(Corrects Feb 27 story to show in para 11 that Prelude is beingbuilt by Technip & Samsung Heavy Industries, not Daewoo.)
* Tamar FLNG terminal could be world's third to come tomarket
* Gazprom wants to buy Israeli gas to expand in LNG sector
By Ari Rabinovitch
JERUSALEM, Feb 27 (Reuters) - The latest floating terminaltechnology could be the key to unlocking gas exports fromIsrael's Tamar field and the larger related gas riches of theeastern Mediterranean.
Russian energy group Gazprom said on Tuesday it isin exclusive talks to buy liquefied natural gas (LNG) fromTamar, located about 90 km off Israel's coast.
To do so, it plans to use a massive, floating LNG vessel(FLNG) that will receive, liquefy and then ship the gas on site.
If it works for Tamar, which has estimated reserves of 9.7trillion cubic feet (tcf), a second could be brought to thenearby Leviathan field, which is more than twice the size andwas the world's largest offshore discovery of the past decade.
"We hope it will put us in a better position to help withLeviathan," said Kathleen Eisbrenner, chief executive of PangeaLNG, the vessel's developer, who helped develop the Gazpromdeal.
Gazprom is the world's biggest gas producer and reliesheavily on pipeline supplies to Europe, which make up around 80percent of its revenues. It is keen to expand in the LNG sectorto grow in the booming Asian market.
Two of the main partners in Tamar, Texas-based Noble Energy and Israel's Delek Energy, are also part ofthe consortium developing Leviathan.
The Tamar and Leviathan finds sparked an exploration frenzyin the area. The U.S. Geological Survey has said the easternMediterranean's Levant basin could hold up to 122 tcf ofrecoverable gas, making it one of the world's richest deposits.
The first FLNG facility is being built for Royal Dutch Shell, the world's top LNG trading company, for use off thecoast of Australia, where natural gas fields are being tappedfor future export to Asia.
Shell's Prelude FLNG project is expected to becomeoperational by the end of the decade.
Prelude, which will be the world's biggest offshorestructure, is being built in South Korea by a joint-venturebetween France's Technip and South Korea's SamsungHeavy Industries.
Each floating LNG vessel costs $3 to $4 billion toconstruct, Eisbrenner told Reuters, adding that Tamar's FLNGvessel would be the third to become operational.
Pangea LNG is partly owned by Daewoo.
Most of Tamar's gas is earmarked for domestic use, and inthe deal being discussed, Gazprom would export roughly a thirdof its reserves over a 20-year period, starting in 2017. Theprice for the LNG would be linked to the price of Brent.
Analysts say FLNG terminals will become a major growthmarket within the next years, as they offer more flexibilitythan stationary terminals.
"Capex will exceed $28.6 billion between 2012 and 2018,"energy consultants Douglas Westwood said.
"Floating regasification is proving popular in countrieswishing to access the buoyant LNG market. The relative costadvantages over onshore terminals plus the short lead times areproving to be a substantial incentive for developers," theyadded.
UNCERTAINTY REMAINS
Some uncertainty remains though, because Israel has yet toofficially say it will allow significant gas exports.
Prime Minister Benjamin Netanyahu is still forming agovernment after last month's election, and it could be weeksbefore a formal decision is made.
"The Tamar partners tell us they do not have concerns inthis regard," Eisbrenner said.
Gazprom will hold exclusive talks for six months with theaim of reaching a binding agreement with the marketing agent forthe Tamar project. Russia is looking to diversify its gasexports, which are focused on the weak European market, and adeal could strengthen its hand in the booming Asian LNG market.
Where the gas from Tamar will be sold, Eisbrenner said,"That is for Gazprom to decide, but we target netbacks fromAsia." (Additional reporting by Henning Gloystein in London, editingby William Hardy and Anthony Barker)
