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ENI Opens the Tap in Egypt’s Baltim South West

Italian explorer ENI has started up production of the offshore Baltim South West gas field in Egypt.

It is another fast discovery to market by the aggressive operator.

ENI discovered the field in June 2016 and took Final Investment Decision (FID) in January 2018. Baltim South West thus comes on stream 39 months after discovery and 19 months after FID.

The field is located in shallow waters 12 kilometres off the Mediterranean coast of Egypt in the Baltim South development lease. It lies within the Great Nooros area, some 10km from the Nooros field, an area in which ENI says it “first recognised great gas production potential and where it is conducting other new exploration projects”.

With the start-up of the first well, BSW1, the field is now producing with an initial rate of 100 million standard cubic feet per day (scf/d) from a new offshore platform connected to the existing onshore Abu Madi Gas Plant through a new 44 km long, 26 inch diameter pipeline.

The development programme anticipates the drilling of further five wells with the objective of achieving a production target of 500Million scf/d by the second quarter of 2020. Volumes produced by Baltim South West will further contribute to Egypt’s natural gas export capacity. The overall gas potential from the Great Nooros Area is approximately 3Trillion cubic feet (Tcf) of gas in place, of which about 2Tcf are in the Nooros field and the remainder in Baltim South West.

ENI has a 50% interest, through its subsidiary IEOC, while BP holds the remaining 50% interest of the contractor’s stake in the Baltim South development lease. The project is executed by Petrobel, the Operating Company jointly held by Eni and the state corporation Egyptian General Petroleum Corporation (EGPC) on behalf of Medgas, jointly held by contractor (ENI and BP) and EGPC.

 

 


Mixed Signals from Tanzania’s Domestic Natural Gas Market

By Sully Manope, East Africa Correspondent

Indonesian owned, Paris listed operator, M&P, reported a sizeable drop in natural gas production in Tanzania for first half 2019.

But Orca Exploration says it had a surge in Natural gas deliveries from the Songo Songo gas project in the same country.

Each of the two companies operates one of the two key natural gas projects that feed Tanzania’s industries, power plants and factories.

M&P operates the Mnazi Bay project, which pumps gas directly into the 532 kilometre National Natural Gas pipeline and connects Mtwara, where the Mnazi Bay gas field is located in the south eastern region of the country with the commercial capital Dar es Salaam.
Orca Exploration operates a natural gas processing facility on Songo Songo Island, off the coast of southern Tanzania.

M&P says its natural gas production (gross) dropped 17% to 66.2Million standard cubic feet per day in first half 2019, from 77MMscf/d averaged in first half of 2018. It cites “a result of the lower demand for gas because of the early and heavy rainy season, which led to a marked increase in hydropower generation capacity at the expense of gas demand”

But Orca Exploration reports its own supply shot up by 68% to 56.6Million standard cubic feet per day (MMscf/d), year to year in the second quarter of 2019.The same project had delivered 33.7 MMscf/d on average in second quarter 2018. Indeed, in the first six months of 2019, the production averaged 59.0 MMscf/d.

Orca says the surge in deliveries “is as a result of higher sales volume to Tanzanian Electricity Supply Company (TANESCO)”. Orca’s plant supplies natural gas to a 25 km 12″ offshore pipeline and a 207 km 16″ onshore pipeline and is used by the power sector and industrial markets in the Dar es Salaam area.

 


Zohr Makes It to The Summit

By Mohammed Jetutu, North Africa Correspondent

The largest natural gas production on the continent, from a single field

ENI has made good its pledge to deliver 2.7Billion cubic feet of natural gas per day from Zohr, the mammoth gas tank it discovered beneath the Mediterranean in 2015.

The Italian giant had climbed the hill in stages; getting the resources from discovery to market in the first phase within 30 months and then growing the output from 350Million standard cubic feet a day in 2017 to almost ten times that size in two years.

Today the output from Africa’s largest single gas field can feed an LNG Plant of 10Million Tonne Per Annum (10MMTPA).

Tarek al-Molla, Egypt;s flamboyant petroleum minister says that the 2,7MMBscf/d  was reached four months ahead of schedule, with 12 high producing wells draining the field

Whereas 2.7Bsf/d was the peak production that ENI prognosed at the beginning if the development, Mr. Molla says that there is enough in the tank to get the output to 3Bscf/d before January 2020.

Production initially increased to 800 MMscfd in early 2018, then climbed to 1.2Bsc/d in May 2018, reaching 2Bsc/d.

The Zohr field is located offshore, within the Shorouk Block, some 190 km north of Port Said.

