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How the Mega Gas Projects Burned Holes in TPDC’s Finances

Servicing of the $1.2Billion (2.409tri/-) debt procured for the construction of gas pipelines and power plants in the country is the major cause of the three consecutive year loss by Tanzania Petroleum Development Corporation (TPDC).

Kapuulya Musomba, acting Managing Director of TPDC, says “the mega investment” made by the government to increase natural gas for electricity generation, after securing the loan from Exim Bank of China supply, is the major reason for the losses.

The fluctuation of the Tanzanian shilling against the US dollar to 2230/- per dollar in 2016 from 1600/- in 2013 is also a huge contributing factor to the increased losses, Musomba wrote in reaction to a Parliamentary report.

The projects consist of a 542 kilometre pipeline from the country’s natural gas fields in Mnazi Bay, Mtwara Region to Dares Salaam, the commercial centre. The line has the  capacity to transport 784 MMscf/d of gas to be used in the production of 3,920 MW of electricity. Also included in the project is the construction of natural gas processing plants at Madimba in Mtwara and SongoSongo Island in Lindi. Two power plants at Kinyerezi I and Kinyerezi II with power generation capacities of 150MW and 240MW, respectively, weill be fired by natural gas.

Musomba’s statement was responding to a Parliamentary Investment Committee (PIC) listing TPDC among the three loss making public institutions in the country.

The mega projects were commissioned in 2015. Musomba said it was impossible to realise profit in a short period of time since project started to operate in 2015. The books recorded $145Million (341Billion/-) loss in the first year of its operations 2015/16,.

This pushed up the loan to $72.5Million (170Billion/-) which is equivalent to 50.4% of the total loss recorded in 2016. The payment of $30.3Million (71.05Billion/-) interest on the loan, representing 21%of the total loss registered in 2016 contributed to the mounting losses.

/- is the symbol of the Tanzanian currency, the Shilling.

 


Three “Gas Monetisation” Companies Still Enjoy Nigeria’s Pioneer Incentive Status

There is no single E&P company on the list of the current beneficiaries of the Pioneer Status Incentive of the Nigerian Investment Promotion Commission (NIPC).

But the oil and gas industry is not entirely excluded.

Three companies, which either use natural gas as feedstock or convert and distribute products of natural gas, are listed among the 21 Beneficiaries of the incentive on the latest report on the NIPC website.

They include the Indorama Eleme Fertiliser, which has purportedly invested ₦360Billion on the facility for which it was granted the incentive. Indorama’s status was approved in April 2017 and it is expected to expire in March 2020. The company is located in Rivers State in the eastern Niger Delta.

PNG Gas Limited, located in Delta State, had its Pioneer Status approved in September 2017, with an August 2020 expiry date. It has purportedly invested ₦13Billion to produce and market Propane. Lagos based Power Gas Delta Innovations Limited is said to be in “gas manufacture and distribution”, according to the NIPC report. It won the Pioneer status as a result of investment worth ₦8.7Billion. The incentive approval was made in March 2018 and the expiry date is February 2021.


Anadarko Takes FID on Mozambican LNG in March 2019

By Toyin Akinosho, Publisher

Anadarko, the large American independent, will take the Final Investment Decision (FID) on its proposed, two train, 12Million Metric Tonnes Per Annum liquefied natural gas (LNG) project, in Mozambique, next month, which is March 2019.

It is official.

Omar Mitha, Chief Executive Officer of the Mozambican state hydrocarbon company ENH, gave the specific date to a correspondent of Africa Oil+Gas Report, in Lagos, Nigeria.

“That’s what we are looking at”, Mitha told us on the side-lines of the West Africa International Petroleum Exhibition and Conference (WAIPEC), held in Lagos, recently.

FID for the Anadarko led project, to monetise over 75Trillion cubic feet of natural gas in the Golf-Atinho fields in the deep-waters of the Indian Ocean, has been long in coming. “Anadarko has gone through a steep learning curve to get here”, Mitha said. The resources were first discovered in February 2010. “They (Anadarko) haven’t done this kind of project before”.

Anadarko, the first company to encounter commercial sized gas accumulations offshore East Africa, has announced four long term Sales and Purchase Agreements with clients from mostly Asia, in the last 15 months. The latest deal, announced February 15, 2019, involves the sale of 1Million Metric Tonnes a year of LNG for a term of 15 years to India’s Bharat Petroleum. The deal gives the project a total of 8.5Million Metric Tonnes of LNG sales a year in signed contracts, lifting the operator over the 8Million Tonne threshold which the company said it wanted to reach before project sanction.

