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Savannah Inks Revised Gas Sales Agreement with Lafarge

New deal comes with a price of $7.5 per thousand cubic feet of gas

Savannah’s Accugas subsidiary has entered into a revised Gas Sales Agreement GSA with Lafarge Africa for the supply of gas to its Mfamosing cement plant in Cross River State, Nigeria.

The company says the new deal “establishes a more sustainable long-term contractual position for the benefit of both parties”.

The revised GSA sees the contract term with Lafarge extended for a further five years to January 2037, giving a remaining contract life of 17 years.  The new agreement also allows for an increase in the gas sales price from 2027, with additional US-Consumer Price Index indexation from 1 January 2029.

The revised GSA has a reduction in the daily contracted quantity (DCQ) of gas from 38.7 MMscf/d to 24.2 MMscf/d. This reduction in the DCQ will allow Accugas to release approximately 12 MMscf/d of currently reserved gas processing capacity at its Central Processing Facility (CPF), enabling Accugas to enter into additional long-term GSAs for these volumes, which will increase the business’ future revenues and cashflow potential.

To compensate Accugas for this reduction in DCQ, the revised GSA includes an advance payment of $20Million and a prepayment structure over the period to 2027, which effectively results in a gas price of $7.50/Mscf on take-or-pay volumes during this period.  “This revised structure also allows Lafarge to utilise its accumulated make-up gas balance of approximately $58Million, whilst we have preserved the capacity to supply higher volumes when these are required by Lafarge”, Savannah says in a statement. “Lafarge’s commitments under the revised GSA will continue to be guaranteed by an international investment grade bank guarantee.

“Overall, the revised terms are expected to have a cumulative positive impact on Accugas’ cash flows over the short and medium term. Following the agreement, Accugas’ aggregate maintenance-adjusted take or pay volume will reduce from 141.4 MMscf/d to 131.8 MMscf/d.


No Oil, Only Gas, in the Future of Sasol

By Fleetwood Grobler Sasol’s President and Chief Executive Officer

 

 

 

 

 

 

 

Future Sasol will comprise two market-focused businesses, Chemicals and Energy.

A key decision as a result of this is the discontinuation of all oil growth activities in West Africa and

resizing our upstream portfolio to focus on gas.

The revision of our strategy aims to have a greater focus on value realization for all stakeholders, business sustainability and enhanced cash generation. It acknowledges the need to streamline what was

previously a complex and wide portfolio.

The Chemicals Business will transform our portfolio towards specialty chemicals in which we enjoy differentiated capabilities and strong market positions that can be expanded over time. We will continue to focus on our commodity chemicals portfolio, however this will diminish over time as we focus more on specialty chemicals.

The Energy Business comprises the Southern African value chain and associated assets and will be positioned for higher cash generation through improved margins, cost efficiency and divesting of assets with low returns. This business will also pursue Greenhouse Gas (GHG) reduction through a focus on gas as a key complementary feedstock and renewables as a secondary energy source. These will be critical enablers to achieve our 2030 GHG reduction target and our longer-term sustainability aspirations.

These two businesses will be fully accountable for profit and loss, management of resources and capabilities. A lean corporate centre will enable the businesses by fostering synergies and integrating activities, setting strategic boundaries and allocating capital. These developments will support improved financial returns.

In tandem, resetting our strategy necessitated a revised operating model, which will become effective on 1 November 2020. The top leadership structure has already been realigned and optimised to enable this new model.

Our intent with Future Sasol is to deliver a Group that is streamlined, focused and positioned to succeed. It is therefore a matter of much regret that not all our employees will be able to make the journey to the new Sasol. In this, unfortunately, we have no choice. We have to put the sustainability of Sasol first, and the steps we are following are taken with only this in mind.

Future Sasol will not only look different, it will behave differently, requiring a change in culture and ways of working, and will be more open to partnering arrangements. It will remain heavily committed to South Africa and plans to work closely with the government to align with the country’s energy and economic goals.

-Sasolburg, August 21, 2020

Published for the benefit of paying subscribers in the August 2020 edition of Africa Oil+Gas Report


Tanzania’s Natural Gas Supply Sees A Spike from Mnazi Bay

By Toyin Akinosho

Wentworth Resources reported a surge in production of natural gas in Mnazi Bay, one of two main gas processing facilities in Tanzania, in November 2020.

