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| An LNG ship sirs at a European terminal.Photo:EPA |
International energy giant Royal Dutch Shell plans to develop a liquefied natural gas (LNG) terminal in Tanintharyi Region.
The firm has signed a Joint Development Agreement with Thai companies Italian-Thai Development and LNG Plus International in Bangkok on August 19 to cooperate on developing the terminal. It will consist primarily of an LNG receiving and re-gasification terminal at Dawei special economic zone.
LNG is natural gas with has been condensed by cooling it to at least -162 degrees Celsius (-260 Farenheit), which reduces its volume to about 1/600th the size. This makes it much easier to transport by ship.
The plan is for the LNG terminal in Dawei to serve as a place for offloading LNG for on-shipping to various businesses in Dawei, Thailand and eventually the rest of Myanmar, cutting out a requirement to ship south around Singapore.
“We believe that this opportunity will enable Shell, together with its partners, to bring its global expertise in LNG to Myanmar meeting the country’s energy aspirations,” said Roger Bounds, vice president of Global LNG at Shell.
The agreement was witnessed by both Myanmar and Thai government officials. With the agreement, Shell will provide technical exertise on developing an LNG terminal in Dawei. It will also access terminal capacity and supply LNG to customers.
Mr Bounds said initially customers would be the developers inside the Dawei special economic zone. Later, the terminal will serve as a conduit to Thailand and other areas in Myanmar.
Dawei is an ambitious project in Tanintharyi Region. Part of the project’s rational is to provide direct transport links from Bangkok to the Andaman Sea, instead of requiring goods to be shipped through the Strait of Malacca.
The agreement marks the first major LNG business deal in Myanmar. International companies from the area, including China, South Korea, Japan, India, Singapore and Thailand, have held discussions with Myanmar authorities to develop LNG facilities.
Myanmar is a major producer of natural gas. However, it may have to import the fuel in the medium term, as much of its production is contracted out to Thai and Chinese buyers, while Myanmar is planning a number of new projects such as electricity generation that requires natural gas.
Royal Dutch Shell did not disclose more details of the deal with Thai companies in developing the terminal.
It is part of a US$1.7 billion deal to develop the first phase of the long-delayed Dawei special economic zone, according to a Reuters report earlier this month. The project will also include a $500 million, 450-megawatt gas-fired generating station, the report said.
However, financing is understood to not yet be finalised. The Reuters report said a senior Italian-Thai official had said World Bank and its private sector arm the International Finance Corporation (IFC) would provide loans for the terminal. However, IFC officials have said an agreement is still in the early stages, and there is much to do before a loan is extended.
Shell claims a study has shown that there are now 30 countries importing LNG, from only nine in 1999.
“The LNG market is growing. It is very strong even though the price is low at present due to continuous falling of international crude oil price,” said Mr Bounds.
The firm has other investments in Southeast Asia in Brunei, Malaysia and Philippines. It was also awarded the right to explore and produce oil and gas at three Myanmar deepwater blocks following the 2013 offshore bidding round. Shell and its Japanese partner Mitsui Oil Exploration have signed production sharing contracts with state-owned Myanma Oil and Gas Enterprise in February. The two companies have committed to invest $1.2 billion over eight years in Myanmar offshore areas.
