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THE intem.ational trad~ in liquefied natural gas experieQced another year of remarkable growth in 1979. Worldwide deliveries were up by almost one-third, a much faster rise than for the gas market as a whole, and sales by value p:cw by a hefty60%. Yet these signs of vigorous health are looking increasingly cosmetic. The LNG market, thoup only 16 years old" is already ailing. In recent months it has been shaken by disputes over pricins~ breac~es of contract, aad abmptcanceUatioas of projects thought certain to go ahead. As alternative means of p~essing_and transportiq ps come to the fore~ most projections for the trade over the next ten years now forecast sisnificandy slower growth thaa had been confidently predicted even two years ago.

This is not to disparage the achievements of the 1970s. Last year's 32% growth in the estimated world trade, from 2 516.8 lllillion cubic feet day (MMcfld) in terms of regasifi"ecJ LNG, to 3 320.5 MMcfld, brought the average annual rate of growth for the five years since 1974 to 28%. The 1979 ligwe indicated that cosdy liquefaction plants were b:klg utilised at a more efficient level, with 690Al of plateau voltmies being fi'.lifiiied; and with the worid average landed price rising from $1.93/million Btu in 1978 to $2.33 last yem-, greater profitability for the operators seemed assured.

Among the six importing nations Japan remained easily the leadet(see Table,!), though the United States, which trebled its purchases in 1979, took over second place from France. Algeria strengthened its position at the head of the six exporting countries, with a .rise in sales of nearly 80%. Four ofits five customers not only bought more but also

. paid more (see Table II). El Paso, of the United States, increased its purchases more than threefold, despite problems at the LNG-1liquefaction plant, and displaced Gaz de France, which has two contracts with Sonatrach, as Algeria's biggest client. Imports by Spain's Enagas grew, but remaintd at only a fraction of contracted volumes due. primarily to technical troubles at Skikda. Supplies to British Gas and to Distrigas, of the United States, were far closer to peak volumes.

During 1980, however, a ~ries of disputes has cut Algerian LNG exports drastically, allowing Indonesia for the first time to ·become the world's major producer. Algiers decided:!} early in the year, to renegotiate every one of its contracts •-both. operational and planned-with a view t() bringing fob prices for LNG into line with fob prices for crude oil. (For a detailed look at Algerian gas policy see Petroleum Economist August' 1980, pages 347-348, and fo~ a survey of LNG pricing structures and exporters' demands see Petroleum Economist September 1980, pages' 373-379). ·

The. many rounds of talks between Sonatrach and its c.~ustomers held over the past few months have, by all a,ccounts, left both sides wide apart. In the cases of Distrigas, Enagas and f~t · ·., • ·,!

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deliveries, though it has delayed, or possibly jeopardised, the planned renewal of the small UK contract, which expired officially more than a year ago. Supplies to the two other importers have slumped drastically. Failure to agree to the Algerian demand for fob parity with crude, which would have meant a doubling in price, led to a suspension of shipments to Gaz de France from mid-March, though by the third quarter sales had recovered to just over bali contract levels. This unprecedented breach of a supposed­ly inviolable, long-term contract was followed on lOth April by a complete shutdown of exports to El Paso, after the American government refused to authorise advance payments for deliveries over a transitional period, during which time a new prit;e would be settled. Sales to El Paso have not been resum~d.

The second North Afrir..an exporter, Libya, was said to be co-ordinating its stance on prices with that of Algeria, and there are suggestions that Libya's hard line, too, may have affected its exports during 1980. Sales to l\idy from Esso Standard Libya's Marsa Ei Brega plant (where the

TABLE I

WORLD: l.NG IMPORTING/EXPORTING COUNTIUES 1978-1979 (million cu ft/day)

1978 %share 1979 %shtm ImportinJ countries Japan 1510.4 60.0 1866.5 56.2 USA 231.3 9.2 692.1 20.9 France 278.4' 11.0 306.2 9.2 Italy 231.3 9.2 231.4 7.0 Spain 193.1 7.7 163.2 4.9 UK WORLD TOTAL 2i HARZA-EBASCO Exporting countries Susitna Joint Venture Algeria

Document Number. Indonesia Brunei Libya UAE \'-\81.., t'SA ·.v.·, ':'!;; T"~TAL 2

