Tenders issued for Fujairah gas terminal work

Abu Dhabi's gas import terminal in Fujairah is moving into the tendering stage.

A gas import project that will help alleviate a supply crunch in Abu Dhabi is moving towards the construction stage, as tenders for key components of the offshore terminal have been issued.

Once completed, the floating terminal will be moored off the coast of the northern emirate of Fujairah, and have the capacity to import 9 million tonnes of liquefied natural gas (LNG) per annum.

The project is run by Emirates LNG, a joint venture between government investors Mubadala Petroleum and International Petroleum Investment Company (Ipic).

The joint venture has now issued tenders for the crucial elements of the first phase of the terminal, which accounts for 4.5 million tones of imports per year, or 1.2 trillion cubic feet per day (cf/d).

"Emirates LNG is in the process of securing the facilities required for the terminal planned in Fujairah, including the floating storage and regasification vessels integral to Phase 1 of the project. This process is continuing," said a company spokeswoman.

The first phase is expected to be operational by 2015. The second stage will come online the following year, said the spokeswoman.

Six companies have been asked to submit technical and commercial bids for the contract to build the storage and regasification units, according to the Middle East Economic Digest (Meed). The deadline for the technical bids has been set for May 19, with commercial bids due for submission on July 1.

Preliminary engineering work has been carried out by France's Technip, while the feasibility study was conducted by US company Poten & Partners, says Meed.

LNG is natural gas that has been cooled to freezing point, allowing it to be transported in specially constructed tankers. At present, Qatar is the largest exporter of the frozen gas, a status it is set to lose to Australia.

Abu Dhabi is turning to gas imports as demand is exceeding domestic sources. Population growth, industrial development, and the reliance on natural gas in power generation have rendered gas reserves inadequate in many Gulf countries. Dubai and Kuwait are already importing LNG.

"When you add all of these things together, the pressure on LNG imports into the region is strongly towards the upside," said Alex Munton, an analyst at the research consultancy Wood Mackenzie.

The import terminal will be near the gas-fired Fujairah I and Fujairah II power and desalination plants that are majority-owned by Abu Dhabi Water and Electricity Authority (Adwea). Apart from supplying Abu Dhabi with power and water, Adwea also keep the lights on and the taps running in the Northern Emirates.

LNG is not the only alternative source of supply that is tapped by Abu Dhabi. Both Dubai and Abu Dhabi receive gas from Qatar via the Dolphin pipeline, a joint venture between Mubadala and France's Total and the US company Occidental.

Abu Dhabi National Oil Company is also developing the Shah sour gasfield with Occidental, a project that will add 500 million cf/d to supplies by next year. Sour gas is laced with sulphur, which makes extraction difficult, hazardous and expensive. A stake in a second sour gas project at the Bab field will be awarded to Anglo-Dutch Shell, according to media reports.