July 2017

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ISSN 1747-1826

CONTENTS

Copyright © Palladian Publications Ltd 2017. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the copyright owner. All views expressed in this journal are those of the respective contributors and are not necessarily the opinions of the publisher, neither do the publishers endorse any of the claims made in the articles or the advertisements. Printed in the UK.

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ON THIS MONTH’S COVER

8

JULYJULY 20172017

STAHL CraneSystems ranks among the leading builders of hoisting technology and crane components on an international level and is the global specialist for explosion-protected crane technology. Our product portfolio is comprehensive and unique on the global market. The products set high standards in innovation, technology and quality.

03 Comment

05 LNG news

35 The value of trainingBrandon Findlay, Compressor Controls Corp., USA, discusses the clear value of training.

39 A hot spot for a cold fuelErik Neandross, Gladstein, Neandross & Associates, USA, looks at how the LNG marine fuel market is set for significant acceleration and growth.

43 Delivering investment confidenceWilliam Brendling, UK, and Suba Sivandran, Singapore, BMT Fluid Mechanics, outline why using operational and economic simulation is key to providing robust early investment support aiding in the decision making process.

15 A process of evolutionNeil Wilson, Cryostar, France, looks at recent trends in FSRU cargo machinery.

18 A new standardAndrew Stafford, Trelleborg’s marine systems operation, UK, discusses the need for industry standards to facilitate compatibility across FSRU interfaces.

23 Keep your distance!Brian Roberts, Renaud Le Dévéhat and Stéphane Paquet, TechnipFMC, France, and Tord Broms Thorsen, HiLoad LNG, Norway, detail how both companies are paving the way to the next generation of open-sea LNG transfers.

26 Turning the tide: a floating optionJohn White and Tom Holmberg, Baker Botts L.L.P., explain why floating regasification is becoming an increasingly popular solution.

31 How to decrease LNG train CAPEXNicolas Bariteau, Kelvion Thermal Solutions S.A.S., France, provides an overview on how to reduce CAPEX on LNG trains using improved technologies on air cooled heat exchangers.

08 Dancing to the Latin beatRasholeen Nakra, Frost & Sullivan, Canada, details how slow-paced development of resources has led to increased dependence on gas imports in Latin America.

46 Mitigating risk at LNG facilitiesSimon Pate, Det-Tronics, USA, looks at the role of fire and gas detection and suppression systems in LNG plants.

51 Proper protectionClara Ketterer, for STAHL CraneSystems GmbH, Germany, highlights the importance of explosion-proof hoisting equipment in the LNG industry.

55 Bad vibrationsJim Cowling, KBR, USA, explains why LNG facilities should be concerned about acoustic and flow induced vibration in piping systems.

59 Safe passageAlec Keeler, Loadtec Engineered Systems Ltd, UK, explains how to ensure safe personnel access to LNG carriers.

64 15 facts... on Latin America and the Caribbean

CopyC right © Palladian Publications Ltd 2017. All rights reserved. No part othis publication may be reproduced, stored in a retrieval system, or transmin any form or by any means, electronic, mechanical, photocopying, recordor otherwise, without the prior permission of the copyright owner. All viewexpressed in this journal are those of the respective contributors and are nnecessarily the opinions of the publisher, neither do the publishers endorsthe claims made in the articles or the advertisements P i

of Circulations (ABC). om our sales department.

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éphane Paquet, TechnipFMC, iLoad LNG, Norway, detail how both he next generation of open-sea LNG

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I n the global game of Monopoly, the US is attempting to acquire a formidable lineup of hotels dotted across the board. Rather than property however, it is through energy export deals that the US is seeking to project power.

Whilst the likes of Australia, Qatar, and Russia have established deals in place in some of the pricier sections of the board, the US is looking to strengthen its position and force others to pay up across the full spectrum of colours.

As the other players watch on, the US is promoting a golden age of its energy business by attempting to assert power abroad through a boost in natural gas exports.1 In an effort to make its rivals ‘pay up’, the US is rebranding efforts to export LNG to markets in Eastern Europe and Asia.

US representatives are meeting in Warsaw, Poland, this month with a dozen leaders from Central and Eastern Europe to promote US LNG exports. For a region highly dependent on Russian supply, the US alternative may prove an attractive alternative. Perhaps these smaller players are becoming tired of the big penalties they are facing on each throw of the dice? As the US shoehorns its way into the Russian coloured part of the board, the hope for countries like Poland is that prices are eventually driven down.

