LNG Storage Hub May Be Located in Fujairah

LNG Site Needed in Gulf
Platts in Singapore announced today--29Nov2007--that the Dubai Multi Commodities Center is in "critical negotiations" to secure a site for its LNG storage hub in the Persian Gulf and to identify foundation customers, who will also be offered an equity shareholding in the project company, a senior DMCC official said Thursday.

Fujairah Location?
The DMCC had initially identified Dubai as the location for the LNG storage project, but was now more keen on locating it in Fujairah, the Dubai-based exchange's Executive Director-Energy Tilak Doshi told the Middle East and Asia Energy Summit in Singapore.

Dubai Disadvantages
The intent was to bypass the Strait of Hormuz, which is regarded as a vulnerable chokepoint if hostilities break out between Iran and the US, Doshi said. Oman had also cropped up as an alternative location, and Dubai was not off the table, though land costs were steep in the emirate, he added.

"If the choice is between Dubai and Fujairah, we will take Fujairah," he said.

Way Ahead
Phase I of the project, which will set up cryogenic LNG storage tanks of 200,000 cu m capacity each, is expected to be ready by 2011, Doshi said. "We are in critical negotiations," he said, referring to both talks with the Fujairah authorities for land and with the project's potential customers.

"We hope to finalize the negotiations by Q1 or Q2 [2008]." Construction on the project should start by mid- or end-2008, and be completed in about three years, Doshi said.

Source: Vandana Hari, vandana@platts.com at Platts.