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TOTAL Expects First Gas from Erg Issouane in 2021

Algeria’s state hydrocarbon company Sonatrach and the French major TOTAL have signed two agreements as part of the comprehensive partnership announced in 2017:

  • A new concession contract to jointly develop the Erg Issouane gas field located on the TFT Sud permit, signed by Sonatrach, TOTAL and Alnaft (the National Agency for the Valorization of Hydrocarbon Resources).

The TFT Sud permit is located south of the Tin Fouyé Tabankort (TFT) field, of which TOTAL is a long-standing partner. Sonatrach (51%) and TOTAL (49%) will develop the reserves of Erg Issouane located on the TFT Sud permit estimated at more than 100Million barrels of oil equivalent (BOE). The development, which represents an investment of around $400Million, will be tied back to the existing TFT gas treatment unit by a 22-kilometer-long gas pipeline. First gas is expected late 2021. The partners have also signed a gas marketing agreement. The concession contract will become effective upon approval by the Algerian authorities.

  • A shareholder agreement to create a joint venture known as STEP (Sonatrach TOTAL Entreprise Polymères).

STEP will be responsible for carrying out a joint petrochemical project in Arzew, western Algeria. The project includes a propane dehydrogenation (PDH) unit and a polypropylene production unit with an output capacity of 550,000 tons per year. The two partners (Sonatrach 51%, TOTAL 49%) are planning to start the front-end engineering and design (FEED) from November 2018.

“This project will allow to valorize the propane, produced in large quantities locally, by transforming it into polypropylene, a plastic for which demand is growing strongly”.

 

 


NLNG Recorded Its Highest Output of All Time in 2017

By Kish Onwunali, Abuja Bureau Chief

The highest production that the Nigeria Liquefied Natural Gas (NLNG) Ltd has delivered to the market in one calendar year is 21Million Tonnes (21MMTPA) and that was achieved in 2017.

“From a production stand point, 2017 was our best year. That was the year that we produced the highest volume ever and we delivered 21Million Tonnes and slightly more”, Tony Attah, NLNG’s Chief Executive Officer, told Africa Oil+Gas Report. “That was the record year for us as the highest volume that the NLNG has ever delivered to the market in a calendar year”.

The NLNG’s six trains can collectively deliver 22Million Tonnes in a year, which means that 22MMTPA is the nameplate capacity.

“You start looking at name plate capacity versus what we are actually delivering”, Attah, who is in his second year on the job, told us in an exclusive interview. “I think overall, we are optimizing all the bottle necks in the plant to be able to do more. Today, we are really around what is re-rating to 66,000 Tonnes per day capacity plant. We are improving within our capacity in terms of operational flexibility and possibility to keep pushing the envelope”, he explained.

Although 22MMTPA has been the nameplate capacity since the installation of Train 6 in 2008, several challenges, including gas supply adequacy,  sabotage of supply facilities, even logistics issues such as the company’s 2015/2016 face-off with the Nigerian Maritime Administration and Safety Agency (NIMASA), all have acted as downward pressure on optimum output.

The NLNG Ltd, incorporated in 1989, commissioned production in 1999, with the first train having a nameplate capacity of 3.2MMTPA. The base project, Trains 1 and 2 collectively have the capacity to deliver 6.4MMTPA. Train 3 is another 3.2MMTPA plant. Trains 4, 5 and 6 have capacities of 4.1 MMTPA each. The proposed Train 7 will be twice the size of the largest of these six trains.

The full interview is published in the October 2018 issue of the Africa Oil+Report, which focuses on Africa’s Midstream projects and the continent’s Refining Gap.

 


Zohr Field Now Producing 2Billion Cubic Feet A Day

Egypt’s Zohr field, discovered by ENI in 2015, is now producing 2Billion standard cubic feet per day (2Bscf/d), “equivalent to approximately 365,000 BOEPD, according to the Italian explorer. “This outstanding result has been achieved only a few months after the first gas in December 2017 and one year before the schedule of the Plan of Development (PoD)”, the company gushes, in a release.