Poland opened its first LNG terminal a year ago as part of an effort to cut its dependence on Russian gas and has lofty ambitions of becoming a regional gas hub. In early June, the Polish gas company PGNiG received its first US spot delivery of LNG from Cheniere Energy.2 It can only help the prospects of players like Poland to welcome the increased competition.

The US is flexing its muscles from a strong starting position. It has plenty of monopoly money in the bank as it makes a push for some of the less well-trodden stops on the game’s circuit. There is currently one operating US LNG exporting facility in Sabine Pass, Louisiana, with four others currently under construction that are expected to become operational between 2018 and 2020. It seems inevitable that as these facilities come online, and exports continue to increase, the US will turn its attention to some of the more expensive stops.

You could argue that Qatar is currently taking up residence on the Mayfair and Park Lane stops of the board, stacking up rows of hotels. They have not however had the luck of the dice on recent throws.

The UAE, alongside Saudi Arabia, Egypt and Bahrain, has taken measures to isolate Qatar, placing the nation under a blockade indefinitely. The coalition has announced that they have severed all ties with Qatar, including transport links, complicating shipments for the world’s largest exporter of LNG. As a result of the blockade, Qatar has been forced to book new refuelling stops in Gibraltar, Singapore and other shipping fuel hubs.

Perhaps seizing on a moment of weakness, Russian gas producer Novatek has announced that it aims to topple Qatar as the top exporter. Novatek expects to start exporting LNG from the first phase of the Yamal project towards to end of this year. However, it is the inception of the company’s second large scale LNG project called Arctic LNG 2 that would transform the company into a leading global producer within the next 10 years.3

With its competitors seemingly rounding on Qatar and another ‘Do not pass Go’ card collected, the Gulf nation could be forgiven for throwing a classic Monopoly tantrum.

As the game progresses and more players make a bid for high earning spots, nobody is any closer to achieving a monopoly.

Frost & Sullivan provide this month’s regional report investigating the LNG scene in Latin America. We are also showcasing the latest developments in FSRUs/FPSOs, heat exchangers, training and simulation. I’d also like to point out our Extreme feature, highlighting safety systems, hazardous environments and hostile operating conditions. I hope you enjoy this issue!1. http://uk.reuters.com/article/us-usa-trump-energy-idUKKBN19K2VY

2. http://in.reuters.com/article/poland-trump-lng-idINL8N1JN0G1

3. http://uk.reuters.com/article/lng-novatek-idUKL8N1JK3BK

WWW.ZWICK-ARMATUREN.DE

TRI-CON SERIES FOR

CRYOGENICAPPLICATIONS

July 2017 5

LNGNEWSGermanyGermany

Brittany Ferries confirms new LNG-powered ferry

B rittany Ferries has announced that it is adding a new LNG-powered ferry to its 10-ship fleet.The vessel, named Honfleur, will be constructed at the

Flensburger Schiffbau shipyard in Germany over the next two years. It is scheduled to take to the seas in June 2019. The 187.4 m long vessel will be capable of carrying up to 1680 passengers, featuring 257 cabins, two cinemas, restaurants, boutique shipping and expansive passengers lounges. It will operate alongside the company’s Mont St Michel on three daily return sailings. Honfleur will replace the Normandie cruise ferry, which will move east to serve the Portsmouth – Le Havre route.

The company claims that this new vessel represents the next step in its drive towards sustainable transport. The adoption of LNG follows a €90 million investment in sulfur and particulate-reducing ‘scrubber’ technology. These exhaust emission systems have been retrospectively fitted to six of the company’s ships over the last 18 months, in a project supported by approximately €5 million in joint funding from the EU and its executive agency INEA – and the ADEME in France.

Honfleur will be the world’s first passenger vessel to feature on board cranes that enable 40 ft ISO standard LNG containers to be lifted into a fixed position. These containers will transported via truck from an LNG terminal to Ouistreham, and then driven on board. Then, they will be hoisted into position alongside a fixed LNG storage tank located at the rear of the superstructure. After reaching the next call at port, the empty containers will be removed and replaced will full units.

Powered with LNG, the new vessel’s four main engines will feed electric generators and two electric shaft propulsion motors with two fixed pitch efficient propellers.