Anadarko leads the LNG project in an acreage named Area 1 with a 26.5% ownership stake. Other owners include ENH with 15%; Japan’s Mitsui Group, 20%; India’s ONGC Videsh, 16%; Bharat, 10% Thailand’s PTT Exploration and Production, 8.5% and Oil India Ltd., 4%.

 


Nigeria Postpones Submission Deadline for Gas Flare Bid

By Akpelu Paul Kelechi, in Abuja

The Nigerian Government has extended the submission date for the first step of the licencing round for uptake of flare gas sites in the country.

The submission deadline for Registration and Submission of Statement of Qualification (SOQ) for the Request for Qualification (RfQ), for the Nigerian Gas Flare Commercialization Programme (NGFCP), was Sunday, January 20, 2019.

That milestone has been extended to Thursday, February 28, 2019, according to Justice O. Derefaka, who is the Programme Manager of the programme (NGFCP).

He added that he would provide further details, (notably about how that shift affects the other milestones).

The other milestones of the NGFCP include the Shortlist of Qualified Applicants, which was to end by March 31, 2019; Issue of Request for Proposal (RFP), which was limited to first quarter of 2019; Submission of Proposals and Selection of Preferred Bidders, both of which were not expected to last beyond the end of September 30, 2019.

Would be bidders have been hoping for postponement of the submission deadline, largely because the first announcement of the licencing round came in during the last six weeks of 2018.

The Nigerian Gas Flare Commercialization Programme is the first auction targeted at  licencing of subsurface hydrocarbon property in 11. Years. It is not a conventional licencing round. It is for uptake of natural gas that is currently being flared in hundreds of sites in the country’s Niger Delta basin.

The government expects licence winners to take over the flare sites, monetize the molecules and boost the micro and macro economy in the process.

“The auction presents a significant opportunity for domestic and international developers alike to participate in the largest market driven flare gas monetization program undertaken on this scale globally”, Mr.Derefaka had declared in earlier statements.

“Bidders will have flexibility of choosing which flare site(s) to bid for, determine the gas price, and their end – use market or gas product, as well as the technology to be deployed. Interested parties will need to demonstrate project development experience and proposed proven technology which we expect to be in commercial application. Additionally, parties will need to demonstrate technical and commercial capacity. Successful bidders will be granted title to the flare gas through a gas sales/supply agreement with the Federal Government of Nigeria.

An interested party (applicant) is not required to be a Nigerian entity in order to submit its SOQ. Following a successful bid, each Preferred Bidder will be required to act through or establish a Nigerian corporate entity, which will enter into the necessary Commercial Agreements.

Applicants may come from a variety of backgrounds including but not limited to:

  • Communities
  • Technology providers
  • project developers
  • resource and energy companies
  • industrial companies
  • infrastructure companies
  • financial investors/lenders

It is important to note that ONLY registered parties on the Programme web portal can participate in the NGFCP bidding process.

See the link below for Registration/Expression of Interest (EoI) on the NGFCP web portal:

NGFCP Registration/Expression of Interest (EoI)

It is also important to note that the interface by those interested in the Programme with the NGFCP will be through the portal ONLY, Derfaka says.

“ALL registered parties are notified to download the Request for Qualifications (RfQ), to submit their statements of qualification (SOQs) for participation on the programme as well as download the Programme Information Memorandum (PIM) from our website. Parties will only have access to relevant programme documents from the NGFCP Portal using its Log on details.
For any inquiries, please refer to the Frequently Asked Questions (FAQs) section on the NGFCP portal or kindly send an e-mail to us via: info@ngfcp.gov.ng”, declares the statement from the Nigerian Ministry of Petroleum, which is also coordinated by the contry’s industry regulator: the Department of Petroleum Resources (DPR).

 


PENSPEN Wins Contract To Execute FEED For Nigeria-Morocco Pipeline

By Fred Akanni, in Djibouti

Penspen has announced that it has been awarded a contract by The Office National des Hydrocarbures et des Mines (ONHYM) and the Nigerian National Petroleum Corporation (NNPC) to execute the First Phase of the FEED (FEED Phase I) of approximately 5,700 km gas pipeline proposed to run from Nigeria to Morocco.

The award is a follow-up on the feasibility study completed by Penspen in July 2018., the company says.

The London headquartered firm claims it is a leading global provider of engineering and project management services to the energy industry, but it doesn’t have a single office in the entire African continent.

Its announcement comes at a time when there’s still a lot of conversation around the value of the project and questions around why the Nigeria-Algeria pipeline idea was scuppered.

Penspen says that the FEED Phase I consists of a detailed review of the feasibility study results and in-depth evaluation of the gas demand and supply study. Further design of the pipeline system, in addition to the execution of an Environmental and Social Impact Assessment (ESIA), will then be carried out with the aim of optimising the proposed pipeline route and project economics.

