POWER March 2017 - 9

Low LNG Prices Fuel
Interest in LNG-to-Power
Projects
Stricken by falling prices, producers of
liquefied natural gas (LNG) are looking to
exploit an emerging trend that integrates
the fuel source with power generation.
According to Houston-based international
law firm Baker Botts, an increasing
number of LNG power projects are emerging
worldwide as a " new, viable medium "
that offers a rapid but long-term power
solution. Last year, Sri Lanka moved to
finalize its first LNG power plant, though
that 300-MW project proposed for Kerawalapitiya
hadn't been approved as of
January. Last year, Chile also approved
an initial 600-MW gas-fired power plant
that will use LNG exported from the U.S.
by Cheniere Energy. In November, the
government of Pakistan invited bids for a
1,200-MW LNG-fueled power plant at the
existing Muzaffargarh thermal power station.
And in early February, the South Jamaica
Power Co. signed an engineering,
procurement, and construction contract
with Spanish firm TSK Group for a turnkey
190-MW LNG-fueled plant. Meanwhile,
LNG producers Cheniere Energy Inc. and
Total SA are separately looking to package
LNG production with power generation,
Bloomberg reported in January.
Interest in the latent market is also
evident by recent technology developments.
Chinese firm Wison Offshore &
Marine in January unveiled a range of
floating solutions that integrate LNG
loading and storage facilities, regasification,
and power generation (Figure 1).
The smallest unit starts at 10 MW and the
largest accommodates an 800-MW power
plant. " We can see increasing demand
from the regions in South East Asia, West
Africa, Caribbean areas, West Coast of
India etc., where electricity demand is
growing and onshore solutions may not
be commercially feasible or preferable, "
said Wison CEO Ying Cui.
A prominent driver behind the project
development is a global plunge in LNG
prices since mid-2014 that has moved in
tandem with oil prices, to which many
LNG contracts are tied. Global dynamics
have improved lately, though prices
remain well below previous peaks. An
influx of U.S. LNG supplies, as well as
new market entrants, notably from East
Africa, could put more pressure on the
market. Meanwhile, forecasts show global
LNG supplies could see explosive growth
through 2035. According to BP's January-released
energy outlook, LNG will
grow seven times faster than pipeline
March 2017 | POWER
2. Barakah (Growth, prosperity, and continuity). The Barakah nuclear power
plant in the United Arab Emirates is slated for full operations by 2020. Courtesy: IAEA
gas trade. The company projected that
by 2035, LNG could account for around
half of all globally traded gas-a fairly
significant increase from the current 32%
share it has today.
However, Baker Botts cites several
other critical drivers behind the LNG-topower
trend. These involve a lack of gas
infrastructure to support conventional
independent power projects, technical
evolution, environmental protection, and
the need to meet demand for gas-fired
power generation.
Developing countries, especially, could
benefit from the trend, the law firm
noted. " However, it presents new and
interesting challenges to those involved
in this gas value chain as LNG to power
combines certain traditional elements of
the LNG value chain with a potentially
new and different element, the downstream
power market, " noted Mark Rowly,
a Baker Botts partner in the London office.
Robin Mizrahi, another partner in
London, explained that the integration
of LNG and power could create a " new
inter-disciplinary area of work " with potentially
wide-reaching business and economic
implications. " It's not just buying
LNG, it's selling electricity as well-and
in many respects the power market and
the LNG market may reshape each other,
which could have a major impact on their
future direction, " he said.
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UAE to Rely on
Renewables Over Long
Term
A long-term energy strategy unveiled by
leaders of the United Arab Emirates (UAE)
in early January suggests that the federation
on the Arabian Peninsula will increasingly
rely on renewables to power its
soaring economic growth.
The UAE's energy strategy was unveiled
by Vice President Sheikh Mohammed bin
Rashid Al Maktoum, who is prime minister
of Dubai. Sheikh Mohammed noted
that the plan was the nation's first unified
energy strategy based on supply and
demand. " The Gulf countries are similar
in their economic structure, and we hope
that we will one day have a unified [Gulf
Cooperation Council] energy strategy in
order to ensure sustainable growth for our
people and global influence for our economies, "
he added.
Under the strategy, the UAE will seek
to increase the contribution of " clean
energy " -nonhydro renewables and nuclear-in
the total energy mix from the
current 25% to 50% by 2050. In 2050, the
country's power mix should comprise 44%
renewables, 38% natural gas, 12% " clean
coal, " and 6% nuclear. The UAE will also
embark on stringent energy-efficiency
measures to slash residential energy consumption
by 40%.
The UAE's reliance on clean energy will
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POWER March 2017

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