“This level of production was achieved thanks to the start-up of the fifth production unit (T4), backed by the eight gas producers and a new 30” x 218 km sealine, commissioned August 2018 and confirms the programme pursued by ENI, its partner, Egyptian Natural Gas Holding Company (EGAS) and their joint venture company Petrobel aimed to reach a plateau in excess of 2.7Bscf/d in 2019”.

ENI boasts even moe: “The latest achievement reinforces the exceptional development path of the Zohr project, one of ENI’s seven record-breaking projects, which is playing a fundamental role in supporting Egypt’s independence from LNG imports”.

The Zohr field, the largest gas discovery ever made in Egypt and in the Mediterranean Sea with more than 30 Tcf of gas in place, is located within the offshore Shorouk Block (some 190 km north of Port Said). In the Shorouk Block, ENI holds a 50% stake, Rosneft 30%, BP 10% and Mubadala Petroleum 10% of the Contractor’s Share (where Eni, Rosneft, BP and Mubadala Petroleum are collectivity the Contractor).

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 Petroshorouk, jointly held by Contractor (EN and its partners) and the state company Egyptian Natural Gas holding Company (EGAS).


Onosode in the NLNG Creation Story

Dateline: Lagos Nigeria, February 1985….
Gamaliel Onosode, first-class technocrat, administrator and Baptist minister, was persuaded to lead Nigeria’s LNG revival campaign by President Ibrahim Babangida.

Former Chairman, Cadbury Nigeria Plc; former Chairman, Dunlop Nigeria Plc; and former Chairman, Nigeria Stock Brokers Limited, Onosode was approached by Tam David-West, then Minister of Petroleum Resources.

In the course of an evening of banter at Onosode’s residence, David- West had informed him that the government was about to establish an LNG Working Committee and wanted him to serve on the committee. “I was a bit surprised because I was not an oil and gas man. I was a banker and a manager; so I was really surprised,” Onosode recalled.

But the minister persisted: “Look, those are the skills we want represented in the working committee.” Eventually, Onosode gave in: “if the government says it wants me to serve in the committee and you came all the way to my house to tell me, I will not say no.

On the day of the inauguration of the LNG Working Committee in March 1985, the minister sprang another surprise. “When we gathered for the inauguration, then the minister sent for me. I went to his office and sat down. And he said ‘well I am sorry I didn’t tell you before, but I deliberately didn’t want you to know before now because I fear that you might turn down the request. We want you to be the chairman of NLNG working committee.’ I was stunned. When I recovered from my shock, I said ‘well, since the government said that this is the right person for the job, I will do my best, but I feel I am not a technical man, not being an oil and gas man; I am a banker and a manager.’
‘I believe that is what we needed’, David West replied.

“One more thing”, the minister continued, “the terms of reference that you will get will ask you to look into the feasibility of the project. That gives you the liberty to advise the government that under present circumstances or whatever, the project is not feasible. However, I want to say very bluntly that the government is not asking you to advise it on whether LNG project is feasible. We want you to tell us how to make it feasible.”

Onosode faced the same dilemma that every administrator who grappled with building LNG project in Nigeria had to contend with. How do you convince the international financial market to lend you billions of dollars when your country has no credit history? How do you convince partners and buyers alike to take you seriously when your country turned past efforts into a circus?

In the three decades before Onosode’s appointment, Nigeria made several unsuccessful attempts at building a LNG plant. Too many false starts; too many missed chances. The struggle to realise the LNG project was an epic story of wasted opportunities and tragic miscalculations, featuring an extraordinary cast of larger-than-life characters, many of them eminence grise of Nigerian politics and public service.

Opportunities to sell Nigeria’s gas in Europe were lost in 1966, 1976 and 1980. Nigeria’s market shares were taken by Algeria, the Soviet Union and Norway. New openings in Europe and USA in mid 1990s might be Nigeria’s last opportunities to get into the international gas business. To realise the LNG project in Nigeria, Onosode and his team needed to find solution to almost unsolvable puzzles of how to keep the government engaged, but not meddling.

