Two leading Government of Dubai entities - the Dubai Multi Commodities Centre (DMCC), and Techno Park - announced that they had tied up with LNG Impel (IMPEL) to develop a world class Liquefied Natural Gas (LNG) storage facility, to be located at Techno Park in Dubai, in the United Arab Emirates (UAE). The total cost of developing the storage facility is estimated to be US$1 billion.
Envisioned as a massive infrastructure facility, Dubai LNG Storage Hub will be the first of its kind in the world and is expected to have a total storage capacity ranging from 40 – 65 billion cubic feet (bcf).
The storage hub will offer customers the ability to store, trade and plan supplies of LNG in addition to providing other services such as LNG loans and LNG quality blending. Over time, it will also offer financial derivatives around LNG and shipping.
DMCC and IMPEL will begin the Open Season bid process for storage capacity at the Dubai LNG Storage Hub with an initial non-binding bid round commencing August 28th, 2006.
The announcement follows the signing of a Memorandum of Understanding between LNG Impel and the DMCC in June 2006 to jointly pursue this project
“This project is a signal achievement for DMCC’s objective to make Dubai the energy hub of the Middle East, and is in keeping with our key role as a promoter of commodity trade and its requisite infrastructure,” said Ahmed bin Sulayem, Chief Operating Officer of DMCC. "We plan to work closely with LNG Impel and Techno Park to ensure that all stakeholders will be able to leverage the facilities offered by Dubai LNG Storage Hub to their best advantage," he added.
“Techno Park, with its core focus built around Oil & Gas, Energy & Alternate Energy and Water Desalination projects, presents the ideal location of choice for such a venture,” said Ms Salma Hareb, CEO of JAFZA and Economic Zones World, where Techno Park is located. “We are committed to the successful implementation of such innovative projects, which will greatly enhance and strengthen Dubai’s role in regional energy distribution,” she added.
Commenting on the joint venture project, Thom Dawson, President of LNG Impel said: “We are very pleased and excited about the Dubai LNG Storage Hub which will help meet the demands of the industry as LNG transitions into a globally traded commodity. It will provide industry participants with choices and options not accessible to them before.”
“The launch of this facility would offer greater flexibility to both buyers and sellers and would release them from being tied to strict and inflexible supply schedules over long periods of time,” said Dr. Tilak K. Doshi, the Executive Director for Energy at DMCC. "The Dubai-based storage facility will enable core LNG suppliers and buyers to capture value by storing and trading across different months, as seasonal price variations are a key attribute of global LNG pricing. It will also allow a multiplicity of buyers, sellers and traders to arbitrage across several regions, and support derivatives trading as a spot market emerges around the storage facility," he added.
Abdelkader Elrahal, Managing Director of LNG Impel Middle East, pointed out that “Dubai is ideally positioned to host this storage facility as it is centrally located between the natural gas rich supply area of the Middle East and the demand driven global markets. Dubai also offers a business climate and a host of services that are unparalleled in the Middle East.”