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LNG MARKET -' ~ ... . •.-t ... . ~ .1 • ' .. -"'

Slower growth for the 1980s by Jeffrey Segal

THE intemational trade in liquefied natural gas experienced another year of remarkable growth in 1979. Worldwide deliveries were up by almost ont:nthird, a much faster rise than for the gas market as a whole, and sales by value grew by a hefty 60-A.. Yet these sips o.fvigorous health are looking increasingly cosmetic. The LNG market, though anly 16 vc-.,...., 0-•w_. .-1";;:: ili~. ~dv ~;!: .. - T-. -~~--• ---•1.. ... :. 1.. .... ..._ __ ... I. .. Ira- 1. .... d: ... - ...... .n.va• RW,..:ne h-!11.-h,..c nf .-nntr!:itcl .and J .ag ,. ~ _...., ...... ., ~5• au., • ..,._ ... .auvu...._. ... A&SJ~G~ .,....., ... o ............ .,3 ..-.ugr ...... fii/1 .., .... r ......... 0 , -----~-.... -- ... ------.i --abmpt cancellations .of projects thought certain to go ahead. As alternative means of processing_ and transporting gas come to the fore1 most projectio.us for the trade over the next ten years now forecast significandy slower growth than had been confidently predicted even two years ago.

This is not to disparage the achievements of the 1970s. Last year's 32% growth in the estimated world trade, from 2516.8 million cubic feet day (MMcf/d) in terms of regasified LNG, to 3 320.5 MMcf~d, brought the average annual rate of growth for the five years since 1974 to 28%. The 1979 figure indicated that co.sdy liquefaction plants were being utilised at a more efficient !eve!, with 69% of platea"ll volumes being fulfilled; and with the world average landed price rising from $1. ~3/million Btu in 1978 to $2.33last year, greater profitability for the operators seemed assured.

Among the six importing nations Japan remained easily the leader (see Table I), rhough the United States, which trebled its purchases in 1979, took over second place from France.Algeria strengthened its position at the head of the six exporting countries, with a rise in sales of nearly 80%. Four of its five customers not only bought more but also paid more (see Table ll). El Paso, of the United States, increased its purchases more than threefold, despite problems at the LNG-I liquefaction plant, and displaced Gaz de France,whichhas two contracts with Sonatrach, as Algeria's biggest client. Imports by Spain's Enagas grew, but remained at only a fraction of contracted volumes due primarily to technical troubles at Skikda. Supplies to British Gas and to Distrigas, of the United States, were far closer to peak volumes.

During 1980, however, a series of disputes has cut Algerian LNG exports drastically, allowing Indonesia fm: the first time to become the. world's major producer. Algiers decided, early in the year, to renegotiate every one of its contracts- both operational and planned-with a view to bringing fob prices for LNG into line with fob prices for crude oil. (For a detailed look at /Jgerian gas policy see. Petroleum Economist August" 1980, pages 347-348, and for a survey of LNG pricing structures and exporters' demands see Petroleum Economist September 1980> pages 373-379).

The many rounds of talks between Sonatrach and its customers held over the past few months have, by all accounts, left both sides wide apart. In the cases of Distrigas, Enagas and British Gas this has not affected

deliveries, though it has delayed, or possibly jeopardised, the planned renewal of the small UK contract, -which expired officially more than a ye21' ago. Supplies to the two other importers have slumped drastically. Failure to agree to the Algerian demand for fob parity with crude, which would have meant a doubling in price, led to a suspension U-f -t..!----·- ...... ~"""-- _.~_ 'C'..,."" ...... from nn"d March though ... ~1Upuu;uu. t.u u-a£ u& .L·.~oau ..... ·-- - ,

by the third quarter sales had recovered to just over half contract levels. This unprecedented breach of a supposed- · ly inviolable, long-term contract was followed on lOth April by a complete shutdown of exports to El Paso, after the American government refused to authorise advance payments for deliveries over a transitional period, during which time a new price would be settled. Sales to El Paso have not been resumed.

