* Tamar FLNG terminal could be world's third to come to
* Gazprom wants to buy Israeli gas to expand in LNG sector
By Ari Rabinovitch
JERUSALEM, Feb 27 The latest floating terminal
technology could be the key to unlocking gas exports from
Israel's Tamar field and the larger related gas riches of the
Russian energy group Gazprom said on Tuesday it is
in exclusive talks to buy liquefied natural gas (LNG) from
Tamar, located about 90 km off Israel's coast.
To do so, it plans to use a massive, floating LNG vessel
(FLNG) that will receive, liquefy and then ship the gas on site.
If it works for Tamar, which has estimated reserves of 9.7
trillion cubic feet (tcf), a second could be brought to the
nearby Leviathan field, which is more than twice the size and
was the world's largest offshore discovery of the past decade.
"We hope it will put us in a better position to help with
Leviathan," said Kathleen Eisbrenner, chief executive of Pangea
LNG, the vessel's developer, who helped develop the Gazprom
Gazprom is the world's biggest gas producer and relies
heavily on pipeline supplies to Europe, which make up around 80
percent of its revenues. It is keen to expand in the LNG sector
to grow in the booming Asian market.
Two of the main partners in Tamar, Texas-based Noble Energy
and Israel's Delek Energy, are also part of
the consortium developing Leviathan.
The Tamar and Leviathan finds sparked an exploration frenzy
in the area. The U.S. Geological Survey has said the eastern
Mediterranean's Levant basin could hold up to 122 tcf of
recoverable gas, making it one of the world's richest deposits.
The first FLNG facility is being built for Royal Dutch Shell
, the world's top LNG trading company, for use off the
coast of Australia, where natural gas fields are being tapped
for future export to Asia.
Shell's Prelude FLNG project is expected to become
operational by the end of the decade.
Prelude, which will be the world's biggest offshore
structure ever built, is being built in South Korea by Daewoo
Shipbuilding & Marine Engineering Co..
Each floating LNG vessel costs $3 to $4 billion to
construct, Eisbrenner told Reuters, adding that Tamar's FLNG
vessel would be the third to become operational.
Pangea LNG is partly owned by Daewoo.
Most of Tamar's gas is earmarked for domestic use, and in
the deal being discussed, Gazprom would export roughly a third
of its reserves over a 20-year period, starting in 2017. The
price for the LNG would be linked to the price of Brent.
Analysts say FLNG terminals will become a major growth
market within the next years, as they offer more flexibility
than stationary terminals.
"Capex will exceed $28.6 billion between 2012 and 2018,"
energy consultants Douglas Westwood said.
"Floating regasification is proving popular in countries
wishing to access the buoyant LNG market. The relative cost
advantages over onshore terminals plus the short lead times are
proving to be a substantial incentive for developers," they
Some uncertainty remains though, because Israel has yet to
officially say it will allow significant gas exports.
Prime Minister Benjamin Netanyahu is still forming a
government after last month's election, and it could be weeks
before a formal decision is made.
"The Tamar partners tell us they do not have concerns in
this regard," Eisbrenner said.
Gazprom will hold exclusive talks for six months with the
aim of reaching a binding agreement with the marketing agent for
the Tamar project. Russia is looking to diversify its gas
exports, which are focused on the weak European market, and a
deal could strengthen its hand in the booming Asian LNG market.
Where the gas from Tamar will be sold, Eisbrenner said,
"That is for Gazprom to decide, but we target netbacks from