextDecade, who

Arthur is a two-train, 11 mtpa project.

customers in the meantime, while

announced the first sales and purchase

Sempra has agreed a 2 mtpa SPA with

Sempra is hedged by Energía Costa

agreement (SPA) for US LNG linked to

PGNiG and signed a Heads of Agree­

Azul’s location in Mexico. But as more

the Brent crude pricing benchmark at

ment with Saudi Aramco covering the

US capacity comes onstream, being

LNG2019. Shell signed for 2 mtpa over

negotiation of a 5 mtpa SPA and an

effectively locked out of the second

20 years from NextDecade’s Rio Grande

equity stake.

largest LNG market pending a new

“We believe our ability to offer mul­

LNG project with some three-quarters

Sempra is also lining up the Energía

A big question facing the US

trade agreement would have an

indexed to Brent and the balance linked

Costa Azul project near Ensenada in

to domestic US gas indexes, including

Baja California, Mexico for FID, which

Henry Hub. Rio Grande in Brownsville,

would be supplied by US gas. Phase 1

New capacity in Africa and the

Texas is planned for a maximum

of this involves the addition of a

Middle East

capacity of 27 mtpa with six trains. The

2.4 mtpa liquefaction train to the exist­

While Australia recently took Qatar’s

EPC contract for the first three trains

ing regasification terminal. Mean­while,

crown to become the largest LNG

and two 180,000m3 storage tanks was

the first cargo from Cameron LNG, a

producer with nameplate capacity of

awarded to Bechtel in May. FID was

joint venture of Sempra, Total, Mitsu

87.6 mtpa, the Middle Eastern nation

expected at presstime, with commercial

and Japan LNG Investment (in turn

was bullish at LNG2019. HE Saad

operations targeted to begin in 2023.

jointly owned by Mitsubishi Corpor­

Sherida Al-Kaabi, Qatar’s Energy Affairs

84 High level of optimism at LNG2019

increasingly severe impact.

LNG2019

HE Saad Sherida Al-Kaabi, Qatar’s Energy Affairs Minister and President & CEO of Qatar Petroleum: Initial contracts awarded to increase LNG capacity to 110 mtpa

Tony Attah, CEO & Managing Director of Nigeria LNG: FID on Train 7 expected at end October.

Darren Woods, Chairman & CEO of ExxonMobil: Time of transformation for the industry.

Minister and President & CEO of Qatar

Empresa Nacional de Hidrocarbonetos

transformation. We’re seeing increased

Petroleum, told delegates that prepar­

(ENH), Bharat PetroResources, PTTEP

supplies from a geographically diverse

ations for the North Field expansion

and Oil India as partners. It is based on

resource base, greater liquidity, more

project to increase the country’s

gas resources in Mozambique’s off­

competition and a growing number

capacity from 77 to 110 mtpa with four

shore Area 1. A joint-venture of

of buyers and sellers.”

new megatrains were well underway.

McDermott, Saipem and Chiyoda

He said that the contract for early site

has the EPC contract and start-up

markets are strong,” said Jack Fusco,

works for the onshore facilities had

is expected in 2024.

President & CEO of Cheniere Energy.

been awarded to a joint venture bet­

The site for the liquefaction plant

“The long-term fundamentals for LNG

According to IGU’s 2019 World LNG

ween Consolidated Contractors and

will be shared with the two-train 15.2

Report, highlights of which were

Teyseer Trading and Contracting, while

mtpa Rovuma LNG project based on

presented at LNG2019, global trade

a contract for the fabrication and

resources from offshore Area 4.

increased 9.8% in 2018 to 316.5 mt.

installation of eight offshore jackets

Rovuma’s partners are ExxonMobil, Eni,

The biggest importing region remains

had gone to McDermott.

CNPC, ENH, Galp Energia and KOGAS,

Asia-Pacific (defined in the IGU report

and FID is expected later in 2019.

as Japan, Korea, Malaysia, Singapore,

Anadarko’s Chairman & CEO Al Walker presented Mozambique LNG

Nigeria too was bullish about

Taiwan and Thailand) where imports

and said the project was on target to

expansion after years of postponing it.

increased by 4.9% to 153.3 mt, but it

reach FID by the end of June (which it

“We expect to take FID on Train 7 to

is the Asia region (Bangladesh, China,

did). “This is going to be a transform­

add 8 mt on October 31,” said Tony

India and Pakistan) which is driving

ational project,” he declared. “It will

Attah, CEO & Managing Director of

demand growth. Imports surged 36%

change the quality of life for people

Nigeria LNG. “We don’t think that will

to 85.9 mt, with China accounting for

in Mozambique.”

be the end; we see more trains.”

70% of the increase.

The two-train 12.88 mtpa project is

“China is the most dynamic LNG

led by Anadarko (although once the

Transformation

market and the one with the most

company is taken over by Occidental

“It’s not just a period of growth,”

potential,” declared Ye Guobiao,

its African interests will be sold on to

declared Darren Woods, Chairman &

Chairman of the Shanghai Petroleum

Total) with Mitsui, ONGC Videsh,

CEO of ExxonMobil. “It’s also a time of

and Natural Gas Exchange.

86 High level of optimism at LNG2019

LNG2019

China’s gas consumption in 2018

The country’s fifth import terminal, and

grew 17% to 280 bcm of which 56%

the first on the east coast at Kamarajar

was produced domestically, 27%

Port near Chennai, received its com­

imported as LNG and 17% via pipeline.

missioning cargo in February. Two

The country’s Blue Sky Policy to reduce

other terminals at Mundra and Jaigarh

air pollution is driving a move away

on the west coast are expected to start

from coal and the target is to double

up later in 2019 and a second east

the share of gas in China’s primary

coast terminal at Odisha is planned

energy mix to 15% by 2030, when con­

for 2021. Jaigarh will use the country’s

sumption is forecast to reach 500 bcm.

Achieving the forecast means signi­ ficant investments in infrastructure and

Li Yalan, Chair of Beijing Gas Group and IGU’s Vice President: Chinese city gas companies need to build infrastructure.

to foster this in the transmission sector

first floating storage and regasification unit (FSRU).

Pakistan and Bangladesh, where gas already has a significant share of

the Chinese government has announced

China is also working to improve

plans to create a national pipeline com­

energy efficiency. “We have put a lot of

tively – are also expected to show

pany by combining the transmission

effort into enhancing the efficiency of

strong demand growth. Pakistan

assets of the state-owned energy

using gas,” said Alfred Chan, Managing

doubled LNG imports in 2018 through

majors. In the distribution sector,

Director of the Hong Kong and China

its two FSRUs, while Bangladesh, which

“Chinese city gas companies need to

Gas Company.

started LNG imports in August 2018,

build infrastructure particularly storage

the energy mix – 44% and 68% respec­

Like China, India is seeking to reduce

brought a second FSRU online just

capacity to cover 5% of consumption,”

urban air pollution, has a target to

after LNG2019 at the end of April.

said Li Yalan, Chair of Beijing Gas Group

increase the share of gas in its energy

Pakistan is planning to add a third

and IGU’s Vice President. More regasi­

mix to 15% by 2030 and is developing

FSRU and Bangladesh is planning an

fication capacity is being built. For

its pipeline infrastructure. Gas con­

onshore regasification terminal.

example, CNOOC operates 10 of

sumption grew 8% in 2018 to 58.1 bcm

China’s 21 LNG import terminals and

of which 47% was produced domesti­

Japan remains the world’s largest

has plans to build 17 more.

cally and the balance imported as LNG.

importer although its imports declined

Of the main markets in Asia-Pacific,

v India’s fifth import terminal, and the first on the east coast at Kamarajar Port near Chennai, received its commissioning cargo from the Golar Snow in February.

High level of optimism at LNG2019 87

LNG2019

slightly in 2018 (by 0.6 mt) and future

years and also using more of the

Argentina. Prelude is the largest FLNG

demand will depend on the rate of

vessel’s capacity.”

project at 3.6 mtpa plus 1.3 mtpa of

nuclear reactor restarts. Meanwhile,

Keppel Shipyard is currently

condensate and 0.4 mtpa of LPG.

Korea’s demand for LNG increased 17%

converting a second Golar tanker (the

Shell’s partners are INPEX, KOGAS

in 2018 and is expected to continue

Gimi) for the Greater Tortue Ahmeyim

and CPC. Tango is the smallest FLNG

rising said Young-Doo Kim, acting

LNG project offshore Mauritania and

at 0.5 mtpa.

President & CEO of KOGAS. Korea has

Senegal. This is being developed by BP

reduced taxes on LNG and increased

and Kosmos Energy with Petrosen and

Dua, will enter service offshore Sabah

them on coal as the country moves to

Société Mauritanienne des Hydro­

in 2020 to produce from the Rotan

reduce coal’s share in the energy mix.

carbures et du Patrimoine Minier.

field operated by PTTEP (which

Going forward, Golar is looking at a

acquired its interest from Murphy Oil)

developed around the world. Indeed,

larger FLNG conversion-based design

with Petronas as a partner, while the

David Knipe, Head of International Gas

with a capacity of 3 to 3.3 mtpa and

Mozambique FLNG project, Coral Sul

at BP, said that half of LNG import

also at a new-build. “Storage is the

with Eni, ExxonMobil, CNPC, Galp

growth to 2040 would come from

thing people want and a limiting factor

Energia, KOGAS and Empresa Nacional

greenfield markets.

for us is the 125,000m3 capacity [of the

de Hidrocarbonetos as partners, will

existing converted tankers],” said Ross.

follow in 2022. Coral Sul has a capacity

Floating LNG

“We note the Petronas FLNGs have a

of 3 mtpa of LNG and 0.48 mtpa

Two sessions at LNG2019 were devoted

capacity of 177,000m3 and our new

of condensate.

to floating LNG which Golar LNG CEO

design would be similar with our new-

Iain Ross pointed out, “can be very

build in-between.”

Moreover, new markets are being

The second Petronas FLNG vessel,

Reducing methane emissions

competitive in terms of schedule and

Petronas inaugurated the first

Industry leaders at LNG2019 agreed

cost”. He presented Cameroon FLNG,

floating liquefaction project when

that tackling methane emissions is

which was the second floating lique­

Petronas FLNG Satu started shipping

vital and that working together is

faction project to start up (shipments

in April 2017 from the Kumang

the way forward. According to figures

started in May 2018). Société Nationale

cluster field, offshore Sarawak,

pre­sented by Shan Weiguo, Head of

des Hydrocarbures du Cameroun (SNH)

Malaysia. The company announced at

Gas Market Research at CNPC’s

and Perenco have contracted Golar’s

LNG2019 that it had just relocated the

Economics and Technology Research

Hilli Episeyo, a converted LNG tanker.

vessel to increase output at the

Institute, the petroleum industry emits

Production currently uses two of the

Kebabangan cluster field, offshore

nearly 100 bcm of methane a year. As

vessel’s four trains for an output of

Sabah, Malaysia, which is operated

well as the environmental impact this

1.2 mtpa.

by Petronas with ConocoPhillips and

represents an economic loss of

Shell as partners. The first LNG cargo

$30 billion a year.