Wavering government attention had been the Achilles heels of previous efforts. The committee needed to convince partners, lenders and buyers that Nigeria was committed to realising the project; that the project would be completed, not abandoned. This was not easy in a country where politicians do not speak and act with one voice. In a country where passionate rhetoric and strutting led to ruin, Onosode’s analytical detachment, sure-footed leadership and years of boardroom experience were major strengths. His integrity and unwavering morals served him extremely well in his new role. He shouldered an enormous responsibility on behalf of the state.

At the inaugural meeting, the Chairman did something unusual. To everyone’s surprise, he proposed, without explaining why it was desirable, the modification of the government’s terms of reference. Onosode recalled that event years later: “I was not happy with the logical sequence of the issues set out. We reorganised the terms of reference so that we would not incorporate the Company until we were satisfied that the project was viable. So, incorporation of the Company was one of the very last things to be done by the LNG working committee. So having challenged the unorthodoxy of the approach, we all agreed and re-drafted the terms of reference and sent it back to the minister. This ensured that the terms of reference fully reflected what the government had in mind. Thereafter, the LNG working committee began the task of engineering and re-engineering the environment to make it conducive towards the LNG project.

Participants were potential investors so the committee negotiated the terms of the partnership and investment. This was captured in the shareholders agreement. It took a lot of time and delicate negotiations to arrive at terms and conditions acceptable to all. ‘After that stage, we had to satisfy ourselves that we had a market for the product – liquefied natural gas’.

Having reshuffled the cards, Onosode reminded the committee that its main duty was setting up the vehicle for the realisation of the LNG project. He said the early registration of the Joint venture would boost the confidence of buyers who would prefer to deal with a corporate entity as opposed to individual companies. He then requested Shell, Elf (now TOTAL) and Agip (ENI’s subsidiary in Nigeria) to state conditions under which they would go ahead with the registration of a joint venture company. This needed to be agreed upfront to avoid ambiguities and surprises. Brian Anthony Lavers, Shell’s highly influential Managing Director in Nigeria, gave three conditions for his company’s participation – market availability, execution of the shareholders’ contract and an agreeable fiscal regime. Agip and Elf supported Shell’s position.

Onosode responded that he did not see the connection between the items enumerated by Shell and the proposed incorporation, adding that he had always thought that the incorporation of the Company would depend only on market availability. “It had never been anyone’s understanding that a fiscal package and service agreements needed to be in place before JVC incorporation. These should not be made pre-conditions for JVC incorporation”, he said.

The lOCs stuck to their guns, insisting that they were not prepared to accept the uncertainty of not having an agreed fiscal package prior to the incorporation of the JVC. It was the responsibility of the committee to formulate and make recommendations to the government and shareholders on the fiscal regime that would govern the project, they insisted.

Onosode argued that it was not the intention of government, nor did indications from first contacts with the market show that ii was desirable that the viability of the project should be dependent on government concessions. The buyers only wanted a stable source of supply. The project would have seeds of instability if the benefits and rewards accruing from it were not seen to have been fairly shared, said Onosode.

He urged the oil companies to appreciate the several roles the government would play in the project- a sovereign, majority shareholder (through NNPC) saying that in both capacities the government had both ultimate responsibilities to all Nigerians.

Excerpted from The Story of Nigeria LNG Ltd., by Ifeanyi Mbanefo. Published by Bookcraft, Ibadan. Funded by NLNG Ltd.


Nigerian Government to Conduct A Bid Round For Flare Gas

By Toyin Akinosho

President Muhammadu Buhari has signed a new legal framework on flare gas reduction, the implementation of which is expected to  lead to a government takeover of fields where flaring is taking place and a bid round of some of such fields before the end of 2018.