The second North Mrican exporter, Libya, was said to be co-ordinating its stance on prices with that of Algeria., and there are suggestions that Libya's hard line, too, may have affected its exports during 1980. Sales to Italy from Esso Standard Libya's Marsa El Brega plant (where the

TABLE I

WORLD: LNG IMPORTING/EXPORTING COUNTRIES 1978-1979 (million cu ftlday)

1978 %share 1919 %share lmportina c::oantries Japan 1510.4 60.0 1866.5 56.2 USA 231.3 9,2 692.1 20.9 France 278.4 ]1.0 306.2 9.2

·Italy 231.3 9.2 231.4 7.0 Spain 193.1 7.1 163.2 4.9 UK 72.3 2.9 61.1 1.8 WORLD TOTAL 2516.8 /00.0 3320.5 /00.0

Exporting countries Algeria 617.1 24.5 1105.6 33.3 Indonesia 502.9 20.0 833.5 25,/ Brunei 711.7 28.3 731.9 22.0. Libya 389.3 15.5 348.4 10.5 UAE 170.1 6.7 167~9 5.1 USA 125.7 5.0 133.2 4.0 WORLD TOTAL 2516.8 100.0 3320.5 100.0

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· govemmen.t ~.to take a S 1o/o1nterest) were unchanged, at ~ peak·volutne_, in ·1979, but during fJ.rSt-balf 1980 fell by

·.· .. ZS%~ ·sparnm_ impilns from Libya dropped by a similar ' amount . in 1~7'9, 'though there is. no information on supplies so far _thit year.

!\ Japanese price• hipel' ··. ·Neither . Libya nor Algeria has yet succeeded in imposing on their European and American buyers pricl!s any\Vhere approaching fob parity with crude, .currently $&-$7/million Btu. Sonatrach has struck provisional deals for continuing 1980 delil!eries at around. the $3.00 ; ob lDal'k. The UK, for u.ample, was payf<Dg an estimated $3.18 cif in September, and the French $3.58 cif the previous month. El Paso was .said to be on the verge of a

TABLEii WORLD: LNG TRADE 1978-1960

Abu Dubi-Japu

Volum.e Av=raae cif (million cu price

ftlday) (US$/thousand cu ft)

Average cif price

(US$/million Btu)

Exporur: ... ~bu Dhabj Gas· Liquefaction (ADNOCIBP/CFP/Mitsui/Bridgestone) lrtt.purUr: Tokyo Electric i.iqwfaetitm pltmt: Das· Island. PlateJJu f10lume: 400 MMcf/d. S~mt-up: 1977. Expiry: 1997. .!978 197, 1979 Jan·Aua 1980 Je·Aua

-.AJF-r.a-Ftace Exporter: Sonatrach Importer: Gaz de Frauce

170.1 167.9 142.3 240.9

2.30 2.42 2.36 5.31

2.20 2.31 2.25 s 'l7

Liqwf4Ciitm plaru: (i) CAMEL, Arzew (ii) Skikda. PlateaU wlume: (i) 100 MMd'/d (ii) 350 MMcf/d. St~~rt~: (i) 1965 (ii) 1973. Expiry: (i) 1990 (ii) 1997. 1978 1979 1979 Ja·Aua 1980 Jaa·Aug

~\lpria-Spam Exporter: Sonatrach Importer: Enagas

278.4 306.2 319.9 171.5

1.92 2.20 2.08 3.20

1.81 2.07 1.95 3.02

Liquefaelitm plant: Skikda. Platzau r10lume: 450 MMcf/d. St~~n-up: 1976. Expiry: 1999. 1978 197.?

Al&eria-UK Expt~rter: Sonatrach Importer: British Gas

35.1 46.2

1.44 2.28

1.36 2.15

Liquefaction plant: CAMEL, Anew. Plareau volume: 100 MMcf/d. Start-liP: 1964. Expny: 1979 (under renq,eotiation) 1978 72.3 1.06 0.99 .191' 61.1 1.22 1.15 1979 JanwSept 78.6 1.16 1.09 1980 Jan-Sept 81.4 1.33 1.25

Alaefta-USA (I.) Exporter: Sonatrach Importer: Distrigas Liquefuctitm plant: Skikda. Plateau volume: US MMcf/d. S~mt-up: 1971. Expiry: 1998. 1978 39.9 2.55 2.39 197, 78.3 2.96 2.72