ENI controls 50% of the project. Russia’s state contrilled Rosneft owns 30%, while BP and Mubadala Petroleum each have a 10% stake in Zohr.

The gas is off taken by government for Power Plants and Petrochemical industries in Africa’s third largest economy.


Another Liquefied Natural Gas (LNG) storage and regas plant For West Africa

The Atlantic coast on the edge of West Africa will, in the near term, be teeming with LNG regasification plants.
Equatorial Guinea just announced it was building one, , after Cote D’Ivoire and Benin Republic went to town with declarations that TOTAL, the French major would be installing those types of facility on the countries’ coasts.

A news release last week said that a storage plant, built alongside the regasification plant will enable the storage, transportation and distribution of liquefied natural gas (LNG) to Equatorial Guinea’s mainland.

The storage plant will be located at the Port of Akonikien, on the southern border of Equatorial Guinea’s mainland. “12 bullet tanks will carry 14,000 cubic meters of storage capacity, supported by a truck loading station and 12-kilometers of ten-inch gas and diesel pipelines”, the release said. “The project will be led by local construction and engineering firm Elite Construcciones; It is part of Equatorial Guinea’s regional LNG2Africa initiative which seeks to drive gas monetization through in-country gas-to-power projects.

“The plant will enable the transportation and storage of LNG from the EG LNG plant at the Punta Europa Gas Complex on Bioko Island. It will then be fed into the regasification plant to be distributed to smaller-scale power plants and LNG power stations throughout the country, as well as exported to neighboring countries”.

“The tanks are currently the largest factory-built cryogenic bullet tanks in the world with a capacity of 1,228 cubic meters and dimensions of 31 meters by 9.3 meters by 8.8 meters. Built by American manufacturer Corban Energy Group, each tank is estimated to require 12 hours to complete the 12,000-meter distance from the port to the new plant. Elite Construcciones is also installing a truck loading station and 12 kilometers of 10-inch gas and diesel pipelines”, says the report.

OTAL had earlier announced signing an agreement with Republic of Benin for the development of a Liquefied Natural Gas (LNG) import floating terminal and the supply of up to 0.5Million tonnes per annum (MMTPA) of regasified LNG from TOTAL’s global portfolio to Benin for 15 years, starting in 2021. The company said it would “develop and operate the regasification infrastructure that will comprise a floating storage and re-gasification unit (FSRU) located offshore Benin and an offshore pipeline connexion to the existing and planned power plants in Maria Gléta”.

TOTAL had, even long before then, (October 2016) announced it had been awarded the rights to build and operate a liquefied natural gas (LNG) re-gasification terminal in Cote d’Ivoire with a capacity of 3Million tons per year. That project is, however, struggling.


GNPC Finances the West to East Reverse Flow of Natural Gas In Ghana

GNPC CEO K. K . Sarpong

Ghana National Petroleum Corporation (GNPC) announces the completion of the initial phase (Takoradi scope) of the project to reverse flow gas from the Western Region of Ghana to the Tema power enclave, which is being financed by the Corporation.

The infrastructure was enabled with the support and collaboration of the Ialian explorer ENI, the crude oil trader Vitol, Ghana National Gas Company (Ghana Gas) and the West Africa Gas Pipeline Company (WAPCo). Commissioning and performance testing of the Takoradi scope of the “Takoradi – Tema Interconnection Project” (TTIP) has been successfully carried out.

“The successful execution of this scope of the project paves the way for the smooth flow of gas from the Western Region to Tema for use by the various gas offtakers in the Tema-Accra power and industrial enclave”, GNPC says in a statement.

This project has doubled the capacity of Ghana Gas to transport GNPC’s gas to feed critical national power generation facilities sited in the Western enclave. Again, gas users in the Accra-Tema region are assured of relatively more reliable gas supply through the TTIP.

The Tema section of the TTIP, which includes the revamping of WAPCo Tema Regulatory and Metering Station (RMS) is ongoing and is expected to be completed by the fourth quarter of 2019.

GNPC’s Role

As the National Gas Aggregator, GNPC played an enabler role, providing the financing and necessary comforts to the partners to ensure the successful completion of the project. GNPC engineers also provided end-to-end advice in the design and scoping, as well as monitoring of the project execution.

Implications for Ghana’s power sector

The successful completion of the project has enormous benefits for the country’s power sector.