The Flare Gas Reduction (Prevention of Waste and Pollution) Regulation 2018, signed in early July 2018, is currently being gazetted. The document seeks the reduction of environmental/social impact caused by the flaring of gas; protection of the environment; prevention of waste of natural resources and creation of social and economic benefits from flare gas capture.

The regulation asserts the right of the government, under Section 9 of the Petroleum Act, to take natural gas produced with crude oil free of cost at the flare site and without payment of royalty. The provision of this regulation is applicable to all petroleum licences, including marginal fields.

Two key aspects of the regulation are the outlines of Bid Processes and the Penalties for supply of inaccurate data by a producer of flared gas.

The minister may, by a permit to access flare gas, authorize a Qualified Applicant selected further to competitive bid processes conducted by the Federal Government, to take Flare Gas on behalf of the government at any Flare site as specified in the permit.

Any producer may apply to the minister to utilize Flare Gas for commercialization, provided that such application shall(a) exclude any Flare Gas volume that is being offered in a bid process conducted by the Federal Government or has been assigned to a permit holder, (b) be made by the producer on behalf of a midstream subsidiary corporate entity, either existing or to be incorporated.

There is, of course, more.

Nigeria flares an excess of 800Million standard cubic feet of gas a day from 178 flare sites, according to the Ministry of Petroleum Resources. The country’s power sector, however, struggles to get enough gas to fire the turbine capacity of 7,000MW.

The government is hoping to use the regulation to bring more investment into the natural gas market.

To achieve this, ministry sources say, there is need for improved oilfield practices and improved regulatory supervision.

The new regulation contains higher penalty for gas flaring than currently obtains and contains an overwhelmingly large number of references to “The Qualified Applicant” and “Permit Holder” of Flare Gas sites, two entities that are largely unknown in extant Nigerian Petroleum ecosystem.

The regulation says that the Department of Petroleum Resources may request a producer to provide Flare Gas Data and when that request is made, the producer shall provide such Flare Gas Data in the format required within 30 calendar days of the date of the request.

In the last 18 months, the MPR has called for data twice from flare gas producers. The Ministry will call again for data after the regulation has been gazetted.

Any individual, in any company, that signs a letter conveying the data has a duty to ensure that the data is accurate. Any person acting on behalf of a producer, who supplies inaccurate or incomplete Flare Gas Data to the DPR or any other duly empowered lawful authority, will be liable to criminal prosecution, the new regulation says.

Fuller details and discussions of the regulation are available here.


XOM Takes Hold of Rovuma Midstream, To Produce >15MMTPA

By Toyin Akinosho

ExxonMobil will lead the midstream segment of the Rovuma LNG project in Mozambique’s Area 4, according to a statement released July 9, 2018, while ENI will be in charge of the upstream aspect.

A development plan, submitted to the government, details the proposed design and construction of two liquefied natural gas trains which will each produce 7.6Million tons of LNG per year.

The world’s largest E&P company has, in effect, taken hold of the core of the largest natural gas development on course in Africa. “ExxonMobil will lead construction and operation of natural gas liquefaction and related facilities on behalf of the joint venture, and ENI will lead construction and operation of upstream facilities,” says the statement, released in ENI’s headquarters in Milan, Italy.

“We are excited to be progressing the Rovuma LNG project, working with the government and leveraging the expertise and capabilities of all of the partners,” the statement quotes Liam Mallon, president of ExxonMobil Development Company.

A final investment decision is still a little bit in the future. The statement talks of possible sanction in 2019, but the hard work of securing sales and purchase agreements is ongoing and there are no binding agreements yet. Still, the partners are optimistic, citing a possible 2024 as date on which LNG production is expected to commence.

Rovuma LNG is operated by Mozambique Rovuma Venture S.p.A., an incorporated joint venture owned by ExxonMobil, ENI and CNPC, which holds a 70% interest in the Area 4 concession alongside its partners Galp, KOGAS and Empresa Nacional de Hidrocarbonetos E.P. (ENH), each of which hold a 10% interest.