“FLNG Hilli Episeyo came in at a cost of $500 per tonne but bear in mind this

from the new location was shipped

is a dry facility with no liquids,”

in June.

explained Ross. “Our model is a tolling

Also shipped in June were the

“We must convince people of the environmental case for natural gas,” said Ben van Beurden, CEO of Royal

model which is a very low capital

first LNG cargoes from Shell’s Prelude

Dutch Shell. “Unless we succeed in

intensive way of developing a field.

FLNG offshore Australia, which had

reducing methane leaks throughout

We are working with Perenco and SNH

shipped its first condensate in March,

the industry that environmental case

about extending the term from eight

and YPF’s Tango FLNG in Bahía Blanca,

will be hard to meet.”

88 High level of optimism at LNG2019

LNG2019

MethaneSAT will be launched in 2021 said Yang Hanling, Director of Inter­ national Policy & Legal Affairs at the Environmental Defense Fund. EDF claims MethaneSAT will improve on existing satellite measuring as it has the capacity to detect lower emission sources while being able to attribute the source of those emissions at scales Bob Dudley, Group Chief Executive of BP: The world needs gas to be better.

relevant to oil and gas infrastructure.

From LNG2019 to LNG2022

Peter Coleman CEO & Managing Director of Woodside: Industry needs to show it is com­ mitted to effective action on climate change.

All in all 40 plenary speakers addressed

colleagues thanked the Chinese hosts

One way is to minimise methane

the conference along with 200 industry

and the organising team for a success­

emissions,” said Bob Dudley, Group

experts covering the entire LNG value

ful event and invited participants to

Chief Executive of BP.

chain, while the accompanying exhi­

Russia for the next edition which will be

“We need to improve our own

bition featured 200 exhibitors present­

held in St Petersburg, April 4-8, 2022.

operations, increasing energy effici­

ing their latest technology and services.

ency, reducing methane emissions

There were 15,000 attendees overall,

Mark Blacklock is the Consulting

across the natural gas value chain and

just over 2,000 of which were

Editor of International Systems and

investing in biosequestration,” said

conference delegates. At the closing

Communications. IGU’s 2019 World

Peter Coleman, CEO & Managing

ceremony Sergey Kalityuk, Director

LNG Report can be downloaded from

Director of Woodside Energy.

General of the LNG2022 NOC and his

www.igu.org.

“The world needs gas to be better.

“Governments and markets need to work together to co-create a sustain­ able environment,” said Wan Zulkiflee, President & Group CEO of Petronas.

In September 2018, 13 companies in the Oil and Gas Climate Initiative (OGCI) signed up to a pact to limit methane emissions to 0.25% of their total mar­ keted product by 2025, with a stated ambition to go as far as 0.2%. The OGCI member companies are BP, Chevron, CNPC, Eni, Equinor, ExxonMobil, Occi­ dental, Pemex, Petrobras, Repsol, Royal Dutch Shell, Saudi Aramco and Total.

Improved monitoring of emissions is important with the use of drones and the launch of a new satellite.

90 High level of optimism at LNG2019

Farewell to “Chat” Dr Nirmal Chatterjee, Chairman of the Programme Committee (PC), which is responsible for the technical programme of the LNG X conferences, retired at the end of LNG2019. He chaired the PC for eight conferences starting with LNG12, which was held in 1998.

Dr Chatterjee (Chat) received his PhD in Chemical Engineering in 1971 from the University of California in Berkeley.

He then worked for Air Products and Chemicals, retiring in 2004 as their Global Vice President of Engineering and Environment, Health and Safety. He was the first to solve the LNG rollover problem in La Spezia, Italy in 1971 and his recommendations are standard design and operating practice in all LNG storage tanks. He was involved in all aspects of LNG development, engineering, operation and safety.

The Global LNG Services Mission and Offering

Supporting the growth of global energy

ject at the Main Pass Energy Hub™

supply at affordable levels is critical, as is

(MPEH). GLS has contracted with

US Maritime Administration (MARAD) as

the replacement of coal as a fuel. In a

TechnipFMC as the EPCIC contractor to

a Deepwater Port for the liquefaction,

global context, coal-related air pollution

complete the pre-FID engineering for the

storage, offloading, and export of LNG.

causes seven million deaths per year.

LMV with FID scheduled for MPEH in 2021.

MPEH already holds DOE approval for

33 billion tonnes of CO2 is currently being

The Project will be permitted by the

export of 24 mtpa of LNG to Free Trade

emitted versus the Paris objective of

Lowest cost liquefaction

Agreement nations. In line with

18 billion tonnes by 2040. Coal to gas

provider

established DOE procedure, MPEH

switching, using low-cost natural gas

GLS is offering its anchor offtaker an

will apply for approval of export to

converted to LNG, is the ideal mechanism

industry-low tolling fee of $2.16 per

non-FTA nations following MARAD’s

to reduce global emissions. It is therefore

MMBtu for the full volume of the first

approval. The DOE recently released

important for global consumers to have

LMV, providing US shale producers a

a study which essentially eliminates the

access to low-cost US LNG.

pathway to global markets. The GLS cost

risk of not receiving non-FTA approval.

advantages stem from GLS’ patent-

The outstanding permitting track record

business in which the lowest cost provider

protected innovations:

of the GLS team and the well-known

is chosen. The lowest cost liquefaction

• Application of proven technology with

regulatory requirements of the Deep­

Liquefaction of gas is a commodity

contract on the US Gulf Coast (USGC)

no residual technology risk.

was the 2010 anchor contract between

• Patented air cooling instead of

two major industry players at $2.25 per

environmentally problematic water

MMBtu. The most recent contract was

cooling for the liquefaction process.

water Port Act (DPA) further reduces risk associated with obtaining necessary licenses.

GLS is a Norwegian-based company

priced at $2.75 per MMBtu. Even lower

• Largest conventional ship hull to

with offices in several countries, including

prices are required if the US is to com­

maintain competitive bidding.

the US. GLS is led by its founder Dr Paul

petitively participate in the continued global growth of LNG. GLS was founded in 2013 with a management directive of reducing the cost

• Pre-processing located off the LMV

Eckbo and a team of highly experienced

provides maximum space on the vessel

principals and board members. Peter

for liquefaction facilities.

Mellbye of the GLS BOD built the Statoil

• Stay-on-station design eliminates time

gas business into the largest gas business

of liquefaction by an order of magnitude.

consuming relocation of the vessel

in the world outside Russia. The mem­

The key focus was to leverage significant

under adverse metocean conditions

bers of GLS’ management team have a

economies of scale and series production

• Series production of standardised LMVs

long history of offshore permitting,

of standardised large-scale, air-cooled

at Asian yards supports the global

liquefaction vessels that would meet the

“plug and play” market for access to

strictest global regulatory standards for

stranded gas.

process of being negotiated with

The MPEH Project’s excellent location

creditworthy counterparties for the full

safety and environmental impact.

operating and construction experience.

Offtaker agreements are in the

east of the Mississippi River entrance,

12 mtpa of capacity from the first LMV.

portfolio including the patented LIQUI-

outside the main shipping lanes and inland

GLS anticipates substantial worldwide

MAX™ Vessel (LMV), capable of LNG

waterways, and away from the congestion

demand for its low-cost liquefaction

production of 12 mtpa. The leading

of the existing and proposed projects in

solution, and is pursuing projects in the

industrial companies in the liquefaction

the western Gulf, provides substantial

US Gulf of Mexico, Canada, Africa, the

space, TechnipFMC, Air Products and

logistical operating cost savings for

Middle East, and Latin America.

Chemicals Inc., Baker Hughes – a GE

prospective LNG offtakers of as much as

company, and Emerson participated in the

$60 million per year per LMV. This

development and verification of the LMV

location provides ready access to abundant

Basis of Design and will continue to

and favourably priced gas supply from

Paul L. Eckbo, Founder and Chairman,

participate in completion of the first pro­

multiple production basins.

Global LNG Services

GLS developed an intellectual property

TAP - Preparing for commercial operations & first gas deliveries in 2020 TAP construction progress in 2019*:

Pipeline construction - Skrapar, Albania

• Overall construction close to 90% complete • 94% land along the route reinstated • Facilities: - Compressor station in Fier, Albania over 96% complete - Compressor station in Kipoi, Greece over 95% complete - Pipeline Receiving Terminal in Melendugno, Italy over 32% complete • 43.2m man hours worked and 121.2m km driven without any major incident

Offshore construction - Adriatic Sea

Reinstated land - Greece

• Market test launched 1st July 2019 *construction progress figures as of end of June 2019

Construction site - Melendugno, Italy

For more information, please visit our website: www.tap-ag.com

NEWS We start this issue’s news section with reports from the Regional Coordinators for North Asia & Australasia and for South & South East Asia. Then the Members’ corner focus is on Spain’s Sedigas. Next up are profiles of IGU’s new members followed by news from the Secretariat and a review of the latest edition of IGU’s Wholesale Gas Price Survey. After the news section, we round off with an overview of IGU’s organisation, members and the events calendar.

93

NEWS

Reports from the Regional Coordinators In this issue we bring you reports from IGU’s Regional Coordinators for North Asia & Australasia and South & South East Asia.

Gas: A breath of

in North China (2017 to 2021), which

period Chinese gas consumption has

fresh air for

requires that by 2019 the clean heating

risen by 44% to 280 bcm (see Figure 1).

North Asia

rate in North China should reach 70%,

However, the share of gas in primary

By Graeme Bethune

replacing 150 million tonnes of coal.

energy consumption in 2018 was still

Natural gas is

Natural gas is playing an important

only 7.5%, well below Japan and Korea.

bringing cleaner

role in this transformation. In 2017,

The government has a target for the

energy to the world,

4 million households switched from

gas share to reach 10% by 2020 and

reducing reliance on coal, diesel and

coal to natural gas and electricity,

15% by 2030.

biomass. Nowhere is this more

exceeded in 2018 by a further 4.8

important than in North Asia, with its

million households.

cold winters and resulting pall of smog from burning coal.

China

As we heard at the LNG2019 con­ ference in Shanghai in April, achieving

All households in the Beijing-Tianjin-

these targets will require substantial

Hebei and Shanxi-Shaanxi regions

investment in infra­structure. China has

will switch from coal to gas for heating

high peak demand in winter but has a

by 2020.

lack of storage so this increases prices.

Gas is one of the tools China is using to

China’s share of coal in its total

tackle its air quality challenge head on.

energy mix is falling, down to 59% in

trated in the south but winter demand

It has a Clean Heating Plan for Winter

2018 from 64% in 2015. Over the same

is in the north, with insufficient pipe­

Regasification terminals are concen­

North Asia gas consumption, 2013-2018 (bcm) 300.0

250.0

200.0

150.0

100.0

50.0

0.0 2013 China

z China’s NGV fleet includes 250,000 LNG-fuelled trucks.