Af~eria-USA (2) Exporter: Sonattach. Importer: El Paso (for Columbia LNG/Con_solidated Systems LNG/Southern Energy) LiJplefactitm plant: LNG .. I, Arzew. Plateau 'DDlume: 1000 MMcf/d. Starr-up: 1978. Expiry: 2003 1978 191.4 1.32 1.17 1919 613.8 1.94 1.70

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compromise settlement at $3.20 fob, while both Distrigas and Enagas were scheduled to move to around $4.40 cif from July~ The last notified Libyan increase was in January, when the official fob rate went up to $3AS, though Italian trade statistics sbow·no indic:ation of this

·increase- the second in·three months- having been· implemented. Snam was paying only ~i2.99 cifJ, Mduding ·

charg b J 1980 .-;,- ".' :; ":'~ . :,. ·. '~! transport es, y une or~ :·7 .. -,,·,.:;-,_..,,;;. ~"""'" •.,. l .,

By contrast Japan, the sole importer of LNG from the four other producing countries, has paid what stemS to be the. price of uninterrupted supplies by agreeing to far higher charges. As from 1st January Abu Dhabi has been selling at a cif rate exactly equivalent to the landed cost of its Aiurban crude in Japan, which reached $5.75 by August. Sales had slipped marginally in 1979, but almost

Volume Average cif Avcraae c:if (million cu price price

ftlday) (US$/thousand (US$/millic..n · ~ cu ft): ·· .••. ._-. Btu) ... . ...

Bnmei-Japu ~ . . .~ +, 1.;.:·:,~~~:;~-:.;~~; ::;,;·.;:;·~~~~ iti;~~:~r~~~-:~ Exporter: Brunei LNG (Shell!Mitsubishi!Bnmei government) ·. · lmpM'tm: Tokyo Electricffokyo Gas/Osaka Gas Liqlllfaetion plant: Lumut. Plau4u wlume: 755 MMcf/d. Start-up: 1973. Expify: 1995. 1978 1979 1979 Jan-Aug 1980 Ja_n,.Aq

Indonesia-Japan

711.7 731.9 738.8 774.9

2.27 2.45 2.45 4.70

Exporters: (i) Pertamina!Huffco (ii) Pertamina/Mobil

2.04. 2.20 2.20 4.22

Imponers: Jilco consortium (Osaka Gas/Kansai Electric/Chubu Electric!Kyushu Electric/Nippon Steel) Liquefaailm plant: (i) Badak, Bontang (ii) Arun. Plalla1J fJCilume: · (i) 410 MMcf/d (ii) 640 MMcf/d. Stan-up: (i) 1977 (ii) 1978. Expity: 1997. 1978 1979 1979 Jan-Aug 1980 Jan-Aug

Libya-Italy Exporter: Esso Importer: SNAM

502.9 833.5 769.8

1145.6

2.93 3.61 3.25 5.43

2.80 3.45 3.ll 5.19

Liquefaction plant: Marsa el Brega. Plateau volume: 235 MMcf/d, S~mt-up: 1970. Expiry: !990. 1978 231.3 1.17 1.12 1979 231.4 1.52 1.45 1919 Jan-June 278.8 1.17 1.12 1980 Jan-June 208.5 3.ll 2.97 Libya-Spain Exporter: Esso lmpurter: Enagas Liquefat:tion plant: Marsa el Brega. Plateau volume: 110 MMcf/d. Stan-up: 1970. Expiry· 1985 . 1978 158.0 1.04 0.99 1979 117.0 1.65 1.58

US~Japan Exporter: Kenai LNG (Phillips/Marathon) lmporurs: Tokyo Gasfl'okyo Electric Liquefaction plant: Kenai, Alaska. Plateau -volume: 160 MMcf/d. Stan-up: 1969. Expey: 1984. !918 125.7 2.32 .2.~0 1979 133.2 2.41 2.39 1979 J:m·Aus 148.5 2.41 2.39 1980 Jan-Aug 105.3 4.56 4.52 WORLD TOTAL 1978 2516.8 2.08 1.93 1979 3 320.5 2.51 2.33

Note: 1978 figures are revised. Sources: Imponing countries' trade statistics, except USA: Dept. of Energy.

