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History
and Background
Following the successful development, construction and
operation of the Oman LNG Plant, the Government of the
Sultanate of Oman decided in March 2002 to develop a third
train adjacent to the Oman LNG Plant.
Shell Global Solutions acted as technical adviser to the
Government during the negotiations and, on 15 January 2003,
the Government and Chiyoda-Foster Wheeler signed the EPC
Contract.
In May 2006 Mitsubishi Corporation, Osaka Gas Co. Limited,
and Itochu Corporation have taken up shares in Qalhat LNG by
way of a transfer from the Government of shares representing
up to 9% of the ordinary issued shares of Qalhat LNG, after
which the capital of the company is now 46.84% by the
Government, 36.8% by Oman LNG and 7.36% by Union Fenosa Gas
and the balance, by the new shareholders, with Mitsubishi
Corporation, Osaka Gas and Itochu each holding 3%. |
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Gas Supply
 The
Government will supply natural gas to Qalhat LNG under a take or pay
gas supply agreement with Qalhat LNG from gas reservoirs within the
Saih Rawl, Saih Nihayda and Barik fields or from any other reservoir
located in Oman. The Government has committed to deliver a maximum
of 3.8 Tcf of natural gas to the Qalhat LNG Plant over the term of
the agreement.
As the Government will supply feedstock gas to Oman LNG via the
common pipeline to the Integrated OLNG/QLNG Complex, the Government,
Qalhat LNG and Oman LNG have entered into a Tripartite Agreement,
dated 15 September 2004, which sets out principles on which gas
consumption procedures will be established to determine the
quantities of gas delivered to Qalhat LNG and Oman LNG under their
respective gas supply agreements.
Project Financing
The total development, construction, and start-up costs for the
Qalhat LNG Project were estimated at approximately US$720 million.
This is to be funded on the basis of a debt:equity ratio of 90:10.
Qalhat LNG has funded this amount by raising US$612 million of third
party limited recourse debt finance
which is being provided by way of a commercial bank term loan
facility (together with a revolving letter of credit facility of up
to US$40 million for funding the term loan facility debt service
reserve requirement), with the balance of up to US$108 million to be
provided by way of Shareholder equity.
Choice of the Location
The Qalhat LNG Plant was built at Qalhat near Sur on the North
eastern coast of Oman adjacent to the existing liquefaction plant
owned by Oman LNG. The main advantages to the location are:
Economies of scales:
The Qalhat LNG Plant shares support facilities and infrastructure
with the adjacent Oman LNG Plant thus ensuring that operations and
maintenance costs for the Qalhat LNG Project are kept to a minimum.
Geographical situation:
The Plant is located outside the Strait of Hormuz, making its LNG
shipments less vulnerable to regional conflicts than those of other
GCC LNG producers. The Qalhat LNG Plant also benefits from deep
water close to the shore and favourable ocean conditions.
Benign weather environment:
Dust storms are uncommon in Oman, which will keep the fouling of the
air-intake of the Qalhat LNG Plant to a minimum.
Project Scope
The Qalhat LNG liquefaction train was built to the same
specifications, utilising similar technical design and construction
as Oman LNG’s existing two liquefaction trains, has a guaranteed
nameplate capacity of 3.3 mtpa and will use the proven APCI
technology. The [nameplate] capacity of the Plant will increase to
at least 3.7 mtpa after 18 months from the EPC plant acceptance.
The Qalhat LNG Project comprised the construction of a liquefaction
train and ancillary facilities as follows:
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Liquefaction Train |
The Qalhat LNG
liquefaction train (the “Qalhat LNG Train”) has a nameplate
capacity of 3.3 mtpa, increasing to 3.7mtpa after guarantee
period. In addition, the Qalhat LNG Train will produce
approximately 80,000 tpa of condensates.The Qalhat LNG Train
will use the proven propane pre-cooled/ mixed refrigerant
technology and will be water cooled. |
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Storage and Loading Facilities |
Modifications
(mainly new tie-in and piping) to the existing storage and
loading facilities of the Oman LNG Plant. |
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General Facilities |
Installation of new
safety systems including:
Fire fighting systems;
Pressure
relief and liquid disposal system;
Drainage and effluent
treating;
Ventilation and air conditioning system; and
Anti-corrosion system
Construction of a temporary roll-on/
roll-off jetty for material loading and off-loading during
construction. |
Project Organisation and Communications
Project Organisation and Communications
The nature of the EPC Contract dictated that the EPC Contractor was
fully and solely responsible for the realisation of the project.
Qalhat LNG’s role was restricted to monitoring the performance of
the EPC Contractor to ensure full compliance with the EPC Contract.
Under the OMSA Oman LNG will operate and maintain the Qalhat LNG
Plant on behalf of Qalhat LNG and will also operate and maintain the
facilities which are owned by Oman LNG but which will be shared
between Qalhat LNG and Oman LNG under the Shared Facilities
Agreement.
Project Milestones
The Project Management Schedule included in the EPC Contract was
developed on the basis of the experience acquired during the OLNG
Project by the sponsors and Chiyoda-Foster Wheeler. For this reason,
the expected time between the EPC contract effective date and the
guaranteed date of RFSU for the Qalhat LNG Plant was only 33 months.
The following table summarises the key dates of the EPC Contract.
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EPC schedule |
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EPC Contract Award |
15 January 2003 |
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EPC Contract Effective |
Date 01 February 2003 |
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Start of Construction |
March 2003 |
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GTG at site |
June 2004 |
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C3 compressor and gas turbine at site |
August 2004 |
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MR compressor and gas turbine at site |
September 2004 |
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MCHE at site |
November 2004 |
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Sea water fill to chamber |
July 2005 |
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Sea water in service |
August 2005 |
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RFSU 13 November
2005 |
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Issue of Guarantee
Certificate |
25 April 2005 |
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Start of 18 month
Guarantee Period |
25 April 2005 |
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Projected Date for
end of Guarantee Period |
25 October 2007 |
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