Gas Starts Flowing At Ghana’s $9/Mscf Sankofa Project

Production of natural gas has started offshore Ghana, from two of the four deep-water subsea wells in the Sankofa field, connected to the Floating Production, Storage and Offloading (FPSO) vessel “John Agyekum Kufuor”.

The gas producing part of the Offshore Cape Three Points (OCTP) Integrated Oil and Gas Project, is scheduled to provide 180Million standard cubic feet per day (MMscf/d) for at least 15 years, “enough to convert to gas 40% of Ghana’s current power generation capacity”, according to a statement by the World Bank.

“After the final steps of commissioning of the offshore facilities, production will gradually flow via a dedicated 60km pipeline to the Onshore Receiving Facility (ORF) in Sanzule, where gas will then be compressed and distributed to Ghana’s national grid”, says ENI, the Italian giant who is the project operator.

The headline price for sale to power generation companies is of $9.8 per Million British Thermal Units ($9.8/MMBtu), or roughly $9.2 per thousand cubic feet ($9.2/Mscf).

The World Bank is heavily involved in the $7.7Billion OCTP project, largely because of this gas component. The bank helped devise a payment mechanism “that ensured all the receipts from the on-sale of the Sankofa gas to the power sector in Ghana flowed to a single designated account from which the private sponsors would be paid in priority for their share of the gas. Should there be any payment shortfall under the Gas Sales Agreement, the sponsors would be able to access an escrow account funded by GNPC with the equivalent of 4.5 months of gas sales ($205Million)”.

“OCTP is the only deep offshore non-associated gas development in Sub-Saharan Africa entirely destined to domestic consumption”, ENI reports. “The project has a strategic relevance: gas from OCTP can help Ghana shift from oil-fueled power generation to a cleaner power source, with financial as well as environmental benefits, and contribute to the Country’s sustainable economic development”.

ENI operates OCTP with 44.44%. Partners include Vitol 35.56% and GNPC 20%.


ENI Tops Up at Libya’s Largest Offshore Gas Field

The first well of the offshore Bahr Essalam Phase 2 project, offshore Libya, has started commercial production of natural gas. “This comes just three years after the final investment decision”, says ENI, the Italian major who is collaborating with the Libyan National Oil Company (NOC) on the project. Two further wells will begin production by the week of July 16, 2018. An additional seven wells will come on-stream by October 2018.

The earlier phase (Phase 1 ) of the project output 600Million standard cubic feet per day (600MMscf/d).

Phase 2 of the project completes the development of what is the largest offshore producing gas field in Libya, increasing production potential by 400MMscf/d. It will be completed between September and October, bringing total field production to 1.1Billion standard cubic feet per day,(1.1Bscf/d).
Bahr Essalam, located about 120 kilometres northwest of Tripoli, contains over Nine Trillion cubic feet (260Billion cubic metres) of natural gas.

The current output is delivered through the Sabratha platform to the Mellitah onshore treatment plant before principally being used to supply the national network.
Chairman of the Presidential Council of Libya and Prime Minister of the Government of the National Accord, Fayez Al-Saraj, attended the opening ceremony and thanked the workers of NOC, ENI and Mellitah Oil & Gas for their efforts in developing the Libyan oil & gas sector.


ENI & Co Step Up Marketing for Moz LNG Offtake

Italian explorer ENI and the US supermajor ExxonMobil say they have ramped up marketing for the Rovuma LNG project, which will produce, liquefy and sell natural gas from the gas fields of the Area 4 block offshore Mozambique.

Senior management representatives of the co-venture parties (ExxonMobil, ENI, CNODC, ENH, Kogas and Galp) met at the just concluded World Gas Conference in Washington, D.C. to affirm marketing progress.

“The key strength of Area 4 is the quality of the co-venture partnership,” said Massimo Mantovani, ENI’s chief gas and LNG marketing and power officer. “Following the FID on Coral South FLNG in 2017 we are working together to develop the remaining gas fields which will feed the Rovuma LNG trains taking full advantage of the expertise of all our co-venture parties.”

