Maritime transportation of LNG: Economics and Politics in one volume of a gas supertanker 

                                                   
                                            Free Opinion 

                                                      ( Свободная трибуна )

                                                          December,  2009 

  
Energy security for the EU today has replaced the issue of military security for the countries of Western Europe during 50-x - 80-ies of XX century. But again, like 20 years ago, the West Europeans closely link this new dimension of European security with Russia. According to opponents of closer cooperation between the EU and Russia (the latter - mostly from the ranks of "Euro-Atlantic Partnership" - the U.S. and UK)  today, too many European countries are too dependent on energy supplies from Russia, especially on  natural gas which is  supplied to the European gas market only one Russian corporation ( “natural monopoly”) of global significance - JSV “Gazprom”.


In order to provide for themselves the most favorable conditions for energy supplies, the EU and the U.S. are taking various measures. Their range is very wide and varied. From the proposal to conclude an advantageous for themselves "Energy Charter" and the attempts to put an "environmental break” on various Russian projects of alternative routes of gas supplies to Western Europe, bypassing transit countries Ukraine and Belarus. These measures also include the implementation of major projects for the transportation of gas, which could provide an alternative to Russia supply of natural gas from other countries. In this case we are talking about alternative supplies in very large quantities. Rapidly growing technology in the production and transportation of liquefied natural gas (LNG) may help to achieve this goal quite soon.


Keeping this in mind, we consider as very interesting some reports of the various major LNG projects around the world: the production of LNG projects in developing countries and transportation of LNG on a large scale to gas consuming countries of the European Union. The projects, which we are writing about, just belong to the category of such important projects of alternative supplies of natural gas in the twenty-first century. To paraphrase the famous slogan from “Head and Shoulders” shampoo advertisement, we can say that the new draft of the marine LNG deliveries is nothing like "the economy and politics in one king size “bottle”, or to be more exact - in one super gas tanker (methane-carrier), capable delivering several hundred thousand cubic meters of liquefied natural gas to any point world in one trip. Given the fact that the number of such gas supertankers is constantly growing, and then there are even doubts - what more do these "super bottles" represent - economic feasibility or energy policy?


For transportation of huge volumes of LNG by sea it is necessary to create an appropriate infrastructure for shipping and receiving and later for re-gasification of LNG delivered by sea. Projects establishing such terminals already exist and are being developed.


Such projects should include the South Hook LNG Terminal, the largest LNG terminal in Europe, for receiving gas tankers (methane-carriers),  on the west coast of Wales, in the deep bay of Milford Haven. LNG terminal which is still under construction is a British joint venture, in which 67,5% of shares are owned by the Qatari government corporation Qatar Petroleum, and 24,15% and 8,35% owned, respectively, by the American corporation Exxon Mobil and French Total. 

           Routes of gas supplies to Britain. Of the six routes, three belong to the LNG 
            After the depletion of gas fields in the North Sea, the main site of gas production will be located 
          at a distance of about 5000 kilometers from the island State of Great Britain.
        Therefore, it is a very important terminal - Milford Haven LNG (leftmost on the map). 

Why a small state of Qatar does possesses nearly three-quarters of all shares of the British super terminal? Because Qatar is the main supplier of LNG to the British terminal and to ensure adequate shipment of LNG by sea to the UK, in Qatar another major terminal is being build. It is also, the LNG terminal, but the purpose of sending LNG out of Qatar. American corporation “FLUOR” already delivered equipment (including storage tanks for LNG and cryogenic pumping stations to pump LNG into gas tankers, etc.) and provided with qualified personnel, this project named «RasGas" worth 1.5 billion dollars. «RasGas» is also a joint venture in which state-owned Qatar Petroleum owns 70% of the shares, and the American Exxon Mobil Corporation - 30%.


Marine transportation of LNG terminals along the route between “RasGas” and the South Hook will be carried out by 14 gas supertankers so far, which  usually take on board in their cryogenic (low temperature)  LNG tanks  the amount as large as from 138 thousand cubic meters to 145 thousand cubic meters of LNG each.

 Launched in 2007 and in 2008 a series of supertankers of  D-Flex and D-Max types can carry even more volumes of LNG - respectively, 210 thousand and 260 thousand cubic meters of liquid (at temperatures below 196 degrees Celsius)  natural gas. Given that the re-gasification (i.e the conversion of low-temperature liquefied gas into an ordinary natural gas at normal pressure and temperature), one cubic meter of LNG converted to 600 cubic meters of conventional natural gas (which in turn is the fuel equivalent to 600 liters of high octane gasoline for one cubic meter of natural gas), then per one voyage ONE supertanker D-Max can deliver from Qatar to the UK 156 million cubic meters of gas (or the equivalent of 156 million liters of gasoline). As we remember only on this route runs 14 supertankers regularly ply and they can do more than one voyage per month. The sea distance from Qatar to Great Britain is relatively small.

