Sharjah takes full ownership of strategic LNG import project

EPC contract likely to be awarded in second half of 2019

Worker on an offshore oil platform. Image used for illustrative purpose.

Worker on an offshore oil platform. Image used for illustrative purpose.

Getty Images

19 June 2019
Sharjah National Oil Corporation (SNOC) has decided to retain 100 percent of the equity of the Sharjah LNG [Liquefied Natural Gas] Project after the cancellation of its joint venture with Germany-based energy company Uniper Global Commodities, the state-owned company announced on Wednesday.

The LNG import project had been launched in 2017 as 60-40 joint venture between SNOC and Uniper.

SNOC said in a press statement it would continue to implement the LNG facility "as a strategic project to assure the provision of timely, reliable supply of gas" to Sharjah's future energy demand.

In November 2017, Thomson Reuters Projects had reported that the Sharjah LNG Project would comprise of an offshore Floating Storage Regasification Unit (FSRU) at Hamriyah Port with approximately 180,000 cubic metres of LNG storage volume and a gas send-out capacity of up to one billion cubic feet per day (bcfd).

Company CEO Hatem Al Mosa told Thomson Reuters Projects on Wednesday that the decision to end the JV was mutually agreed between both parties but didn't elaborate on the reasons.

"The project is now scheduled to start operations towards the end of 2020," he said on the sidelines of an LNG workshop in Dubai.

The November 2017 report by Thomson Reuters Projects had said the Engineering, Procurement and Construction (EPC) contract would be awarded in the second quarter of 2018 and the FSRU would start operations by the end of 2019.

Al Mosa said the EPC contract was tendered last year following the completion of front-end engineering and design (FEED) by Uniper.

SNOC is "close to awarding the EPC contract" in the second half of 2019, he disclosed. He also clarified that the change in project status from JV to single-owner won't impact sales agreements inked with Sharjah Electricity & Water Authority (SEWA) and other customers to lock in base demand.

The JV had signed a binding 10-year Gas Sales Agreement with SEWA in 2017.

However, Al Mosa said the project's "gas send-out capacity has been reduced" after the additional demand anticipated from a power project planned by Federal Electricity and Water Authority (FEWA) in the Northern Emirates didn't materialise due to the project being cancelled.

The SNOC statement on Wednesday said that Uniper "will continue to support all other requirements of the project".

Last month, Reuters reported that Uniper has been at loggerheads with Finland's Fortum since the state-owned utility tried to take over the German group in 2017. The report said the deal was opposed by Uniper's management due to concerns that the company might be broken up.

(Reporting by Anoop Menon; Editing by Michael Fahy)


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