TIMOR GAP’s response to Fernando d’Silva’s article
TIMOR GAP, E.P. (TIMOR GAP), considers that the recent article written by Mr Fernando d’Silva and published by the national newsagency “Tatoli” titled “Timor-Leste’s dream for an LNG regasification terminal” was in relation to the press release from TIMOR GAP on the 31st March, 2021. After an in-depth analysis of the article, TIMOR GAP would like to make an official response in order to provide a contextual explanation regarding the planned studies for the LNG regasification terminal project and furthermore, to respond and clarify the points presented by the author, Mr d’Silva.
In relation to TIMOR GAP’s press release published on the 31st March 2021, TIMOR GAP would like to reiterate the objectives of the feasibility study as follows:
- Identify the potential market supply for import of LNG (Liquified Natural Gas) to Timor-Leste;
- Identify potential site locations for implementation of an LNG import terminal and conduct a site selection assessment;
- Develop a concept design for an LNG import terminal and associated LNG regasification facilities;
- Perform geotechnical and geophysical surveys to support development of an LNG Import Terminal design;
- Study the mode of distribution of natural gas to the 3 power plants;
- Develop the capital and operating cost estimates for the LNG Import Terminal and natural gas distribution;
- Develop the implantation plan for facilities.
In normal practice, a feasibility study is undertaken by oil and gas companies as a first step in assessing the technical feasibility and economic viability of a new project. The idea of the LNG regasification project came about in the context of the current power generation in Timor-Leste which, for the last 9 years has been generated using Diesel (specifically light fuel oil – LFO). The Government expends approximately US $100 million annually to purchase diesel to generate power at the nation’s 3 power plants in Hera, Betano and Inur-Sakato in Oe-cusse. Given this context, TIMOR GAP as the National Oil Company under the Ministry of Petroleum and Minerals plans to import LNG and regasify it, providing natural gas to the power plants as a replacement of diesel as the fuel for power generation. TIMOR GAP will undertake the feasibility study for the project which aligns with EDTL, E.P.’s plan to undertake its own studies to convert its generators in both the Hera and Betano power plants. Furthermore, the President of the RAEOA Authority (Região Administrativa Especial de Oé-Cusse Ambeno) has conveyed his support on the conversion plan for Inur Sakato power plant.
In relation to Mr d’Silva’s article, TIMOR GAP responds as follows:
- Background information on LNG Import Terminal Feasibility Study
Timor-Leste national electricity supply is delivered by three main power plants at Hera, Betano and Oe-Cusse located on the north and south coasts of the island. The Hera and Betano power plants were installed in 2011 and are equipped with Wartsila 18V46 generators currently configured to fire on light fuel oil. The Hera and Betano installed capacities are 119 MW (7 Generators) and 136 MW (8 Generators) respectively. The Inur Sakato (Oe-Cusse) power plant was installed in 2015 and is equipped with Wartsila 34DF generators also configured for light fuel oil with installed capacity 17 MW (4 Generators). The Wartsila generators have capability for conversion to fire on natural gas. Conversion of the power plants to fire on natural gas would achieve significant reductions to both fuel supply cost and greenhouse gas emissions. A reduction of annual expenditure on fuel import and improvement to environmental impact presents a compelling case to examine the investment required for conversion.
The installed aggregate capacity of 272 MW (mega watts) electrical load from three power plants would require a supply of 53 MMSCFD (million standard cubic feet per day) natural gas following conversion of both plants. This gas flowrate is equivalent to an LNG supply of 0.37 MTPA LNG. This is a relatively low capacity and the project would be classified as a small-scale LNG (SSLNG) facility development. TIMOR GAP intend to conduct an initial feasibility study to select a site for an LNG Import Facility and define the development concept.
The feasibility study will examine various concepts for import of LNG including, but not limited to the lease of a small scale FSRU (Floating Storage and Regasification Unit) or delivery of LNG ISO tanks via barge. The objective of the study is to select a concept which entails minimal infrastructure and low capital investment offering a viable solution to reduce net cost of power plant fuel supply. Moreover, an important objective of the study is to establish a design concept that will enable the facility to be re-purposed for the supply of natural gas (in the form of LNG or Compressed Natural Gas (CNG) from the future development of Greater Sunrise or other Timor-Leste upstream development.
It is unlikely that installation of an onshore pipeline distribution system will be viable and therefore LNG or CNG (compressed natural gas) will need to be distributed to the 3 powers plants by barge. At that time an LNG import terminal can be repurposed to receive either Iso tanks or CNG from Beaco.
- TIMOR GAP’s Clarification of some misconception statement.
To respond to Mr. d’Silva’s article in general, TIMOR GAP would like to convey that Mr. d’Silva misinterpreted or failed to understand (misconceive) the objective of the press release published by TIMOR GAP. Mr. d’Silva’s misinterpretation does not reflect the norms or current practices related to the import and regasification of LNG on a small scale for supply for power generation.
The specific response from TIMOR GAP to every statement raised by Mr. Fernando are as follows:
- d’Silva’s statement:
“Build an LNG Plant for Greater Sunrise field will make the regasification project/plant unviable, or in other words, building a regasification terminal first will not allow for the development of TLNG. The fundamental reason lies in financing; Timor-Leste will face difficulty to construct two large plants simultaneously without third party involvement to invest in Timor. Taking into consideration this context of third party investment, it would be more realistic to prioritize the investment of the construction of TLNG.
