Last year, some ten million tonnes of LNG were exported from Qatar, and by 2010 Qatar, expects to be the world’s leading supplier by exporting 77 million tonnes of LNG per year from the North Field, off the coast of northern Qatar. This non-associated gas field contains about 15 per cent of the world’s proven gas reserves and about 99 per cent of Qatar’s reserves. Sales of LNG and associated hydrocarbon products are expected to contribute about USD 500 billion to the Qatari economy over the next 25 years. The export goal of 77 million tonnes by 2010 corresponds to very many fully loaded LNG carriers, such as the Al Gattara. Qatar Gas Transport Company Ltd (Nakilat) is entrusted to do this, and this owner/operator company will have a fleet of 54 ultra modern LNG vessels at its disposal by 2010.
Responsible for running Nakilat is Managing Director Muhammad Ghannam.
“To say that we focus on the floating part is an oversimplified way of describing what we have been established to do,” says Ghannam. “The upstream part of Qatargas and RasGas are designed to produce and liquefy gas at their own facilities. Our role is then to be the midstream/shipping operator to transport the gas on long-term charters with ship owners and operators, including ourselves. The LNG is delivered to the downstream/regasification terminals at selected markets around the world. This again is supplied through long-term sales contracts with customers in the United States, United Kingdom, Asia and Europe. Nakilat is an integral part of the supply chain, from the wellhead all the way to the consumer.”
In 2005, Nakilat established several joint venture companies to own and operate 29 LNG carriers with capacities ranging from 145,000 to 216,000 m3, with ownership percentages of 20–60 per cent. (We would like to point out that in the second issue of Tanker Update 2007 there was an article about Teekay and the four LNG vessels on time charter for RasGas which were close to delivery from Samsung – the article did not disclose that the Nakilat ownership of these vessels is 60 per cent so this has now been corrected.)
Four vessels were delivered in 2006; eight in 2007 and the remainder will be delivered in 2008. In addition, Nakilat established other subsidiaries to privatise the Ras Laffan Port Agency and to provide marine supplies and engineering services to vessels visiting the port.
Here are some of the achievements realised by Nakilat:
March 2006: Nakilat was awarded 25-year time charter contracts by Qatargas II for six Q Max LNG carriers, which will be the largest LNG carriers ever constructed. Agreements to build these vessels were signed with Korean shipbuilders Daewoo and Samsung.
September 2006: Nakilat was awarded 25-year time charters by Qatargas 3 for ten large LNG carriers, 7 Q-Flex and 3 Q-Max. Agreements to build these vessels were signed with Korean yards Daewoo, Hyundai and Samsung.
November 2006: An additional Q Max vessel was awarded by RasGas 3, which increased Nakilat’s 100 per cent, owned total to 17 LNG carriers.
n February 2007: Nakilat signed contracts with Daewoo and Samsung for the construction of four Q Max and four Q Flex LNG carriers. These vessels will be dedicated to the Qatargas 4 project.
Accordingly, the total number of Nakilat wholly owned LNG vessels have reached 25 (in addition to the 29 joint venture vessels). These vessels, also ordered from Korean yards, incorporate the latest technology to ensure the safe, reliable and cost-effective transportation of LNG over many years and are the result of years of design work and testing. They are scheduled for delivery between the third quarter of 2008 and early of 2010 and represent a total investment by Nakilat of USD 7.5 billion. The financing is regarded as very safe and Nakilat’s debt has been awarded a very high investment grade rating from international rating agencies: Aa3 from Moody’s, A+ from S&P and A+ from Fitch, recognising the very strong credit quality underlying the financing.
We asked Mr Ghannam how Nakilat plans to own, operate and manage such a large fleet of highly specialised vessels: “Here, too, we have formed a company called Qatar Shipping Inc. We entered into an agreement with Shell to help us manage the fleet and build this company to become an independent ship management company within 8–12 years. Shell is very experienced in managing such a fleet. Our policy for joint ventures is to work with the best. For our joint venture vessels we have worked with OSG, Teekay, Maran, Pronav, Petronet and a Japanese consortium consisting of MOL/NYK/
K-Line.”