“Penspen will also support the client in marketing and promoting the pipeline project to potential stakeholders showcasing the wider benefits of its development”, the company says..

“At the end of the study, key detailed outcomes will help the client prepare for the second phase of the FEED (FEED Phase II) which is expected to lead to a Final Investment Decision (FID).

“Penspen will be utilising the skills and capabilities of Dar Al-Handasah, Crestech and Control Risk to conduct a number of special studies required for the FEED services, environmental impact assessment, Nigeria gas supply study and risk study respectively”.

 

 


Offtakers Secured For 15MMTPA LNG on Mozambique’s Mamba Fields

By Toyin Akinosho

FID expected in 2019. First Gas Likely By 2024

Italian explorer ENI and US major ExxonMobil, say they have, along with co-venturers, secured sufficient offtake commitments “from affiliated buyers of the co-venture parties to move towards a final investment decision for the Rovuma LNG Project in Mozambique’s Area 4”
This is a “key milestone enabling the participants to rapidly move toward a final investment decision in 2019 on the first phase of the Rovuma LNG project. Area 4”, ENI says in a release. Participants are ExxonMobil, ENI, the China National Petroleum Corporation, Empresa Nacional de Hidrocarbonetos, Kogas and Galp.

“Those commitments are subject to the conclusion of fully-termed agreements, which will be finalized and initialed in the next weeks, with the approval of the Government of Mozambique”, ENI explains.

“The Rovuma LNG marketing team has worked at an accelerated pace to reach this important milestone, a tremendous achievement made possible by the strength of the Area 4 co-venture parties and the support of the Government of Mozambique,” adds Peter Clarke, president of ExxonMobil Gas and Power Marketing Company.

In July 2018, Mozambique Rovuma Venture submitted the development plan to the Government of Mozambique for the first phase of the Rovuma LNG project, which will produce, liquefy and market natural gas from the Mamba fields located in the Area 4 block offshore the Rovuma Basin in Mozambique. ExxonMobil will lead construction and operation of natural gas liquefaction and related facilities on behalf of the Area 4 joint venture,

while ENIwill lead the construction and operation of the upstream facilities.
The development plan for the first phase of the Rovuma LNG project specifies the proposed design and construction of two liquefied natural gas trains, which will each produce 7.6Million tons of LNG per year. Mozambique Rovuma Venture is currently holding productive discussions with the Mozambican Government on development plan details.

Massimo Mantovani, ENI chief gas and LNG marketing and power officer, said: “these commitments are an important step forward for the Rovuma LNG project and provide a solid foundation for securing project financing. This achievement highlights the strength of our partnership and commitment to developing Mozambique’s natural resources.”


BP Sanctions the Third Floating LNG Plant off Africa

By Toyin Akinosho, Publisher

BP has announced the agreement, with its partners, for Final Investment Decision (FID) for Phase 1 of a Floating LNG project in two fields straddling Senegal and Mauritania.

It will be the third floating LNG plant offshore Africa, coming after the Perenco operated  2.4MMTPA Hilli Episeyo FLNG, located  on the Atlantic offshore Cameroon, which came on stream last June and the ENI operated 3.3MMTPA Coral South FLNG, to be sited on the Indian Ocean offshore Mozambique. Construction of the Coral South Vessel has begun.

The FID for BP operated Greater Tortue Ahmeyim development was made following agreement between the Mauritanian and Senegalese governments and partners BP, Kosmos Energy and National Oil Companies Petrosen and SMHPM.

The project will produce gas from an ultra-deepwater subsea system and mid-water floating production, storage and offloading (FPSO) vessel, which will process the gas, removing heavier hydrocarbon components. The gas will then be transferred to a floating liquefied natural gas (FLNG) facility at an innovative nearshore hub located on the Mauritania and Senegal maritime border. The FLNG facility is designed to provide circa 2.5Million tonnes of LNG per annum on average, with the total gas resources in the field estimated to be around 15Trillion cubic feet. The project, the first major gas project to reach FID in the basin, is planned to provide LNG for global export as well as making gas available for domestic use in both Mauritania and Senegal.

The parties will continue to finalise agreements and obtain final regulatory and contract approvals, following which Phase 1 of the development will move into a detailed design and construction phase, with award of engineering, procurement, construction and installation (EPCI) contracts.  Project execution activities are expected to commence in 1Q 2019. First gas for the project is expected in 2022. Following a competitive process involving all partners, BP Gas Marketing has been selected as the sole buyer for the investor partners’ LNG offtake for Tortue Phase 1.

 

 

 


Nestoil Delay Pushes Completion of OB3 Over into 2019

Delays by one of the two contractors constructing the OB3 Pipeline has ensured that the crucial line will not be completed in 2018.

