$1b Investment Prospect in FLNG Industry

$1b Investment Prospect in FLNG Industry$1b Investment Prospect in FLNG Industry

Foreign companies have shown interest in investing $1 billion in floating liquefied natural gas or FLNG production projects, director of investments at the National Iranian Oil Company said on Sunday.

"These companies are conducting feasibility studies to find out whether undertaking such a mega project is economically viable or not," Ali Kardor was quoted as saying by Fars News Agency.

Pointing to three proposals to produce LNG using flare gas in the Persian Gulf gas fields, Kardor added, "As long as the proposals are not finalized, details will not be revealed as those who are against Iran implementing such projects may obstruct the process."

According to the official, 5.6 million cubic meters of APG, or associated gas, will be converted into LNG. Furthermore, $1 billion are to be invested to manufacture FLNG using flare gas.

Underscoring the fact that LNG production projects from APG have been planned to be exploited prior to natural gas liquids projects, Kardor said except for the first two years which will be spent on the construction of FLNG facilities, the companies will be supplied with natural gas for three years, although they are asking for longer periods.

"As announced in tender, they will be provided with sour gas from different fields at prices ranging from 1.75 cents up to 4 cents," he said. Kardor said investing in FLNG infrastructure is financially viable, because the cost of producing LNG offshore is relatively on a par with LNG production from onshore facilities.

Iranian Offshore Oil Company's managing director had already announced the production of liquefied natural gas using flare gas will commence as soon as the sale contract for Forouzan Oilfield's associated petroleum gas is finalized.

According to Saeed Hafezi, a consortium of domestic and foreign companies will sign the contract for producing FLNG from APG.

Based on the National Iranian Oil Company's statistics, more than 5.4 million cubic meters of APG are burned per day on FZ-A platform in Forouzan Oilfield.

NGL are naturally occurring elements found in natural gas, and include propane, butane and ethane, among others. NGL are valuable as separate products and it is profitable to remove them from the natural gas. The liquids are first extracted from the natural gas and later separated into different components. APG is a form of natural gas found with deposits of petroleum, either dissolved in the oil or as a free "gas cap" above the oil in the reservoir.

FLNG production includes all systems to enable offshore liquefaction of natural gas into LNG. An FLNG facility would produce, liquefy, store and transfer LNG at sea before carriers ship it directly to markets.

According to reports, no FLNG facilities currently exist, but Malaysia's state-owned Petronas is constructing such a facility. In addition, the UK-based oil and gas major Royal Dutch Shell is reportedly working on the world’s biggest FLNG project.