BelgiumBelgium

DEME holds naming ceremony for LNG-powered dredger

DEME has announced that it has held the naming ceremony for its latest newbuild – the Minerva.The 3500 m3 trailing suction hopper dredger is the

world’s first dredging vessel to feature dual-fuel engines and be capable of operating in LNG mode. It has a ‘Green Passport’ and ‘Clean Design’ notation, complying with – and exceeding – stringent international emission requirements.

The naming ceremony was held in the Port of Zeebrugge, Belgium. The vessel was named by Marijke Verboven, the wife of Mr Ben Weyts, the Flemish Minister of mobility, public works, tourism and animal welfare. During the ceremony, DEME also presented the Mellina – a gravel dredger that will be deployed by a subsidiary of the company, DEME Building Materials.

The Minerva was constructed at Royal IHC’s shipyard in the Netherlands, and is part of the company’s multi-year fleet investment programme, focused on further increasing efficiency, both in terms of productivity and environmental performance.

The Head of DEME’s Technical Department, Bart Verboomen, said: “We operate in an industry where our customers invest in a green energy supply and implement measures to limit the impact of their operations on the environment. It is a logical step for DEME to make the transition to cleaner types of fuel such as LNG to meet customer requirements and to comply with changing legislation and emission reduction targets.”

South KoreaSouth Korea

GTT receives order from HHI to equip new LNG carrier

Gaztransport & Technigaz (GTT) has announced that it has received an order from

Hyundai Heavy Industries (HHI) to equip a new LNG carrier with its Mark III Flex containment system.

The 180 000 m3 vessel will be built on behalf of Norwegian shipping company NORSPLAN LNG XII AS (Knutsen). It will be constructed at Hyundai’s shipyard in Ulsan, South Korea, with delivery scheduled for 2019.

Currently, the Knutsen fleet includes 10 large scale LNG

carriers in service, and one on order. All of these vessels feature GTT membrane containment systems. GTT claims that Mark III – the technology that will feature in the new LNG carrier – allows a boil-off rate of 0.085%V/day.

The Chairman and CEO of GTT, Philippe Berterottière, said: “It is the second order of this type this year with the HHI shipyard and the shipowner Knutsen. It highlights the excellent relationship we have with these two key players of the maritime industry.”

6 July 2017

LNGNEWS

05 - 08 September 2017

SPE Offshore EuropeAberdeen, Scotlandwww.offshore-europe.co.uk

12 - 14 September 2017

Turbomachinery & Pump SymposiaHouston, USAtps.tamu.edu

01 - 03 October 2017

North American Gas ForumWashington, USAenergy-dialogues.com/nagf

16 - 17 October 2017

3rd International LNG CongressBarcelona, Spainlngcongress.com

JapanJapan

ABS grants AIP for Chiyoda FLNG power plant concept

ABS has announced that it has granted approval in principal (AIP) for a FLNG power plant and floating

storage and regasification unit (FSRU) design concept developed by Chiyoda Corp.

The concept offers a new approach to delivering new power sources to remote corners of the globe. It is based on existing LNG carriers, which are converted into floating power plants with small (approximately 72 MW) to medium (approximately 400 MW) scale power generation capabilities. ABS applied its relevant Rules and Guides when reviewing the concept to confirm that the conceptual design meets the intent of applicable gas requirements.

Patrick Janssens, ABS Vice President for Global Gas Solutions, said: “As the energy mix shifts and global demand for gas increases, concepts like this will reshape how energy is supplied.

“By working closely with Chiyoda, we were able to help them prove the feasibility of this novel and innovative concept.”

Toyomitsu Kanai, Chiyoda Corp. Project Manager, added: “By applying ABS’ robust guidance, we were able to develop a concept that meets operational demands and advances safety.

“By basing this concept on existing LNG carriers, we are able to reduce constructions costs and shorten delivery times. We look forward to developing this concept further and expanding the LNG value chain to new markets.”

AustraliaAustralia

TRACE wins six-year Ichthys LNG contract

B roadspectrum has announced that its joint venture (JV) with Actemium – TRACE – has won a six-year contract

from INPEX for maintenance services to support the operation of the Ichthys LNG onshore facilities in Darwin, Australia.

Under the terms of the contract, TRACE will provide day-to-day operational maintenance activities, shutdowns, workshop operations, fabrication services and specialist support services.