“Ghana Gas’ ability to supply gas for a stable production of electricity means that, cost of electricity to the final consumer will now be relatively lower as compared to the use of Heavy Fuel Oil (HFO) or diesel as fuel for electricity generation”, says K. K. Sarpong,CEO of GNPC “The cost of production for local companies, especially in the manufacturing and mining sectors, will reduce significantly to enable them become more competitive. Dr.Sarpong was optimistic that, with GNPC’s drive to increase the utilization of domestic gas, the take-or-pay obligation on the country will be reduced significantly, once the power sector pays for the gas.


TOTAL will develop the LNG market in Benin

TOTAL, the Republic of Benin and the Société Béninoise d’Energie Electrique (SBEE) have signed the Gas Supply Agreement and the Host Government Agreement for the development of a Liquefied Natural Gas (LNG) import floating terminal and the supply of up to 0.5Million tonnes per annum (MMTPA) of regasified LNG from TOTAL’s global portfolio to Benin for 15 years, starting in 2021.

TOTAL will develop and operate the regasification infrastructure that will comprise a floating storage and re-gasification unit (FSRU) located offshore Benin and an offshore pipeline connexion to the existing and planned power plants in Maria Gléta.

The gas import project will supply plants in Benin, such as the new 127 MW power station at Maria Gléta, with imported liquefied natural gas, on preferential terms and will position Benin, capital of the WAPP (West African Power Pool), as the crossroads for gas and electricity in the subregion, the Beninois authorities say.

“This project is in line with TOTAL’s strategy to develop new gas markets by unlocking access to LNG for fast-growing economies. We are very pleased to have been entrusted by the Benin authorities to develop LNG imports and support a broad adoption of natural gas in the country,” notes Laurent Vivier, Senior Vice President Gas at TOTAL.

“Access to LNG will help Benin to meet growing domestic energy demand and add more natural gas to the country’s current energy mix, hence reducing its carbon intensity”.

Benin is one of the three countries that receive gas from the West African Gas Pipeline Company, but the authorities have complained, severally, that the supply is not only low, it is far from the contracted volume.

Dona Jean-Claude Houssou, Minister of Energy of Benin, says he congratulates TOTAL Group on its willingness to support the revitalisation of the country’s energy sector, “which is at the heart of the Government’s Action Plan (PAG)”.

He speaks of “the Government’s efforts to restore Benin’s energy independence, which is the foundation of the country’s ambitious economic and social development. The new legislative framework fosters the participation of private capital in the energy sector and is manifested in independent thermal, solar and hydroelectric power generation projects”.

 


ENI Reaches Hull Installation in Mozambique FLNG Project

Italian giant ENI has announced it has started installation works on the hull of theCoral Sul floating liquefied natural gas (FLNG) treatment and liquefaction unit that will be moored offshore in Mozambique.

The unit is part of the Coral South project, which will put in production the 450 billion cubic meters of gas in the giant Coral reservoir. The hull is expected to be launched in 2020, in line with the planned production startup of the Coral South Project in 2022.

The Coral Sul FLNG facility will have a gas liquefaction capacity of 3.4Million tons per year when completed and will be the first FLNG vessel ever to be deployed in the deep waters of the African continent. The vessel, which will be 432 metres long and 66 metres wide and weigh about 220,000 tons, will be able to house up to 350 people in its eight-storey accommodation module. The facility will be anchored at a
water-depth of around 2,000 metres by means of 20 mooring lines that weigh a combined 9,000 tons.

Construction works on the Coral Sul FLNG started in 2018 and are ongoing in seven operational centres across the world. Construction of the mooring turret began in March; construction of the hull’s 24 modules that contain the LNG storage tanks and sections of the treatment facilities began in September. Construction of the topside, consisting of 12 gas treatment and LNG modules, started last November, along with the living-quarters. By the end of 2019 the overall progress of the project is expected to exceed 60% completion with the total man-hours worked shortly expected to reach 10 million.

Drilling and completion activities for the six submarine wells that will feed the liquefaction unit will begin in September 2019. The wells will have an average depth of approximately 3000 metres and will be drilled in about 2000 metres of water depth. The activities, carried out by the SAIPEM 12000 drilling rig, will be completed by the end of 2020.

Alongside the LNG infrastructure under construction, the Coral South project also includes a number of initiatives aimed at enhancing the overall capabilities of the local workforce. These include specialized training activities for over 800 Mozambicans, who will eventually be employed during the operational phase of the project. Eni is also engaged in a broad programme of social, economic and health care initiatives, to support a long-term, diversified and sustainable development of the local communities.


Why Mozambique Can’t Be an LNG Hub

By Fred Akanni

Almost everyone, it seems, expects Mozambique to become a natural gas hub in East Africa; an LNG hub, if you like.