Petroleum Economist December 1980

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doubled. in the first eight months. of this year. Both Brunei and Alaska have been paid at cif parity with the mean cost of all Japan's imported crude since 1st April, though by August the Alaskan price, at a record $5.93, had managed to overtake that of Brunei ($5.21). Both countries are selling at plateau volWlles, though Alaskan deliveries have dropped off somewhat during 1980. ;

Finally Indonesia, whose sales to the Jilco group rose by two-thirds in 1979, has soared to the top of the producers' .. league in 1980 by exporting over 1100 MMcf/d in January-August. This in fact exceeds contractual volume..~, as it includes a "spot" deal for 350 000 tonnes for Tokyo Electric during 1980 and an extra 3.4 million tonnes for Jilco between 1980 and 1983. Indon~1ian prices have not officially been raised, though in January a surcharge was imposed on top of the existing price formula, which is based on the average price for selected Indonesian oil products plus an inflation factor. By August 1980 Indonesian LNG was fetching $5.43 cif.

Re-evaluation of projects

These rapid increases in prices, to the point where LNG is now only barely competitive with alternative fuels, hale led many consumer countries to reappraise plans for substantial increases in imports during the 1980s. Their doubts over the economic cost have been reinforced by continuing anxiety over LNG safety and now, with contracts having been broken with impunity, over security of supply. On the producers' side, too, there has been a noticeable re-evaluation of LNG as a cost-effective mean.S ·of utilising surplus gas. More attention has been paid to domestic uses, such as in fertilisers and petroche­micals, and where exports have been discussed there has been greater interest in the pipeline route and in exotic alternatives such as methanol.

These changes in attitudes have inevitably meant that the n11I'riber of new projects planned to come onstream in the 1980s has been whittled down. Algerian plans in particular have been greatly cut back. Having announced earlier this year that it was prepared to stop the exploitation of LNG altogether, Sonatrach has now terminated construction contracts for the 1 524 MMcf/d LNG-3 liquefaction plant at Arzew and shelved plans for two further 1 064 MMcf/d units at Skikda East and I~sers Centre. Two immediate casuaities were firm import contracts for northern Europe signed in 1979. The Netherlands' Gasunie was to have taken 544 MMcf/d from 1984, and West Germany'p, Ruhrgas and Salzgitter an equal amount starting 1983.

Only three new Algerian contracts now look certain to be realised, assuming, as seems likely, that price clauses will soon be successfully re-negotiated at a compromise level. All three are to be supplied by the LNG-2 plant at Arzew, now nearing completion. Panhandie, of the United States, is to take 461 MMcf/d starting next year; Gaz de France has a third contract, for 498 MMcfld, also from 1981; and Belgium's Distrigaz has sig.ned for 483 .MMcfld starting 1982 (though direct deliveries to the proposed Zeebrugge terminal will not begin until three years later). Further planned exports·to West Germany's Deutsche BP (435 MMcf/d from 1985) and Brigittal Thyssengas (387 ~.Mcf/d from 1984) are thought to be in jeopardy, since the Wilhelmshaven terminal is now not li.'<ely to be built until 1986 or 1987 at the er4!'liest.

Western Europe has not been unduly worried by the Algerian canceliations, as feelers had already been put out

Petroleum Economist December 1980

for replacement gas supplies should Sonatrach decide to downgrade LNG. The Trans-Mediterranean pipeline from Algeria to Italy is tn be expanded from 1209 MMcf/d to 1742. MMcf/d, and there is a fair chance of a second subsea line, of similar capacity, being built. The USSR is negotiating the sale of some 3 870 MMcf/d of Siberian pipeline gas, and Norway is to increase its North Sea sales.

WestAfricanLNG, too, willhelptofillthegap. During 1980 firm contracts were signed with Nigeria's Bonny group for a total784 MMcf/d starting 1984-85. The takers will be Ruhrgas!Brigittarrhyssengas (223 MMcf/d); Gaz de France (184 MMcf/d); Snam (135 MMcf/d); Distrigaz (87 MMcf/d); Gasunie (97 MMcf/d); and Enagas (58 Mldcf/d). These vvlumes will more than double if, as is almost certain, the United States regulatory bodies fail to approve by the August 1981 deadline draft contracts signe:d by four US utilities for a further 833 MMcf/d from Bonny. Another 500-1000 MMcf/d of Mrican gas could be available from 1987 from a proposed plant at Kribi, in Cameroun, now under preliminary study.

