Ministry of Energy and Water Government of Lebanon
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- Eileen Hoover
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1 Ministry of Energy and Water Government of Lebanon Call for Expressions of Interest for a Liquefied Natural Gas Import Project in Lebanon This document has been prepared by Poten & Partners, Inc. ( Poten ) pursuant to that certain Contract for Consultants Services between Council for Development and Reconstruction Republic of Lebanon ( CDR ) and Poten, dated October 4, 2011 (the Agreement ). To the maximum extent permitted by law, Poten, together with its affiliates and their respective officers, directors, employees and agents, disclaims any liability (including without limitation any liability arising from fault or negligence) for any loss arising from any use of this document or its contents by a third party or otherwise arising in connection with this document. March 30 th, 2012 Lebanon Ministry of Energy & Water Corniche du Fleuve
2 A) OBJECTIVE The Ministry of Energy and Water ( MoEW ), on behalf of the Government of Lebanon ( GOL ), is seeking qualified applicants to Engineer, Procure, Construct, Operate and Maintain a Liquefied Natural Gas ( LNG ) import terminal in Lebanon ( Project ). The Project will consist of: 1. The procurement and operation of an LNG Floating Storage and Regasification Unit ( FSRU ) vessel starting in 2015 for a period of 12 years or more, AND 2. The construction and operation of an offshore LNG unloading berthing structure ( Berth ) to allow for the FSRU to be permanently berthed on one side of the jetty, while LNG supply tankers berth and unload on the other side (LNG transfer across the Berth) Expressions of Interest ( EOI ) are hereby invited from firms, joint ventures or consortia to provide items 1 and 2 above as required for Project. The MoEW intends to develop a list of qualified bidders based on the responses to this Call for EOI. Only the listed bidders will receive the subsequent Invitation to Bid. It is anticipated that the Invitation to Bid will be issued on October 1st B) DESCRIPTION OF SERVICES Tolling LNG Import Terminal MoEW seeks an experienced firm, joint venture or consortium ( Terminal Owner ) to construct, own, operate and maintain Project (including FSRU and Berth). Terminal Owner will be responsible for: Engineering, Procurement and Construction of an FSRU and Berth for the receiving, unloading, storage and regasification of LNG (including all related marine facilities and port services such as tugs). The Project shall be designed and constructed to internationally recognized and proven codes, standards and guidelines Owning, operating and maintaining Project, on a build, own and operate ( BOO ) basis. Project will be operated and maintained to internationally recognized and proven codes, standards and guidelines. Receiving, unloading, storing and re-gasifying the LNG on a tolling basis for delivery to MoEW at the high pressure outlet flange of the FSRU. MoEW will be responsible for procuring LNG supply to the terminal, and is initiating in parallel to this EOI, discussions with potential LNG suppliers. C) COMMERCIAL ARRANGEMENT MoEW proposes that the Project operates as a tolling facility. As such, MoEW would enter into a long-term Terminal Use Agreement ( TUA ) with Terminal Owner. MoEW will pay monthly capacity reservation fee regardless of actual usage 2
3 No title change of gas/lng/rlng MoEW will pay monthly a throughput fee for operating costs incurred for actual usage Terminal Owner may also have a right to retain some regasified LNG for use as fuel The GOL will stand behind the financial obligation arising from TUA. Proposed Terminal Structure: Tolling LNG title transfer from LNG supplier to MoEW LNG Supplies MoEW Project LNG Terminal Terminal Owner Services required for this EOI Regasified LNG Offtaking by MoEW End-Users Gas title transfer 3
4 D) LNG DEMAND FOR LEBANON The principal market for natural gas in Lebanon is the power sector. The country has a critical need for LNG import as it revamps and expands its power generation capacity. There are two operating Combined Cycle Gas Turbine ( CCGT ) plants, 435 MW each of nominal capacity, at Beddawi in the North and Zahrani in the South. Furthermore, MoEW plans to alleviate the acute power shortages by more than doubling the current level of generating capacity by 2016, adding around 2.4 GW. The bulk of the new capacity will come from new CCGTs: a new 450 MW CCGT station planned at Beddawi adjacent to the existing station plus 1,500 MW of Independent Power Producers ( IPPs ) projects whose locations are to be determined by MoEW. Lebanon Power Stations & Proposed Gas Infrastructure FSRU Beddawi Section 1 Onshore Selaata Section 2 Onshore Zouk Section 3 Offshore Jieh Section 4 Onshore Zahrani FSRU Location Section 5 Onshore Future Pipeline Tyre Route MoEW plans to start construction of a Source: Poten & Partners natural