2014 Japan

2015

2016

2017

2018

Korea

Sources: BP, EnergyQuest

96 Reports from the Regional Coordinators

c Figure 1.

NEWS

line capacity and a lack of pipeline

Vice President and will become IGU

ment policy is now encouraging gas

connections. Trucking is widely used to

President in 2021.

and renewables, lowering taxes on

transport LNG, from regasification

China produces its own gas but

terminals, pipelines and mini-LNG

domestic production is only sufficient

and raising taxes on thermal coal. LNG

plants inland. About 14% of gas

to meet around 60% of demand,

imports were up by 17% year-on-year

demand is met by trucking LNG. There

making the country a major gas

in 2018 to a record 44.5 mt. Nuclear is

are currently proposals to establish a

importer by both pipeline and LNG.

relatively important in Korea (10% of

national pipeline company.

China’s LNG imports increased by

the energy mix) but is also politically

40.7% year-on-year in 2018 to 54.8 mt

controversial. Australia is the second

China has the world’s largest down­

and total imports (LNG and pipeline)

biggest LNG supplier to Korea.

stream LNG market (24 mt in 2018).

were up by 32.4% to 90 mt, passing

About 10 mt is liquefied from small gas

Japan to be world’s largest gas

with relatively clean air. Over the last

fields and pipelines. The largest sector

importer. Australia is the leading

three years Japanese gas consumption

is industrial buyers who are not

supplier of LNG to China, supplying

has fallen by 6%. Gas consumption

connected to pipelines or who want

43% of LNG imports in 2018. Pipeline

peaked in 2012, shortly after the Great

security of supply.

gas currently comes from Central Asia

Eastern Earthquake which closed down

and Myanmar but the Russian Power of

the country’s nuclear generation.

countries is that there is already

Siberia pipeline is also due to start

However, nuclear is now back on the

large-scale use of gas in transport in

supplying northern China by the end

table with five reactors starting up

China, reducing carbon emissions by

of 2019.

again in 2018. Japan also relies entirely

Reflecting the lack of infrastructure,

One difference from many other

over 25% compared with diesel. Gas

LNG by up to 74% from April 2019

Japan is an exception in North Asia,

on LNG for its gas supplies, with

is also cheaper than diesel. China has

Korea and Japan

6 million natural gas vehicles and

China is not the only North Asian

the fleet is forecast to increase to

country with an air pollution problem.

Australasia

10 million by the end of 2020.There

Earlier in the year (March 13, 2019) The

The other two countries in the

are already 250,000 trucks powered

Guardian ran an article headed, “Social

region are Australia and New Zealand,

by LNG, forecast to increase to

disaster: South Korea brings in emer­

collectively known as Australasia.

1.5 million. China has 3,000 LNG

gency laws to tackle dust pollution”.

By Asian standards Australia has a

filling stations.

The paper said that air quality has

rela­tively small domestic gas market

become a key political issue after

of around 42 bcm but is now the

record pollution levels hit the country.

world’s largest LNG supplier, with

Korea, which relies on LNG imports,

exports expected to reach around

city-gas distributors and major gas

has a well-developed gas market with

80 mt in 2019. The last decade has

users such as Beijing Energy, Beijing

substantial storage and an integrated

seen a massive LNG building boom

Gas, China Gas, ENN, Guanghui Energy,

national pipeline system. Nonetheless

in Australia with seven new projects

Guangzhou Gas and Shenzhen Gas.

the share of gas in the energy mix is

added to the three existing projects.

Many of them are relatively unknown

only 16%, well below the 22% in

Prelude, the last of these and the

in the west but are likely to be very

neighbouring Japan.

world’s first large-scale floating

The LNG2019 conference provided an opportunity to meet China’s large number of second-tier gas companies,

important in future. The chair of Beijing Gas, Madam Li Yalan, is currently IGU

Australia the largest supplier.

Since 2015, Korean gas consump­ tion has increased by 29%. Govern­

LNG project is now coming into production.

Reports from the Regional Coordinators 97

NEWS

Australia’s latest LNG project to start up is Prelude which shipped its first condensate cargo in March and its first LNG cargo in June on the Valencia Knutsen (pictured).

The customers for all this LNG are pre­

gas prices. This has reduced gas-use for

only 6% coal and 11% renewables,

dominantly North Asian: China, Japan

power generation, benefitting coal and

17% gas and 27.5% hydro according

and Korea. Australia has been supplying

subsidised renewables. While LNG is

to the BP energy statistics for 2018.

Japan since 1989 and started first supp­

reducing greenhouse emissions in Asia,

However, despite this it has the fifth

lies to China in 2006. This has provided

it is criticised for increasing emissions

highest level of per capita greenhouse

LNG buyers with a secure source of clean

in Australia.

emissions in the OECD. While it only

energy, improv­ing urban air quality.

Unfortunately, despite its manifest

New Zealand has an even smaller

produces modest volumes of methane

domestic gas market than Australia of

from gas wells, it also produces signi­

benefits, natural gas development has

around 7 bcm. Gas development is not

ficant volumes from its cattle and

become increasingly unpopular in

encouraged. While there have been

sheep. A “clean” energy mix is no

Australia. The anti-fossil fuel movement

some recent onshore exploration

guarantee of low emissions.

has been successful in restricting

licences released, the government has

onshore development in the two most

said it will not issue any further

Dr Graeme Bethune is Chair of the

populous states, New South Wales and

offshore permits.

Australian Gas Industry Trust and the

Victoria, leading to a tight domestic gas market and much higher domestic

Overall New Zealand has a relatively “clean” energy mix with 38.5% oil but

98 Reports from the Regional Coordinators

IGU Regional Coordinator for North Asia & Australasia.

NEWS

Major growth for

c Bangladesh is the region’s newest LNG importer and has two FSRUs offshore Moheshkhali Island in the Bay of Bengal.

The first to enter ser­ vice was the Excellence in August 2018 and it is contracted by Petrobangla. The second FSRU, Summit LNG, (pictured arriv­ ing on station) was commissioned in April 2019 and is con­tracted

by Summit Energy.

Both vessels have been supplied by Excelerate Energy.

gas in South & South East Asia

By Hazli Sham Kassim Covering an area of some 10 million km2 with a population of nearly 2.5 billion population and a combined GDP of approximately $6 trillion, IGU’s South & South East Asia Region makes up the bulk of non-OECD Asia.

The region holds great potential as a critical driver of global gas consump­ tion growth. By 2040, IEA projects that consumption in non-OECD Asia will

terminal projects in many countries

Gas is boosted by the fact that fin-­­

increase by over 600 bcm/year, acc­oun­

as they turn towards imports to com­

ancial institutions in the region are

ting for nearly 40% of global growth.

plement domestic production.

making a decisive switch towards

As the region increases its reliance

Gas is used mostly for power

funding only clean energy sources,

on gas, it is also facing supply con­

generation in the region, where it

including gas-fired power plants.

straints. The need to ensure energy

traditionally competes against a

Indeed, several – such as the Asian

security is spurring LNG regasification

cheaper alternative, namely coal.

Development Bank and Singapore’s

The need for energy security is spurring LNG regasification terminal projects in South East Asia countries, such as the world’s first jetty-based regasification unit in Malacca, Malaysia, built, operated and owned by Petronas.

100 Reports from the Regional Coordinators

Common Energy Common Future

NEWS

major existing and planned gas pipe­

Gas statistics for Bangladesh, India and Pakistan, 2018 (bcm)

line infrastructure within ASEAN coun­ tries to ensure greater security of gas

70

supply for the region through redund­

60

ancy and enhanced sourcing options.

50

On the demand side, electricity

40

consumption in ASEAN countries is

30

set to grow by an average of 5.6% annually, which translates into about

20

13GW of additional power generation

10

capacity per annum in the years 2020-

0 Bangladesh Production

India LNG imports

2030. Gas demand, driven by both this

Pakistan

key power sector as well as the non-

Consumption

power sector, is expected to increase

Source: BP Statistical Review of World Energy 2019

c Figure 2.

by 20% from 2017 to 2030, with LNG imports increasing by more than 10%

leading banks – have ceased financing

Philippines, Singapore, Thailand

new coal power projects.

and Vietnam).

Regional cooperation in oil and gas

per annum during the same period.

South Asia

South East Asia

matters takes the form of the ASEAN

This sub-region covers Bangladesh,

This sub-region essentially com-

Council on Petroleum (ASCOPE) plat­

India and Pakistan. It is facing acute

prises the members of the Asso-

form that is made up of national oil

supply constraints resulting in a need

ciation of South East Asian

companies. A cooperative initiative

to expand its gas supply infrastructure.

Nations – ASEAN (Brunei, Cambodia,

under ASCOPE is the Trans-ASEAN Gas

Indonesia, Laos, Malaysia, Myanmar,

Pipeline, which aims to inter­connect

In India, the government aims to increase the share of gas in the primary energy mix from 6% to 15% by 2030.

There are plans to nearly double the

Gas statistics for ASEAN countries*, 2018 (bcm) Country Production

LNG imports

LNG exports

Pipeline imports

Brunei

12.6

Indonesia

70.6

21.0

Malaysia

72.5

33.0

Myanmar

17.8

Philippines

1.8

Pipeline Consumption exports

8.8 7.6

0.6 10.6

4.2

Singapore

4.5

Thailand

6.2

Vietnam

pipeline network from 16,000 km to city from 27 to 78 mtpa. Meanwhile,

42.0

regasification terminals in Pakistan and

41.3

Bangladesh that have been commis­

7.2 4.1

8.8

12.3

7.8

49.9

9.6

9.6

37.7

0.7**

3.8

30,000 km and triple LNG import capa­

sioned in recent years will facilitate more LNG imports for the region as demand continues to grow (see Figure 2).

Notes:

Hazli Sham Kassim is President of the

* Cambodia and Laos do not currently have natural gas supplies but Cambodia is planning to start LNG imports using a floating storage and regasification unit (FSRU)

Malaysian Gas Association and the IGU

** re-exported

Regional Coordinator for South & South

Sources: BP Statistical Review of World Energy 2019, SKK Migas Annual Report 2018

102 Reports from the Regional Coordinators

East Asia.

NEWS

Members’ corner This section of International Gas gives IGU members an opportunity to profile themselves and their relationship with the Union. In this issue we have a Q&A with Marta Margarit Borras, the Secretary General of the Spanish Gas Association (Asociación Española del Gas – Sedigas).

International Gas (IG) Could

activities the key role the use of gas

you introduce Sedigas briefly

is going to play when facing the

to readers in terms of your

environmental, energy and economic

membership and activities?

challenges in the future. Sedigas has

Marta Margarit Borras (MMB)

committed itself to help achieve the

Sedigas is an association that brings

goals set by the recently presented

together all companies from the

National Energy and Climate Plan,

Spanish gas sector. Our work aims to

providing greater energy efficiency

comply with the UN’s 2030 Agenda of

and encouraging the introduction

the Sustainable Development Goals

of renewable energy.

and the EU’s energy and climate objec­

By 2030 the National Energy and

tives. Our main goal is to promote the

Climate Plan has forecasted the quick

use of gas, as it is a mature, tested, effi­

insertion of renewable energies in the

cient and easily substitutable techno­

sector due to the gradual disappear­

logy, which works as an alternative

ance of coal and, subsequently, of

energy source to more polluting fuels.