The reserves are there: more than a hundred trillion cubic feet of gas have been discovered in deepwater Rovuma Basin, in the Indian Ocean, since February 2010. A Floating LNG facility, with capacity for 3MIllion tonnes Per Annum, is under construction. Two larger onshore LNG projects, each at least 12MMTPA to start with, are about to receive financial sanction.

So, yes, Mozambique would become a magnet for regional LNG import and export logistics, and the country could supply the length and breadth of the Southeast African region with natural gas, as Africa industrialises. True?

Not so quickly.

Mozambique’s poor industrial mind-set, for one, is a setback. The shabby neighbourhood which it inhabits, is another minus. With the several trillion cubic feet of gas reserves that have been proven onshore, long before the Rovuma deepwater finds, Mozambique has failed to develop a semblance of industrial capacity. Apart from Sasol-led construction of one power plant 175MW and another new 106MW gas fired plant built entirely by the state , as well as connection of gas to a couple of hundred locations in Mozambique’s commercial cities, there is no linkage of the natural gas resources with the larger economy. Contrast this with Tanzania, its neighbour to the north, with similar sized onshore natural gas resources, which has gradually constructed and expanded a domestic gas market that now edges close to 200Million standard cubic feet per day, one of the top five in Africa.

Mozambican officials lament their smallness; they are shy about what they have. They come across as lacking scale mindedness.

A recent interview with one of the country’s most respected energy leaders illustrates this challenge.

“There’s the potential to become an LNG hub”, Omar Mitha, the personable, charismatic, chairman of the state hydrocarbon company ENH, told The Oil and Gas Year (TOGY), an annual publication detailing hydrocarbon activities in the country. “We are building the oil and gas service centre in Pemba”, he told the publication; “people are interested in the project because it will help logistics. People are bullish on Mozambique”.

But the capacity of its neighbours to lock into Mozambique’s immense resources does not inspire Mr. Mitha.

“We have to bear in mind that the scale is small and bankability is a question from the standpoint of the neighbour’s investment grade”, he explained to TOGY. “If you look at even South Africa, which is a powerhouse in the region, they are not sure about what their power matrix is going to be for the future. If you’re not sure how the market is going to evolve, you can hardly conceive a business model. Our model has to make sense and add value”.

Mozambique is hoping to create a domestic gas market by allocating some of the gas in the Rovuma basin to select companies to build some domestic projects. Shell won the bid to construct a Gas To Liquid Plant, the largest of the three domestic gas utilisation initiatives approved by the authorities

in 2017. It will have a feedstock capacity of around 350Million standard cubic feet per day (MMscf/d). Yara International will develop a fertiliser plant and small power plant, both requiring 78-88 MMscf/d. GL Africa Energy is expected to build a mid-sized 250 MW power plant, to utilise 42MMscf/d.

The feedstock for the Shell-promoted GTL project will be provided from the Area 4 of the Rovuma Basin, where ExxonMobil leads a consortium to develop 15MMTPA LNG plant.

These three projects, in addition to the power plants, effectively inaugurate Mozambique’s domestic gas market.

The question is: can the authorities see a larger variety of gas based projects in the country in the horizon? Do they foresee neighbouring countries taking gas from Mozambique for industrial projects? There’s only one fertiliser plant planned for Mozambique, for now and the medium term, and that plant will only offtake around 60MMscf/d.

Listen to Mitha talk to TOGY: “If you have one fertiliser plant in Mozambique, that could supply all of Southern Africa so it wouldn’t make sense to have another plant in the region. It’s a compelling narrative: Once you have the resources in Mozambique, you are well placed to cater to neighbours. But you need to test that business model. I tend to believe we have to be cautious about what the future holds with regards to neighbouring countries, especially the Southern African Development Community”.

Again, the impression he has given is that the African absorptive capacity is extremely limited.

Which is why Mr. Mitha cuts foreign investors in Mozambique some slack for insisting on export projects.

“The reason most projects in Rovuma are export oriented is because there has been a lot of money spent on exploration. To monetise these resources, you have to sell to premium markets such as Japan and China. They are far away, so you need LNG, not pipelines. It’s costly to take pipelines into Malawi and Zimbabwe, the same with refineries and fertiliser plants.

But this line is the most telling of the entire interview that Mr. Mitha granted TOGY: “We will not be a hub of LNG for the sake of it. It has to make sense. You must sell at a price that is viable, because no one else will deploy an investment if it does not provide an ROI”.