gas coastal pipeline linking various power stations in Lebanon ( Pipeline ) by the end of Pipeline construction is planned to proceed in stages and is projected to last 27 months, and is expected to be completed in 2015 or Current projections indicate that the LNG need will reach 1.2 million metric tons per year ( MMt/y ) by 2015, and grow to 3.5 MMt/y by At a first stage, LNG will feed CCGTs located in the Northern part of the country and subsequently reach plants located South of Beirut as the pipeline develops from North to South. The LNG will feed the following: Stage 1 by 2015: Beddawi existing 435 MW CCGT + Beddawi new 450 MW CCGT + Zouk new 180 MW reciprocating engines. Stage 2 by 2016: Following the completion of the Pipeline, the existing Zahrani 435 MW CCGT as well as Jieh new 80 MW reciprocating engines (will switch to LNG). Stage 3 by 2022: 1,500 MW of planned CCGT IPPs, Tyre 210 MW conversion to natural gas, and additional CCGT capacity to be developed to meet growing demand for electricity. Cumulative total LNG requirement Stage MMt/y by 2015 Stage MMt/y by 2016 Stage MMt/y by
5 MMt/y The graph below represents the annual LNG requirements for Lebanon. Limited seasonality is foreseen considering the plants will operate as base-load facilities. LNG Requirement by CGGT* Generic CCGT (South) Generic CCGT (North) Planned CCGT (South) * Planned CCGT (North) Zahrani Existing Beddawi Existing Source: Poten & Partners * Planned CCGTs are: Beddawi Expansion (450 MW), IPP 1 + IPP 2 (1500 MW), Tyr (210 MW) Generic CCGTs are additional CCGT plants that would need to be built from 2018 to meet growing demand for electricity E) CONSULTANT LNG CONCEPT REPORT (PRE-FEASIBILITY) MoEW, through the Council for Development & Reconstruction ( CDR ), has engaged Poten & Partners Inc. ( Consultant ) to undertake a pre-feasibility study ( Concept Report ) to assess the Project. The Concept Report provides a review of the LNG market, potential LNG terminal business structures, the gas market in Lebanon and the technical and cost aspects of an LNG Import Terminal in Lebanon. Pre-feasibility report including conceptual design and cost has been prepared by experienced industry consultant on both the LNG terminal and the required marine facilities. Following a detailed site and technology investigations, MoEW has decided the following: 1. Technology of choice is offshore FSRU because of its advantageous timing and capital cost to market as compared to conventional onshore technology. 2. Site of choice is Beddawi, because of its relatively sheltered offshore location (from the predominant southwesterly winds and waves) and its proximity to the majority of current and planned CCGT capacity. In particular, MoEW has made Beddawi the site of the next 450 MW CCGT development. MoEW will entertain responses with variants from these key findings of the Concept Report, provided they result in timely and efficient delivery of Project. Applicable sections of Concept Report will be made available to those parties that are shortlisted by MoEW for further discussions. 5
6 F) THE PROJECT I. Location After investigating six potential sites along the coast of Lebanon, MoEW has determined that offshore Beddawi is the preferred option for siting an LNG FSRU ( FSRU Site ). FSRU Site is northeast of the Port of Tripoli, around 2.4 kilometer ( km ) east of the Tripoli Harbor breakwaters and around 3.2 km west of Beddawi existing power station. FSRU Site N Palm Islands W E S 30 Berth Tripoli Harbor A FSRU Site Berth 3 B C D F G Berth 2 Beddawi Power Station Some of the attributes of FSRU Site at Beddawi are: FSRU Site is naturally sheltered by the Tripoli Bay, Port of Tripoli breakwater and the Palm Islands from predominant southwesterly winds and waves the site may however require northern exposure protection with a breakwater construction. Proximity to existing 435 MW Beddawi CCGT as well as the planned 450 MW capacity expansion. FSRU Site is located within an existing oil product importing port, operated by MoEW General Directorate of Oil Installations (hereinafter referred to as Lebanon Oil Installations or LOI ), and with local personnel experienced in fuel imports. There are five LOI buoy mooring points for oil and LPG located in the port. Four of these are currently operational. Un-used berth number 4 (shown as FSRU Site 6