We also work to promote the

Marta Margarit Borras, Secretary General of Sedigas.

cooperation of all the agents involved in accelerating the energy transition,

nuclear energy and gas will play an important part in guaranteeing the energy supply. The Plan highlights the

Our organisation integrates among

government’s intention to develop

which seeks a balance between

its members companies engaged in

specific plans to achieve the pene­

looking after the environment and the

the transmission, distribution or mar­

tration of renewable gas. In this regard,

guarantee of supply, economic growth

keting of gas, as well as associations of

it specifies that gas must play an

and consumer welfare.

companies and product and services

important role in the energy matrix by

suppliers for the gas industry.

providing a sink for CO2 – which serves

Sedigas thus becomes the sector’s representative body and interlocutor

to reduce emissions – and providing

with national, regional and inter­

IG How has Sedigas been involved

solutions to the problem of waste

national administrations, as well as

in the drawing up of Spain’s

management. The Plan also aims to

a key player in promoting the use of

National Energy and Climate Plan

foster gas usage in the building sector,

gas through its numerous initiatives

and what is the outlook for the gas

in its heating and hot water applica­

and activities developed by the

industry in Spain to 2030?

tions and to advance hybrid gas and

Committees and Working Groups that

MMB We have worked on ensuring

renewable technologies as highly effi­

make up its functional structure.

and communicating through our

cient and achievable energy alter­na­

104 Members’ corner

NEWS

IG An important feature of the

solid particles and sulphur can be

gas industry in Spain is the growing

reduced by 80%, in addition to reduc­

use of gas as a transportation fuel.

ing greenhouse gases by 20%. Through

How has Sedigas been working to

greater implementation of gas in

promote this?

mobility, a greater number of people

MMB We aim to contribute to a rapid

will have access to clean and econo­

and effective transformation towards

mical transport thanks to this efficient

a more sustainable society through

technology.

many actions and one of our main

tives. Furthermore, the Plan seeks to support economic growth and the creation of local employment: up to 25,000 jobs in Spain by 2030, with a contribution to GDP of up to

We have worked on organising

concerns has been mobility. Sedigas

presentations and conferences with

has worked on promoting and foster­

experts in order to explain the advan­

ing the use of natural gas powered

tages that using these kinds of vehicles

vehicles especially in the taxi sector.

could bring to the taxi sector: their

Thanks to natural gas vehicles, emis­

safety, economic savings, easy main­

sions of nitrogen oxides and almost all

tenance and EU Ecolabel (which

z Rosa María Sanz García of Naturgy is the President of Sedigas and a member of IGU’s Executive Committee.

€472 million.

cz The use of gas as a transportation fuel is growing in Spain. l e f t Some 42% of the buses operated by local transport operator EMT in Madrid run on CNG. a b ove The ferry operator, Baleària is midway through a programme to convert six vessels to run on LNG and add three new-builds to its fleet. Pictured is the Abel Matutes, which re-entered service in July 2019 after conversion.

Members’ corner 105

NEWS

recognises environmental excellence)

to improve the quality of life by

affecting the gas industry worldwide.

are some of the attractions of this

advanc­ing gas as a key contributor

This contact with other companies and

mature and reliable technology, which

to a sus­tainable energy future. Thanks

organisations belonging to the same

will be boosted through the instal­

to our membership, Sedigas has a

sector has provided a unique oppor­

lation of more refuelling stations. We

network of influential contacts due

tunity for improving future decision

are trying to raise awareness among

to the fact that we belong to an

making, enhancing business relation­

taxi drivers because they can become

organi­sa­tion whose members are

ships, and developing operational

pioneers in the large-scale use of these

associations and corporations of the

excellence. We also get the chance to

gas-powered vehicles fostering their

gas industry representing over 95%

have access to top-level information

use in cities.

of the global gas market and covering

and reports on key topics concerning

the complete gas value chain from

the gas industry like pricing and new

IG What do you see as the main

exploration and production to

developments, which helps us make

benefits that IGU offers its

transmission and distribution.

the best decisions based on the most

members?

Joining IGU has allowed us to par­

MMB We value being part of a global

ticipate in meetings and conferences

organisation like IGU, one that seeks

that address the most critical issues

up-to-date information.

IG Thank you.

Spain and IGU – a brief history Spain was involved in the early discus­ sions to establish IGU and its national association was all set to be a founder member. Indeed, the Asociación de la Industria en España de la Destilación de la Hulla y sus Derivados was included in Article 2 (members) of the 1931 statutes.

However, 1931 was a year of political turmoil in Spain with the exile of King Alfonso XIII and the declaration of the Second Republic, and IGU membership went on the back burner. Then the Spanish Civil War and World War II inter­ vened and it was not until 1951 that Spain joined IGU. The joining member was the Sindicato Nacional de Agua, Gas y Electricidad.

The arrival of natural gas in Spain in 1969 prompted the gas companies to look at setting up a body dedicated to the gas industry. As only the govern­ ment had the right to set up national associations this body had to be struc­ tured as a limited company and in April 1970 the Sociedad para el Estudio y Desarrollo de la Industria del Gas

106 Members’ corner

(Sedigas) was founded. The Sindicato Nacional remained the IGU member.

The return of democracy to Spain following the death of General Franco in 1975 and the draw­ ing up of a new con­ stitution led to the abolition of the Sindicato Nacional and Sedigas became Spain hosted LNG15 in Barcelona in April 2007. Pictured is the then President of Spain’s National Energy Commission, María Teresa Costa the IGU member Campí, opening the exhibition flanked by the then President of in 1978.

Sedigas changed Sedigas, Antoni Peris Mingot (left) and Antoni Llardén i Carratalà, Honorary LNG15 Chair (right). its status from a Of IGU’s flagship conferences limited company to Spain has hosted LNG15, which an association in 1998 and became was held in Barcelona in April 2007. the Asociación Técnica Española de la Spain currently hosts the IGU Industria del Gas – now shortened to Secretariat, which is based in the the Asociación Española del Gas – administrative headquarters of while retaining the well-established Naturgy in Barcelona.

Sedigas name.

Energy changed the world. Let’s change it again now.

naturgy.com

NEWS

Presenting IGU’s new members During an electronic session held between May 20 and June 3, the IGU Council approved the applications of Ghana National Gas Company to become a Charter Member and of Tubacex to become an Associate Member. Here they give brief overviews of their activities and their reasons for joining the Union. There is also a new Charter Member for Vietnam. generation company, Volta River

improve the quality of life by advanc­

Authority (VRA), which in turn

ing gas as a key contributor to a

produces electricity for the industrial

sustainable energy future.

sector and the nation as a whole, while

The company under the leadership

Ghana National Gas Company

the LPG and condensate produce

of the governing board is operated on

By Dr Ben K. D. Asante

are sold on both the local and inter­

a business model which primarily

Ghana National Gas Company is a

national markets. This reduces the

generates revenue through processing,

midstream state-owned enterprise;

nation’s heavy dependence on

transportation and the sale of natural

established with the core mandate to

imported fuel therefore cutting

gas and natural gas liquids. This

build, own and operate infrastructure

down import expenditure.

concept will accelerate the nation’s effort of rapid industrialisation by

required for the gathering, processing and transportation of natural gas

Values of IGU

providing cost-competitive natural

resources in Ghana.

Ghana Gas identifies itself with the

gas and gas-based products for the

core values of IGU, which seeks to

domestic markets and to feed the

The company was incorporated in July 2011 by the Government of Ghana under the 1963 Companies’ Act, 179.

The decision to establish a national gas company came about following the recommendations of the National Gas Development Taskforce after commer­ cial quantities of associated gas were discovered 60km offshore; between the Deepwater Tano and Western Cape Three Points blocks in the Western Region of Ghana. The company began operations officially in November 2014.

Ghana Gas is responsible for the prospecting and processing of lean gas, condensate, LPG and isopentanes; ultimately, being the catalyst in the nation’s industrial sector as it is the major gas supplier for the power

108 Presenting IGU’s new members

zv Ghana Gas offers Ghanaian engineers a range of skilled employment opportunities.

NEWS

existing and emerging gas-based

its commission­ing and commercial

issue of interrupted power gener-

industries in sectors such as petro­

operations began, therefore reducing

ation and supply will be curtailed

chemicals, food processing, plastics,

the LPG import bill by $47 million. In

or possibly extinguished.

fertiliser manufacturing and above

summary, the capacity of Ghana Gas

all for power generation, as well as

to take over the duty of supplying

board and staff, the company looks to

exporting to foreign markets.

processed gas for the generation of

achieve more in the coming years and

power for the whole country in place

bridge the gap between demand for

in Accra, with the main gas processing

of LCO has helped save the country

gas and its supply in the country.

plant situated at Atuabo and an

millions of US dollars.

The company has its headquarters

operational office at AB Bokazo, both being located in the Western Region.

For the project with Karpowership,

With the support of the governing

Vision

which is ongoing in the Western

Ghana National Gas Company focuses

Region, Ghana Gas will supply lean

on being the fulcrum of Ghana’s

Achievements

gas to the Karpowership barge in

economic development and seeks to

Ghana Gas has clocked up noteworthy

place of fuel oil, which will save the

develop business, build human capa­

achievements since it began oper­

country millions of US dollars. This is

city and improve community engage­

ations in 2014. A key development was

Karpowership’s first project in Africa

ment through best business practices

the move to 100% local staffing of the

and a significant step towards meeting

to make the company a giant in the

Atuabo gas processing plant. In April

the electricity demand of Ghana’s

global gas production industry.

2017, the operation of the plant and all

population and industry. With a

its ancillary facilities were fully taken

capacity to produce 470MW of

Dr Ben K. D. Asante is the CEO of Ghana

over by Ghanaian engineers. An

power from gas resources from the

National Gas Company. For more

international contractor had been

Western Region of the country, the

information, visit: www.ghanagas.com.gh.

initially tasked to operate the plant whilst providing the required transfer of knowledge and training to the technical staff of Ghana Gas. This move has resulted in savings of $24 million per year and has also provided local skilled employment thereby helping to reduce the menace of youth unemployment in the country.

The use of processed gas from the Atuabo plant for power generation by VRA in place of light crude oil (LCO) generated savings of about $42.6 million in 2017 and about $206.4 million in early 2018. The yearon-year analysis shows that Ghana Gas sup­plied 40% of domestic LPG demand in 2017, the highest since

Presenting IGU’s new members 109

NEWS

Tubacex Group,

efficiency of their projects and

opportunity to reinforce a division with

adding value to the

processes and reducing total project

a constantly growing product and

upstream operations

costs. Tubacex has supplied tubular

service portfolio closer to customers:

By Antón Azlor

solutions (pipes, tubes and fittings) to

Tubacex Advanced Solutions.