It is expected that the Ichthys LNG project’s onshore processing facility at Bladin Point near Darwin will operate for a minimum of 40 years, producing and shipping approximately 8.9 million tpy of LNG during this time.

Tom Quinn, Broadspectrum’s Chief Executive, Resources, said: “On behalf of the TRACE joint venture, we are delighted to be awarded this important contract and to be able to further build on our presence in, and commitment to, the Northern Territory.

“INPEX will also have access to our data-driven solutions and innovations as we leverage the capabilities of our global Centre of Excellence for Resources and our position as part of the Ferrovial group, one of the world’s largest services companies.”

The TRACE contract will create 160 new jobs in the Northern Territory. Broadspectrum claims that TRACE has already hired 85 locals for a variety of positions, including planning, rigging, crane driving, scaffolding, electrical and instrumentation, and mechanical technicians. The contract is for a six-year period, and includes two two-year extension options.

19 - 22 September 2017

CWC World LNG & Gas Series: Asia Pacific SummitSingaporeasiapacific.cwclng.com

27 - 28 September 2017

Tank Storage Asia 2017Singaporewww.easyfairs.com/tank-storage-asia-2017

July 2017 7

LNGNEWSUSAUSA

Crowley, Eagle LNG Partners and ExxonMobil sign LNG collaboration agreement

C rowley Maritime Corp. has announced that it has signed an agreement with ExxonMobil and

Eagle LNG Partners LLC to collaborate on the development of LNG as a marine fuel.

The aim of the agreement is to develop the necessary storage and technical support for the provision of safe and reliable LNG delivery for vessel operators bunkering in North America.

All three parties signed a Memorandum of Understanding on 27 June 2017, and will initially focus their efforts in Florida, US, before expanding to other North American markets.

ExxonMobil will provide its technical support and expertise to help the companies execute safe bunkering operations and sell LNG bunker fuel to vessel operators. Eagle LNG Partners, meanwhile, will supply the LNG, and will design, construct and operate small scale production and storage facilities, as well as coordinate land-based LNG transportation. Finally, Crowley will provide bunker logistics, and will ensure safe and reliable operations.

Luca Volta, LNG Venture Manager at ExxonMobil, said: “The Memorandum of Understanding is another major step forward in developing LNG as a marine fuel. It will leverage the specialist knowledge and expertise of ExxonMobil, Eagle LNG Partners and Crowley to the benefit of vessel operators bunkering in North America.

“This agreement provides additional opportunities for vessel operators looking to adopt LNG as a marine fuel.”

AustraliaAustralia

Monadelphous wins more Ichthys work

Monadelphous Group Ltd has announced that it has been awarded new construction and fabrication

contracts with a combined value of approximately AUS$170 million.

The company has won a new contract with JKC Australia LNG for structural, mechanical, piping, electrical and instrumentation works for the completion

of gas turbine generators and the associated steam piping of the combined cycle power plant at the Ichthys Project Onshore LNG facilities in Darwin, Australia.

In addition to this, SinoStruct – the company’s China-based fabrication business – has secured a contract to provide approximately 7000 t of structural steel, plate work and conveyers to Kiewit Corp.

FinlandFinland

MacGregor and ESL Shipping reach agreement

MacGregor has announced that it has reached an agreement with ESL Shipping Oy to jointly develop and

test an autonomous discharging feature on MacGregor bulk handling cranes.

MacGregor is part of Cargotec, whilst ESL Shipping Oy is part of Aspo Plc. The cranes will be fitted on ESL Shipping’s two new LNG-powered handysize bulk carriers.

Leif Byström, Senior Vice President, Cargo Handling at MacGregor, said: “Autonomous crane operation improves efficiency and safety.

“Discharging operations can be monitored and controlled from the bridge and therefore eliminate the need for personnel in hazardous operational areas.”

Mikki Koskinen, Managing Director at ESL Shipping Oy, added: “Our new environmental friendly LNG-fuelled ships will be operated in very demanding trade with high number of voyages, port calls and crane operation hours annually. Autonomous operation will further increase our competitiveness and offer our clients unforeseen efficiency and safety.”

Byström added: “We are very excited about collaborating with ESL on this development project.

“By combining the expertise of a forward-thinking shipowner and operator with our expertise in intelligent cargo handling, we can reduce unnecessary waste in the value chain and therefore develop safer and more efficient solutions for unloading bulk cargoes.”

The vessels are scheduled to commence service in 2Q18, when automation testing will begin.

