International Piracy a Concern for CA-Bound LNG

As state officials consider security for liquefied natural gas ships that may call on California ( Circuit , Oct. 29, 2004), another concern raised by the prospect of offshore gas is the potential for supply disruption abroad. Once an LNG import terminal opens in California, it quickly could become a major provider of natural gas to the state, able to send out as much as one billion cubic feet a day, or some 15 percent of the state?s average daily gas consumption. ?We?d be even more dependent on foreign energy sources,? noted Rory Cox, a spokesperson for Pacific Environment, which is part of a coalition that has questioned the wisdom of importing LNG to California. A sudden halt in receiving LNG from abroad?such as that caused by the accident earlier this year at an LNG production plant in Algeria?could send shivers through the gas market. Pirates or terrorists have never attacked an LNG ship or production facility, industry sources quickly point out, but experience with foreign oil has sensitized the industry to security concerns when it comes to LNG. A 2002 terrorist attack on the oil tanker MV Limburg off the coast of Yemen?which successfully punched through the vessel?s double hull?and other recent incidents have highlighted energy industry security concerns. ?The energy industry is fairly conservative,? said Anthony Bingham, global LNG business manager for Lloyds Register Americas in Houston. ?Nobody wants to be the first to have a disaster.? Accordingly, the industry is making security at production facilities and on ships a top priority, according to Bingham. New equipment allows ships to be remotely tracked as they sail the globe. To successfully breach a ship, an attacker would have to break through three layers of containment, including a double hull and the separate LNG storage tanks. Companies are security conscious at their onshore production facilities. Such concern, for instance, is well illustrated by BP?s Tangguh project in West Papua, Indonesia, which is slated to provide half the gas imported at the Sempra-Shell LNG terminal planned for Baja California. Separatists on the island have long waged an armed campaign for independence from Indonesia, according to a recent report by the company?s Tangguh International Advisory Panel, chaired by former Senate majority leader George Mitchell. To avoid becoming a target, the panel has advised BP to maintain a careful balance between the island?s native population and the national government in Jakarta by supporting development of community-based security in the area instead of relying solely on the Indonesian military. Ship piracy is another concern. It is rampant in Indonesia, especially in the Straits of Malacca, where Aceh rebels and criminal bands have boarded and looted ships and even commandeered palm oil shipments to as far away as Africa to sell on the black market. Eastbound oil and LNG from the Middle East pass through the straits, and once West Coast terminals are built, some of that gas may be headed for California because spot-market purchases are expected to increase around the Indian Ocean and Pacific Rim. In the first half of 2004, there were 20 piracy incidents in the Straits of Malacca, plus an additional 50 in Indonesia, according to the International Chamber of Commerce Commercial Crime Services Bureau. Bingham believes it would be extremely difficult for pirates to scale the 20-foot freeboards of an LNG tanker ship, and even if they could, they would not be able to take over the ship and sail away. ?You can?t exactly head off with an LNG ship and hide,? he said. However, oil tanker piracy is known to occur. ?Twenty-three percent of the [pirate] attacks were against tankers,? said Captain Pottengal Mukundan, director of the International Maritime Bureau in London, which tracks piracy worldwide. While many attacks?such as an attempt by pirates earlier this year to board a tanker in an Indonesian anchorage by scaling its anchor chain?are unsuccessful, piracy has become so serious that ship owners have called for increased naval patrols throughout Southeast Asia. At a meeting of the International Chamber of Commerce earlier this year, Alan Chan, owner of the Petro Ranger tanker?a ship hijacked in the South China Sea?called for ?effective maritime enforcement . . . which does not stop at the limits of a nation?s territorial waters.? He said that trading nations, such as Japan and the United States, need to become increasingly involved in providing security for shipping in Southeast Asia, particularly around Indonesia.

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International Piracy a Concern for CA-Bound LNG

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