Qatar’s RasGas is the epitome of how a state-owned natural gas producer and exporter can maintain profitability when the revenues of NOCs are being squeezed. Moreover, RasGas exemplifies how a local energy producer, by strengthening its midstream capabilities, can take on mighty liquefied natural gas (LNG) suppliers and punch above its weight to carve out a massive chunk of the consumer market for itself.
RasGas’ secret to success lies in relying on shipping as an effective method of LNG transportation and persistently expanding its LNG terminals. RasGas’ long-term chartered fleet of 14 conventional LNG carriers, 12 Q-Flex vessels and one Q-Max ship, delivers cargoes to customers worldwide and enables Qatar to achieve unprecedented economies of scale.
In December 2014, RasGas delivered two milestone LNG cargoes to Petronet LNG’s import terminal at Dahej in India. The first, discharged by the 266,000m3 Mekaines, was the largest-ever shipment of LNG unloaded in the nation. Mekaines was the first Q-Max LNG carrier to visit India. The second consignment, carried by the 138,000m3 Disha, was the 1,000th RasGas cargo shipped under its long-term agreement with Petronet. For RasGas, in terms of sales volumes, India is its second-largest customer after Korea.
For India, RasGas is its largest – and currently only – long-term supplier. Petronet imports 7.5mn tonnes per annum (Mtpa) of LNG from RasGas under a 25-year agreement. In April 2014, the Indian company signed up for a further 800,000 tonnes of RasGas LNG for delivery over a 12-month period. RasGas shipped 9.1mn tonnes of LNG to Petronet in 2014, plus an additional 0.9mn tonnes of spot cargoes to GAIL, GSPC, Reliance and Shell.
It doesn’t stop there. Late last month, RasGas announced that Ras Laffan Liquefied Natural Gas Company Limited (RL 3) has entered into a new LNG sales and purchase agreement (SPA) with French energy company EDF SA (EDF). Under the terms of the SPA, RL 3 will deliver up to 2mn Mtpa of Qatari LNG into EDF’s new terminal in Dunkerque, France, starting in 2017 and over the medium term. This new agreement complements three existing long-term SPAs between RasGas ventures and EDF Group subsidiaries for the delivery of up to 4.6 Mtpa to Edison in Italy and up to 3.5 Mtpa to EDF Trading in Belgium.
RasGas also marked a significant milestone this year with its delivery of the 500th LNG cargo to its long-term customer CPC Corporation, Taiwan (CPC). The cargo was loaded aboard CPC’s TaiwanQatar vessel at Ras Laffan port on March 5. In 2011, RasGas and CPC signed a second long-term contract for the supply of LNG from RasGas, which increased the annual long-term sales to over 5mn tonnes per year to CPC and Taiwan. In addition, RasGas has delivered 72 cargoes – approximately 4.4mn tonnes – of LNG to CPC on a spot basis since 2007 to date.
RasGas’ midstream prowess is further complimented by its excellent storage facilities. RasGas is one of the world’s leading LNG enterprises – its total annual production capacity is 37.1mn tonnes, and its integrated supply chain includes facilities to extract, treat, liquefy and export natural gas around the world. In that supply chain, the focus naturally falls on the offshore wells and production platforms, the pipelines, the seven onshore LNG trains and the dedicated fleet of LNG carriers.
But a key – and often overlooked – link in the chain is the 11 storage tanks in which the company’s primary product is held prior to final loading at Ras Laffan port. Of these tanks, three are for the rich LNG produced by RasGas Trains 1, 2 and 3, and eight for the lean LNG produced by Trains 4, 5, 6 and 7.
The three rich LNG tanks are owned by RasGas, while the lean LNG tanks are jointly owned and shared with its sister company, Qatargas. The tanks are huge. Each one has a diameter of 74.3m and thus covers an area of more than 60% of a football field, and is tall enough to accommodate a 17-storey building. Depending upon which LNG trains a tank serves, it typically takes between two and three days to fill it to its total volume of 140,000m3, the same capacity as a conventional LNG carrier.
That eight of the 11 LNG storage tanks are shared by RasGas and Qatargas is no mere technical detail: it provides Qatar with a clear commercial advantage. “The fact that the tanks are supplied by two LNG production companies means that if one company’s facilities are out of action for some reason, the other company will ensure continued supply,” Aditya Eranki, offsite asset manager at RasGas, is quoted as saying in the company’s internal magazine. “This is a huge added value to our customers. No other LNG producers in the world enjoy this competitive advantage.”
The tanks are of the above-ground ‘full containment’, tank-within-a-tank type: a pre-stressed, reinforced-concrete outer tank, a 9% nickel-steel inner tank and, between the two, perlite powder as a thermal insulator to maintain a temperature of –160°C.
In some countries – including Japan, Malaysia, South Korea and Taiwan – underground LNG storage tanks have been built, in cylindrical, spherical and ‘bullet’ designs. Underground storage provides some insulation advantages but is dependent on local conditions, and most major producers use above-ground tanks similar to those at Ras Laffan port.
Whether LNG tanks are above-ground or not, clean LNG causes no corrosion, so there is no need for regular shutdowns: the tanks’ exteriors are inspected periodically to ensure their integrity, and the perlite is topped up approximately every 10 years. The tanks are designed for intervention-free use over 25–30 years, operated and maintained by a dedicated team of 60 staff.
In the final analysis, the 11 LNG storage tanks that are owned by RasGas at Ras Laffan form a critical link in the supply chain, as well as an integral element in Qatar’s LNG success story.