Is it a lot of gas or not so much? Let us take, for instance, the annual gas consumption of a small European country, such as Hungary, (15.5 billion cubic meters in 2007). To provide this country with natural gas  for the  whole year just 100 voyages of  supertankers of D-Max is more than enough. The only pity is that these can not dock in the Hungarian Balathon Lake. 

 The latest gas supertanker «Mozah» (named after the Sheikh of Qatar - Mozah Bint Nasser Al-Missned).  7 May 2007. Maiden voyage to the first stage of South Hook terminal with 266 thousand cubic meters of LNG on board.

 But if we talk quite seriously, with full gas Russia exports to Europe at about 124 billion cubic meters a year, in order to completely abandon the import of Russia's natural gas in Western Europe there should be less than one thousand voyages of LNG supertankers annually. And this number of gas trips is quite feasible.

 Knowing form the history of the World War II, the wonders of military transportation by sea performed by the U.S.A  to Europe, there is no doubt that even in peacetime, with the present development of a tanker ship building, if necessary, including for reasons of "energy security", the United States can quickly organize  production, and marine transportation (and if necessary, the protection of it) that amount of  natural gas for “Europe in need”, which shall be deemed as necessary and sufficient. There shall be no technical problems for this in the U.S. and its European allies for this purpose. For us, Russians, the people of continental Eurasia, it is very difficult to grasp what exactly can be done quickly and so well done for handling huge quantities of goods by sea by maritime powers, especially by the United States. We just cannot imagine it as our transportation is mainly by land. But the great possibilities of the maritime transportation -it is a fact that should not forgotten by the continental builders of gas flows on the seafloor. 

Gas flows at the bottom of the seas as far as it is needed to flow this way. As long as the European consumer accept this as  more reliable way to transport Russian  gas avoiding territories of  not very reliable and politicized routes through transit countries, such as Ukraine, Poland and even Belarus. But the rapid growth of LNG transportation by sea demonstrates that the traditional supply of gas for export, namely, - transport by land pipelines, will not remain forever the most important means of transporting gas. This should not be forgotten.

How much gas just one super terminal LNG South Hook will be able to take? After starting to work at full capacity in the first quarter of 2010, this terminal will be able to take annually 15.6 million tons of LNG, or after re-gasification - 21 billion cubic meters of natural gas to be pumped from the terminal to the National gas distribution network. And it will be 20% of all needs of the UK in natural gas. 

                       Schematic drawing of 210 thousand cubic meters of LNG supertanker D-Flex. Dual overboard.

                         
Here there is something to think about. For “Gazprom” Company and for those who determine the export of raw materials model of Russia's economy. What will be tomorrow, and especially the day after tomorrow, with gas prices in Europe, if massive supplies of cheap LNG from various countries - Qatar, Algeria and other gas-producing countries should “suddenly” start ? Of course, we have, as an alternative export routes, "ever  hungry for energy” customer – that is neighboring China. But China is always very tough bargaining on prices and it is unlikely we manage to sell Russian gas "for the European price" to Chinese. And if the gas pipes leading to the West will be downloaded only partially, what then will be the price of gas?  For both.  For the West and for the East.

All these questions are not simple. But one thing is clear enough. It is a must  to intensify the development of LNG production in Russia itself and it is a must to make a breakthrough in new ways of transporting natural gas. Not necessarily for export. We have immense Northern territories which are supplied today with traditional fuels at very high prices due to the logistic difficulties. Of course, one can still pump natural gas by pipelines, taking extra good money for pumping this gas and still hoping that this an "eternal business. But there is nothing eternal. This includes the new ways of transporting natural gas. All  this implies not only an economic but also a number of  purely political consequences. For “Gazprom” company, as well as for Russia's State. For its foreign policy. For a real role of Russia in the world politics and the world economy.

This particular example of construction of LNG super terminals and LNG supertankers clearly demonstrates that "Euro-Atlantic Partnership" has a well conceived and already technically feasible long-term strategy for "Europe's energy independence from Russia." Well, at the least in the foreseeable future it will make Russia's position in Europe, weaker, and as a maximum, it will make Russia " not very necessary" for Europe. And as a consequence of this is lost “necessity”  - make all even more dependent on the United States. All this is the clear  evidence that even in the new historical conditions  the old goal of NATO will remain unchanged. That is: «To keep America in, Germany down and Russia out


Have these objectives changed essentially since 1949, when NATO was created? It is doubtful that they really have changed. Maybe it was one of the reasons that Germany was the most interested (along with Russia) in a gas pipeline under the Baltic Sea waters, from Russia gas terminal to German gas terminal. No middlemen and no  transit countries. Just a direct line. A pipeline.

