EMGC '18: FLNG to the rescue for Eastern Med gas?

NICOSIA—On Day 2 of Gulf Publishing Company's Eastern Mediterranean Gas Conference (EMGC 2018) in Cyprus, Charles Ellinas, CEO of E-C Natural Hydrocarbons Co. Ltd., talked about floating LNG (FLNG) barges as an option for gas production and export in the Eastern Mediterranean.

Charles Ellinas, CEO of E-C Natural Hydrocarbons Co. Ltd.
Charles Ellinas, CEO of E-C Natural Hydrocarbons Co. Ltd.

Ellinas acknowledged that the region's deepwater gas fields are expensive to develop, and regional geopolitical challenges remain; however, Cyprus and Israel need to import their surplus gas to global markets. For these reasons, Ellinas suggests that FLNG could become a game-changer in the development of Eastern Mediterranean gas resources.

Why FLNG? FLNG is ideal for development of gas resources in remote offshore locations, especially where export infrastructure is lacking, such as in Cyprus and Israel, Ellinas explained. FLNG also avoids regional geopolitics by acting as a mobile, standalone LNG facility.

As a technology, FLNG has come of age, with two FLNG projects operating in Malaysia and Cameroon, and Shell's giant Prelude FLNG vessel scheduled to come online in Australia in the near future. FLNG combines production, liquefaction and export in one, eliminating the need for a floating production, storage and offloading (FPSO) vessel, a deepwater pipeline or an expensive, time-consuming, land-based LNG facility.

FLNG technology also has the ability to unlock access to isolated and stranded gas reserves, and it takes the entire gas liquefaction and export project offshore. Permits and authorizations can be obtained quickly for FLNG, compared to the lengthy approvals processes required for onshore LNG.

An applicable example project for the Aphrodite field, Ellinas said, is Eni's Coral FLNG in Mozambique. Coral FLNG is a 3.4-MMtpy project at 1,500 meters offshore and a 2,300-meter water depth. Eni estimates the unit cost to be approximately $1,300/t of LNG. BP will buy all of Coral FLNG's product and sell it to Asia.

"If other export options do not materialize for Cyprus and Israel, FLNG may be the last option left for these gas field," Ellinas said. He called FLNG "ideal" for the Leviathan, Aphrodite, Calypso and other gas fields.

Challenges to FLNG in the Eastern Med. Implementing FLNG in the Eastern Mediterranean is not without challenges, Ellinas warned. Issues include a high upfront capital cost for FLNG vessels amid an environment of low gas prices. Banks may also see FLNG as a risky or unproven technology in a new area.

Also, new major gas finds may bring back the option of onshore LNG, which would delay the implementation of FLNG. Furthermore, the European gas market may be saturated, which would force new FLNG vessels in the Eastern Mediterranean to find export markets further afield, possibly in Asia, Ellinas said.

EMGC 2018 is taking place at the Hilton Cyprus in Nicosia, Cyprus, from 21–22 March.

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