All articles in the Gas Monetization Section:


S. A Fiddles While Gas Burns

By Toyin Akinosho

In late October 2019, the South African government published the long-awaited Integrated Resource Plan, or IRP, which seeks to chart the means by which the country will manage and meet its electricity needs leading up to the year 2040.

The plan provides insight into the state’s 20-year approach to SA’s energy mix.

IRP 2019 envisages, among other energy types, some 1 000 MW of Gas To Power capacity being introduced into the South African grid by 2024, with a further 2 000 MW to be added by 2027

We have been here before.

Assigning a figure for proposed electrical power expected to be generated by natural gas in the energy plan does not begin to address the possibility of gas based industrialisation in South Africa.

For a country with such an absorptive capacity, a significant flow of gas into the economy is a compelling case against the forces of de-industrialisation, banging hard at the gates.

But the business/political elite has to have the appropriate mind-set to construct a system of opportunities to allow gas to flow in.

The absence of a framework for gas intake and utilisation is a core reason for the looming shutdown of the state run Gas to Liquid (GTL) plant which, at inception, was the largest such plant in the world.

The absence of a coherent guidance on gas to industry is why Sasol’s importation of (currently about) 400Million standard cubic feet of gas a day does not come across as a leverage factor for what the country can do with gas.

What has South Africa done to pump up its economy with natural gas? What has she done?

Find out the details in this Kick-starter piece in the October 2019 edition of the Africa Oil+Gas Report

 


Chevron Signs Second Gas Sale Agreement in Seven Months

Chevron Nigeria Limited, operator of the NNPC-Chevron Nigeria Limited Joint Venture (NNPC/CNL JV), has signed a gas sale and aggregation agreement with Olorunsogo Generation Company Limited, Niger Delta Power Holding Company Limited and Gas Aggregation Company Nigeria Limited.

It is the second time the American major would be signing a Gas Sales Agreement with a company that would use the gas in the Nigerian economy.

Last March, Chevron, which operates the NNPC/Chevron Joint Venture, signed a 75MMscf/d Sales Agreement with Dangote Fertiliser. The new agreement with NDPHC, will enable the company to supply on an interruptible basis, a daily contract quantity of up to 63Million standard cubic feet a day (63MMscf/d) of natural gas to Olorunsogo Generation Company Limited.

The Olorunsogo generation plant in Ogun State is an existing NDPHC electricity generation project designed to supply power of about 750MW into the national grid. “Natural gas is the feedstock of the Olorunsogo generation plant. The GSAA for the supply of the major input needed to run the power generation plant is another demonstration of the NNPC/CNL JV’s commitment to the domestic gas market,” explains Esimaje Brikinn, Chevron Nigeria’s General Manager, Policy Government and Public Affairs.

Sanjay Narasimhalu, Director, Chevron Nigeria’s Downstream Gas claims that  NNPC/CNL JV was currently the largest and most on-spec supplier of gas to the domestic market. “The JV continues to collaborate extensively with other stakeholders in finding creative solutions to issues relating to the domestic gas market”, he says.


Frontier Oil Gives Up on Uquo Gas, Now Focuses on Liquids

Frontier Oil, the Nigerian minnow known primarily for developing a gas field and advocating a robust domestic gas market, has given up on that business for now.

The company has handed over monetization of the gas in the Uquo field in south eastern Nigeria, to Savannah Petroleum, in the ongoing process of the latter taking over the bankrupt Seven Energy Limited.

Final long-form documentation has been signed by Frontier Oil Limited, Seven Uquo Gas Limited SUGL and Accugas Limited (both now part of Savannah Petroleum) in relation to the restructuring of economic ownership interests at the Uquo marginal field and the operatorship of the Uquo gas central processing facility (Uquo CPF) .

“The Frontier Transaction will result in SUGL assuming responsibility for all operations (including production) of the gas project at the Uquo marginal field (including, inter alia, control of gas-related capital investment projects, design and implementation of operations and production plans, as well as day to day gas operations at the Uquo gas field) and will retain 100% of the revenue from gas sales”., Savannah Petroleum says in a statement

Frontier Oil’s founder and Chief Executive, Dada Thomas, is a passionate advocate for a robust Nigerian market. His passion drove him to become the President of the Nigerian Gas Association, the highest, private sector advocacy group for the country’s gas market.

But as Thomas spoke on podium after podium, his company got caught up in the liquidity crisis of the Nigerian electricity industry. Frontier struggled with getting paid for gas sold to Nigerian state energy firms, including the Akwa Ibom State owned Ibom Power and the Federal Government owned Calabar IPP plant.

In the deal signed with Savannah, Frontier will control all oil related activities in the Uquo Field and retain 100% of revenue from oil sales. Operatorship of the Uquo CPF will be transferred to Accugas. Following completion of the Frontier Transaction, the Enlarged Group will have effective operational control of the Uquo gas supply chain. The Frontier Transaction is conditional upon completion of the wider Seven Energy Transaction, and is expected to occur following Transaction completion.

