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Asia: the next big thing in pipelines

Asia: the next big thing in pipelines

Asia is a region that is growing fast – in population, in natural gas consumption, and in pipeline infrastructure. Almost 50,000 km of under construction or proposed pipeline projects are slated for the region in 2015, and the USA’s Energy Information Agency predicts Asia’s liquid fuel consumption to reach 30 per cent of world consumption by 2035, suggesting that pipeline construction in the region will remain strong. Pipelines International reviews industry developments in the region that is tipped to become the next big thing in pipeline infrastructure.

New gas pipeline for China

In March this year, the Jiangsu Rudong Joint Venture (JV) Pipeline Company was officially established in Shanghai by PetroChina, Shenergy (Group) Company and Yangkou Port Company, with each holding a share of 50 per cent, 40 per cent, and 10 per cent respectively.

The newly-established JV will invest, build, and operate the Rudong-Haimen-Chongming Gas Pipeline, which starts from the initial station of output pipeline at the Rudong LNG terminals, Jiangsu Province, and runs through Rudong, Tongzhou, and Haimen, where the pipeline crosses the Yangtze River to enter the Chongming Island in Shanghai.

The 90 km, 610 mm pipeline has a designed annual delivery capacity of 1.84 Bcm.

China National Petroleum Corporation (CNPC) signed a co-operation framework agreement in Beijing with Shenergy Group and Yangkou Port Company to establish the JV in 2013.

Fox Petroleum lobbies Indian government to build Oman-India pipeline

Fox Petroleum Limited, an associate of Fox Petroleum Group, has lobbied the Indian Government to build the Oman-India Multi-Purpose Pipeline (OIMPP), a deepwater, transnational, natural gas pipeline system that will cross the Arabian Sea with 100 per cent investment from foreign funding.

The project is estimated to be completed within four years and is worth $US5.6 billion.

A dual sized, single pipeline from the Oman coast near Ra’s Al Jifan would be linked to the port of Duqm onshore to the Indian coast at Gujarat via a mid line re-compression station situated on the Qualhat Seamount (Murray Ridge).

Chairman and Managing Director of Fox Petroleum Limited Ajay Kumar recently presented the project’s plans to the Indian Government’s Petroleum Minister Dharmendra Pradhan in New Delhi.

During his presentation, Mr Kumar explained how the project would contribute to India’s energy needs.

“In the last few years, deep sea gas pipeline technology has matured. Since India has serious security concerns with regard to pipeline projects over land, a deep sea pipeline is probably the most promising option. This approximately 1,600 km OIMPP project intends to transport 8 trillion cubic feet of natural gas to India over a period of 20 years,” he said.

Mr Kumar said the pipeline is planned to be about 1,300 km long in phase I and 300 km more to connect Mumbai, laid at a depth of 3,400 m below the seabed.

The OIMPP is anticipated to be the first of many in a corridor of pipelines that will form the final leg of a major energy supply route linking the two countries.

Indian conclave posits gas as “÷fuel of the future’, looks to expand gas pipeline network

The inaugural IndianOil Gas Conclave was held in March 2015 in New Delhi, and brought together experts from the global and Indian gas industry to deliberate on the theme “÷Gas – towards a green future’.

IndianOil Corporation Limited, or IndianOil, is an Indian state-owned oil and gas corporation with its headquarters in New Delhi, India. The meeting aimed to encourage creation of a roadmap for the growth of the Indian gas industry, which would shape the future of the sector.

IndianOil Chairman Mr B. Ashok delivered the inaugural address, stating that natural gas has become the most favoured fuel over the last three decades, with a
24 per cent share in the global primary energy sector.

Speaking on India’s natural gas industry, Mr Ashok said the demand for natural gas is rising sharply and its share is likely to reach approximately 20 per cent in primary energy consumption in the coming decade.

Mr Ashok added that the higher share of natural gas will help resolve key issues such as energy security and environmental concerns, and address criticalities of fuel subsidy and currency fluctuation.

Mr Ashok unveiled the first Gas Conclave’s background paper, titled “÷Fuelling a Better Tomorrow’ – prepared in collaboration with KPMG – which provides an overview of India’s energy landscape, with a focus on the evolution of the natural gas market in India.