The Tubacex Group,

the most relevant projects related to

premium stainless

gas production worldwide.

steel tubular solutions partner, has

Tubacex Advanced Solutions integrates the largest global network of own stock and service centres

moved forward in the value chain

Integrated model

worldwide with a presence in Spain,

to become a full-service supplier

Tubacex provides advanced stainless

France, Central Europe, Houston, Brazil,

offering advanced stainless steel

steel tubular solutions from alloy

the Middle East and India (Tubacex

solutions to the final customer with

design, thanks to its integrated

Service Solutions).

a value proposal able to cover all the

manufacturing system, with its own

stages of the process: from design to

steelworks, which enables the full

CRA specialist

maintenance services.

production process to be monitored

Tubacex has become the world’s

from steel development onwards. This

largest provider of corrosion-resistant

a solid strategic plan focused on

model guarantees traceability in the

alloy (CRA) solutions for oil and gas

growth, diversification and excellence

quality control of the product and

drilling operations. Certified in

in service. These three pillars are aimed

ongoing improvement throughout

accordance with the latest edition of

at providing high technological steel

the process.

API 5CRA, Tubacex is equipped with

This position has been leveraged by

solutions developed in co-creation with customers, increasing the global

The position of Tubacex as a fullservice supplier has represented an

state-of-the-art facilities for the manu­ facture of CRA tubulars to serve c Tubacex is a fullservice supplier of stainless steel tubular solutions. vz Duong Manh Son, General Director of PetroVietnam Gas (left) at the signing ceremony for the Thi Vai LNG terminal project on June 24.

110 Presenting IGU’s new members

NEWS

challenges. Joining IGU represents an opportunity to share industry’s chal­ lenges and work together in tailored solutions. One of the main concerns of the gas industry is to manage corrosion throughout the life of materials.

Tubacex has innovative solutions that help our customers to improve their CAPEX and OPEX, offering the right solution at the right time.

Antón Azlor is Vice President Global Marketing & Sales at Tubacex. For more information, visit: www.tubacex.com. upstream operations with safety,

Innovation strategy

efficiency and flexibility. This leadership

As part of its strategy towards

New Charter Member for Vietnam

status, together with a good position­

integrated tubular solutions, Tubacex

The Charter Member for Vietnam,

ing in the Middle East, has led to a

is launching new lines of action in R&D

previously Vietnam Oil and Gas Group,

strategic alliance with SENAAT General

as well as in the search for strategic

is now one of the Group’s member

Holding Corporation, one of the largest

alliances to develop integrated value

companies, PetroVietnam Gas Joint

investment and industrial holding

proposals, in particular, applications

Stock Company (JSC), which is one of

companies in the United Arab Emirates.

with a high technology component.

the largest publicly traded Vietnamese

The aim is to jointly develop energy

Innovation management at Tubacex

companies.

projects in the region, contri­buting

is carried out under open innovation

to its economic development with

principles, which allows for the inte­

integrated operations, from drilling for

local investments.

gration of capacity and knowhow from

gas through to marketing. It controls

a network of companies, including

nearly 70% of the domestic market for

alliance, Tubacex and SENAAT have

customers, suppliers, research centres

LPG and is planning to start LNG

acquired NTS Group, a company

and partners in general. Most of the

imports through the Thi Vai terminal in

specialised in repairing and manufac­

innovation projects that are currently

the coastal area southeast of Ho Chi

tur­ing stainless steel components

under development at Tubacex

Minh City. The facility will provide

for the upstream sector of the oil and

emerged from alliances and consortia

natural gas to the Nhon Trach

gas industry with manufacturing

with other companies. These include

combined-cycle power plant. Phase

plants in Saudi Arabia, Dubai and

the design of components and

one with a capacity of 1 mtpa is

Norway. With the acquisition of NTS,

even subsystems.

scheduled to enter service in 2022

In the framework of this strategic

Tubacex is mov­ing forward in its

PetroVietnam Gas JSC runs

followed by phase two increasing

strategy to become a global supplier

IGU membership

of tubular solutions by significantly

Tubacex believes that collaborative

strengthening its product portfolio

models can contribute to facing the

For more information, visit:

for upstream customers.

gas community’s global energy

www.pvgas.com.vn.

capacity to 3 mtpa in 2023.

Presenting IGU’s new members 111

Public Gas Corporation (DEPA) S.A.

Playing a major role in the energy sector

www.depa.gr

The natural gas industry is a major contributor to the GDP of many countries. It is by nature large-scale, employing thousands, generating associated revenues and tax income. The natural gas helps fuel local businesses and builds a platform to grow Greece’s economy.

DEPA, with its long presence in the Greek market, is a modern and competitive group of companies with a dynamic role in the energy sector and substantial contribution to the development of the Greek economy, the protection of the environment and the improvement of the quality of life of local communities. With the continuous expansion of natural gas pipelines DEPA Group is bringing natural gas to more and more regions of the country. It sources gas from a number of suppliers through longterm supply contracts and provides security of gas supply in the Greek energy market.

COMPRESSED NATURAL GAS for transport

Clean environment Unadulterated fuel

DEPA is a group that: • is the largest natural gas importer and distributor in Greece, selling gas to large consumers and to gas supply companies.

Noiseless performance High reliability

• expands natural gas network in Greece.

• makes significant contributions to the Greek economy, growth, environmental protection and improvement of local communities’ quality of life.

IGB

• has opened up the way to gas-powered driving by establishing filling stations in large cities.

TAP LNG

I

IG

Αλεξανδρούπολη

TAN

AP

DEPA’s INTERNATIONAL ACTIVITIES • Interconnector Greece - Bulgaria (IGB)

Athens

• LNG Terminal in Northern Greece in Alexandroupolis GREECE

• Interconnector Greece - Italy (IGI) • The Eastern Mediterranean pipeline (EastMed) EASTMED

NEWS

Activities of IGU A round-up of news from the Secretariat.

Natural Gas Day 2019

Key Asian stakeholders from the

(JGA) delivered the IGU-JGA Gas Day

IGU and the Japan Gas Association

energy sector and G20 representatives

Communiqué to HE Hiroshige Seko,

held the Natural Gas Day 2019 on June

from 18 countries participated in the

Minister of Economy, Trade and

12 in Tokyo. The event was organised

meeting. The theme of the event was

Industry of Japan.

on the occasion of the G20 Energy and

“Securing Transparency, Competitive­

Environment Ministerial and was one

ness and Enhancing Security of Gas

Understanding methane emissions

of only three events being featured in

Markets in Asia”.

The 32nd European Gas Regulatory

the official G20 Japan Presidency sideevents listing.

Following a press conference,

Forum (also known as the Madrid

IGU President, Joo-Myung Kang

Forum), which gathered key stake­

together with Mr Michiaki Hirose,

holders across the European gas sector

Chair of the Japan Gas Association

to discuss opportunities and chal­

IGU and JGA held the Natural Gas Day 2019 on June 12 in Tokyo. i n s e t President, Joo-Myung Kang (left) delivering the IGU-JGA Gas Day Communiqué to HE Hiroshige Seko, Minister of Economy, Trade and Industry of Japan.

114 Activities of IGU

NEWS

take to further reduce its

while supporting reliable access to

methane emissions.

modern energy.

IGU was pleased to be

The 2019 edition also contains

among an impressive list of

a special section on methane

industry contributors to the

emissions, and the opportunities

report. IGU’s Global Group of

that their further reductions present

Methane Experts, established

for the industry.

in late 2016, was instrumental in sharing the most critical

Farewell to Rafael

information on the issue from

Rafael Huarte

around the world.

Lázaro, Director

The report can be down­

Advisor in the

loaded from: www.igu.org/

Secretariat, ended

publications-page.

his service to IGU on April 30 when

lenges and to share information on European gas market regulations, took

Global Natural Gas

he retired from Naturgy. Taking up

Insights – 2019 edition

his post in November 2016, when the

IGU has released the second

Secretariat moved to Spain, Rafael

edition of Global Natural

provided valuable contributions to

Gas Insights.

This handy booklet contains the

IGU in many areas. He led the strategic partnerships programme and pro­

place during the first week of June.

latest information on natural gas and

moted multiple regional meetings in

Discussions centred on the prospects

its role in helping economies grow,

Latin America and Africa. He also

for the next European Union gas

lifting people out of poverty and

organised the meetings of IGU’s

package (2020), including cutting

cleaning up the environment,

Regional Coordinators.

methane emissions.

As requested by the Directorate General for Energy of the European Commission last year, Marcogaz and Gas Infrastructure Europe, which are organisations affiliated to IGU, led the development of a report presenting the current state of industry activity on methane emissions in the European Union and beyond. The report, Potential Ways the Gas Industry Can Contribute to the Reduction of Methane Emissions, also proposes a set of recommendations and potential actions that the industry can under-

GLOBAL NATURAL GAS INSIGHTS • 2019 EDITION

Sustainable Future Powered by Gas Activities of IGU 115

NEWS

IGU releases latest Wholesale Gas Price Survey IGU has released the latest edition of the Wholesale Gas Price Survey covering price developments in 2018 and here we give its key findings.

This is the 11th Wholesale Gas Price

respectively, but the latter declined

but reflects the fact that there are

Survey to be undertaken with the

by almost half a percentage point,

multiple buyers and sellers, distin­

series covering 2005, 2007, 2009 and

reflecting slower consumption growth

guish­ing it from the bilateral monopoly

2010, and then each year from 2012.

in countries with regulated social and

category, where there would be a

The 11 surveys show the changing

political pricing and a switch away in

single dominant buyer and/or seller.

trends in wholesale price formation

Argentina to regulated cost of service.

mechanisms over a period of rapid and

In turn, regulated cost of service lost

price escalation to gas-on-gas compe­

significant change in the global gas

share in China to oil price escalation.

tition, has seen the latter’s share inc­

market. They consider different types

Over the 2005 to 2018 period, the

reasing from 15% in 2005 – when oil

of price formation mechanism which

share of gas-on-gas competition has

price escalation was 78% – to 76% in

are described in the box on page 118.

risen by almost 16 percentage points,

2018 – when oil price escalation had

while oil price escalation has declined

declined to 24%.

