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Fortuna Gets A Dedicated Offtaker, FDI Imminent

Gunvor Group has been nominated as the preferred LNG Buyer for offtake from the Fortuna FLNG project by the Equatorial Guinea authorities, Ophir Energy the operator and OneLNG, its investment partner.

Ophir Energy says that the commodity buyer is committed to take the full contract capacity of the Gandria FLNG vessel of 2.2 MMTPA which will be purchased on a Brent-linked, Free on Board (“FOB”) basis for a 10 year term.

“All parties have agreed the principal commercial terms subject to finalising a Sale and Purchase Agreement (“SPA”) for the offtake ahead of the Final Investment Decision (“FID”) on the Fortuna FLNG project”, Ophir enthusiastically declares in a release.
 
The contract structure allows flexibility for up to 1.1MMTPA of the Fortuna capacity to be marketed on an alternate basis. Consequently the agreement gives the Fortuna partners alongside the State of Equatorial Guinea, the potential to sell volumes to higher priced gas markets in Africa and beyond, whilst retaining a share in the profits of such onward marketing.
 
“With the identification of a preferred LNG Buyer now achieved, the last significant milestone prior to the FID of the Fortuna FLNG project is the completion of the project funding, with FID remaining on track for 2017”, Ophir says.
 
Gabriel Mbaga Obiang Lima, Minister of Mines and Hydrocarbons for the Republic of Equatorial Guinea, commented: “The selection of Gunvor sets a landmark moment in the development of the Fortuna Project. The partnership with Gunvor also paves the way for the government’s objective to deliver important projects that monetize our gas, promotes local content and brings world-class petroleum technology to Equatorial Guinea.

The Fortuna Project will target becoming the first choice supplier of LNG for the LNG to Africa initiative , furthering Equatorial Guinea’s leadership position in Africa as an LNG exporter.”


South Africa’s First Onshore Gas Project Should Reach Market By 2019

By Sully Manope

Tetra4, the natural gas subsidiary of JSE-listed energy company Renergen, is developing a natural gas resource in South Africa’s Free State Province through the creation of a 107-km pipeline network and associated gas processing facilities.

Tetra4 is the holder and operator of the country’s sole onshore petroleum production right, which, in 2015, was acquired from Molopo South Africa Exploration and Production in a deal valued at $50Million. The asset has since started producing limited volumes of gas, which is being processed at a recently completed natural gas compression station in Virginia, (a gold mining town in the Province) and sold to Megabus-a passenger transport and logistics company-which uses compressed natural gas to fuel its bus fleet.

The current development is designed to increase gas production to well above 1.23MMscf/d and enable Tetra4 to pursue new markets for the gas, including gas-to-power opportunities.

Tetra4 is close to receiving debt funding of $17MM for the project from the Industrial Development Corporation and says the key outstanding condition precedent for the funding to happen relates to receipt, from the Petroleum Agency South Africa (Pasa), of a record of decision for the project’s recently completed environmental impact assessment (EIA). The company expects PASA to approve the EIA decision by early August 2017 and for pipeline construction, all going to plan, to begin before the end of 2017.

All things being equal, Tetra4 expects the project to enter commercial operation before the end of the first half of 2018.


Will Egypt Allow Rosneft To Export Gas From Zohr?

Russian giant Rosneft has been credited in the media as proposing to export gas from Egypt’s Zohr field, the vast deposits in the Mediterranean sea.

Quoting a source in the company, the widely respected Russian news agency, TASS, said that Rosneft, which holds 30% stake in the gas field, “will export gas from Zohr to the countries of Europe and the Middle East”.

But that’s exactly contrary to the expectations of the Egyptian government at this time.

Egypt’s economy was experiencing a severe gas deficit when ENI discovered Zohr in late 2015. The government’s assistance to the operator to fasttrack the field’s development is situated in the proposition that Zohr would help return Egypt back to self-sufficiency in natural gas.

“We will sell gas from the Zohr project when economic conditions are best for it. In this case we will act as a gas exporter from one country to another,” TASS quoted the source as declaring.

The Egyptian government is willing to purchase gas from Zohr for higher than $5 per thousand cubic feet (Mscf). That’s one of the highest gas prices in the world at the moment.

Neither the Egyptian Petroleum Ministry, nor Rosneft Public Affairs, responded to our query.


Dangote is the smallest gas offtaker in Tanzania’s Mnazi Bay

From September 2017, Dangote Industries’ Cement plant is expected to be supplied with five million standard cubic feet of gas per day (5MMscf/d) of natural gas from the Mnazi Bay gas development project in Tanzania’s Mtwara Region.

