BG Takes Brand LNG From Damietta Plant.

On Sept. 24, BG signed agreements with EGPC, Egas, Petronas and the Spanish Egyptian Gas Co. (Segas) which will give BG Gas Marketing about 700,000 t/y of LNG from the Damietta plant, where the first 5m t/y train went on stream recently (see gmt23cDec6-04). The LNG will be taken for a four-year period, starting from the first quarter of 2005, with supplies in the fifth year to be lower.

This will be brand LNG, meaning BG Gas Marketing can sell it anywhere it wants, with BG Gas Marketing to act on behalf of all the ELNG partners. Segas takes its gas feed from the WDDM's Scarab/Saffron fields. To make the 700,000 t/y of LNG available to these partners, the fields will be supplying the Damietta plant with 225 MCF/day, and about 150 MCF/day in the fifth year.

Iran-Total Deal For Pars LNG Signed: Total of France on Dec. 7 signed a framework agreement with the state-owned National Iranian Gas Export Co. (NIGEC) allowing for a decision to go ahead with the Pars LNG venture by early 2006. A Total spokesman said: "This agreement allows the start of engineering studies in 2005 which should allow a decision to launch the project at the end of 2005 or early 2006". The partners in Pars LNG will be NIGEC, Total and Petronas.

The project will initially involve building two trains with each to have a capacity of 5m t/y. As part of the deal, there will be a separate buy-back contract with the state-owned National Iranian Oil Co. (NIOC) for the Total-Petronas partnership to develop Phase 11 of the offshore South Pars field, which will produce the gas to feed the LNG plant. All related agreements are pending approval by Iranian authorities, Total said. Total will be the upstream operator with a 60% share of the buy-back contract, and Petronas will hold the remaining 40%.

The Pars LNG project and Phase 11 have been the subject of long and complicated negotiations between the foreign partners NIOC, NIGEC and oil ministry officials. Total and Petronas earlier this year agreed with the Iranian side to form a gas liquefaction company, Pars LNG, half-owned by NIGEC on behalf of NIOC, with Total holding 30%, and Petronas 20%.

Total's spokesman declined to give details on the price tag of the LNG project, which has been slated at $2 bn. "The engineering studies (for Pars LNG - not for Phase 11) will determine the final costs", he said. Iran is seeking to kick-start its LNG business as the Islamic republic has the world's second largest reserves of natural gas, but lags far behind its Arab neighbours - Qatar, Abu Dhabi and Oman - in building LNG facilities.

Total executives have said the two LNG trains will almost certainly be developed in parallel, although this will depend on the market for the second train. The probability of doing both at the same time will depend on an offtake agreement with BG Group, which has been negotiating with NIGEC for years. Commenting on the possibility of a deal BG, a Total executive on Dec. 10 said: "This depends on the Iranian side, not on us. But if the deal is signed before we tender the EPC contract, then the contract will be for the two trains to be built at the same time".

It is believed that Total has already secured a firm market for the first train. If BG takes another 5m t/y, mostly for its Indian market where it has a stake in a terminal, the two trains should be on stream by 2008. Of course, this will depend on the Iranian side letting things process the way they should. The partners will save a lot of money if both trains are built in parallel.