LNG Export Plants
Case study: Pakistan LNG import terminal projectClient challenge: Pakistan has an established gas market and currently produces around 40 Bcm of gas per year. This is much less than demand for gas at 60 Bcm, expected to increase to 80 Bcm by 2020. The Government of Pakistan, with the support of USAID, sought to alleviate gas shortages through the import of LNG.
Support provided: QED was appointed by the Government of Pakistan and USAID as lead advisor for the planning and implementation of LNG import terminals. QED led on all aspects of project development, managing a wider team that included an international legal firm, a local legal firm, local consultants, and marine engineers, working closely with the national gas company SSGC. QED assisted the government/SSGC in running the international tender process, evaluating bids and selecting the preferred bidder, and supporting SSGC in negotiating full agreements to secure Regasified LNG services on a long term basis. QED also worked closely with the Government to advise on Pakistan's LNG procurement strategy and with Port Qasim Authorities on terminal siting and related agreements.
Outcome: In April 2014 Government of Pakistan/SSGC secured the development of the Fast Track in Port Qasim by Engro with the FSRU provided by Excelerate. This is the first LNG import project to be secured in Pakistan after more than 10 years of planning. This project is due onstream early 2015.
Case study: Israel Gas Market DevelopmentClient challenge: The Government of Israel require hands on support on the development of a natural gas industry and the implementation of its Gas Master Plan. Founders of QED have supported the Government throughout the 15-year development of the Israel natural gas industry.
Support provided: The initial phase of work included building a gas infrastructure model, modelling gas flows and P&L's for transmission and distribution companies, out to 2025. Once the planning was well understood, the team went on to develop the tender package and management process to identify and select a suitable international consortium to develop the greenfield Israel gas industry on a BOOT basis. The next step was to draft primary and secondary legislation and develop a regulatory framework, including designing the transportation tariff system.
Outcome: The team worked closely with the Government and many other advisors, including international and local lawyers, design engineers, and international gas supply companies and was later retained by the Israeli national gas company, INGL, in the next stage of the development for the commercialisation of the gas transmission network. This included developing and negotiating transportation agreements, reviewing gas security of supply measures, and supporting the Government in securing the SBM for LNG imports when gas pipeline imports from Egypt were lost.
Case study: Kenya Gas Master PlanningClient challenge: Until recently, Kenya had no known commercial reserves of hydrocarbons. Following large oil and gas discoveries in 2012, through a World Bank funded project the government requested support to understand its policy alternatives to maximize the monetary, social and environmental value of oil and gas in Kenya and map out the way towards a Petroleum Master Plan.
Support provided: QED was retained to lead on all oil and gas production and supply and gas monetisation aspects of the Master Plan, which included: a review of potential future indigenous production; advising on oil and gas import and export projects and potential siting; and planning the development of midstream and downstream infrastructure to meet projected market needs. This included an in-depth international benchmarking study into the main policies and legislative frameworks in place in other countries, and reviewing options for gas supply both through LNG imports and incorporating indigenous gas supply in the future.
Outcome: QED has developed scenarios for the projected establishment and development of a natural gas market largely based on gas' potential role in the power generation mix to meet rapidly growing demand for power in Kenya, and produced a road map for the implementation of the Master Plan. QED's success in developing a well-function gas market in Israel was a key analogue to our work in Kenya.
Case study: US Shale Gas AcquisitionClient challenge: An IOC looking to enter the US market required commercial and market advisory services relating to potential investments in the upstream shale gas sector. This was part of the company's strategy to gain a long term position in competitive natural gas supply to meet its requirements for related investments in the downstream sector.
Support provided: QED were retained over a period of two years to providing support in relation to prospective acquisitions, including: researching and analysing the routes to market and future economics of condensate, NGLs and gas flows from target fields in Canada and in the US; advising on the dynamics of the US gas market and how it had been impacted by the move towards shale gas production and the development of LNG export projects; identifying major players in the region and the potential match of their projected gas production profiles to meet the client's needs; and, reviewing a portfolio of shortlisted candidate companies/targets and supporting in the valuation of different investment options.
Outcome: In Q1 2011, the client successfully purchased a 50 per cent working interest in the Montney shale basin located in British Columbia. The assets acquired for approximately $2 billion included 108,000 total net acres of land with approximately 20 trillion cubic feet of gas resource. This offered a large asset base with long-life production to meet the supply requirements for the client's large scale gas projects.
Case study: Natural Gas Process Plant Valuation DisputeClient challenge: An EPC company required support in its defence against a claim relating to 2 natural gas processing plants that had been designed and manufactured for specific onshore fields in Eastern Europe.
Support provided: QED Managing Director, Phil Nutman, acted as an Expert Witness, with technical support provided by other members. The case required a valuation of the gas processing plants which were no longer required by the developer. In order to derive a valuation, QED had to consider how and where these plants might be effectively used, and the potential requirement for modifications to meet the changing technical needs of the new fields. The valuation considered both the replacement cost and a market value. Another important element in this case was the time between when the original transaction took place and the time of the trial, such that the valuation was relevant to the market conditions some 2-3 years previously and depreciated.
Outcome: QED successfully supported its client in providing an independent commercial, technical and market opinion through a detailed Expert Witness Report and in follow on Supplemental Reports. QED also prepared for and attended arbitration hearings in the High Court, giving oral evidence, and being cross examined by Counsel.