“The signature of the Frontier Transaction documentation represents the achievement of one of the final remaining milestones to be reached as we move towards completion of the Seven Energy Transaction”, says Andrew Knott, CEO of Savannah Petroleum: “The Frontier Transaction is of strategic significance, affording the Enlarged Group increased operational control across the gas value chain and enabling us to maximise value from the Uquo gas field..”

 

 


Africa’s Largest Gas Field Threatens Even More Output

The giant Zohr cannot be reined in

The giant massif contained Zohr field in the Mediterranean offshore Egypt is threatening to surpass its 2.7Billion standard cubic feet per day mark, its handlers are saying.

Luca De Caro, head of the IEOC Joint Venture, ENI’s partnership with Egypt’s state hydrocarbon company, says the 13 wells currently producing at the field will be surpass 3Bscf/d by the end of October, up from 2.7Bscf/d in August.

ENI discovered Zohr in the Sharouk concession in 2015, on the same acreage which Shell had held for 10 years before relinquishment.

The discovery affected the fortunes of Egypt, changing the country from a net importer of natural gas to a self sufficient consumer of natural gas with aspirations to be an exporter of natural gas again.

The company originally estimated that production would peak at 2.7Bscf/d, but, in consultation with the Egyptian government, it was agreed that output would rise above 3Bscf/d in 2019.

 

 


With Gas Reserves Confirmed in Bauchi, Who Needs an AKK Pipeline?

By the Editorial Board of the Africa Oil+Gas Report

If there is truly far more substantial natural gas reserves encountered in Kolmani-2 than was found in Kolmani-1, then there is a clear basis for a valourisation project targeted at gas supply to the commercial city of Kano, the ultimate terminus of the Ajaokuta-Abuja-Kaduna-Kano pipeline, AKK.

The Anglo Dutch major Shell reported 33Billion cubic feet of gas in one zone for the Kolmani-1 discovery in 1999.

NNPC has not provided any volumetric figures for the Kolmani River-2, the appraisal well it just drilled, but its statement about the probe is quite upbeat and the company did indicate that hydrocarbon was found in several levels.

It also says that Kolmani 2 is the first of a multi-well drilling campaign.

Should Kolmani be found to hold even just 500Bcf of gas, NNPC should be ready to commence a natural gas supply study project to ferry those molecules from Bauchi to Kaduna and Kano and therefore discard the $2.8Billion, 614 km project.

Some have suggested that discarding the expensive AKK pipeline would be too wrongheaded, considering that the project is already on course.

But the least the company can do for Nigeria’s sake is start evaluating the modification of the AKK project, now that there is clearer line of sight to hydrocabons in Nigeria’s geographic and political north.

NNPC has reported it had completed negotiations with Chinese Financiers to loan it the money for the AKK project, which will pump gas from the Niger Delta to the North of the country. But paying for that project has been a point of debate.

“What NNPC has done is to look at the entire receivables from gas flows from the existing pipelines today and used that to pledge in terms of the tariff”, says Emeka Okwuosa, Chief Executive of Oilserv, one of the contractors for the project.

So, even though the AKK is being called contractor financed, the state hydrocarbon company is essentially funding it and that has implications for the treasury.

We do know that pumping hydrocarbon from any point to another in pipelines managed by the NNPC or its subsidiaries is always riddled with inefficiency. And no one has said that the AKK was going to be managed by any entity other than this highly unaccountable state hydrocarbon company.

The Escravos Lagos Pipeline System is frequently sabotaged. A looping of the line (running a parallel line in order to double the throughput), has been under construction for seven years. The cost overruns ensuing from this kind of poor project management and what it does to the national treasury receipts never show up even in the most detailed reports of the Nigeria Extractive Industry Transparency Initiative (NEITI).

If we find natural gas in the north, should we not simply structure a north- north gas project to feed power plants and industries in the north and do away with expensive, long distance pipelines, the payment for which we are not entirely certain?

 


The Japanese Get Rovuma LNG

Japan is not only going to consume gas produced in Mozambique but its engineers will be leading the operations to extract the gas from the Indian Ocean.

The Japanese contractor, JGC Corp. unprecedentedly won the contract to develop the Rovuma liquefied natural-gas project in Mozambique, which is set to be the biggest-ever private investment in Africa.

JGC is leading a consortium including Fluor Corp. And Technip FMC Plc to develop the Rovuma LNG project, a 15.2Million Tonnes Per Annum (MMTPA) project which is operated by ExxonMobil. The invoice for the project is around $30Billion and is the priciest hydrocarbon valourisation project on the continent in the last 10 years.

The Rovuma LNG project will develop over 60Trillion cubic feet of reserves in the deepwater Area 4 block, offshore Mozambique.

But the final investment decision, earlier planned for second quarter of 2019, has been deferred to 2020, with first gas expected on stream in 2025.

 


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.

© 2019 Festac News Press Ltd..