The LNG cycle
| LNG Shipping
During 2011, the Group’s LNG business benefited from strong demand, particularly in Asia, delivering 86% of its cargoes to global markets. The Group signed additional agreements for the supply and sales of LNG volumes.
- Signed 20-year US LNG export agreement for 5.5 mtpa, commencing 2015.
- Heads of agreement signed with Gujarat State Petroleum Corporation (GSPC) in India for the long-term supply of up to 2.5 mtpa of LNG for a period of up to 20 years.
- Significant progress made with the construction of the QCLNG liquefaction plant and related infrastructure in Australia.
- Lake Charles terminal received a 15 mtpa export authorisation to export LNG to FTA countries from the USA.
- Delivered 208 LNG cargoes to 13 countries.
* For a reconciliation between business performance and total results, see Annual Report note 1 and note 8.
BG Group’s LNG activities combine liquefaction and regasification facilities with the purchasing, shipping, marketing and sale of LNG.
||Exploration and production |
BG Group discovers and extracts gas. Onshore and offshore platforms collect gas from drilling wells, then transport it to liquefaction facilities.
A liquefaction facility cools gas to -160˚C, condensing it to 1/600 of its volume, allowing for economical transportation.
The LNG is loaded onto specially built ships designed to hold super-cooled gas. LNG can be transported to any country in the world with a regasification terminal.
The LNG is warmed at the terminal, converting it back to gas for distribution.
In addition to BG Group’s own LNG resources, the Group also buys gas resources under long-term purchase agreements or on the spot market in order to meet LNG demand.
- BG Group has equity stakes in liquefaction facilities in Egypt and Trinidad and Tobago. The Group’s equity share of liquefaction volumes from these interests in 2011 was 5.7 mtpa.
- The Group is developing a two-train 8.5 mtpa liquefaction plant on Curtis Island in Queensland, Australia.
2011 key events
- Completed site preparation for QCLNG plant and commenced construction on the foundations for the LNG storage tanks.
- Commenced fabrication of QCLNG facility with propane condenser units being assembled in Thailand.
- Received authorisation from the US Department of Energy (DOE) to export up to 15 mtpa of LNG from the Lake Charles terminal to countries with which the USA has a FTA.
- Application pending for authorisation to export LNG from the Lake Charles terminal to non-FTA countries.
- First LNG from QCLNG is expected in 2014.
- Possible further expansion of QCLNG with a third LNG train.
- Expect decision on application for authorisation to export LNG from Lake Charles terminal to non-FTA countries by end of 2012.
- Identification of potential site for onshore LNG plant in Tanzania.
- BG Group has regasification capacity rights in the USA through terminals at Lake Charles, Louisiana and Elba Island, Georgia and in the UK through Dragon LNG in Wales.
- In Chile, BG Group has 40% ownership of GNL Quintero S.A (GNLQ), which owns and operates the 2.5 mtpa LNG import terminal located in Quintero Bay.
2011 key events
- GNLQ declared commercial operation, following the completion of construction and testing.
- GNLQ commissioned a truck loading facility enabling supply of LNG to areas not connected to the central Chilean gas transmission system.
- Second phase of US Elba Express pipeline expected to be in service by 2014
- BG Group has a portfolio of flexible LNG supplies that can be deployed globally in order to capture greater margin opportunities.
- BG Group is engaged in marketing LNG both on a long and short-term basis. The combination of flexible supply, shipping capacity and commercial capability enables BG Group’s strategic approach to LNG marketing.
- BG Group has market access to both the USA, via capacity rights at Lake Charles and Elba Island, and to the UK, through its 50% ownership of the Dragon LNG terminal, underpinning the Group’s destination flexibility approach to LNG supply.
- BG Group has supplied 23 of the 25 markets able to import LNG and bought LNG from 12 of the 18 LNG producing countries.
2011 key events
- Managed LNG volumes totalled 12.8 mtpa.
- In total, delivered 208 cargoes, of which 179 cargoes were diverted to markets outside the USA.
- Supplied cargoes to 13 countries in the year.
- BG Group signed an agreement with Sabine Pass for the purchase of a total of 5.5 mtpa of LNG. Sabine Pass will deliver 3.5 mtpa to BG Group from its first train, with deliveries commencing as early as 2015, and a further 2 mtpa ramping up through 2018 as trains 2, 3 and 4 come onstream.
- Signed heads of agreement with GSPC in India for the long-term supply of up to 2.5 mtpa of LNG for a period of up to 20 years.
- Under the aggregator agreement with Singapore’s Energy Market Authority, BG Group has contracted the long-term supply of around 2.65 mtpa for up to 20 years out of its franchise 3 mtpa target.
- Formally signed a sales agreement with Tokyo Gas Company for the supply of 1.2 mtpa of LNG for 20 years from 2015 and a sales agreement with Chubu Electric Power Co. Inc, to supply up to 122 cargoes over 21 years.
- With Sabine Pass, BG Group’s contracted LNG supply is set to exceed the Group’s 2015 target of 20 mtpa.
- US LNG exports anticipated to commence as early as 2015 from the Sabine Pass terminal in Louisiana.
- Initial LNG deliveries into Singapore expected in 2013
- BG Group has a core fleet of modern double-hulled LNG carriers that it owns or operates under long-term charter. In addition, the Group contracts additional vessels as required to maintain a balanced shipping position.
- The Group’s shipping strategy is to control a fleet to meet short, medium and long-term commitments.
2011 key events
- Finalised mid-term time charters of eight LNG vessel newbuilds.
- At year end 2011, the total number of LNG vessels under BG Group control was 27.
- The eight LNG vessels will be delivered in 2013 and 2014.
- Finalising the joint venture structure with China National Oil Corporation for the design and construction of two LNG ships in China.