Italian engineering giant Saipem hopes to play a long-term role in the development of sub-Saharan African LNG infrastructure, its Chief Operating Officer for onshore, Maurizio Coratella, said in an interview.
According to an S&P Global Platts report, Saipem-led consortiums were selected as the main EPC contractors for both the two-train Mozambique LNG plant and the Nigeria LNG Train 7 expansion project.
“We are seeing a growing LNG market in Africa, and countries like Mozambique and Nigeria have plenty of gas so it is very likely they will further expand their capacity in the near future,” Coratella said.
“We are heading toward a world that will be more and more sensitive to greenfield installations, where commodity price competition will be challenging, and the main consequence is that the add-on of new trains on existing facilities will be cheaper and will give shorter time to market for our clients.
“Whoever is already present and mobilized in certain areas will be better positioned to benefit from synergies, lessons learned, and investment already done,” he said.
Coratella said Saipem would aim to be the preferred partner for LNG expansion projects as they happen.
“In Nigeria we have been recently awarded together with Daewoo the Bonny Train 7 project, relying on our long-term presence in the country where we have developed previous trains. We hope that one day we will also be building the seventh train in Mozambique,” he said.
At Mozambique LNG, work remains on track despite the growing Islamist insurgency.
“I don’t see this as disruption that could potentially jeopardize the schedule,” Coratella said. “We have contracted almost everything, and we have transferred off site some of the construction that we would have done on site.”
Nonetheless, Saipem remains committed to helping develop a local industry in Mozambique around the project.
“We don’t want Mozambique to lose local content. We look at Mozambique like Nigeria. We want to develop infrastructure, the participation of local employees, knowledge transfer also through a dedicated training center, and the building of competence there,” he said.
Major opportunities coming for Guyanese suppliers to service Saipem fabrication yard
Midstream engagements
Saipem, Coratella said, is becoming increasingly engaged in midstream projects — LNG export and regasification projects for example — as big-ticket traditional upstream projects lose their attraction.
“Due to the change of paradigm in the energy world, where the east has become the main center of demand, we are seeing that long and complex pipelines are being replaced by LNG, giving the freedom to gas producers to ship gas everywhere, and not be limited by geography,” he said.
Gas is at the center of Saipem’s onshore business, representing more than 80% of the portfolio through LNG projects and gas treatment plants.
While it lost out on the EPC contract for the major Qatar LNG expansion project in early February, it has a significant portfolio of work on top of Mozambique and Nigeria.
This includes work at the Novatek-operated Arctic LNG 2 project in Russia and BP’s Tangguh LNG expansion project in Indonesia.
“We are a bit upset because we lost the expansion of Qatar LNG. But we are becoming more selective as we have a significant backlog of projects,” Coratella said.
Both the Arctic LNG 2 and Tangguh expansion projects suffered setbacks due to the coronavirus pandemic, but work continues.
“The first train [at Arctic LNG 2] will be the game-changer,” he said, adding that there is a specific timeframe for completing the project’s giant gravity-based structures in the Murmansk yard given the limited window for sailing in the ice-bound waters off northern Russia.
Novatek plans to start up the first train at Arctic LNG 2 in 2023.
Carbon footprint
Coratella said LNG project operators were now also more committed to reducing their carbon footprints, which contractors needed to also engage with.
Important clients are planning to develop blue hydrogen production both for use in its own installations and for future sale via dedicated pipelines or by blending hydrogen with natural gas.
“We’re seeing that our clients are committing seriously to a more sustainable approach to capex,” Coratella said.
While LNG liquefaction technology has not changed significantly, the way it is used has, he said, adding that Saipem believes in an integrated approach. “Processes are still the same, but the way you integrate them has changed substantially,” he said.
“We are measured on the carbon footprint of our installations — how much CO2 is produced per ton of LNG produced. That was not the case 10-15 years ago, but it is now extremely present.”
He said Saipem was looking to push its approach to emissions further — to “walk the extra mile” — and is working to assess how green its whole value chain can be, including the reduction of emissions during the construction phase and the reduction of the carbon footprint of materials it uses, such as steel.
Saipem also sees an expanded role in providing solutions in the energy transition, especially in handling CO2 — right across the value chain from capture, to transportation and storage.
“CO2 is something we’ve handled for many years,” Coratella said. “In upstream projects we treat the gas before being transported and in many cases — especially in Southeast Asia where the gas is rich in CO2 — we have to separate and sequestrate the CO2 upstream,” he said.
“CO2 is part of the gas business, it’s a gas, we know how to separate it, transport it, and store it in depleted gas fields.”
Saipem, he said, is looking at providing its solutions to planned CCS projects across Europe.
“We are bidding for many projects, in different phases such as feasibility, front-end design or EPC, by providing our proprietary technology and expertise in handling CO2,” he said.
Saipem has also signed an MOU with Italian upstream giant Eni aimed at decarbonizing hard-to-abate sectors by studying the collection of CO2 from industrial zones in Italy and storing it in depleted offshore fields.
“I see Saipem playing a wider role in CO2. Saipem covers the entire value chain thanks to its E&C [engineering and construction] onshore and offshore and drilling divisions. This is where the market needs help and needs to identify the actors,” he said.
Blue hydrogen would be a driver of the energy transition, he said. “We believe that the implementation of a hydrogen economy cannot start giving tangible results without blue hydrogen, and carbon capture, which will allow the industry to maximize the value from existing assets. Without these two things, the transition cannot happen.”
Green hydrogen facilities will be a strategic asset once technology improvements allow them to be competitive, given cost and logistical constraints.
“In the short-term, we see blue hydrogen: capturing CO2 and burning hydrogen in dedicated gas turbines next to your production point.”
In Guyana, Saipem has been awarded contracts by ExxonMobil for the Engineering, Procuring, Construction and Installation of Subsea Umbilicals Risers Flowlines for the offshore developments at the Stabroek Block.
Source: S&P Global Platts
