Petronas: New vessels cuts cost
Published on: Thursday, April 23, 2015
Kuala Lumpur: Petroliam Nasional Bhd (Petronas), which is building two floating liquefied natural gas (FLNG) facilities, said the new vessels would lower the production cost of smaller gas fields."With the Petronas FLNG 1 (PFLNG 1), we are looking at US$500mil (RM1.85bil) cost saving for a marginal gas producing field," said Petronas vice-president and venture director LNG project (domestic) Datuk Abdullah Karim.The first such vessel in the world, which is expected to enter production early next year, is designed to operate near an offshore gas field where it will produce, liquefy, store and transfer LNG at sea to bigger ships for exports.
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A conventional way to produce LNG requires gas to be pumped through underwater pipelines to an onshore facility and processed."We will save on the cost of building a pipeline. For instance, 180km would cost US$400mil to US$500mil, as well as a jetty and a berth onshore that would cost US$100mil to US$150mil more," he said.Abdullah said the PFLNG 1 would open new opportunities to better access small and remote offshore gas field in the country."With PFLNG 1 we are able to monetise gas fields which were previously considered too small or stranded," he said.
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Petronas former president and CEO Tan Sri Shamsul Azhar Abbas had said last year that the company would not proceed with contracts to award new marginal oil fields unless oil settled at levels above US$80 per barrel.Using the FLNG would help lower the cost of production, hence making marginal gas field development commercially viable even at current depressed level.
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The price of Brent crude oil hovered at around US$63 a barrel on Tuesday."If the oil prices traded above US$70 per barrel, the FLNG would see a double-digit internal rate of return. But, at the current oil prices, it is challenging to estimate the return," Abdullah said.The PFLNG 1, which is expected to be completed by the first quarter of next year, would be deployed in Kanowit field, which is located 180 km offshore Bintulu, Sarawak.The Kanowit field has an estimated reserves of about one trillion cu m of gas, this is considered small because a conventional gas field has at least two to three trillion cu m with a production that could last for 25 years."We are estimating the PFLNG 1 to be at the Kanowit field for at least five years, before moving it to another field," Abdullah said.The PFLNG 1 was designed to operate on shallow waters with a capacity to produce 1.2 million tonnes LNG per year. It has a lifespan of 20 years to 25 years.Currently, Petronas produce about 28 million tonne on LNG per annum.Meanwhile, Petronas' second FLNG facility (PFLNG 2) project is expected to start construction by the third quarter of this year.Abdullah said the PFLNG 2 was planned to be used for deep water gas field in Sabah.Stay up-to-date by following Daily Express’s Telegram channel.
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