7 in map above) area provides suitable and adequate space to construct new LNG berth. The FSRU Site will be close inshore of the 20 m contour, located in a water depth of approximately 15 meter ( m ), 1.7 km from shore. Adequate maneuvering space seems available for the safe approach of LNG carriers, either from the West or the East. This takes into consideration preliminary assessment of underwater contours, reefs and other obstructions together with other port facilities and marine traffic. The coordinates of FSRU Site are: 34 O 28.5 N 35 O 51.5 E. The exact position for the FSRU facility however will only be finalized after a full hydrographic survey of the area, with the berth position chosen to optimize safety of navigation and minimize costs. The sea survey area should include the berth area and the ship maneuvering area. II. Concept Weather and wave conditions are reportedly moderate in the bay area lying in the lee of Tripoli. FSRU Site benefits from the shelter provided by the Tripoli Harbor breakwaters and the Palm Islands from the predominant southwesterly winds and waves. Berth alignment is proposed similar to existing alignments along the coast of Lebanon, which is heading East-West into the prevailing weather. FSRU Concept at Beddawi 800m Breakwater (34º N 35º 51.5 E) 20 W N E FSRU Unloading 300m FSRU (34º 28.5 N 35º 51.5 E) S 10 Deir Amar PP HP Pipeline (2.5 Km) Lebanon Gas pipeline AGP/Gasyle Terminus Terminal Owner s Proposed Scope: FSRU: Size of FSRU recommended at minimum of 125,000 m 3, with ship-based LNG vaporization at regasification capacity of up to 3.5 MMt/y of LNG equivalent. MoEW will consider proposals for new-build FSRU, existing FSRU, and conversions of existing vessels to FSRU. 7
8 Berth: LNG berth with across-the-berth unloading capability from LNG ship to FSRU is recommended. Berth shall comprise all required top-side equipment including conventional unloading arms, vapor return arms, high pressure gas unloading arm, and mooring and breasting dolphins. Gas unloading arms are required to unload high pressure regasified LNG from moored FSRU to an offshore high pressure gas line to bring natural gas to shore. Even though this across-the-berth LNG transfer is a preferred option, MoEW will consider alternative FSRU docking designs if they can be shown to perform equally well in the offshore weather conditions of the Beddawi area and result in cost and schedule saving. MOEW Proposed Scope: In addition to the FSRU and Berth, a high pressure pipeline is required to bring natural gas to shore, as well as potentially an offshore breakwater to protect from northerly weather exposure. Both the potential breakwater and pipeline will be the responsibility of MoEW and are not required services under this EOI. Breakwater: A breakwater may be required to protect against northerly winter gales which could have a strong effect on the continuity of LNG operations at Beddawi. The proposed breakwater would be 800 m in length, detached from land, and at a depth of approximately 20 m. The breakwater would be aligned in a similar direction to the berth that is an East West alignment into prevailing weather. The requirement for such a breakwater will be established following more site specific investigation and in detailed discussions with Terminal Owner. An option being considered by MoEW is to construct the breakwater, if required, after start-up of the Project. The Terminal Owner should indicate if Breakwater could be built while Project is operating. The decision to build the Breakwater will be based on interruptions to the supply of high-pressure gas from the FSRU to shore due to northerly winter gales. Pipeline to shore: 2,500 m long high-pressure gas pipeline. III. Schedule MoEW aims to select Terminal Owner by 1 st quarter It is expected that the Terminal Owner will lead the procedures required to finalize the engineering, award of EPC contracts, and commission the Project. An indicative Project development schedule is shown below. The base case is for Front End Engineering & Design ( FEED ) to be initiated in early 2013, with commissioning of the FSRU achieved by mid-2015 (30 months total duration from FEED initiation). Applicants are encouraged to propose accelerated schedules from this base case. Base Case - Engineering & Construction Schedule PRE-FID PHASE CONSTRUCTION PHASE (MONTHS) MMSCF/D ISLAND JETTY - CROSS-JETTY UNLOADING FEED EPC ENQUIRY / AWARD BREAKWATER FSRU/LNGRV JETTY CONSTRUCTION FSRU CHARTER/CONVERSION PRE-COMMISSIONING COMMISSIONING MMSCF/D ISLAND JETTY - SIDE-BY-SIDE UNLOADING FEED EPC ENQUIRY / AWARD BREAKWATER FSRU/LNGRV JETTY CONSTRUCTION FSRU CHARTER/CONVERSION PRE-COMMISSIONING COMMISSIONING 8
9 G) SOURCING OF LNG In parallel to this EOI, MoEW is initiating discussions with potential LNG suppliers for supply to the terminal. EOI applicants interested in entering into discussions with MoEW to supply LNG to Lebanon are also encouraged to indicate so in the response to this EOI invitation. H) GOL NATURAL GAS IMPORT POLICY MoEW s authority to govern the gas industry in Lebanon is based on Decree Law # 79/77 dated June 2, 1977 which entrusted the MoEW with the management of all the oil installations on Lebanese territory and the administration of all financial, economic and regulatory matters relating thereto. MoEW is also entrusted with all sale, purchase, export and import transactions concerning crude oil by-products including natural gas. Natural gas has been considered in past transaction by MoEW and GOL as crude oil by-product. MoEW conducts such activities as a private firm