IndianOil Director (P&BD) Mr D. Sen underscored the need for making gas affordable and working to expand India’s gas pipeline network.

He added that Asia is poised to be a growth driver of natural gas usage in the future, with increasing demand aimed at Asia. He said that the conclave would pave a way for creating a progressive action plan towards building gas as the fuel of the future.

Company incorporated to build, own and operate TAPI pipeline

In late 2014, GAIL India Ltd and the state gas companies of Turkmenistan, Afghanistan, and Pakistan established a company that will build, own, and operate the planned 1,800 km, 56 inch diameter Turkmenistan – Afghanistan – Pakistan – India (TAPI) natural gas pipeline.

Turkmengas, Afghan Gas Enterprise, Inter State Gas Systems (Private) Ltd and GAIL will own equal shares of the company, TAPI Pipeline Company Limited (TPCL).
The company has been incorporated as a Special Purpose Vehicle (SPV – also referred to as a “÷bankruptcy-remote entity’) in the Isle of Man, a British Crown dependency, located in the Irish Sea. This SPV would be responsible for finance, design, construction, operation and maintenance of the pipeline.

Appointed as transaction advisor for the TAPI gas pipeline project in November 2013, the Asia Development Bank (ADB) advised on the establishment of the TAPI pipeline company as an integral part of the larger goal of identifying and selecting a consortium leader to spearhead the construction and operation of the pipeline. When selected, the consortium leader will be expected to take a substantial stake in the company.

The TAPI pipeline will export up to 33 Bcm/a of natural gas from Turkmenistan to Afghanistan, Pakistan, and India over 30 years. Turkmenistan has the world’s fourth-largest proven gas reserves, and the pipeline will allow the landlocked country to diversify its gas export markets to the southeast. Turkmengas in turn will provide a key new source of fuel for Afghanistan, Pakistan, and India.

India and Pakistan are expected to receive approximately 38 MMcm/d of gas from the pipeline feed, whereas Afghanistan will receive 14 MMcm/d. Currently, Afghanistan has indicated that it will be taking volumes of around 1.5-4 MMcm/d of gas. Volumes not taken by Afghanistan can be equally shared between India and Pakistan.

In October 2014, oil and gas engineering firm Penspen was awarded a contract by the ADB to carry out a technical feasibility study on the project. It is expected that the pipeline will be completed by 2017.

Penspen’s scope of work includes a review of the proposed route, confirmation of hydraulics including compressor station size and location, provision of cost estimates, and development of project execution strategy and schedule.

Penspen has awarded a sub-contract to the Netherlands-based Royal HaskoningDHV, an international engineering, consultancy and project management firm, to undertake the environmental and social safeguard components of the study.

Penspen Chief Executive Peter O’Sullivan said, “We are proud to be involved in this major project, which will enable Turkmenistan to monetise a part of its vast natural gas reserves, by opening a southerly route to the energy-hungry markets of South Asia.”

Russia looking to Asia to ease oil and gas pressures

External pressures on Russia’s oil and gas industry have compelled the country to seek partnerships with Asia-based companies to help with the production and marketing of its vast hydrocarbon resources, according to research and consulting firm GlobalData.

According to GlobalData’s Upstream Analyst covering the Former Soviet Union, Anna Belova, Russia’s oil and gas industry has been hit hard by expanded US and EU sanctions within its financial and energy sectors. The industry now faces limited access to financing, as well as limitations on technology transfers for unconventional and offshore developments.

“These sanctions have led Western companies to reduce their operations in Russia. ExxonMobil and North Atlantic Drilling suspended their deals with Rosneft, while Schlumberger recalled some of its managerial and technical personnel from the country,” Ms Belova said.

“As a result, the Russian government and industry operators have intensified their pursuit of partnerships with Asia-based interests, with countries such as China, India, and Turkey being the likeliest trading partners for Russia over the next decade. Following the cancellation of the South Stream gas pipeline to Europe on 1 December last year, Russia’s immediate alternative was to propose a subsea pipeline across the Black Sea for deliveries to Turkey.”

In addition to this project, Russia and China also signed a memorandum of understanding on a new gas pipeline, Altai, (see p 8) in November 2014. Altai, the second gas pipeline to China announced last year, will connect Russia’s West Siberian fields to the Xinjiang Uyghur Autonomous Region of China.