It is the smallest volume contracted to any of the eight contracted offtakers in the project.
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Equatorial Guinea Looks Forward to A Second FLoating LNG

With the final investment decision for the first Floating LNG in Equatorial Guinea almost at hand, the state is looking forward to discussions around a second such project.

The Ophir operated FLNG, focussed on draining gas resources in the Fortuna cluster of fields in Block R, looks forward to taking FID by the end of June 2017, but Equatorial Guinea, as a country, is proactive about further inflow of investment in gas export industry.

Its Ministry of Mines and Hydrocarbons (MMH), has gone ahead to enter into a binding agreement with OneLNG SA (the company with which Ophir has an agreement for the Fortuna FLNG) to explore the liquefaction and commercialization of natural gas in offshore blocks O and I.

“OneLNG, a joint venture between Golar LNG and Schlumberger to rapidly develop gas reserves into LNG, will commit funding to explore the technical and commercial feasibility of a floating liquefied natural gas project”, according to a release on behalf of MMH by Africa Oil and Power.

“The agreement commits the State and OneLNG to find a binding commercial and technical structure for an agreement on a second FLNG project with a target date of end of 2017”, the release notes.

The Government of Equatorial Guinea is a stakeholder in production sharing contracts in blocks O and I through its national oil company, GEPetrol, which is an indirect participant in the development of the liquids-rich gas and condensate fields Alen, Diega, Aseng and Yolanda.

There is no mention, in the press release, of Noble Energy, the operator of Blocks O and I.

“This agreement is a crucial step to monetizing these offshore natural gas reserves and expanding Equatorial Guinea’s sizeable role as a global gas exporter while developing a domestic component,” said H.E. Gabriel MbagaObiang Lima, Minister of Mines and Hydrocarbons of Equatorial Guinea. “Equatorial Guinea is an African pioneer in deepwater FLNG projects and OneLNG has been a vital partner in those efforts. We stand ready to work with OneLNG to provide the right incentives to make this project work.”

“OneLNG looks forward to again collaborating with the Republic of Equatorial Guinea on an innovative project,” said Jeff Goodrich, Chief Executive Officer of OneLNG SA. “This further cements the strong relationship we have built in executing the Fortuna Project.”


Egypt Connects Eight Million Households to National Gas Grid

The Egyptian Government has connected a total of 7.9Million Households into the National Gas Network.

2.1Million, or 26.5% of that number, were connected between 2013 and 2016. The country hopes to have connected an additional 715,000Households by the end of 2017.

Egypt started connecting households to natural gas in 1980, but for the first 20 years, only one million households were connected.

Despite the surge in the growth of household connections, some provinces (governorates) are still not part of the grid.
The Marsa Matrouh governorate, located in the north-western part of the country, with some parts bordering Libya, was connected for the first time between 2013 and 2016.


TOTAL and Sonatrach Settle Outstanding Differences

By Mohammed Jetutu, North African Correspondent, in Cairo

The 64Bcf/year Timimoun Gas Project is at the heart of the agreement

Sonantrach-the Algerian state hydrocarbon company-has signed, with French major TOTAL, a comprehensive agreement enabling both to expand their partnership by progressing new upstream projects, notably with a new contractual framework for the Timimoun project, continued joint operations for the TFT field under a new agreement and joint development of a new project, as well as the amicable settlement of outstanding differences between the two companies.
 
The accord also enhances cooperation in other areas including exploration, petrochemicals, solar and international developments.
 The agreement is more than welcome lift for Sonantrach, who has struggled to attract new significant investment from large European and American companies for over a decade.
TOTAL says that the deal underscores “the willingness of Sonatrach and TOTAL to continue to work together to further develop and strengthen their historic partnership”.


M&P’s Tanzania Gas Production Far Less Than Optimum

By Sa’ad Bashir, in Dar es Salam

But the state hydrocarbon company is a ‘good customer

Maurel et Prom’s first quarter 2017 production from the Mnazi Bay Field averaged forty three million
standard cubic feet a day (43 MMscf/d).
This is just around half of the initial maximum volume the company and its partner agreed to supply the
Tanzanian gas network.

Pursuant to the Mnazi Bay Gas Sales Agreement, the Mnazi Bay Partners were contracted to supply to
the Pipeline Project up to a maximum 80MMscf/day of natural gas during the first eight months with the
option to increase over time to a maximum 130MMscf/day of natural gas for up to 17-year supply
period. The gas is sold and purchased at the inlet to a 16 inch pipeline connecting the Mnazi Bay gas
production facility to the state operated Madimba central processing facility.
Apparently the country’s natural gas demand has not surged as the government expected, at the time it
signed the contract in 2015.