This article was initially published in the April 2019 edition of Africa Oil+Gas Report


Government Bias For the End User Stifles Investment in Nigeria’s Domgas Market

By Akpelu Paul Kelechi

The Nigerian Gas Association is concerned that state intervention in gas pricing in aid of end users is having  unintended negative consequences on other sections of the value chain.  “We feel that the government should not throw interventions at one end of the value chain without looking at the roll back effect”, argues Audrey Joe-Ezigbo, president of the association.

She says that the whole pricing idea is hinged on “some kind of assumption that a thousand cubic feet of gas in the Niger-Delta can be reasonably produced for about $1 and that there is even inherent profit in the form of condensate”, which is sold as crude oil. That thinking, that the Nigerian gas reservoir is largely a wet gas tank from which an investor can retrieve other products apart from dry natural gas (methane), is behind the 2008 domestic gas pricing and supply regulation, which remains the default regulation for gas pricing in the country.

Joe-Ezigbo was reacting to Africa Oil+Gas Report’s question regarding the NGA’s position on a January 2019 gazette on tariffs for natural gas sold to Manufacturers and Textile sectors. That gazette caps the price per thousand cubic feet by gas producers and suppliers at $3.85.  “So the gazette was withdrawn and a second one came up which also has been suspended”, the NGA president explains. “Currently, we are at discussion to see what will make sense for the industry. As we see it as NGA, again I use the word signal, what are we signaling to investors?”

A player in the midstream sector of the gas value chain herself, Joe-Ezigbo became the first female President of the NGA several months ago. She points at government’s push to ensure that all pricing in the domestic market is hinged on export parity; export parity being the LNG export price. “There are many challenges with that; one, in that arrangement, LNG is like the major taker and when you are comparing other LNG hub prices, you are not actually getting like for like if the bulk of the number you are going to divide with is coming from one particular place. In the meantime, the LNG price which is about $2.50, is not the end price, the end price of the product currently is over $5 but there is no gas anywhere at $1.40 which is the gas supply price underpinning the $3.85. Not from NPDC, not from any of the suppliers or producers”.

Joe-Ezigbo also argues against the notion of a fixed transportation cost, “which is also the transportation cost by a government agency”. She says: “At the end of the day, of course there are other costs that go with the marketing and distribution. When that price (for the Textile sector) came, it was clear to us that it was not a sustainable price. However, what we did was have a stakeholders’ meeting where we tried to arrive at a price that the industry can live with so that it would make sense right from the point of supply all the way to the end of the value chain”.

Full details of the conversation with the NGA President is due out in the forthcoming July 2019 edition of Africa Oil+Gas Report, to be distributed at the SPE Nigeria Conference in Lagos. You can also subscribe here.

 


In Moza, Africa’s Biggest FID For Natural Gas Development in History

By Sully Manope, southern Africa correspondent, in Windhoek

US independent Anadarko and the government of Mozambique announced yesterday, June 18, 2019, the Final Investment Decision for what is the biggest single natural gas development project in Africa, ever.

It is the first phase of development of the natural gas reserves in Area 1 of the Rovuma Basin, stored in about 1,600 metres of water off Mozambique. The Liquefied Natural Gas facility with capacity to produce 12.8 Million Tonnes of the product every year (12.8MMTPA), will utilise 2Billion Standard cubic feet of gas a day (2Bscf/d)

No LNG project in Africa ever started this big.

To put it in context. The Nigeria LNG project in Bonny, in the country’s east, started production in 1999, from a plant with capacity less than 4MMTPA. The Algerian LNG, the first on the continent, started from even smaller sized capacity plants.  Angola’s LNG is 5.2MMTPA. Egypt’s largest LNG plant, the one at Idku, has a total size of 7.7MMTPA.

The Mozambique LNG project, as the Anadarko led development is called, will cost $20Billion to build, on a site on the Afungi peninsula, in the country’s district of Palma. This onshore site is where the deep-water gas will be channelled, to be turned into liquefied gas.

Even though it has taken considerable time (close to three years), for Anadarko to secure enough sales agreements to give it comfort to sanction a 12.8MMTPA project,  leading industry ‘bibles’ forecast considerable market for this product in the mid to long term. Global demand is expected to increase from 319MMTPA to 632MMTPA (average) from 2018-2040.

On its part,it has taken the Government of Mozambique 13 years to reach this stage. It launched the 2nd Licensing Round on 15th July 2005. Applications were submitted on  31st January 2006. Anadarko discovered the first commercial sized reservoir of gas in the country’s deep waters in February 2010.

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