Establishing TLNG, Timor-Leste has feed gas from Greater Sunrise, and gas to LNG plant itself could be designed as an inlet point (receiving point) at TLNG or outlet point from pipeline could have direct connection; one to connect to TLNG and the other direct connection to power plants which utilized natural gas. This method is practice (best practice), tested and utilized in some LNG plants. This said, the author considers, building a regasification for the sole purpose of supplying fuel to power plants in Timor, is irrelevant because TLNG itself is already sufficient.”
TIMOR GAP’s response:
There are two main misconceptions presented in the article:
- The article considers that the study would consider an onshore regasification plant which would be a significant facility and not economically viable for Timor-Leste’s low fuel demand. This is an incorrect assumption. The study objective is to examine a minimum facility such as a small scale FSRU provided under lease contract typical of recent developments in Indonesia, and around the world, for similar applications. The scope of the study shall also examine alternative concepts such as a facility to receive and handle the offloading of LNG Iso-tanks delivered via shuttle barge with installation of small evaporator units on each of power plant. Thus, the study objective to examine a development offering the lowest possible capital expenditure. Economic assessment of the selected concepts will be conducted with the aim to demonstrate commercial viability by a net reduction in cost of fuel supply compared to import of Light Fuel Oil or otherwise.
- The article considers that the LNG Import Facility would be irrelevant when Greater Sunrise TLNG, or another Timor-Leste upstream development, is implemented in future. This is not a correct assumption. On the contrary. The scope of the study will set out a functional requirement that the LNG Import Facility can be re-purposed in future to receive either LNG product or CNG (compressed natural gas) from an indigenous Timor-Leste source such as the aforementioned cases. Therefore, the infrastructure investment can be leveraged by future Timor-Leste upstream developments.
- d’Silva’s statement:
“Another consideration is to build regasification, from regasification terminal itself will transport natural gas to power plants or consumers through pipelines; a mode of transport which mainly used and secure in most of the regasification terminal. With power plants in Hera, Betano and Oe-Cusse building pipelines around Timor will involve significant investment. Pipelines will go up and downs mountains, pass rivers and swim ocean (possibly).
Another possible mode of transport is to use LNG rail tanker; once again, can we consider train circulation around Timor with risk of explosion? Using trucks to transport natural gas is probably not recommended take into consideration of Timor’s geography and required in depth assessment from the health and safety aspect which could lead to explosion.”
TIMOR GAP’s response:
The study will assess the various modes of gas distribution and compare the risks and viability. At this stage it is anticipated that the most viable method of distribution is via small shuttle barge to Oecusse and either Betano or Hera depending on the location of the import terminal. The study will examine the possibility to transport ISO-tanks by barge and associated offloading facility at the corresponding locations. It should be noted that construction of cross-country onshore pipelines is also unlikely to be viable to distribute the small volumes of natural gas required for the power plants from a TLNG liquefaction plant in future therefore maritime distribution may be needed at that time.
- d’Silva’s statement:
“Keeping in mind that, the regasification terminal is highly dependent to feed gas LNG; the reasonable assessment is the consideration of the LNG plants located near Timor-Leste. Some LNG plants to consider for its feed gas to regasification terminal in Timor is Darwin LNG, Ichthys LNG project, Wheatstone LNG project (8.9 MTPA), Gorgon LNG project (5.2 MTPA) and Freeport LNG project (4.64 MTPA) which is located in Australia……….”
TIMOR GAP’s response:
The feasibility study will examine LNG sourcing options within the region, including Indonesia (for example Badak LNG, LNG Tangguh, etc) and Singapore as well as Australia, with capability to receive small scale LNG carriers. Moreover, the market study will examine sourcing of LNG ISO tanks for transportation via barge.
- d’Silva’s statement:
“By considering the description stated in this article, the writer once again re-iterates that the decision to conduct the feasibility study must be based on profound preliminary assessment which is reasonable and deliberation from the technical hypothesis and commercial reachable.
All this included but not limited to the assessment of the detailed technical operational of LNG regasification, operation of the plant, Timor-Leste’s natural resources in connection to gas production field particularly Greater Sunrise negotiation, feed gas (LNG) and market existence/long term contract agreement.”
TIMOR GAP’s response:
The pre-feasibility assessment has considered the recent industry practice for development of LNG import on a small scale within the region and the potential cost of minimal permanent infrastructure. As mentioned above the study will consider the functional requirement for an LNG Import Facility to be re-purposed in future to receive product from Timor-Leste’s natural resources.
TIMOR GAP would be very grateful if Mr. Fernando could justify and present his technical and commercial data.
- d’Silva’s statement:
“To keep in mind that geographically, transport of natural gas from the location of the regasification plant to three power plants is not practical. With that in mind, the intention to provide gas to three power plants, the most favorable is to build TLNG and actively continue with the exploration activities in onshore oil and gas field to be produce in the future.”
TIMOR GAP’s response:
The study will consider the functional requirement for an LNG Import Facility to be re-purposed in future to receive product from Timor-Leste’s natural resources including TLNG.
TIMOR GAP would be very grateful if Mr. d’Silva could present data and study reference regarding the comparison between the utilization of diesel (light fuel oil) vs natural gas from the economic aspect, environmental aspect and project for the possibility of gas production onshore and offshore in Timor-Leste jurisdiction area.
Thank you.
End.
TIMOR GAP, E.P.
Downstream Business Unit
Francelino Boavida – Managing Director