Of course, small eastern European satellites of the U.S. resisted this, despite evident economic interests in this project from the main power of the European economy – from Germany. Why should they resist? Not only because they were deprived of an income from gas transit through their territory and became "less necessary" for Russia because of this underwater pipeline . But they objected to this pipeline also because there - in the pipeline" bottle "at the bottom of the sea, there are also both economics, and politics. And there is even more of  politics than economics even if nobody admits it openly. There is a lot of politics because the U.S. and Britain ( The Euro-Atlantic Partnership), and evidently sandwiched between Russia and Germany, the East European small satellites of the United States, each group of these countries for their own reasons, are totally unwilling to accept the strengthening of Russo-Germanic continental partnership. This kind of European partnership – between Russia and Germany - is unprofitable for the United States, and for their East European satellites in any ways – politically and economically.

                        V.V. Putin and the Emir of Qatar, during an official visit to Qatar, February 12, 2007.
                            The heads of the two largest gas-producing countries have something to talk about. Or agree upon..

                                          ( Photo from  www.kremlin.ru. )

Whatever critical voices are there in opposition to Prime Minister Putin’s policies, and whatever are the real interests of Mr. Putin’s in his personal efforts to reach an agreement on a gas pipeline from Russia to Germany, bypassing any transit country, this submarine pipeline will actually act in the interests of both partners on the gas transit project "North Stream" . It is also advantageous for Russia not only because it allows us to reduce the risks of excessive economic (and political) demands of the present transit countries. No less important is the fact that it contributes to a greater binding of Germany's economy to Russia's economy and thereby it contributes to the rejection of the principle "To keep Russia out" (out of Europe). It as a matter of consideration for Germany and its European and trans Atlantic partners if the aim “to keep Germany down” is still valid or not. Let them decide this issue or non issue for themselves. For us Russians it is more important that we must be IN Europe no less than trans Atlantic states. Perhaps this “North Stream” gas transit project will also contribute to a closer partnership between Russia and Germany in spheres other than natural gas sector. And this had always bееn feared, and has always been strongly opposed by the maritime powers - the United States and the United Kingdom. Not to mention Eastern European states.

 However, the latter twice in the twentieth century, played along with those who wanted to push Russia and Germany into a major mutual battle and as a result they themselves have suffered from such a policy of the more distant from the European battlefields maritime powers. However, even the United Kingdome suffered from such a policy as its colonial empire grew weaker, and after the World War II this empire completely disintegrated. But the United States in both cases benefited the most. Politically and economically.

Russophobe hysteria that often occurs in the new century in a number of the U.S satellite countries (notably in Poland) once again proves that "History teaches us that it teaches nothing." While for us, Russians, it is important that these lessons of History have been correctly understood by the Russian and German peoples. The short history of the gas pipeline project  "Northern stream" gives us some hope that the painful lessons of the European History, both Germany, and Russia were able to "learn", 65 years after the Russian-German mutual slaughter.

Policies to prevent the partnership between Russia and Germany and the associated fears are not new - they are not less than one hundred years old. But they continue to affect everyone. Including the influence on the methods and the routes for transporting gas from Russia and other countries, by the bottom of the sea and by the waves of the sea. From which it follows that the routes and the means of transportation in Russia's natural gas should not be a clearly biased in one particular direction. Their choice should be very pragmatic, but this choice should always be placed not only on the basis of short-term pragmatic interests, but also from the standpoint of the prospects for the foreseeable future. That's what "Euro-Atlantic Partnership” is doing now, strategically planning their future and building for this future  new LNG super terminals and new LNG supertankers. And while all this is being built not by the States but by large private corporations, we need not look far for examples of the close link of very big Russian private business and the government. An example of such a business connection practiced by “Euro-Atlantic Partners” differs from the Russian example only in one respect - the interests of large Western corporations coincide with public interests of Western states. The construction of the new South Hook LNG super terminal on the west coast of Britain may well serve as an illustration of the principle or general idea that the financial interests of very large private corporations should not be “by economic necessity” harmful for public interests of their countries and ruinous for national economies of those countries. Since Peter the Great Russia has been trying to learn from the West the best examples of public life but the survey of present Russian gas policies with regard to Russians themselves proves that not all the necessary lessons in the sphere of relationship between the public and the big business have been successfully learnt. Sometimes it looks just the visa versa case.

But as Russians say “We start slowly but we ride very fast”. Let us hope and work hard for that fast riding in gas transportation and gas utilization matters.

   Qatar's Sheikh Mozah Bint Nasser Al-Missned his second wife (of three) on one of the ceremonies associated with the opening of the first stage of the LNG terminal in the UK. 

(Note that the sheikh is dressed as befits his dressing "on his official post", but his wife is without a veil, and very decently dressed according to European notions, though  the dark color of the clothes and the headscarf are obligatory) 

Madame did not accidentally got photographed with British schoolchildren: she is actively engaged in charitable and educational activities in connection with which she has  the official status of the Special Representative of UNESCO on the secondary and higher education.

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