The Oben –Obiafu-Obrikom (OB3) pipeline is Nigeria’s largest gas transmission pipeline and its completion will create the first semblance of a gas grid in the country.

It will ferry gas from the huge reservoirs in Rivers State, in eastern Nigeria, to the industrial markets in the West of the country.

The pipeline, being constructed by the Nigerian government, will have the capacity to pump Two Billion standard cubic feet of gas a day.

The EPC contract was awarded by the Nigerian cabinet of Ministers (Federal Executive Council) in the third quarter of 2012, to Messrs Nestoil Limited (Lot A) and Oilserv Limited (Lot B).

Lot A involves the EPC of 64.15km x 48” Class 600 gas pipeline and Custody Transfer Metering Station at Obiafu/Obrikom in Rivers State. Lot B involves the EPC of 47.13km x 48” & 18km x 36” Intermediate Pigging Station and Gas Treatment Plant at Oben, Edo State.

Contractual project completion date for both Lots is 31st July, 2018.

But whereas Lot B (OILSERV) is mechanically finished, Lot A (Nestoil) is stagnant. There are contractor issues with Lot A and the project is stalemated.

 


DPR Awaits Abuja’s Signal For Bid Round of Flared Gas Sites

The Department of Petroleum Resources, Nigeria’s regulatory agency for the petroleum industry,  is awaiting signal of the President and Minister of State in Abuja to start the process of conducting a bid round of some of the country’s 178 flare gas sites.

It’s the first major implementation of the new legal framework on flared gas reduction, signed by President Buhari in July and gazetted in early September 2018.

The Flare Gas Reduction (Prevention of Waste and Pollution) Regulation 2018, weighs strongly in favour of “The Qualified Applicant” for Flared Gas. That so called Qualified Applicant is a company who wins in a bid round of flare gas sites.

The thinking at the Ministry of Petroleum Resources is that there are many companies out there who want to monetize Nigerian gas, but lack access to the molecules, whereas a lot of operators are wasting the value of natural gas assets by flaring.

 


The Southern Gas Market Is Still Far In The Future

By Toyin Akinosho

South Africa’s updated Integrated Resource Plan IRP, released late August, contains provisions for introduction of natural gas to produce 11,930MW of electricity in the country by 2029.

That’s around four times the allocation of gas to power in the energy mix provided in the last incarnation of the IRP, gazetted in 2011.

This “allocation” of natural gas fuelled energy, expected to provide 15.7% of installed capacity in 8-12 years’ time (2026-2029), is the most forceful, formal endorsement of natural gas investment into Africa’s most industrialised economy. The IRP calls for the gas generated electricity to be used in conjunction with 7,958 MW of solar PV and 11,442 MW of wind PV energy (10.5%  and 15.1% of installed generation capacity respectively) by 2030. There are over 4,000MW of these renewables already connected into the South African energy grid. The rest are planned to be rolled out annually, with a gap around 2022 to 2025.

So, whenever natural gas is used in the South African electricity the thermal plants  will be run in such a way as to be deployed and withdrawn from the grid at relatively short notice, according to the IRP, to balance wind and solar energy, the availability of which is dependent on weather conditions and time of day.

The planned new gas and renewable energy are coming to replace some of the existing coal fleet, which are going to be progressively decommissioned.

South Africa’s total electricity generation in the next decade is not expected to be more than incrementally higher than the current 35,000MW operated capacity.

It’s important to note that this is just a plan, whose implementation depends on the growth trajectory of the economy and the accessibility to the resource itself.

South Africa’s economy has tanked. The country is not in demand of energy as much as it was only five years ago.

To generate 11,900MW requires 3 Billion standard cubic feet of gas a day. There is also no clear line of sight to where that volume of hydrocarbon will come from. South Africa’s technical and bureaucratic elite often talk as if the vast reserves of gas in Mozambique are their country’s for the asking. The most widely canvassed option of accessing the molecules is to import Liquefied Natural Gas from the North Eastern neighbour. But that is expected to happen after a South African bid process for Gas to Power IPP, in which the winner/s  is/are expected to bring in the gas through any of two designated ports in the country and then pipe to turbines. Neither of the two ports, Coega in the Eastern Cape province and Richards Bay, in Kwazulu Natal, currently has infrastructure for receiving natural gas. The LNG import can only be accessed through a deal with either ENI or Anadarko, who, in developing the three export LNG projects in Mozambique, are currently talking to a number of offtakers, none of which is likely having South Africa on its radar.

Another option is to import the gas through a pipeline, no less than 2,000km in length, but what most commentators fail to consider is that none of the LNG developers in Mozambique today is licenced to supply gas into a pipeline. Such supply will not be available until Mozambican government concessions it and that’s unlikely before 2030.

Complete the article in this link

 

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