8

Dancing to the

beatLatin

9

L atin America is well endowed with natural gas resources and has the potential to produce enough gas to fulfil the region’s burgeoning demand.

According to the US Energy Information Administration (EIA), Latin America holds technically recoverable shale gas resources of approximately 1978 trillion ft3. Argentina, Mexico and Brazil hold huge amounts of shale gas resources. However, due to lower exploration activity in Latin America, domestic gas production has not been able to reach its full potential. With improved economic and financial support from the government and investors, Latin America is likely to become self-sufficient in terms of its energy requirements by 2030.

In 2016, the total natural gas production increased by 1.8% to reach 235.8 billion m3. Major contributors to this production were Mexico, Argentina, Venezuela and Trinidad & Tobago. Mexico is the largest natural gas producer followed by Argentina, which has seen a steep decline in production in recent years. Venezuela has the largest proven reserves of natural gas. However, such resources remain mostly unexploited due to country’s financial crisis.

Although the production has been increasing annually, the growth rate has been slow in the region mainly due to

Rasholeen Nakra,

Frost & Sullivan,

Canada, details how slow-paced development of

resources has led to increased dependence on gas imports in Latin America.

10 July 2017

lack of investment. Geopolitical uncertainties coupled with geographic and regulatory issues in Latin America have made gas integration a challenging process. Even though some countries like Argentina and Venezuela have extensive resources, a lack of pipeline interconnection has posed obstacles in fulfilling the gas demand of some regions in Latin America.

The energy sector in Latin American countries is highly regulated by the government. The hydrocarbons sector in most Latin American countries falls under the purview of national petroleum companies that have up to 90% control over their energy industry. However, over a period of time, some countries have showed their receptiveness to private investment in the oil and gas sector. Mexico and Argentina, for instance, are in the midst of revising their policies to encourage private and foreign participation.

In 2016, natural gas consumption reached 262 billion m³, a 13.1% increase over the demand in 2011. This has been a result of accelerated economic growth coupled with the need to switch to cleaner fuels. Mexico, Argentina and Brazil have seen the strongest increase in natural gas consumption and this trend is expected to continue for the next 10 – 15 years. This robust growth in consumption is backed by high demand of natural gas in the electricity sector. More than 40% of the gas is consumed to generate electricity and in future this trend will be followed by the transport sector.

The gap between supply and demand has continuously increased in the last few years, and this gap will likely keep increasing unless the natural gas resources in Latin America are fully developed. So far, this excess demand is met by gas imports. In order to maintain the energy security of the region, Latin America sources LNG and pipeline imports.

A boost in gas demand, combined with lower domestic gas production in various Latin American countries, has triggered the increased LNG and piped gas imports. In 2016, approximately 80.75 billion m³ of gas was consumed through LNG and piped-gas imports. Of the total gas imported, LNG held 31%. The role of LNG in Latin America has become inevitable. In 2008, Latin America received its first LNG cargo. Since then, the LNG imports have significantly increased and, in 2016, total LNG imports reached 24.65 billion m3. In last five years, Latin America has shown greater dependence on LNG to fulfil its growing gas demand. The trend of importing LNG to achieve

Latin America’s energy security is expected to continue, but at a slow rate.

As seen in Figure 1, some countries in Latin America are highly dependent on LNG imports to support their growing energy portfolio, such as Mexico, Argentina, Brazil and Chile. On the other hand, some countries have the capability to export LNG to the international market, such as Peru and Trinidad & Tobago.

Mexico’s dwindling domestic gas production has augmented gas imports in MexicoMexico’s natural gas production has been declining since 2012. In 2016, gas production dropped by 5.1% from 53.2 billion m³ in 2015. This has been as a result of low investment in exploration activities by Petróleos Mexicanos (PEMEX) which is a state-owned petroleum company.

Even though Mexico has a robust resource potential, it has not been able to create a conducive environment for investments in the oil and gas sector. Unclear policies in conjunction with a lack of financial resources have delayed Mexico’s shale gas evolution.

According to the EIA, Mexico’s technically recoverable shale gas resources amount to 545 trillion ft³. However, the development of these resources has been slow. The geographic complexity, along with lack of suitable technology and water resources has been a major challenge in the production of shale gas in Mexico. In addition, the extraction of gas from the shale reserves demands advanced technology, which is accompanied by colossal capital investment.