pursuant to the rules of trade and industry. The MoEW proposes to enter into a TUA with the Project owner. MoEW is entitled to execute such contract by virtue of Decree Law # 79/77 which authorizes MoEW to enter into energy related transactions and to act as a commercial firm pursuant to the rules governing trade and industry in Lebanon. I) ENVIRONMENTAL I. Preliminary Environmental Impact Assessments A Preliminary Environmental Impact Assessment ( PEIA ) of the Beddawi FSRU Site was conducted as part of the Concept Report. The PEIA indicates that negative impacts should be minimal provided that recommended mitigation measures are properly implemented. Project will result in positive environmental and socio-economical impacts both on a local and national level. In order to ensure the proper integration of Project to the existing environment, Environmental Management Plans ( EMPs ) must be developed and implemented by Terminal Owner especially for the construction phase of Project. The EMPs should ensure as a minimum that potential negative impacts are mitigated, that discharges to the environment are minimized and monitored, that appropriate staff are trained efficiently, that precise record keeping is maintained and that effective contingency measures are prepared. Attached in Appendix A is a copy of PEIA for the Beddawi FSRU Site. II. Permits and Approvals The FSRU Site is located 1.7 km offshore in Lebanese territorial water. The site is within an existing port currently owned and operated by LOI/MoEW. In support of the Project, MoEW will coordinate the investigations and procedures for the issuance of all necessary permits (operational, construction, environmental assessment, and others as required). J) DESCRIPTION OF FIRMS JOINT VENTURES OR CONSORTIA MoEW seeks the participation of experienced firms, joint ventures or consortia interested in the Project and in providing the services described above. Interested firms, joint ventures and 9
10 consortia must have experience in the LNG industry. MOEW expects that an interested firm, joint venture or consortium will be able to exhibit: LNG Experience The firm, joint venture or consortium must demonstrate established and credible prior experiences in the LNG industry and in the applicable parts of the LNG supply chain (e.g., LNG import terminal development, FSRU development, marine construction and operation) Financial Strength The firm, joint venture or consortium must have the financial strength and ability to execute and deliver on the Project and provide the proposed services. Technical Know-How, including offshore marine operations The firm, joint venture or consortium must have the technical know-how and capability to execute and deliver on the Project and provide the proposed services. The firm, joint venture or consortium needs to demonstrate experience of successfully developing marine offshore energy projects. Management Capacity The firm, joint venture or consortium will have the management capacity, skills and depth to manage the Project, to provide the proposed services and interact with key stakeholders. The firm, joint venture or consortium needs to demonstrate successful management of either onshore or offshore energy projects. K) SUBMISSION OF EXPRESSION OF INTEREST Interested firms, joint ventures and consortia are requested to submit (in English) their EOI which includes all of the following information and documents, together with any other details, catalogues and brochures, in a sealed envelope no later than 17:00 hours (Beirut time) by 4 th of June, 2012: 1. A Letter of Interest (see format attached). 2. Executive Summary. It should include a brief description of the interested firm, joint venture or consortium and (where appropriate) of each member in the joint venture or consortium containing details such as Ownership structure Write up on business history and growth Business area Financial details 3. General and Legal information on the interested firm, joint venture or consortium and (where appropriate) on each member of the joint venture or consortium, which information should include the following: 10
11 Name of the entity, registered office address and evidence of registration as provided for in legislation of country of registration, telephone number, facsimile number, address and website (if the entity is a subsidiary company, the above mentioned details of the parent company should also be furnished) Name, address, contact number and address of the authorized contact person for the firm, joint venture or consortium. A consortium need not be constituted by any formal agreement or through any vehicle/company for the purposes of filing EOIs at this stage. 4. Details of experience executing work in the LNG industry similar to the applicable services described in Description of Services in Section B above (and proposed to be provided by the firm, joint venture or consortium), including a brief description of the work and location. By way of example, project brochures and marketing material would provide appropriate details. 