South Hook Gas Company Ltd is a London-based liquefied natural gas (LNG) import company, which owns and manages the regasification

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1 Energy for growth

2 South Hook Gas Company Ltd is a London-based liquefied natural gas (LNG) import company, which owns and manages the regasification capacity and the gas supply from the South Hook LNG Terminal in West Wales. The company is a joint venture between Qatar Petroleum International (70%) and ExxonMobil (30%), which was established in South Hook Gas activities are separate to the physical operation of the Terminal, which is owned and operated by South Hook LNG Terminal Company Ltd. The respective shareholders of South Hook Gas and South Hook LNG have demonstrated their long-term commitment to the UK by investing more than 1bn, and South Hook Gas has established long-term arrangements with its key suppliers, customers and industry partners. The company received its first commissioning cargoes in 2009 and commenced full commercial operations in Since then, it has supplied the UK gas market every day and has imported more gas than any other LNG company. Indeed, when the Terminal is operating at full capacity, the company can supply around 20% of total UK gas demand. 1

3 Who we are South Hook Gas core business is to import Liquefied Natural Gas (LNG) from Qatar, which has the third largest gas reserves in the world. The natural gas is extracted from the North Field which is the largest single, non-associated gas field in the world, and is situated just off the coast of Qatar. The gas is then transported by pipeline and processed onshore at Ras Laffan Industrial City in Qatar. During the onshore processing, the gases and liquids are separated and then natural gas is separated from other gases, such as ethane and butane, before being cooled to -160ºC. At this temperature, the natural gas changes from a gaseous to liquid state and so can then be loaded onto LNG vessels for transportation. Qatari LNG is transported to the South Hook LNG Terminal predominantly by a purpose-built fleet of vessels with double membrane LNG tanks as well as double hulls for additional safety and cargo protection. These vessels are known as Q-Flex and Q-Max LNG ships. However, the Terminal can also offload cargoes from conventional LNG tankers. Q-Max ships are the largest LNG vessels in the world and have been commissioned with a designed capacity of 266,000 cubic metres and are over 340m long. Q-Flex vessels meanwhile have a designed capacity of about 215,000 cubic metres. Once the LNG arrives at the Terminal, it is unloaded and stored in insulated onshore tanks. The LNG is then warmed to a point where it reverts to its gaseous state and is delivered into the UK market via the National Gas Grid. Offshore Ras Laffan LNG Vessel UK gas network SHLNG Terminal 2

4 The LNG route from Qatar to the UK Typically, the journey from Qatar to the UK could take up to 18 days South Hook LNG Terminal Company Ltd South Hook Gas Company Ltd, London Ras Laffan Industrial City 3

5 What we do South Hook Gas owns and manages 100% of the capacity of the South Hook LNG Terminal. Its core business is to import LNG from Qatargas and sell it to ExxonMobil Gas Marketing Europe. The company has a 25-year LNG supply agreement with Qatargas, a 25-year sales agreement with ExxonMobil Gas Marketing Europe and a 25-year service agreement with the Terminal to provide regasification services on its behalf. LNG Seller Gas Buyer When there is spare capacity at the Terminal, this is marketed by South Hook Gas so that other companies can potentially bring in additional LNG cargoes to the UK. To date, the company has signed agreements with a number of companies and welcomes discussions with any other company interested in bringing LNG to the UK. In addition, as a way to build resilience into its supply arrangements and improve UK energy security, Alternative Access Arrangements (AAA) have been signed to enable access to capacity at other LNG Terminals in the event of a disruption in service at the South Hook LNG Terminal. 4

6 South Hook LNG Terminal The South Hook LNG Terminal is situated in Pembrokeshire in west Wales and is one of Europe s largest LNG import Terminals with a capacity of 15.6 million tonnes per annum. South Hook Gas is responsible for the import capacity of this facility, and the day-to-day operations are managed by the Terminal. The facility was built on an existing brownfield site, commissioning started in April 2009 and full commercial operations commenced in April By siting the tanks in two rows, excavating earth to reduce the height of the LNG storage tanks and increasing the size of the earth banks either side, the visual impact of the facility has been kept to a minimum. The Terminal has two shipping berths and the deep waters of the port of Milford Haven mean that it is able to handle the largest LNG vessels in the world. 5

7 Fast Facts The North Field is the largest single, non-associated gas reservoir in the world* One Q-Max vessel could supply enough gas to meet the needs of every London household for a fortnight There are five LNG storage tanks at South Hook LNG Terminal, each of which is large enough to hold the Royal Albert Hall. In total, the tanks can store enough gas to meet total UK gas demand for two days *Source: Oxford Business Group 6

8 Fast Facts With an enclosed water area of approximately 45km 2, Ras Laffan Port is the second largest artificial harbour in the world and contains the world s largest LNG export facility A Q-Max tanker takes on average 18 days to reach the UK from Qatar and is longer than three full-size football pitches South Hook Gas has supplied more natural gas to the UK market than any other LNG importer 7

9 Natural gas and the UK energy market Security of supply We believe that UK energy security is best served by having a diverse range of energy sources including renewables, nuclear and natural gas, with a diverse range of suppliers and energy infrastructure. The UK arguably has the most diverse gas supply network in Europe with domestic production from 300 fields meeting around 50% of demand and the other 50% delivered to the UK through four main pipelines and three LNG terminals. Thanks to the private investment made in gas import infrastructure in recent years, there is now sufficient import capacity to meet peak UK gas demand for the foreseeable future. Climate change Natural gas is the cleanest fossil fuel and as such can help the UK to reduce its emissions and decarbonise by replacing more polluting coal and oil use. In addition, natural gas has the flexibility to complement intermittent wind and solar power by providing reliable energy even when the sun isn t shining or the wind isn t blowing. Technological developments mean that LNG can help reduce emissions still further through the use of co-located combined heat and power facilities (CHP) which are around 30% more efficient than a conventional gas power station, replacing petrol and diesel use in the commercial and road transportation sectors, heavy fuel oil use in the marine industry and potentially diesel and kerosene use in the rail and aviation sectors. The industry itself is helping to reduce its own emissions too. For example, thanks to economies of scale and engine efficiency, the Q-Max and Q-Flex vessels used to deliver LNG to the Terminal require approximately 40% less energy per unit of cargo and have 25-30% lower CO2 emissions compared to conventional tankers. Looking ahead, increased use of bio-methane and carbon capture and storage technology offer the potential to reduce natural gas emissions still further. Natural gas and affordability LNG has transformed the UK gas market by improving competition and cost competitiveness, and giving access to additional gas supplies from outside of Europe. Indeed, the UK now has some of the lowest pre-tax gas prices in Europe. Natural gas is cost competitive with other sources of energy and has lower build and decommissioning costs than nuclear or renewable power sources. UK Secretary of State for Energy & Climate Change on the role of natural gas: Gas will continue to play a vital role in a low-carbon economy. Modern gas-fired power stations are relatively quick to build and twice as clean as many of the coal plants they re replacing. Carbon capture and storage promises to give gas an even longer term future in the mix. UK Chancellor of the Exchequer on the role of natural gas: Gas is a reliable, affordable source of energy. We need to recognise that gas will be a vital part of the mix in delivering affordable and secure low-carbon energy. 8

10 South Hook Gas Company Ltd Level 28 The Shard 32 London Bridge Street London SE1 9SG Website: General enquiries: Switchboard: +44 (0) Facsimile: +44 (0) Energy for growth