The Nigerian-US deal is likely to join others from Algeria, Australia, Iran, Mala~, CaDada, Siberia and the Soviet Arctic which the American political and regulatory processes have effectively quashed in the past three years. Only one new inter-continental contract for the United States now seems set to go ahead- the Pacific Lighting/Pacific Gas and Electric scheme for 539 MMcf/d of Indonesian LNG from 1983- though prolonged state hearings on the planned Californian terminal site are still underway. The Pacindonesia supplies will be sup­plemented by 431. MMcf/d of Alaskan LNG, which should start up in 1984-85, and by a uuique contract I> ..:cently signed ~~tween four American power companies and the Arctic P'ilot Project group, headed by Petro­Canada. This will deliver 450 MMcf/d ofWestem Canada pipeline gas to the United States, offsetting deliveries of 225 MMcf/d of LNG from the Drake Point field, on Melville Island in the Canadian Arctic, starting in 1985. The LNG itself will be shipped either to one of three locations in Eastern Canada, for domestic use, or to the eastern seaboard of the United States, or possibly even to Western Europe.

If American government policy on deterring LNG imports is relaxed at all, it will provide incentives not only to develop Canadian sources but also those in Central and South America. Three long-standing proposals for ex­ports from the region to the United States are under study: from Cabo Negro, in Chile (250 MMcf/d); from Colombia (163 MMcf/d or 478 MMcf/d); and from Point Lisas, in Trinidad. (548-750 MMcf/d). A fourth, for an unspecified volume from Ecuador, remains pm·ely speculative.

.Expansion for Japan

The Japanese, who, by virtue of their lack of substantial domestic gas supplies and their great distance from any possible pipeline routes, are more committed to LNG than either the Americans or the Europeans, also have interests in three Western Hemisphere schemes. Mitsu­bishi and Nichimen are studying the feasibility of buying 250 MMcf/d from Chile, talks are being held with Petro-Canada on the sale of western province LNG, and a group of five utilities have just signed a letter of intent with Dome Petroleum for 400 MMcf/d from British Columbia fields, starti.ng 1985.

The Asia/Pacific region, .however, is the natural source of Japanese supplies. The Petronas/SheWMitsubishi plant

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now being built at Bintulu, in Sarawak, Malaysia, is to provide850 MMcf/d from 1983 to To.kyo' Gas and Tokyo Electric under sales agreemmts signed in 1979, and there is talk of a second Sarawak unit for tbe future. Talks are being held, too, between eight Japanese companies and the North-West Shelf joint ventuters, which should result in t!te signing of a contract for s~ome 800 MMcf/d from their offshore Western Australia fields, starting 1986. And nep1tiations are also underway between lndones.'a .and two separate groups of Japanese utilities, which aim to take •m extra 425 .M.Mcf/d from Arun, in northern Sumatra, from 1983, and some 410 MMcf/d from Badak, in east Kalimantan. Japan has recently agreed to provide a loan for the Artm expansion and a letter of intent for the construction contract at Badak has been awarded. The Paclndonesia deal will further enlarge capacity at Arun, while Esso is looking at the possibility of a third LNG facility which would be situated in the Natuna Islands.

Revised projections

Most other plans for inter-continental LNG supplies mooted in the past few years have now either been cancelled outright, suspended indefinitely, or taken no further than the .initial study stage. Cancelled or sus­pended schemes not already dealt with in detail include those for expons from Algeria to the United States (a total of some 3 000 MMcf/d in five projects), Sweden (164 1\iMcf/d), Italy (850 MMcf/d) and France (500 MMcf/d); from Iran to the United States (300 MMcfld) and Japan (400 MMcf/d); from Siberia to the United States (1 000 MMcf/d) and Japan (1 000 MMcf/d); from the Soviet ArcC:c to the United States (I 500 MMcf/d) and Europe (500 MMcf/d); from Abu Dhabi ~o Japan (650 MMcf/d); from Australia to the United States (400 M.Mcf/d); from New Zealand to Japan (370-436 MMdi'd); from the Arabian Gulf to Sweden (2 900 Ai..\il~fld); from Bang­ladesh to Japm (400 MMcf/d); from Thaila..nd to Japan (some 60 MMcf/d); and from Malaysia to the United States (unspecified).