In Europe the move from formal oil

Share of pricing mechanisms

by 5 percentage points. Bilateral mono­

The share of gas-on-gas competition

poly has declined by 2.5 per­centage

share in Europe, there have been large

rose by half a percentage point bet­

points, while in the regulated cate­

gains in share in Asia with a rise from

ween the 2017 and 2018 surveys to

gories regulation cost of service has

35% in 2005 to 67% in 2016, initially as

47%. That largely reflected the increas­

risen by 9 percentage points, regu­

China began importing more LNG and

ing share of spot LNG cargoes in LNG

lation social and political has risen by

pipeline gas, but largely reflecting the

imports and rapidly growing US

nearly 3 percentage points and regu­

domestic pricing reform, initially in two

consumption, which more than offset

lation below cost has declined by

Chinese provinces, followed by rolling

the declining share in pipeline imports,

almost 20 percentage points.

these changes out to the whole of

as a result of reduced European pipe­

The major overall changes, in the

While oil price escalation has lost

China for most sectors. The share fell

line imports and increased China

2005 to 2018 period, have been the

back slightly in 2017 but recovered in

pipeline imports. The oil price esca­

continuous move away from formal

2018 to 67% again.

lation share declined by a quarter of a

oil price escalation to gas-on-gas com­

percentage point to 19%, with the loss

petition in Europe, and also in Russia

steady increase in oil price escalation

in LNG imports being partly offset by

as the independents and Gazprom

up to 2017, reaching some 66%,

gains in pipeline imports and domestic

competed for sales to large eligible

largely at the expense of regulated

production in China. The regulated

customers such as power plants. This

pricing, principally in Malaysia and

cost of service and regulated social

is clearly a different kind of gas-on-gas

Indonesia. The share of oil price

and political mechanisms were largely

competition from the liquid trading

escalation declined in 2018 as spot

unchanged overall, at 10% and 14%

markets in North America and Europe

LNG imports surged.

116 IGU releases latest Wholesale Gas Price Survey

In Asia-Pacific there has been a

NEWS

Move away from subsidies

61% in 2018, as oil price escala­

Apart from the changes concerning

tion declined from 57% to 31%.

gas-on-gas competition and oil price

How­ever, the decline in oil price

escalation in Europe, Asia and Asia-

escalation has been partly off­

Pacific, there have also been signifi-

set by a switch from bilateral

cant changes in the regulated pricing

mono­poly in intra-former Soviet

cate­gories. The increases in regulated

Union trade in 2009, and more

pric­ing and policy changes in Russia

recently the imports of pipe­line

not only saw a switch towards gas-

gas from Turkmenistan to

on-gas competition, but also a switch

China, and in 2016, the

from the subsidised regulation below

change in one of the gas con­

cost in 2009 to regulation cost of

tracts from Russia to Turkey.

service as Gazprom finally stopped

GAS PRICE SU RVEY 2019 EDITIO N

A GLOBAL RE VIEW OF PRICE FORMATION MECHANISM S 2005 TO 2018 MAY 2019

The rise in gas-on-gas

losing money on its domestic gas sales,

competition at the expense

although with the freeze in regulated

of oil price escalation has

prices in 2014, there was a partial

been almost entirely in the

switch back to regulation social

Euro­pean market as the

and political.

northwest Europe coun­

There were also significant changes

WHOLESALE

tries began switching to gas-on-

in China as pricing reforms, again

gas competition and more recently the

Indeed, 2018 saw the most signi­

around the 2009 period, saw domestic

Central Europe countries and, in 2014,

ficant change in LNG imports since IGU

production prices being more formally

Italy. In respect of pipeline imports into

began releasing its surveys, driven by

regulated and the price formation

Europe, gas-on-gas competition in

the continued rise in Henry Hub priced

mechanism changing from regulation

2018 had a 75% share compared to

US LNG exports as well as a general

social and political to regulation cost

25% for oil price escalation. This is in

rise in spot LNG cargoes. The share of

of service, before the significant move

marked contrast to 2005 when it was

spot LNG imports reached just over

to oil price escalation. Similarly, in Iran

91% oil price esca­lation and only 7%

30% of total LNG imports in 2018,

prices were raised significantly with the

gas-on-gas compe­tition. In 2017,

amounting to some 126 bcm – an

category changing from regulation

Ukraine switched to importing gas

increase of 65 bcm since 2016, or 10.5

below cost to regulation social and

from Europe at hub prices, reducing

percentage points. Gas-on-gas com­

political in 2012. There was also a

the oil price escalation share in the

petition for LNG imports in the traded

change in Nigeria in 2014, as prices

former Soviet Union.

markets, mainly in northwest Europe, added another 4.5% of total LNG

increased and gas-on-gas competition LNG trade

imports. Gas-on-gas competition

From 2007 to 2017, in contrast, oil price

accounted for more than 50% of

Pipeline trade

escalation largely held its share in the

LNG imports into Europe in 2018,

In pipeline imports there has been a

LNG market, averaging 72%, compared

compared to 33% in 2017, while gas-

largely continuous rise in gas-on-gas

to 28% for gas-on-gas competition.

on-gas competition in China and the

competition at the expense of oil price

However, in 2018, there was a large

Indian sub-continent rose from 24% to

escalation, rising from 23% in 2005 to

surge in spot LNG imports.

30.5% and for the Asia-Pacific impor­­ters

was introduced.

IGU releases latest Wholesale Gas Price Survey 117

NEWS

(mainly Japan, Korea and Taiwan) from

$4.38 per mmBtu – the highest average

cost of production and transportation

18% to 24%. Despite the growth in

price since 2014.

–Algeria, Turkmenistan and Venezuela.

LNG imports between 2017 and 2018

The highest wholesale prices in

of some 22 bcm or 5.5%, the actual

2018 were again found in the main

Price convergence

volume of oil price escalation imports

LNG importing countries in Asia and

Global gas prices have been converg­

declined for the first time ever.

Asia-Pacific – Japan, Korea and Taiwan

ing continuously since 2005, indicating

– plus Singapore and China. Not far

further globalisation of the gas mar­

Wholesale prices

behind were many European countries,

kets, at least up until 2018, when some

Wholesale prices outside North America

with gas-on-gas pricing, as spot prices

divergence occurred. It is also con­

rose continuously between 2005 and

rose in 2018. Prices were much lower in

cluded that there is more gas price

2014, declined in most regions in 2015

the USA, where prices were even below

convergence amongst countries: (1)

and 2016, before rebounding in 2017

those in Egypt, Indonesia, Malaysia,

with market related pricing; (2) which

and 2018 in almost all regions. This was

Nigeria and some Middle East

are connected with the global gas

mainly in Europe and Asia, as oil prices

countries. Prices in Russia have fallen

market through gas imports; (3) with

increased and spot markets tightened.

well below other countries, which, in

oil-indexed gas prices; and (4) within

Prices also increased in the more regu­

previous years, they had been above,

Europe. The trend of global gas price

lated regions such as Africa and the

as a consequence of the large rouble

convergence is more distinct when we

Middle East, as authorities continued

depreciation. At the bottom of the

exclude the data of North America.

policies to increase prices to more

chart are generally countries where

market or economic levels. The average

wholesale prices were subject to some

The full report can be downloaded from

world wholesale price in 2018 was

form of regulation and often below the

www.igu.org.

Types of price formation mechanisms Oil price escalation

The price is linked, usually through a base price and an escalation clause, to competing fuels, typically crude oil, gas oil and/or fuel oil.

In some cases, coal prices can be used as can electricity prices.

Gas-on-gas competition

The price is determined by the interplay of supply and demand and is traded over a variety of different periods (daily, monthly, annually or other periods). Trading takes place at physical hubs (e.g. Henry Hub) or notional hubs (e.g. NBP in the UK). There are likely to be developed futures markets (NYMEX or ICE). Not all gas is bought and sold on a short-term fixed price basis and there will be longer-term contracts but these will use gas price indices to determine the monthly price, for example, rather than competing fuel indices. Also included in this category are any spot LNG cargoes, any pricing which is linked to hub or spot prices and also bilateral agreements in markets where there are multiple buyers and sellers.

Bilateral monopoly

The price is determined by bilateral discussions and agreements between a large seller and a large buyer, with the price being fixed for a period of time – typically this would be one year. There may be a written contract in place but often the arrangement is at the government or state-owned company level. Usually there would be a single dominant buyer or seller on at least one side of the transaction, to distinguish this category from gas-on-gas competition, where there would be multiple buyers and sellers.

Netback from final product

The price received by the gas supplier is a function of the price received by the buyer for the final product the buyer produces.

This may occur where the gas is used as a feedstock in chemical plants, such as ammonia or methanol, and is the major variable cost in producing the product.

Regulation: cost of service

The price is determined, or approved, by a regulatory authority, or possibly a ministry, but the level is set to cover the “cost of service”, including the recovery of investment and a reasonable rate of return.

Regulation: social and political The price is set, on an irregular basis, probably by a ministry, on a political/social basis, in response to the need to cover increasing

costs, or possibly as a revenue raising exercise – a hybrid between regulation: cost of service and regulation: below cost.

Regulation: below cost

The price is knowingly set below the average cost of producing and transporting the gas often as a form of state subsidy to the population.

No price

The gas produced is provided free to the population and industry, possibly as a feedstock for chemical and fertiliser plants, or in refinery processes and enhanced oil recovery. The gas produced maybe associated with oil and/or liquids and treated as a by-product.

118 IGU releases latest Wholesale Gas Price Survey

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O R G A N I S AT I O N

IGU Organisation 2018–2021 IGU Council

IGU Executive Committee Mr Mazighi Ahmed, Algeria

IGU Management Team

President Executive Committee

Task Force 1: Strategic Communications and Outreach

Task Force 3: Energy Policy

Strategy

Exploration and Production

IGU Secretariat

Coordination Committee

Task Force 2: Energy for All

Sustainability

Vice President

Secretary General

Storage

Dr Graeme Bethune, Australia, Regional Coordinator North East Asia and Australasia

Mr Hazli Sham Kassim, Malaysia, Regional Coordinator South and South East Asia

Mr Jean-Pierre Hollevoet, Belgium

Mr Han Fennema, Netherlands, The

Mr José Carlos Broisler Oliver, Brazil

Mr Pål Rasmussen, Norway

Mr Khaled Abu Bakr, Regional Coordinator Africa and the Middle East

Mr Andrey Sapozhnikov, Russian Federation

Mr Andrea Stegher, Regional Coordinator Europe

Rosa María Sanz García, Spain

Mr Orlando Cabrales Segovia, Regional Coordinator Latin America and the Caribbean

Ms Che Lixin, China, People’s Republic of Marketing and Communications

LNG

Transmission

Dr Jeongwook Khang, Korea, Republic of

Ms Li Yalan, China, People’s Republic of,

Committees

Gas Markets

Mr Patricio da Ré, Argentina

Distribution

R&D and Innovation

Utilisation

Mr David Carroll, United States of America

Dr Chen Xavier, China, People’s Republic of

Ms Karen A. Harbert, United States of America

Mr Andreas Rau, Czech Republic Mr Patrick Corbin, France Mr Gerald Linke, Germany Mr Mostafa Sepehrian, Iran Mr Satoshi Yoshida, Japan Mr Joo-Myung (Joe) Kang, Korea, Republic of

IGU Management Team

Mr Joo-Myung (Joe) Kang, President (Republic of Korea)

Dr Jeongwook Khang, Chair of the Coordination Committee (Republic of Korea)

Mr Luis Bertrán Rafecas, Secretary General

Ms Li Yalan, Vice President (People’s Republic of China)

Mr Liu He, Associate Member, CNPC Mr Francisco P. de la Flor, Premium Associate Member Enagás

Mr Peder Bjorland, Premium Associate Member, Equinor Mr Ajay Shah, Premium Associate Member, Royal Dutch Shell

Mr Timothy M. Egan, Regional Coordinator North America Mr Marcel Kramer, Regional Coordinator Russia-Black Sea-Caspian Sea Mr Luis Bertrán Rafecas, Secretary General

Mr Jean-Marc Leroy, Premium Associate Member, ENGIE

Dr Chen Xavier, Vice Chair of the Coordination Committee (People’s Republic of China)

Mr David Carroll, Immediate Past President (United States of America)

IGU Secretariat Team c The staff of the IGU Secretariat (from left to right): Emma Siobhan Paños Knowles, Administrative Advisor; Hyunchang Kim, Advisor; Flavia Malet de Hvidbo, Senior Advisor; Luis Bertrán Rafecas, Secretary General; Luisa Peris Meléndez, Executive Assistant; Luis Calvo, Director Advisor.