Stunted domestic gas production in the country has prompted the government to bring in changes in the energy policy. It was only in December 2013 that the Mexican government passed the energy reform bill and opened its oil and gas sector after more than 50 years. This step will transform the Mexican economy, as it provides tremendous opportunities to foreign and domestic private companies to invest in the oil and gas sector.

Though the energy reform bill in Mexico highlights flexibility and eases policies in order to capture higher investment, inadequate pipeline connectivity in Mexico has posed several challenges. Hence, in addition to producing shale gas, investments to build a gas supply infrastructure will also be required.

Figure 1. LNG imports in Latin America are increasing at a high rate.

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2020 it is expected to increase to 70%. Given that the shale gas development is still in the nascent stage and will take at least 10 years to start producing, LNG imports are envisaged to grow at a slow pace, but will decrease the gap between consumption and production of gas.

With the availability of huge gas reserves, Argentina has the potential to become self-sufficient According to the EIA, Argentina ranks

third after the US and China in terms of technically recoverable shale gas at 774 trillion ft³. Argentina’s Vaca Muerta shale play is the biggest shale play reserve after that of China. Argentina’s lucrative oil and gas reserves have attracted majors from all over the world to explore the hydrocarbons sector of the country, including Chevron Corp. , Exxon Mobil Corp. and Royal Dutch Shell Plc.

The presence of such colossal reserves has the potential to make the country self-sufficient in terms of energy requirements. However, production from these shale plays requires extensive hydraulic fracturing and drilling, which is not only expensive, but requires exceptional technical expertise. In 2016, natural gas production increased by 3.3% to reach 37.7 billion m³. The production growth rate has been steadily increasing in the last few years. The slow rate of growth is as a result of inadequate capital and advanced technology.

The Argentine government and Yaclimientos Petroliferos Fiscales (YPF), a state owned oil company, together promote and develop the exploration and production of the hydrocarbons sector in Argentina. The country’s gas market gives it an edge over other regions in Latin America. Along with being rich in gas reserves, the development of these reserves is taking place at a steady pace.

In terms of gas demand, the power sector has the largest share of natural gas consumption with approximately 40%, and this demand is followed by the residential and commercial sector that consumes 25% of natural gas. As the share of residential and commercial sector is significant, gas demand is often seasonal in the region. In 2016, the natural gas demand stood at approximately 47.5 billion m3. 75% of this demand was supplied by domestic production, whereas the rest was fulfilled by gas imports.

The government has been making efforts to attract foreign investment to develop the Vaca Muerta shale resources. The country has modified its regulatory regime to enable foreign participation. In 2010, YPF and other major companies started exploring these resources.

Although the Argentine government has been progressive in shaping up its policies, the unstable

Gas consumption has been rising as a result of high demand from the natural gas-fired power plants. More than 50% of the power plants consume natural gas as a fuel. In addition, Mexico’s energy reform initiative has encouraged private investment in the electricity sector. With the objective to use cleaner and more efficient fuels, the push on natural gas to be used as a fuel to generate power is greater than ever.

To fulfil the increasing gas demand, Mexico imports huge volumes of gas through pipelines and via LNG. As seen in Figure 2, in 2016 Mexico imported a total of 41.6 billion m³ of gas. The surge in US natural gas production has made gas accessible to Mexico at low prices, which has triggered an increase in pipeline imports. Mexico’s close proximity to the US gives it the advantage to leverage cheap gas from their neighbours. In 2016, Mexico imported 35.8 billion m³ of gas from the US via pipelines, which constituted 83% of the total gas imported in Mexico, and for balance 14% of gas as LNG.

Although most of the gas that is imported in Mexico is piped gas, LNG is slowly and steadily becoming an important source of gas supply. The central region in Mexico lacks pipeline connectivity, but the Manzanillo LNG terminal has made it possible for customers in the central region to get direct access to gas. Furthermore, with the expansion of the Panama Canal, the duration to reach the Manzanillo terminal from the US has significantly reduced from 27 days to 10 days. In 2016 Mexico received LNG from the US for the first time.

Despite the flexibility and viability of LNG imports in Mexico, piped-gas will always have an edge over LNG. LNG imports are gradually being substituted by lower-priced natural gas from the US. The Los Ramones Phase II South pipeline was completed in 2016 and this pipeline, once commissioned fully, will displace the LNG supply in the central region. This pipeline runs from Texas to Mexico and will stimulate 50% higher gas pipeline imports. With Mexico’s falling gas production, US pipeline exports seem like a feasible option to fulfil robust gas demand. Mexico has plans to bring in new natural gas fired plants in 2017 with a capacity of 7 GW.

