To shed some light on various aspects of ‘Iran LNG’ project, IranOilGas Network has spoken to Ali Kheyrandish, managing director of ‘Iran LNG Company’ (ILC), excerpts of which follow:
Touching on the backdrop of ‘Iran LNG’ project, Kheyrandish said the project was defined in 3 packages and contracts for packages 2 and 3, which dealt with the construction of LNG and LPG storage tanks and the relevant harbor and jetties, were all signed during February 2007.
The project’s package 1 included its Power Plant, Utilities, Gas Sweetening, Liquefaction and Offsite sectors. According to the ILC MD, this package was initially planned to be assigned in a single contract, but talks with few consortia, like Linde/Snamprogetti/Hyundai and their proposed high prices, led to the decision to subdivide the package into four parts to be assigned separately.
Kheyrandish explained that following selection of the Spanish company ‘Socoin’ as the Management Contractor (MC) of package 1 in September 2007, the package was broken up into four sectors with the help of Socoin.
According to him the first sector was called the E-LNG, which entailed building a Power Plant (EPC), carrying out the Engineering and Purchasing (EP) of the compressors needed in the Liquefaction unit plus the major parts of the Utilities unit.
The contractor in charge of the Liquefaction sector will install the compressors, he clarified.
Construction of the Gas Sweetening plant is the second sector in package 1, the contract for which was signed in 2007. Here, the sour gas yields of phase 12 of South Pars will be sweetened and sent to the Liquefaction unit.
Kheyrandish went on to explain: “The third sector of package 1 was initially planned to include the Utilities and Offsite sectors. However, since bulk of the Utilities unit was already covered in the E-LNG contract, the third sector was later reduced to the Offsite and the remaining parts of Utilities unit”.
The contract for the third sector of package 1 was signed early this year.
The fourth and the most essential sector of package 1 is the ‘Liquefaction’ unit, the contract for which was signed last month, said ILC MD, explaining: “Initially five groups of companies were involved in the talks on the Liquefaction unit but ultimately two groups of Farab/HFEC and Worley Parsons/ PIDECO remained and the contract was signed with them on March 18, 2008”.
Kheyrandish found both the groups fully capable of undertaking the project, but said they were given 40 days to propose their plans for the project and the appropriate decision would then be made. He said the whole project could be given to any one of the two or it could be shared by them.
In response to question about the capability of the Chinese HFEC in building Liquefaction plants, Kheyrandish said: “HFEC has not built any 5-Mln ton plants, but has experience with liquefaction in general and is well acquainted with Linde’s liquefaction technology”.
As for the German Linde’s role in Iran LNG project, Kheyrandish explained: “Linde is not only the licensor of the Liquefaction unit; it is also partnering Snamprogetti in revising the unit’s FEED. Besides, Linde will be supplying the exclusive equipment of the unit and will also be supervising over the works of its contractor.
Asked if Linde would have a say in selecting the contractors of the Liquefaction plant, the ILC MD replied: “Linde has made it clear that contractors are expected to work in the project only under certain conditions, including the constant presence of its specialists amongst the working groups of the contractors”.
Kheyrandish said while efforts were underway to secure some sort of a financing scheme for the Euro 700 Mln Liquefaction unit, Iran’s Foreign Exchange Reserve Fund could be seen as an alternative source for the purpose
He also clarified that the first Train of the Liquefaction unit, with 5 Mln t/y capacity, was foreseen to come on stream in 31 months’ time from the effective date of the contract, and the second Train, with the similar capacity, in 36 months from that date.
When asked what if the gas of phase 12 could not be available by the time the Liquefaction unit is ready to take it, Kheyrandish replied that the gas yields of other phases of the South Pars, such as phases 6-8, would be used as a temporary measure until phase 12 is brought on stream.
The ILC chief said talks were underway with the Italian Edison and the Austrian OMV on investing in Iran LNG project, but stressed that works on the project must move ahead so that the risks involved in it are lowered to the least, which will raise the value of its share and also create more incentive for such companies to invest in it.
Kheyrandish said there was no worry about marketing the LNG yields of the project because, he believed, the LNG market was the ‘sellers market’.
As for physical progress in Iran LNG project, Kheyrandish explained: “The engineering works of most parts of the plan are underway and Socoin, the MC, has started working too. The whole project, in its three packages, has so far made about 6% overall physical headway”.
Kheyrandish said Western sanctions had created obstacles on financing Iran LNG project and on obtaining its parts, but believed they could be managed.