Not pictured: Menelaos (Mel) Ydreos, Public Affairs Director; Rodney Cox, Events Director; Tatiana Khanberg, Manager Public Affairs.

120 IGU organisation 2018–2021

NATURAL GAS Clean Fuel, Sustainable Future

Natural gas is emerging as the “fuel

“LNG at the doorstep” initiative

exclusive rights for 17 Geographical

of the 21st century,” steadily replacing

which started in 2007 is highly popular

Area (GA) sites. In addition, IndianOil

liquid fuels and coal due to its low

with bulk consumers located away from

with its JV partners bagged 23 more GA

ecological footprint and inherent

gas pipelines. At present, IndianOil

sites taking its total tally to 40 GA sites.

advantages for all user segments:

supplies LNG to about 60 institutional

The Corporation’s investment in

Industries, Transport, Households.

customers from fertiliser, power, steel

development of CGD networks in the

and other industrial sectors. The

next eight years is likely to be about Rs.

ambitious plans to increase the share

Corporation is also importing LNG

10,000 crore ($1.4 billion), which

of natural gas in the country’s energy

in greater quantities directly to meet

includes equity contribution in JVCs.

mix from the current 6.5% to 15% in

increasing domestic demand.

The Government of India has

the next decade by boosting domestic

As the second largest player in the

IndianOil is also a JV partner in Indradhanush Gas Grid Ltd linking

production and encouraging infra­

growing segment, IndianOil is making

all the major cities in the Northeast

structure rollouts in the form of LNG

significant investments and capacity

for supply of natural gas to various

import terminals, pipelines and city gas

commitments across the value chain,

customers in the domestic, commercial,

distribution (CGD) projects.

viz., LNG sourcing, LNG import

industrial and automobile segments.

terminals, natural gas pipelines,

The Corporation is also investing in two

CGD networks, etc.

more JV companies that are laying three

A number of steps have been taken in this direction by way of policy changes, marketing and pricing free­

The Corporation’s 5 MMTPA

gas pipelines of a combined length of

dom, capital grant, reduction of duties,

LNG import terminal at Ennore,

3,760km connecting Mehsana-Bhatinda,

gas pooling mechanism and CGD

commissioned in March 2019, has

Bhatinda-Jammu-Srinagar and

bidding rounds. Thanks to the proactive

begun supplying R-LNG to Manali

Mallavaram-Bhopal-Bhilwara-Vijaipur,

steps taken to promote a gas-based

Refinery and other anchor customers in

covering nine States.

economy, India’s natural gas demand

the neighborhood. There is a provision

outlook is continuously improving. India

to expand its capacity up to 10 MMTPA

as green auto-fuel at its over 27,000

is now the fourth-largest LNG importer,

in future. A 1,244km pipeline network

fuel stations across India and is also

after Japan, China and South Korea,

is being laid to make LNG from the

collaborating with fleet owners and

and accounts for 7.1% of total global

terminal available right across Tamil

auto­mobile manufacturers to introduce

LNG imports.

Nadu, Pondicherry and Karnataka.

LNG as on-board fuel in long-haul

Indian Oil Corporation Ltd

IndianOil had formed two

The Corporation is adding CNG

commercial vehicles. The Corporation

(IndianOil), India’s downstream

joint ventures, Green Gas Ltd and

has also taken up field trials on use

petroleum major, proactively took up

IndianOil Adani Gas Pvt. Ltd, to

of LNG in mining (HSD+LNG)

marketing of natural gas in 2004

enter the burgeoning CGD segment

and bunkering.

through its joint venture, Petronet LNG

through CNG networks for the trans-

Ltd, that has set up two LNG import

port sector and piped natural gas

IndianOil is committed to energising

terminals at Dahej and Kochi on the

networks for households coming up

the future, naturally through Gas.

west coast of India.

across the country.

Over the years, the Corporation

The Corporation, on its own, made

has rapidly expanded its customer base

an aggressive bid for CGD projects in

of gas users by leveraging its proven

the 9th and 10th rounds announced by

marketing expertise in liquid fuels and

the Petroleum & Natural Gas Regulatory

its countrywide reach. Its innovative

Board (PNGRB) of India and won

MEMBERS

Members of IGU Albania Algeria Argentina Armenia Australia Austria Azerbaijan

Bahrain Belarus Belgium Bolivia Bosnia and Herzegovina Brazil Brunei

Bulgaria Cambodia Cameroon Canada Chile China, People’s Republic of

Chinese Taipei Colombia Côte d’Ivoire Croatia Cyprus Czech Republic Denmark

Egypt Equatorial Guinea Finland France Germany Ghana Greece Hong Kong, China Hungary India Indonesia Iran Iraq Ireland Israel Italy Japan Korea, Republic of Kuwait Latvia Lebanon Libya Lithuania Macedonia Malaysia Mexico Monaco Mozambique Netherlands, The New Zealand Nigeria Norway

Albania Albanian Energy Regulator (ERE)

Bolivia Yacimientos Petrolíferos Fiscales Bolivianos (YPFB)

Colombia Asociación Colombiana de Gas Natural – Naturgas

Israel The Israel Institute of Energy & Environment

Algeria Association Algérienne de l’Industrie du Gaz – AIG

Bosnia and Herzegovina Gas Association of Bosnia and Herzegovina

Argentina Instituto Argentino del Petróleo y del Gas

Brazil Associação Brasileira das Empresas Distribuidoras de Gás Canalizado (ABEGÁS)

Côte d’Ivoire Société Nationale d’Opérations Pétrolières de la Côte d’Ivoire – PETROCI Holding

Germany Deutscher Verein des Gasund Wasserfaches e.V. (DVGW

Countries represented in IGU 88 Charter Members 14 Premium Associate Members 61 Associate Members

Oman, Sultanate of Peru Poland Portugal Qatar Romania Russian Federation Saudi Arabia Serbia Singapore Slovak Republic Slovenia South Africa Spain Sudan Sweden Switzerland Thailand Timor-Leste Trinidad and Tobago Tunisia Turkey Ukraine United Arab Emirates United Kingdom United States of America Uzbekistan Venezuela Vietnam Yemen

Charter Members

Armenia Union of Gas Companies of Armenia (UGCA) Australia Australian Gas Industry Trust Austria Österreichische Vereinigung für das Gasund Wasserfach (ÖVGW) Azerbaijan State Oil Company of the Azerbaijan Republic (SOCAR) Bahrain The National Oil and Gas Authority (NOGA) Belarus Gazprom Transgaz Belarus Belgium Association Royale des Gaziers Belges

Brunei Brunei Energy Association Bulgaria Overgas Inc. AD Cambodia Cambodian Natural Gas Corp. Ltd Cameroon Société Nationale des Hydrocarbures Canada Canadian Gas Association

Croatia Croatian Gas Association Cyprus Ministry of Energy, Commerce, Industry & Tourism Czech Republic Czech Gas Association Denmark Dansk Gas Forening – Danish Gas Association Egypt Egyptian Gas Association

Chile Asociación de Empresas de Gas Natural (AGN)

Equatorial Guinea Sociedad Nacional de Gas de Guinea Ecuatorial (SONAGAS G.E.)

China, People’s Republic of China Gas Society

Finland Finnish Gas Association

Chinese Taipei The Gas Association of Chinese Taipei

France Association Française du Gaz (AFG)

122 Members of IGU

Ghana Ghana National Gas Company Greece Public Gas Corporation of Greece S.A. (DEPA) Hong Kong, China The Hong Kong & China Gas Co. Ltd Hungary Hungarian Electricity Plc (MVM) – Hungarian Gas Trade India Gas Authority of India Ltd (GAIL) Indonesia Indonesian Gas Association (IGA) Iran National Iranian Gas Company (NIGC) Iraq State Oil Marketing Company/Ministry of Oil (SOMO) Ireland Gas Networks Ireland

Italy Comitato Italiano Gas (CIG) Japan The Japan Gas Association Korea, Republic of The Korea Gas Union Kuwait Kuwait Petroleum Corporation (KPC) Latvia JSC Latvijas Gāze Lebanon Ministry of Energy and Water Libya National Oil Corporation

Monaco Société Monégasque de l’Électricité et du Gaz (SMEG) Mozambique Empresa Nacional de Hidrocarbonetos, E.P. (ENH) Netherlands, The Royal Dutch Gas Association – Koninklijke Vereniging van Gasfabrikanten in Nederland (KVGN) New Zealand The Petroleum Exploration & Production Association of New Zealand Inc. Nigeria Nigerian Gas Association c/o Nigeria Gas Co. Ltd

Lithuania Nacionalinė Lietuvos Energetikos Asociacija (NLEA)

Norway Petoro AS

Macedonia Macedonian Gas Association

Poland Polskie Zrzeszenie Inżynierów i Techników Sanitarnych (PZITS) – Polish Gas Association

Malaysia Malaysian Gas Association Mexico Asociación Mexicana de Gas Natural, A.C.

Oman, Sultanate of Oman LNG L.L.C.

Portugal Associação Portuguesa das Empresas de Gás Natural (AGN)

MEMBERS

Charter Members – continued Qatar Qatar Liquefied Gas Company Ltd (Qatargas)

Singapore SP PowerGrid Ltd

Spain Spanish Gas Association – Asociación Española del Gas (Sedigas)

Thailand PTT Public Company Ltd

Turkey BOTAŞ

United States of America American Gas Association

Timor-Leste TIMOR GAP, E.P.

Ukraine Naftogaz of Ukraine

Uzbekistan Uzbekneftegaz (UNG)

United Arab Emirates Abu Dhabi Gas Liquefaction Company Ltd (ADGAS)

Venezuela Petróleos de Venezuela S.A. (PDVSA)

Romania S.N.G.N. Romgaz S.A.