“Another major deal in Russia’s oil and gas industry is the potential sale of a small equity in Vankorneft, a subsidiary of Rosneft, to CNPC, which will allow Rosneft to strengthen its relationship with one of its largest potential market partners,” Ms Belova continued.

“Vankorneft holds licenses for several fields in Eastern Siberia, including Vankorskoye, Russia’s largest field to be put into production in the last 25 years. Vankorskoye feeds into the Eastern Siberia-Pacific Ocean pipeline, with the majority of its crude output contracted to CNPC in China.”

Ms Belova concludes that Russia’s deals with Asian countries are a prudent response to Western sanctions, as the new partnerships provide financing for Russian projects and secure a long-term demand centre for the country’s resources in growing Asian markets.

Russia ratifies gas pipeline agreement with China

In early May, Russian President Vladimir Putin ratified an agreement between the government of the Russian Federation and the government of the People’s Republic of China to supply gas to China via the so-called “÷eastern’ route.

The agreement, originally signed in Moscow on 13 October 2014, aims to develop Russian-Chinese cooperation in the energy sector and outlines the main conditions for natural gas supplies from Russia to China, which includes a trans-border gas pipeline across the Amur (Heilongjiang) River between Blagoveshchensk (Russia) and Heihe (China).

The agreement’s conclusion is an essential condition for the contract signed between Gazprom and CNPC on 21 May 2014, on the purchase and sale of natural gas and its delivery via the “÷eastern’ route, to come into force.

The agreement is valid for 40 years. Once its term ends, it is automatically extended for subsequent five-year periods if neither party has sent written notification of intent to terminate the agreement to the other party within the set deadline.

Gazprom and CNPC sign agreement for gas supply via western route

Also in May, Gazprom Management Committee Chairman Alexey Miller and the CNPC Vice President Wang Dongjin signed an agreement in Moscow for gas supply from Russia to China via the western route, which envisages gas supply to China from Western Siberia’s fields.

Inked in the presence of Russian President Vladimir Putin and Chinese President Xi Jinping, the document outlines the main technical and commercial parameters of the future supplies.

In addition, Alexey Miller and Wang Dongjin signed another Agreement of Strategic Cooperation (the previous ten-year Agreement expired in 2014) outlining the main areas of joint actions in the gas sector.

“The western route will provide access to the vast resources of Western Siberia for the Chinese market. The resource base is available. Gazprom will be able to start supplies upon completion of the gas pipeline. In the meantime, the western route will not affect the Power of Siberia project. The intergovernmental agreement on the eastern route is ratified. Gazprom will fulfill its obligations right on time,” said Mr Miller.

The Power of Siberia is a gas trunkline intended for natural gas delivery from the Irkutsk and Yakutia gas production centers to the Russian Far East and China (eastern route).

Thailand project achieves significant safety milestone

During April 2015, the McConnell Dowell team delivering the Fourth Transmission Pipeline Stage 2 (FTP2) project for PTT Public Company Ltd (PTT) in Thailand achieved the significant safety milestone of working three million hours LTI free.

This milestone was achieved whilst delivering a complex, fast track project with significant terrain, environmental, safety, logistics, and stakeholder challenges. Peak site workforce has exceeded 2,800 located at over 50 discrete work locations. Proactive safety management has included a tailored project induction, timely and consistent communication with all stakeholders and innovative engineering solutions. Each of these have been effective in mitigating risk to the workforce and general public.

The project involves approximately 70 km of 42 inch high-pressure gas pipeline constructed between Rayong LNG Terminal in the south to the Wang Noi – Kaeng Khoi Pipeline Tie-in Station in the north.

Work is spread over 300 km and involves in excess of 20 km of trenchless pipe installation and also the construction of significant above ground facilities. At peak construction key equipment included six horizontal directional drilling (HDD) rigs, two direct pipe rigs and six thrust boring rigs operating concurrently, in addition to conventional pipeline installation and facilities construction teams.

The FTP2 Project was awarded to McConnell Dowell Constructors Thailand Limited in June 2014 by PTT. The project is currently on target with a forecast completion date of August 2015.


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