Tanzania Petroleum Development Corporation ("TPDC"), who is the wholesale offtaker, commenced gas
delivery to a new industrial customer, Goodwill Tile Factory in first quarter 2017, demonstrating demand
growth from the industrial sector which is expected to increase throughout 2017 as Dangote Cement
begins using gas for power generation.

Wentworth, the junior partner in the Mnazi Bay project, says that the state hydrocarbon company has
so far been a good customer. So far in 2017, TPDC has settled in full the November 2016 and December
2016 invoices that were outstanding at the year end, and has also settled a 2015 invoice for line fill gas
volumes.

“As part of our Gas Sales Agreement with TPDC, payment guarantees are in place which can be utilized,
if determined necessary, should payments from TPDC be excessively delayed”.


Cameroon Will Host the World’s First Floating LNG

By Sully Manope, in Douala

Move over, Australia, the quiet Atlantic waters offshore Cameroon are steadily on course of hosting the world’s first Floating Liquefied Natural Gas (FLNG) unit.

Golar’s FLNG Hilli, currently under conversion in Singapore’s Keppel Shipyard, is close to moving to West Africa to start its eight-year contract in the second half of 2017. 

Golar, owner and operator of liquefied natural gas carriers; Perenco, the French E&P independent and Cameroon’s state hydrocarbon company Société Nationale des Hydrocarbures (SNH), are partners in the 1.2Million Tonnes Per Annum (MMTPA) FLNG Hilli, which they have been developing since November 2014.

Shell’s bigger Prelude FLNG project, planned for offshore Western Australia, took Final Investment Decision (FID) in 2011, four years earlier than the September 2015 FID for FLNG Hilli. But Prelude FLNG is a 5.3MMTPA project with all the issues of a large LNG facility. With 488m in length and 74m in width, it is the largest facility of its kind. It will monetize the resources in the 3Tcf Prelude natural gas field, discovered in 2007. Partners in the project include Shell, 67.5%, INPEX, 17.5%; KOGAS, 10% and CPC, 5%.

Golar has spoken with certainty about the scheduled delivery of the conversion project and claims it is within its $1.2Billion budget. Shell speaks less of timing of delivery and more of the might of the Prelude: ”Hundreds of engineers from across the world have combined their experience and expertise to design the world’s largest floating offshore facility”, the company says on its website. “It will be used to help open up new natural gas fields at sea that are currently considered too costly or difficult to develop”. Prelude FLNG is said to be the largest of its kind, but the world, really, does not yet know of any stationary gas floater! Module installation work for the Prelude FLNG has been completed at Samsung Heavy Industries’ Geoje shipyard in South Korea and, in the words of the JGC, which is contracted to support the completions work for the FLNG’s safe and on-schedule completion, ”commissioning is well and truly underway.” Still, it is likely that this project is not commissioned until the third quarter of 2017.

The Cameroon project is based on the allocation of 500 Bcf of natural gas reserves from offshore Kribi fields, which will be exported to global markets via the FLNG Hilli. The 1.2MMTPA of LNG, represents approximately 50% of the vessel’s nameplate production capacity.


Nigeria’s LPG Consumption Inches to 500,000Metric Tonnes Per Annum

Consumption of Liquefied Petroleum Gas (Cooking Gas), reached 500,000Metric Tonnes in 2016, according to Dapo Adesina, Chairman of the Nigeria Liquefied Petroleum GAS Association.

It was the first year in which the Nigerian Liquefied Natural Gas (NLNG), which has been the main supplier of the fuel since 2004, broke even on the project.

The company provided 350,000 Metric Tonnes, or 70% of the consumption, in 2016. Other suppliers included NNPC refineries , but the consumption is still far short of the World Bank estimated market potential for the country which, as far back as 2004, was 3.2Million Tonnes Per Annum.

NLNG was instructed by the government of President Olusegun Obasanjo administration to start supplying the market in 2003, by which time the refineries had almost entirely ceased supplies and there was a near zero supply to the market, leading, itself, to significant reduction in demand.

The NLNG intervention, which started with 70,000Metric Tonnes Per Year allocation, thus guaranteed some security of supply, which led to increased demand from what was clearly a low base.

By 2012, the company had increased its allocation to 150,000 Metric Tonnes. It increased to 250,000 Metric Tonnes in 2013 due to growing demand.

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