Slovak Republic Slovak Gas and Oil Association

Russian Federation PJSC Gazprom

Slovenia Geoplin

Sudan Ministry of Petroleum and Gas

Trinidad and Tobago The National Gas Company of Trinidad and Tobago Ltd

Saudi Arabia Saudi Arabian Oil Company (Saudi Aramco)

South Africa South African Gas Develop­ ment Company (Pty) Ltd

Sweden Swedish Gas Association – Energigas Sverige

Tunisia Association Tunisienne du Petrole et du Gaz (ATPG) c/o STIR

Serbia Gas Association of Serbia

Switzerland Swissgas

United Kingdom The Institution of Gas Engineers and Managers

Vietnam PetroVietnam Gas JSC Yemen Yemen LNG

Premium Associate Members Anadarko Petroleum Corporation (USA)

ENGIE (France)

Naturgy (Spain)

Beijing Gas Group (China)

Equinor ASA (Norway)

PT Pertamina – Persero (Indonesia)

Cheniere Energy Inc. (USA)

ExxonMobil Gas & Power Marketing (USA)

Royal Dutch Shell (The Netherlands/UK)

China National Petroleum Corporation – CNPC (China)

İGDAŞ – Istanbul Gas Distribution Co. (Turkey)

TOTAL S.A. (France)

Enagás (Spain)

Korea Gas Corporation – KOGAS (Korea)

Associate Members Abu Dhabi National Oil Company (ADNOC) Distribution (UAE)

GAZBIR – Association of Natural Gas Distributors of Turkey

Regas (Italy)

Hermann Sewerin GmbH (Germany)

Repsol S.A. (Spain)

AGL Energy Ltd (Australia)

HIMOINSA S.L. (Spain)

Russian Gas Society (Russia)

Atlas Copco Gas & Process (USA)

Indian Oil Corporation Ltd (India)

Samsung Engineering Co. Ltd (Korea)

Australian Petroleum Production & Exploration Association – APPEA (Australia)

Indonesian Gas Society (Indonesia)

Santos Ltd (Australia)

INPEX Corporation (Japan)

Schlumberger (USA)

BP Gas Marketing Ltd (United Kingdom)

Instituto Brasileiro de Petróleo, Gás e Biocombustíveis – IBP (Brazil)

Sempra LNG & Midstream (USA)

Bureau Veritas (France)

Israel Natural Gas Lines Ltd (Israel)

Société Suisse de l’Industrie du Gaz et des Eaux – SSIGE/SVGW (Switzerland)

Bursagaz (Turkey)

Liander N.V. (The Netherlands)

Sonorgás (Portugal)

Chevron Gas & Midstream Company (USA)

Linde AG (Germany)

TAQA Arabia (Egypt)

China LNG Association (China)

Natural Gas Society (India)

Tatweer Petroleum (Bahrain)

China Petrochemical Corporation – Sinopec (China)

NextDecade Corporation (USA)

COM-therm (Slovakia)

N.V. Nederlandse Gasunie (The Netherlands)

TBG – Transportadora Brasileira Gasoduto Bolívia-Brasil S.A. (Brazil)

ConocoPhillips Company (USA)

Oman Gas Company SAOC (Oman)

TgP – Transportadora de Gas del Perú (Peru)

DNV GL (Norway)

OMV Gas & Power GmbH (Austria)

The Association of Oil & Gas Exploration Industries in Israel

Edison S.p.A. (Italy)

ONC Energy (China)

Tubacex (Spain)

Enerdata s.a.s. (France)

Origin Energy Limited (Australia)

Turboden (Italy)

Energodiagnostika (Russia)

Petróleo Brasileiro S.A. – Petrobras (Brazil)

Uniper SE (Germany)

Eni (Italy)

Petronet LNG Limited (India)

Vitol S.A. (Switzerland)

Eurogas

Posco Daewoo (Korea)

Westnetz GmbH (Germany)

GasTerra B.V. (The Netherlands)

PwC (The Netherlands)

Woodside (Australia)

ARPEL – Regional Association of Oil, Gas and Biofuels Sector Companies in Latin America and the Caribbean

GIIGNL – Groupe International des Importateurs de Gaz Naturel Liquéfié/International Group of LNG Importers

MARCOGAZ – Technical Association of the European Natural Gas Industry

Energy Delta Institute (EDI)

NGV Global

Pipeline Research Council International, Inc. (PRCI)

Gas Infrastructure Europe (GIE)

Russian National Gas Engine Association (NGA)

Gas Technology Institute (GTI)

NGVA Europe – European Association for Bio/Natural Gas Vehicles

GERG – Groupe Européen de Recherches Gazières/ European Gas Research Group

International Pipe Line & Offshore Contractors Association (IPLOCA)

Baker Hughes, a GE company (USA)

Organisations Affiliated to IGU

World LPG Association (WLPGA)

Members of IGU 123

EVENTS AND ACKNOWLEDGEMENTS

IGU events and other major gas-related events 2019-2020 2019 October 8-10 IGU Council, Executive Committee and Coordination Committee meetings Yogyakarta, Indonesia November 5-7 European Annual Gas Conference Paris, France November 6-8 European Gas Technology Conference 2019 Groningen, The Netherlands

November 10-12 GIIGNL General Assembly Singapore November 11-22 25th Session of the Conference of the Parties to the UNFCCC (COP 25) Santiago, Chile November 14-15 IGU-EnergyNet Latin America & Caribbean Gas Conference & Exhibition (LGC 2019) Lima, Peru

2020 February 24-26 IGU Research Conference (IGRC 2020) Muscat, Oman April 21-23 IGU Executive Committee and Coordination Committee meetings Prague, Czech Republic September 17-18 GIE Annual Conference Lucerne, Switzerland

October 6-8 IGU Council, Executive Committee and Coordination Committee meetings Vancouver, Canada November 2-4 33rd World LPG Forum Dubai, UAE November 9-19 26th Session of the Conference of the Parties to the UNFCCC (COP 26) Glasgow, UK December 6-10 23rd World Petroleum Congress Houston, USA

Acknowledgements For the IGU Secretariat Secretary General: Luis Bertrán Rafecas Director Advisor: Luis Calvo Events Director: Rodney Cox Director Public Affairs: Menelaos (Mel) Ydreos Manager Public Affairs: Tatiana Khanberg Senior Advisor: Flavia Malet de Hvidbo Advisor: Hyunchang Kim Executive Assistant: Luisa Peris Meléndez Administration Consultant: Emma Siobhan Paños Knowles For ISC Consulting Editor: Mark Blacklock Copy & Picture Editor: Adrian Giddings Publisher: Robert Miskin Finance Director: Yvonne O’Donnell Finance Assistant: Maria Picardo Senior Consultants: Michael Gaskell, Karin Hawksley and Jonathan Unsworth Art and Design Director: Michael Morey Printed by Buxton Press Ltd which is certified to Chain of Custody Standards for the Forest Stewardship Council (FSC) and Programme for the Endorsement of Forest Certification (PEFC), all paper used being sustainably sourced.

124 Events and Acknowledgements

IGU and ISC would like to express their thanks to all those who helped in the preparation of this publication. Thanks are also due to the following companies, people and organisations for providing pictures. The credits are listed by article. Where the pictures for an article came from a variety of sources, the appropriate page numbers are given in brackets after each source.

The gas industry in Indonesia: Badak LNG (67), BP plc (69 left), Premier Oil plc (69 right), Chevron Indonesia (70 upper), PT Nusantara Regas (70 lower), Höegh LNG (71).

Cover (the pipelaying vessel Pioneering Spirit): Gazprom.

Reports from the Regional Coordinators: EnergyQuest (96 upper), Eugene Pronin (96 lower), Shell Australia Pty Ltd (98), Malaysian Gas Association (100 upper left), Summit Power International (100 upper right), Petronas (100 lower).

Introduction: IGU. Gearing up for IGRC 2020: Oman LNG (20), Oman Convention and Exhibition Centre (21), Oman LNG Development Foundation (22).

Resilience of integrated energy systems: mjm_foodie [CC-BB-2.0] (24 wind turbines), Torresol Energy Investments, S.A (24 solar).

Improving resilience and reducing emissions in residential housing: ATCO (32 & 33), NAIT-Northern Alberta Institute of Technology (34).

Unveiling gas opportunities in Latin America and the Caribbean: Sempra LNG (37 upper), Wärtsilä (37 lower), Exmar (40), BW LNG (43).

Natural gas as a backbone of the Russian energy sector: Gazprom (57, 58, 60, 62 & 63).

High level of optimism at LNG2019: LNG2019 (76, 77, 82, 86, 87 upper & 90 upper), JSC Yamal LNG (80), Sempra LNG (84), GAC (87 lower), LNG17/Gary Fountain (90 lower).

Members’ corner: Sedigas (104, 105 top & 106), Baleària (105 middle), Scania AB (105 bottom).

Presenting IGU’s new members: Ghana National Gas Company (108 & 109), Tubacex (110), PetroVietnam Gas (111).

Activities of IGU: IGU. IGU Organisation: Korea Gas Union (Joo-Myung Kang & Jeongwook Khang, 120), Beijing Gas Group (Li Yalan & Chen Xavier, 120), IGU (Luis Bertrán Rafecas & Secretariat team, 120), GTI (David Carroll, 120).

Pertamina is Developing its Gas and LNG Portfolio From domestic and international sources to secure the energy demand in Indonesia and ready for global LNG trading business

Note: LNG Source

Gas Business Journey of Pertamina

LNG Market Development Source

Market

Transportation

Big - Medium

Medium - Small

1970s

LNG Dispenser

Road Transportation (Trucking)

Rail Transportation

LNG for Industry

Develop Badak & Arun LNG Terminal for exporting the LNG to Japan Korea & Taiwan Market

LNG Microbulk for Hotel/ Restaurant/Cafe

LNG for Mall/Hotel/Apartment

2010-2015

2016

202-2022

Convert Arun LNG Liquefaction Terminal to become LNG Regasification terminal and Develop Nusantara Regas to support Indonesia LNG market supply

Improving the LNG trading business capability with Pacific Petroleum Trading (PPT) Co. Ltd

Pertamina has been acknowledged as a global integrated LNG player

2017

LNG for for Workshop

2000–Present

Shipping and Other Transportation

Construct pipeline for gas supply in Java, Sumatra and Kalimantan Area (priority demand point)

LNG for co-Gen

Pertamina as a Pioneer for Integrated LNG to Power Project in Indonesia

2011-2015 Develop Donggi Senoro LNG Liquefaction Terminal for monetizing the gas reserve around Sulawesi Area. The LNG is supplied to Japan Korea & Taiwan Market

Pertamina formed Global Ventures to develop overseas energy business incl gas supply, infrastructure, and power

Jawa-1 Project Scope

Other Parties

Regasification

Power Plant

ONSHORE GAS RECEIVING FACILITY LNG CARRIER

POWER PLANT TRANSMISSION LINE

FSRU

MOORING FACILITY LNG PLANT/ LNG HUB

1760 MW OFFSHORE GAS PIPELINE

ONSHORE GAS PIPELINE

SUBSTATION