Q-Flex and Q-Max
After 2010, the fleet will consist of 58 vessels: nine conventional LNG vessels, 31 Q-Flex LNG vessels, 14 Q-Max vessels and four LPG vessels. Q-Flex and Q-Max are new creations and are the largest LNG vessels in the world.
The conventional vessels are 145,000 to 154,000 m3 and are usually less than 300 metres long. The Q-Flex vessels are longer and, with a typical carrying capacity of 217,330 m3, the result is reduced carrying costs per unit of LNG. The dimensions of the Q-Flex vessels still allow them access to approximately two-thirds of the primary existing LNG terminals worldwide. As implied by the Flex notation, some existing LNG Terminals have the flexibility to handle the Q-Flex vessels with minor modifications.
The Q-Max vessels are designed to have a carrying capacity of up to some 266,000 m3 and a length of 345 metres. Q-Max vessels will be the largest LNG carriers in the world and will have principal dimensions which are slightly less than conventional VLCCs. Q-Max will not be able to call into some ports, but nearly half of the world’s existing LNG terminals can, possibly with minor modifications, accommodate Q-Max vessels.
“We are developing our competence as we go along through strategic alliances with the right companies. We might even need more ships than the 54 LNG vessels we have ordered so far depending on the future market developments,” says Ghannam.
The Qatargas offshore production, separation and treatment facilities on the North Field are located about 80 kilometres north-east of Qatar’s mainland. Twenty production wells have been drilled and completed to supply 45 million m3 (1,600 million cubic feet) of raw natural gas per day from the field’s reservoir. Qatargas was established in 1984 to operate three LNG trains with a design capacity of two million tonnes per annum, Qatargas 1. Today this has been expanded to ten million tonnes per year and the expansion will see Qatargas export 42 million tonnes by 2010.
Qatargas 2, Qatargas 3 and Qatargas 4 will increase the number of LNG trains to seven from the original three. The Laffan Refinery is another major project in progress – also here with international partners. Qatargas Operating Company Ltd was formed in 2005 to operate and maintain the assets of Qatargas 1, 2, 3 and 4 and the Laffan Refinery. The onshore LNG plant occupies a 3.7 km2 site within Ras Laffan Industrial City and presently consists of three LNG trains. Each of the trains is 300m long and processes the natural gas to form the export product, LNG. The plant will also produce naphtha, kerosene, gasoil and LPG for export.
Ras Laffan drydock
Stephen May is the Project Director for the new ship repair yard and ship construction facility, now under construction. “Our own fleet will only occupy some 25 per cent of the capacity of our ship repair yard, so it’s vital that we are internationally competitive, and set up the facility as a commercial venture. In keeping with Nakilat’s business model, we have a world-leader as strategic partner – Singapore’s Keppel Offshore and Marine,” says May.
The Nakilat facilities at Ras Laffan will be developed in five phases, with phase one and two set to be completed by 2009. The first two phases will involve two large drydocks and a floating dock, on a 43-hectare site. The third phase will target the fabrication, construction and maintenance of structures for the offshore oil and gas industry and the onshore petrochemical and industrial sectors. The fourth phase will entail the construction of high value small vessels, such as tugs, platform support vessels, and coastal patrol boats. The fifth phase will be a repair yard for small ships.
“We have tried to take everything into consideration when building the new yard from literally a hole in the water. The overall facility will be 2.6 km long. We have sought advice from many experienced people when designing the yard. We believe that the result will be a flexible yard with minimal constraints in terms of adapting to future business conditions. The project organisation is a ‘United Nations’, made up of some 25 professionals, from Canada, the UK, Singapore, India, Malaysia, Sudan and the Phillippines.
“We can handle ships of up to VLCC size. The dock sizes have been dictated by our own ships. The idea is to become a centre of excellence for the LNG business,” concludes May. The yards will have some 9,000 employees when finished.
Make sense
“Must make sense for Qatar Inc,” says Muhammad Ghannam. “That is the leading business directive for us,” he continues. “We are a key component of Qatar’s integrated LNG supply chain and we are building a unique company supplying LNG worldwide. In a few short years Qatar will produce 30 per cent of the global LNG supply and Nakilat will deliver Qatar’s energy to the world in a safe and reliable manner – including through our own terminals.”
We can only conclude that this is most impressive and must no doubt make a lot of sense for Qatar.
Date: 2008-03-14