5. Most recent published annual report and audited financial statements for the last three years. 6. In case of a joint venture or consortium, the roles and responsibilities of the joint venture partners or consortium members shall be stated. If a joint venture or consortium wishes to submit an EOI, the joint venture or consortium must provide the information above with respect to each member of the joint venture or consortium and identify the proposed division of responsibility and equity interest among the parties to the joint venture or consortium. Each entity will be allowed to participate in only one EOI, whether individually or as part of a joint venture or consortium. Each firm, joint venture and consortium will be responsible for any costs and expenses incurred by it in the preparation and submission of, and in connection with its EOI. Communications and the submission of the EOI should be addressed to: Minister of Energy and Water Corniche du Fleuve Beirut, Lebanon Telephone: Facsimile: LNGoffers@energyandwater.gov.lb Website: L) OPENING AND EVALUATION OF EOI MoEW will open the EOI on the same time and date specified in the Letter of Invitation. The opening of documents shall not be a public opening. 11
12 Based on the documents submitted and the criteria mentioned herein, MoEW and/or its Consultant will carry out an evaluation of the EOIs. MoEW reserves the right for it or its Consultant to directly request clarifications from any firm, joint venture and consortium that has submitted an EOI at any time during the evaluation process. The interested firm, joint venture and consortium (including the partners and members thereof) should respond to any request for such information within a reasonable period. MoEW reserves the right, at its sole discretion, to accept or reject, in whole or in part, any firm, joint venture or consortium submitting an EOI, or any document submitted along with an EOI. MoEW will be under no obligation whatsoever to provide reasons for such acceptance or rejection. MoEW reserves the right to amend, modify, revise or supplement all or any part of this invitation for EOIs and to terminate or cancel this invitation for EOIs at any time, without any obligation whatsoever to notify any and/or all applicants, in a manner or without any liability to any person. The sole purpose of this Call for Expressions of Interest is to provide background information on the proposed Project and it should not be used for any other purpose. MOEW makes no representations or warranties as to any information set forth in this invitation. No person shall be entitled to rely on any information provided by MoEW in connection with this invitation for EOIs and each person shall be obligated to conduct its own investigation with respect to the Project at its sole cost and expenses and without having any right to claim for any reimbursable in kind or in nature 12
13 Format of Letter of Interest for Submission of EOIs (On Firm/Joint Venture/Consortium letterhead) DATE, 2012 Minister of Energy and Water Corniche du Fleuve Beirut, Lebanon Telephone: Facsimile: LNGoffers@energyandwater.gov.lb Ref.: Subject: Expression of Interest for FSRU LNG Import Project Dear Sir: With reference to your letter, reference No: dated and Call for Expression of Interest (EOI) Document, we hereby submit our EOI for the tolling LNG Import Project: We are submitting this EOI on our own. Or We are submitting the EOI as Lead Partner of a Consortium consisting of the following: Company / Firm Name The following items are attached herewith: Executive Summary General Information Details of Experience (if a joint venture or consortium, with respect to each member of the joint venture or consortium) Annual Reports / Audited Financial Statements for the last three years (if a joint venture or consortium, with respect to each member of the joint venture or consortium) We hereby certify the following: That we have submitted only one response to the EOI, whether individually or as part of a joint venture or consortium. That we will be responsible for any costs and expenses incurred by us in the preparation and submission of, and in connection with our EOI. 13
14 That we understand and accept that MoEW reserves the right to reject any or all of the responses submitted without giving any reasons. We acknowledge and understand that in the event that the MoEW discovers anything contrary to our above declarations, MoEW has the right to disqualify us at any stage of the process. Kindly let us know if any further information/clarification is required. We look forward to inclusion in the next phase of the process. Thank you. Sincerely, Signature Name Designation Firm/Joint Venture/Consortium Name Attachments: as above. 14
15 APPENDIX A: Beddawi FSRU Site Preliminary Environmental Impact Assessment 15
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