All posts by Fred Akannni


A Mercenary in The Niger Delta

In late July, 2012, The Guardian of Lagos published a story regarding concerns about the acquisition of 45% participating interest in Nigeria’s Oil Mining Lease(OML) 30, a producing acreage by Shoreline Natural Resources Limited. The sellers are Shell, TOTAL and Eni(known as Agip in Nigeria).

The story essentially expressed misgivings that Heritage Oil, the British company which is a 45% shareholder  in Shoreline Natural Resources Limited, is run by Tony Buckingham, a former mercenary who is linked to the planners of the abortive coup attempt in Equatorial Guinea in 2004 and was part of a crack military unit named Executive Outcomes, described by Britain’s leading media houses as “not simply guns for hire…but the advance guard for major business interests engaged in a latter day scramble for the mineral wealth of Africa, including oil, gold and diamond mining ventures…and offshore financial  management services”.

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A Firmer Grip On Domestic Gas

Quantity of Natural Gas Vehicles Sold in Egypt

Investments are flowing into pipelines, gas processing facilities and gas-for-factories all over the continent

The headline news favour big ticket projects; Five million metric tonnes  per year LNG trains aimed at the Chinese market. Long trans-border gas pipelines lain under the Mediterranean Sea, ferrying North African gas to Europe.

But the projects that will kickstart Africa’s industrialization are less likely to feature humongous sized vessels transporting super-cooled natural gas from offshore  Mozambique to China, than several, intra country pipelines taking methane from hydrocarbon rich villages to power plants, factories and homes in the continent’s rapidly growing cities.

These projects are starting off all over the continent, more readily than they used to. After Ghana insisted to World Bank officials that it would not export its gas to pay its loans, the country took a couple of years to get a grip on developing the fuel for home use. Now the project is going forward.
The concept: A 36km shallow water, dense phase gas pipeline will take one hundred and twenty million standard cubic feet of gas per day (120MMscf/d) of gas from the Jubilee Field production facility to a new, 150MMscf/d central processing facility at Atuabo (in Ghana’s Western region) to produce lean gas, propane, butane LPG and condensate. From here, a 120km onshore gas line will deliver the lean gas to a 550MW thermal power station at Aboadze, near Takoradi, while another 75km onshore line will transport more gas to the mining centre of Prestea. The plant at Atuabo is planned to be Ghana’s first gas hub, as gas from other discoveries, including those at Sankofa, Dzata, Tweneboa, North and South Tano fields, will be piped to Atuabo for processing. The cost is $850MM. Opportunities will open up to secondary distributors of gas, as well as industries that can take advantage of the fuel.

Tanzania: State sponsors a big infrastructure leap.
In July 2012, Tanzania signed a contract with three Chinese companies -China Petroleum Technology Development Corporation, Petroleum Pipeline Engineering Bureau and China Petroleum Pipeline Engineering Corporation to construct an 898 kilometre pipeline from Mtwara to Dar es Salaam and then round the  bay(offshore). The project will cost $1.2 billion (or 1.86 trillion shillings). Anticipated project completion date is early to mid- 2014. The onshore segment involves a 36-inch line for 487 kilometres and a 24-inch line for 24 kilometres, connecting the mainland to the gas source on Somanga Fungu, a small island in the Indian Ocean. Officials say that the infrastructure will drastically reduce the cost of electricity generation from $0.42 (663 shillings) per to $0.02, almost 32 shillings.

Mozambique, Big and small:
While everyone focuses on Anadarko’s proposed two train LNG project off the coast of Mozambique, a number of gas projects are taking off in this South east African country. ENH, the state hydrocarbon company, has initialed an agreement with South African synfuels giant Sasol, that will lead to having natural gas piped to homes in Maputo city and the neighbouring district of Marracuene.
Since 2004, Sasol has commissioned and operated both a gas processing facility located in Temane in southern Mozambique, and a pipeline that takes the gas from the Pande and Temane fields to Sasol’s chemical plants in the South African city of Secunda. A branch of the pipeline goes to Matola where it supplies gas to several Mozambican industries, including the Mozal aluminium smelter. With the April 2012 agreement, Mozambican homes and smaller enterprises will begin to benefit.

Some 100 institutions, including hospitals, hotels and restaurants will be the first beneficiaries of the pipeline. The programme is expected to capture all of Maputo and Marracuene within ten years.

Sasol promises to make available to ENH, for domestic consumption, some 5.5Billion cubic feet of gas a year for a period of 20 years in an initial phase. The gas pipeline will run from Matola to Marracuene over a distance of 30 kilometres. It’s not clear how much each residence connected to the line will pay, but ENH says the $40MM project, funded by South Korea, will be implemented on the basis of social funding and subsidized, so that takers will be connected at a much lower price than the cost reflective price of $1,200.00.

Cameroon: small is beautiful.
One project to watch is the Victoria Oil and Gas(VOG) operated Logbagba project in Douala, the main commercial city of Cameroon. It’s a very small project, with the initial phase completed in November 2011, delivering 0.7MMscf/d of gas to factories in the city. The project is on course to raise capacity to 8MMscf/d. The delivery helps companies to substitute heavy fuel oil and waste oil used in raising heat with natural gas, helps in power generation at customer sites and is used in centralized near site power generation with local distribution, in compliance with current electricity legislation and regulations, on industrial estates and at the Douala port. Essentially, what VOG is doing is a minuscule version of what Oando is doing in Lagos; delivering gas to factories, but Cameroon is a much smaller economy than Lagos and the fact that this is happening at all is key.

Nigeria’s is the most ambitious.
For all the debate about the pace, the efficiency, and the operating environment, the Nigerian state-led infrastructure programme for domestic gas is the most ambitious on the continent. True, the cost is not comparable with the outlays that Egypt and South Africa, the biggest economies in the neighbourhood, have invested over several years on keeping the lights on. But among the smaller economies, Nigeria is a local champion of sorts. Spending $2Billion at a go on a number of gas pipelines(See map) to connect gas wells to power plants, while a number of power plants are being built all over the Niger Delta basin, is noteworthy.

Egypt keeps the lead.
Egypt has powered its economy with natural gas, providing the impetus for the near doubling of consumption over the last decade, to reach 1.6 Trillion cubic feet (Tcf) in 2010. Electricity consumption increased by an average of 7 percent per annum in the past 10 years, surging from nearly 61 billion kWh in 2000 to 116 billion kWh in 2009. In terms of electricity generation, conventional thermal electricity, which derives from traditional fossil fuels, accounts for nearly 90 percent of Egypt’s electricity generation, with the remainder mainly from hydroelectricity. The increased use of compressed natural gas as a fuel for motor vehicles and the conversion of some thermal power plant feedstock to gas have, to an extent, helped to ease the consumption of petroleum products.

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