“We have made significant progress on marketing and are now in active negotiations on binding sales and purchase agreements for Rovuma LNG with some affiliated buyer entities of the Area 4 co-venturers,” Peter Clarke, president of ExxonMobil Gas and Power Marketing Company, said at the World Gas Conference. “These commitments will help us progress toward a final investment decision, which we expect to reach in 2019.”
The initial phase of the Rovuma LNG project will develop the Mamba reservoirs in Area 4 and help deliver reliable, affordable energy to customers and create long-term economic value for the people of Mozambique and the project’s co-venturers.

ExxonMobil Moçambique Limitada will lead construction and operation of liquefaction trains and related onshore facilities for the Rovuma LNG project, while Eni Rovuma Basin will lead upstream developments and operations. In parallel to the marketing, the co-venturers are also advancing financing activities and working with the government of Mozambique to progress approval of the project.

About Area 4
The Area 4 concession is located offshore of the Cabo Delgado province of northern Mozambique and is operated by Mozambique Rovuma Venture S.p.A., owned by ExxonMobil Development Africa B.V., ENI S.p.A. and CNODC Dutch Cooperatief U.A., which holds a seventy percent interest alongside Galp Energia Rovuma B.V., KG Mozambique Ltd. and Empresa Nacional de Hidrocarbonetos E.P., each of which holds a ten percent interest.


TOTAL Mulls >$1Billion Investment in Petrochemicals in Algeria

TOTAL has signed an agreement with Sonatrach, the Algerian state hydrocarbon company, to launch engineering studies for a petrochemical project in Arzew, in the west of the country.
 
The project includes a propane dehydrogenation (PDH) unit and a polypropylene production unit with an output capacity of 550,000 tons per year. The project represents an investment of around $1.4Billion by the two partners (Sonatrach 51%, TOTAL 49%), who are planning to start the front-end engineering and design (FEED) this summer, subject to approval by the relevant Algerian regulatory authorities.

The facility will valorize propane, produced in large quantities locally, by transforming it into polypropylene, a plastic for which demand is growing strongly. It will supply in priority the local and Mediterranean demand and TOTAL will be responsible for the commercialization of the rest of the production in Europe, where it will leverage its market expertise to the benefit of both partners.  
 
“This project in Algeria illustrates our petrochemical growth strategy which consists of expanding our activities from competitively advantaged feedstock, especially derived from gas, to take advantage of the growing global plastics demand. This polypropylene project complements our other projects announced recently in the United States, in the Middle-East and in Asia, which are primarily focused on polyethylene” commented Patrick Pouyanné, Chairman and Chief Executive Officer of Total. “It is also an opportunity to strengthen our cooperation with Sonatrach, by moving beyond our long-standing exploration and production relationship to invest in the downstream together.”
 
TOTAL in Algeria
 
In 2017, TOTAL produced 15,000 barrels of oil equivalent per day (BOEPD) in Algeria, all of it from the Tin Fouyé Tabankort (TFT) gas and condensate field. The Group currently holds a 35% in interest in TFT.
 
In March 2018, TOTAL started up production from the Timimoun gas field in southwestern Algeria. The Group has a 37.75% interest in the field, which has a production capacity of 5 million cubic meters of gas per day (around 30,000 boe/d). TOTAL also markets lubricants and bitumen in Algeria.
 
Through the Maersk Oil acquisition, which closed on March 8, 2018, TOTAL now holds a 12.25% interest in the El Merk, Hassi Berkine and Ourhoud oil fields, which have a combined production capacity of 400,000BOEPD.
 
In November 2017, TOTAL also announced the acquisition of Engie’s upstream liquefied natural gas (LNG) assets. Once closed, this transaction will add 4.6 million tons per year to the Group’s global LNG portfolio thanks to supply agreements with Sonatrach.

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