Liquefied natural gas (LNG) chains are usually set up to transport natural gas from producing regions to consumer centers when pipeline construction is difficult or even unfeasible for technical or economic reasons. Growth in the LNG trade is being spurred by a combination of fast-rising world demand for natural gas and the ever-greater distances between consumer and producing regions. Although the process is heavily capital-intensive across the chain, a number of technical advances have reduced production and transportation unit costs.
The LNG industry first developed in Algeria in the 1960s to supply the UK and French markets with natural gas. Our involvement in this pioneering venture gave us an early jump in LNG expertise.
Total’s positions in the LNG chain
Total has entered into agreements to obtain long-term access to LNG re-gasification capacity on the three continents that are the largest consumers of natural gas: North America (the United States and Mexico), Europe (France and the UK) and Asia (India). This diversified access to markets allows Total to develop new liquefaction projects, in particular in the Middle East and Africa, while strengthening its own LNG supply portfolio.
- In France, Total acquired in June 2006 a 30.3% interest in the Société du Terminal Méthanier de Fos Cavaou (STMFC). Thisterminal is expected to have a re-gasification capacity of 291 Bcf/y (8.25 Bm3/y), of which 79 Bcf/y (2.25 Bm3/y) has been reserved by Total through its subsidiary Total Gas & Power Ltd.
- In December 2006, in connection with its entry in the Qatargas II project, Total acquired an 8.35% interest in the South Hook LNG re-gasification terminal project in the United Kingdom.
- In addition, as part of the Snøhvit project (Norway), in which Total holds an 18.4% interest and where the first deliveries started in October 2007, Total Gas & Power Ltd signed in November 2004 a purchase agreement for 35 Bcf/y (1 Bm3/y) of natural gas primarily intended for North America and Europe. Total, through its subsidiary Total E&P Norge AS, chartered an LNG tanker, the Arctic Lady, to transport this LNG. This tanker has a capacity of 145,000 m3 and was delivered in April 2006.
- In October 2007, Total announced the creation of Adria LNG, in which Total holds a 25.58% interest, to study the construction of an LNG re-gasification terminal on KrK Island (Croatia), in the northern Adriatic Sea. This terminal is expected to have an initial natural gas re-gasification capacity of 353 Bcf/y (10 Bm3/y), which could be subsequently increased to 494 Bcf/y (14 Bm3/y).
- In Mexico, the Altamira re-gasification terminal, in which Total holds a 25% interest, has been onstream since summer 2006. This terminal, located on the east coast of Mexico, has an initial LNG re-gasification capacity of 236 Bcf/y (6.7 Bm3/y). This capacity has been entirely reserved by Gas del Litoral, in which Total has a 25% interest.
- In the United States, Total has reserved re-gasification capacity of 10 Bm3/y (1 Bcf/d) at the Sabine Pass LNG terminal in Louisiana, beginning in April 2009 for a renewable 20-year period. The terminal was inaugurated in April 2008. The LNG to supply Sabine Pass is expected to come from LNG purchase agreements providing for shipments from various producing projects worldwide in which Total holds interests, notably in the Middle East, Norway and West Africa.
- The Hazira re-gasification terminal, located on the west coast of India in the Gujarat state, was inaugurated in April 2005. It had an initial re-gasification capacity of approximately 120 Bcf/y (3.4 Bm3/y). At the end of 2008, its capacity reached 177 Bcf/y (5 Bm3/y) after debottlenecking operations were conducted during the year. Total has held a 26% interest in the Hazira merchant terminal since May 2005. Its activities include LNG re-gasification and natural gas marketing. Total has agreed to provide up to 26% of the LNG for the Hazira terminal.
- On December 10, 2008, Total, through its subsidiary Total Gas & Power Ltd, signed an LNG sale agreement with China National Offshore Oil Company (CNOOC). As part of this agreement, Total is expected to supply CNOOC with up to 1 Mt/y of LNG starting in 2010. The gas supplied will come from the Group’s global LNG resources.
- In Qatar, pursuant to heads of agreement signed in February 2005, Total signed purchase agreements in July 2006 for up to 5.2 Mt/y of LNG from Qatargas II (second train) over a 25-year period. This LNG is expected to be marketed principally in France, the UK and North America. In December 2006, Total also concluded an agreement to acquire a 16.7% interest in the second train of Qatargas II.
- In Yemen, Total, through its subsidiary Total Gas & Power Ltd, signed an agreement in July 2005 with Yemen LNG Ltd (in which Total has a 39.62% interest) to purchase 2 Mt/y of LNG over a 20-year period, beginning in 2009, to be delivered to the United States.
- In Nigeria, as part of the expansion of the Nigeria LNG plant (NLNG), in which Total holds a 15% interest, Total Gas & Power Ltd signed an LNG purchase agreement for an initial 0.23 Mt/y over a 20-year period, to which an additional 0.9 Mt/y was added when the sixth train came onstream. The first deliveries under this agreement were received in January 2006.
As part of an additional NLNG expansion project to build a seventh LNG train with a capacity of approximately 8.5 Mt/y, Total signed a purchase agreement in February 2007 for 1.375 Mt/y of LNG over a 20-year period. This agreement is subject to NLNG’s final investment decision for this new train.
Total also acquired a 17% interest in the Brass LNG project in Nigeria in July 2006. This liquefaction project calls for the construction of two liquefaction trains, each with a capacity of 5 Mt/y. Total signed a preliminary agreement with Brass LNG Ltd in July 2006 setting forth the principal terms of an agreement to purchase approximately one-sixth of the plant’s capacity over a 20-year period. This LNG would be delivered primarily to North America and Western Europe. The purchase agreement is subject to final investment decision for the Brass LNG project.
- In Angola, Total holds a 13.6% interest in Angola LNG, a project to construct a single-train liquefaction plant with a capacity of 5.2 Mt/y. The construction of this project began in December 2007 and LNG production is expected to start in 2012. As part of the Angola LNG project, Total, through its subsidiary Total Gas & Power North America, signed a regasified natural gas purchase agreement in December 2007 for 13.6% of the quantities to be delivered to the Gulf LNG Clean Energy terminal in Mississippi in the United States.
The LNG Chain
Most LNG consists of 90% methane, ethane, propane and butane and less than 1% nitrogen. It is produced by refrigerating natural gas to -163°C.
The LNG chain comprises:
Liquefaction, which consists of chilling natural gas to -163° C. LNG is roughly 1/600th the volume of natural gas, for an equal quantity of energy.
Transportation over long distances on board LNG carriers, dedicated vessels in which the liquefied gas is maintained at a temperature of -163°C.
Re-gasification, which takes place once the LNG reaches its destination. The liquid is heated in receiving terminals close to consumer markets to convert it back to its initial gaseous form.
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