US Gas Exports Mean More LNG Carriers for Nakilat [INTERVIEW]

In 2004, Qatar was expanding their production trains of liquefied natural gas and founded Nakilat, the critical transportation link in Qatar’s global LNG value chain, and now the largest owner of LNG carriers worldwide.

At the LNG 17 conference in Houston last week, I met up with Muhammad Ghannam, Nakilat’s Managing Director.

Mr. Ghannam, can you give me a bit of an overview of your company?

Nakilat was founded in 2004 when Qatar decided to go for the expansion of LNG production. At the time, Qatargas was producing more than nine million tons and RasGas was producing slightly more than six million.

With this expansion, Qatar developed the concept of having big ships.  At the time, there wasn’t a specific destination although Qatar was targeting North America, Europe, and the Far East.  From a production standpoint, the vision was to achieve 77 million tons per year.

With this increase in production, it was very difficult to determine how many build slots were needed. We had secured a significant number of slots with the Korean yards to accommodate the expansion of Qatar’s gas production and its new destinations. When we were done however, we ended up building 54 LNG carriers and 4 LPG carriers.  We didn’t go for the conventional 145,000 cubic meter LNG carriers, but we built the Q-Max at 266,000 cbms and the Q-Flex at 210,000-216,000 cbms.

These ships were built targeting destinations across the globe — Asia, Europe and North America.  Supplying the transportation for the gas was part of the vision to allow Qatar along with partners like ExxonMobil, ConocoPhillips, Total and Shell, to manage its LNG value chain from production all the way to receiving units and distribution to customers. Also resulting from this vision was the construction of three terminals to handle the reception and distribution of gas at its destinations: the Golden Pass terminal in the US, the UK’s South Hook, and the Adriatic LNG Terminal in Italy.

At the beginning, we sought to grow our fleet through partnerships, so the first 29 ships which included 20 Q-Flex and 9 conventional ships were done with partners Maran Gas, Teekay, OSG, ProNav, NYK, K-Line, MOL, Mitsui, INO and others.  We decided that it would bring more benefit to Qatar to own and operate the remaining 25 ships in our fleet, which included the 14 Q-Max.  Operational and technical management of these wholly-owned ships was delegated to Shell.

As of last year, however, Nakilat has taken over the management of the 4 LPG ships. Eventually and in accordance with our contract with Shell, we will be considering taking over the management of our LNG ships in due course.

Are you looking at expanding your shipping operations?

We look at it, but we don’t do anything on speculation or on spot.  You might have seen the news that we signed a cooperative agreement recently with Algeria for the co-ownership of two 177k ships and we are talking with the yards right now to meet the needs of this joint venture.

How do you see the evolution of the US gas market affecting your business?

ExxonMobil and Qatar Petroleum (QP) International have signed a MoU expanding their cooperation and looking at evaluating unconventional natural gas resources in North America. This agreement supports QP’s intention to expand its international portfolio and will give Qatar the opportunity to leverage on its strong partnership with ExxonMobil should a successful project result from the signing of this MoU. The success of this initiative will have a positive impact on Nakilat’s growth and expansion outside Qatar in the future.

Potential for more ships?

With the ships we have, we only have the ability to ship 77 million tons, whatever extra volumes will mean more ships.

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