Several other schemes, though not yet dead, are unlikely to materialise in the 1980s, ifatall. Theseu\clude potential Japanese imports from such diverse sources as Qatar, Saudi Arabia, China and Pakistan; and sales to Taiwan and South Korea from Malaysia, Indonesia or Australia. Anotber four projects mentioned above are, at best, outside possibilities (Cameroun, Chile, Ecuador and T . "da ., nm a,.

A realistic "best guess" or "median case" projection for the extent of LNG trading in 1989~90 would necessarily exclude all the above, plus three schemes currently thought to be questionable (the two remaining Algeria­West Germany contracts and the newly-initiated British Colum\bis-JaJ:~n project). It would encompass only existing trades, those considered fum or a.lready under construction!' and also "probable" deals (those where sales agreements have generally been signed and project details vinually finalised, though complete approval still has to be sought). Malaysia-Japan, Algeria4 Panhandle, Algeria­Distrigaz and Algeria-Gaz de Fran€.:e Ill are taken as firm; Nigeria-Western EuroJ)\~ (for the total Bonny output), Australia-Japan, Indonesia-United States, the Indonesia­Japan c:xpansions and the Arctic Pilot Project are thought to be probable.

This adds up to a median. case projection for t.he international trade in 1989-90 ofl1133 MMcf/d (exclud­ing the planned Alaskan coastal ti'ade). This figure m.ay be

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rather high, since it includes, firstly, the three existing contracts due to expire during the 1980s - assuming, perhaps optimistically, that they will be renewed; secondly, the 225 MMcf/d Arctic Pilot Project, though its output may be consumed domestically; and thirdly, the plateau or peak volumes for each project, which are unlikely to be attained by that time.,. ·. ··· .. ; .,r·,. ~.-;:-:-·.·-::··

Even then, it is in line with, or slightly lower than, other projections made. in recent months: Perhaps more significantly, it is more than 2 000 MMcf/d lower than our last such forecast (see Petroleum Economist November 1978, pages 465-467). The shrinkage in the predicted trade, for reasons explained above, becomes even more apparent when it is realised that two of the projects now thought "probable" had not even been conceived two years ago and therefore did not appear on our 1978 listings. •

CHANGE OF ADDRESS ~ ~· ..

Please note that the main office of Petroleum. Economis~ has now moved to: 107 Charterhouse Street, London EClM 6AA, telephone 01-251 3501, telex 265619.

World's largest LNG project· for Nigc~ria .

Phillips, as operator for the 60% state~owned Bonny LNG consortium, has called for tenders for the design and construction of what will be the world's largest gas liquefaction plant, to be built at Bonny in the Niger delta. Three groups of companies have been asked to bid, on a lu:mp-sum turnkey basis, by 1st April next year. The groups are: 1) Pullman Kellogg (USA), JGC Corporation (Japan), Bilfx..1ger and Berger (West Germany) and Thyssr:n Rheinstahl (West Germany); 2) Lummus (USA), Chiyoda Chemical (Japan), Kloechner (West Germany) and Salzgitter (West Germany); and 3) Snamprogetti (Italy), Technip (France) and Procon (USA).

The plant, scheduled for start-up in the mid-l980s, will use the Phillips "optimised cascade process" to cool the gas to the point of liquefaction. Output capacity is now given by Phillips as 616000000 million Btu annually, equivalr:nt (assuming a heat energy content for Nigerian gas of 9 320 kcal/m3) to 16 650 million cu m of gas in the· form of LNG annuall}'. About two million tonnes annually of gas liquids will also be produced. Cost of the project, includ1,ng pipelbes and at least 14 LNG tank-ship11, is put at more than $10 000 million. Phillips states that Bonny LNG (comprising the state's NNPC 6C%, ShelllO%, BP 10%, Phillips 7.5%~ Agip 7.5% and Elf 5%) is still negotiating with the US companies which the Nigerian government hoped would take 50% of the plant's output. Regulatory approval for the import of Nigerian LNG has not yet been sought from US authorities, however. The European buyipg group has the "ption to pur~chase the US share if agreements are not reached by August 1981. (See LNG survey in this issue fnr sales agrll!ements). •

Petroleum Economist December 1980

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