Going forward, Mexico will likely witness declining domestic gas production and higher dependence on piped gas and LNG imports. At present, almost 50% of gas consumption in Mexico is fulfilled by imports and by

Figure 2. Mexico consumes over 30% of imported gas in the form of LNG and piped gas.

14 July 2017

political environment has failed to attract a lot of foreign and private participation in the country.

As highlighted in Figure 3, Argentina imported 51.7% of gas in form of LNG in 2016. Argentina has two LNG liquefaction terminals and with the growing natural gas demand, a third terminal is likely to be constructed.

Argentina has three main gas pipelines and imports gas mostly from Bolivia. Argentina also plans to bring additional pipeline capacity by 2017, which is expected to meet the projected increase in gas demand.

By 2020, the natural gas demand is likely to increase to 52 billion m³, with the government also planning to bring in new gas-fired power plants by 2025 of approximately 5 – 7 GW. This demand will be fulfilled by domestic production which is expected to be around 42 billion m³ and the balance demand will be supplied by piped-gas from Bolivia and LNG. Although LNG imports from Chile are more expensive than the piped-gas from Bolivia, Argentina relies on LNG as a result of shortages of gas from Bolivia.

By 2030, Argentina may be able to fully tap in to the shale resources, which may substitute the gas imports in the country. In order to make this a reality, Argentina will require a lot of investment. Until then, the country’s energy sector is expected to be dependent on domestic production and gas imports, the majority of which will be LNG.

Brazil’s dependence on LNG imports is likely to decline significantlyAlthough the power sector in Brazil relies heavily on hydroelectric plants, the recent shortfall of hydropower

has led to high consumption of natural gas in the power sector. In 2015, the total natural gas supply stood at approximately 40.9 billion m³, of which more than 90% of the gas was consumed by the industrial and power sector. However, this consumption fell drastically by 18% in 2016, owing to slow economic growth in Brazil, which led to the decline in prices of commodities. Furthermore, the electricity prices were exceptionally high. As a result, Petrobras – an integrated Petroleum corporation in Brazil – delayed investments and future plans.

According to the EIA, Brazil’s technically recoverable shale gas resources amount to 245 trillion ft³. As most of these resources are located offshore, developing these resources is complex and challenging.

The gap between the natural gas supply and demand in Brazil is met by piped-gas and LNG. As seen in Figure 4, more than 80% of the gas imported in Brazil is via pipelines, most of which is from Bolivia. The balance is LNG imports that have been steadily increasing since 2009 when Brazil first started importing LNG in order to secure the country for power shortages. LNG imports more than doubled from 3.2 billion m³ in 2012 to 7.14 billion m3 in 2015.

Going forward in short-term, LNG imports are likely to decline on the back of slow economic growth rate, increase in hydropower and high volumes of piped-gas imports. In addition, Petronas is planning to terminate a few LNG contracts before the expiry timelines.

ConclusionOverall, Latin America is undergoing some significant developments in terms of building its energy landscape. However, the role of LNG will not be as dominating as some might have thought few years back. With the US having surplus gas and pipeline connectivity becoming stronger, the chances of LNG are becoming bleak. Furthermore, Latin America is encouraging foreign investments to tap its untouched gas reserves. Although LNG is not likely to be completely wiped off from Latin America, countries such as Brazil, Argentina, Mexico and Chile will continue to import LNG, but at minimal rate.

Even though Latin America has enormous shale gas resources, it is unlikely to enjoy the position of surplus gas production in the near future, owing to slow infrastructure expansion and moderate energy resource development. Latin American countries will need substantial investments for infrastructure development in order to sustain energy security.

Although the government has modified regulations in order to promote investments and develop the resources in Latin America, it will take some time before these countries start producing enough gas to accomplish energy self-sufficiency and supply excess gas to international markets. Hence, a high level of energy dependence on the gas imports is likely to be the scenario throughout the region in the near future. LNG imports will play an important role in meeting the region’s objective of energy security.

Figure 3. Argentina’s dependability on LNG has increased in the last few years.

Figure 4. Brazil relies heavily on pipeline imports from Bolivia.

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