Increased demand had prompted an 18% increase in Mnazi Bay production, to 68.8Million standard cubic feet per day (MMscf/d) in Q3 2020, compared with 58.3 MMscf/d (gross) for H1 2020.

Lifting of COVID-19 restrictions have helped the boost, the company reports.

Indeed, production volumes have also risen during Q4 2020. In November 2020, the volume averaged 74MMscf/d.

Wentworth also reported low operational cost of production of $1.72/Mscf (2019: $1.88/Mscf)

The Mnazi Bay facility has the capacity to supply volumes of 100 MMscf/d (gross).

Production from the Songo Songo Gas project, the country’s older processing plant, trended in the same upward trajectory as that from the Mnazi Bay during Q3 2020.

Songo Songo is being operated by Orca Energy.

Total output was 92.5MMscf/d at Songo Songo, including: (1) gas supplied directly to Industries (13.4 MMscf/d),; (2) to the Power Sector (47.5MMscf/d) and (3)as Protected Gas (31.6MMscfd). Overall, the output in Q3 2020 increased by 19% compared with the 77.8MMscf/d supplied at the Songo Songo plant in Q2 20

Fuller story of Tanzania’s overall natural gas market in 2020 is published in the January 2021 edition of Africa Oil+Gas Report, which is available to paying subscribers of the monthly journal. Also look out for our STEPPING ON THE GAS ANNUAL.

 


UNESCO inks Cooperation Agreement with Gas Exporters

United Nations Educational, Scientific and Cultural Organisation (UNESCO) and the Gas Exporting Countries Forum (GECF) have signed a Memorandum of Understanding (MoU) to bring the benefits of collaboration to the world at large.

Shamila Nair-Bedouelle, the Assistant Director-General for Natural Sciences at UNESCO and Yury Sentyurin, the Secretary General of the 20-member coalition of the leading gas exporting countries of the world, signed the agreement, which “will serve as a gateway of opportunities between the two entities in the areas of struggle against climate change, natural resources management, and positive developments across the globe, particularly in the Africa region”, according to a GECF release.

“The partnership will further allow the sides to focus on capacity building, technical support, and shared expertise”, the statement adds.

The GECF comprises of 20 member countries, of which six (6), or 30%, are African countries, including Algeria, Angola, Egypt, Equatorial Guinea, Libya and Nigeria. Other members include Bolivia, Iran, Qatar, Russia, Trinidad and Tobago, Venezuela, Azerbaijan, Iraq, Kazakhstan, Malaysia, Norway, Oman, Peru, and the United Arab Emirates. The GECF member countries  jointly control 71% of the proven gas reserves, 45% of its marketed production, 53% of pipeline, and 60% of LNG exports across the globe. It is headquartered in Doha, Qatar.

The MoU has been signed against a unique backdrop. The world’s overall energy demand is assumed to grow along with the global economy and population growth. The GECF experts forecast that in order to fulfil this increased demand, the world will likely see a symbiosis of conventional and renewable energies to solve climate issues and to meet the needs of nations for affordable energy. Natural gas is expected to shoulder the bulk of this demand on the back of its attributes of being the most environmentally friendly, affordable, flexible, and abundant fossil fuel

Natural gas is projected to become the largest source of primary energy by 2050, from currently 23% to 28%, according to the latest data available from the GECF Global Gas Outlook 2050. Along the way, natural gas is expected to play a vital role in decarbonisation options including natural gas-based hydrogen, also known as the blue hydrogen, with carbon capture, utilisation and storage (CCUS) technologies.

“The mobilisation of science for the benefit of society and the planet is now more urgent than ever. We need science and technology, we need access to science and technology, we need to be able to reduce the knowledge gap between different countries across the world, and therefore this partnership with the GECF is really a beacon of hope and light,” said Nair-Bedouelle, following the virtual signing ceremony. “The GECF serves as a platform for the science policy interface, underpinning the importance of the exchange of scientific knowledge, experience, and dissemination of information through research and production of global outlooks and statistical bulletins”, she explained, adding that UNESCO is “confident that this partnership will further harness the potential of science and technological cooperation to address global challenges, through advocacy and awareness raising at all levels of society and economic sectors towards achieving the sustainable goals of the 2030 Agenda and beyond.”

Scientifically-grounded data and insights are championed at the GECF, whose Secretary General emphasised that technology is key to the envisaged energy transition and climate action such as greenhouse gasses (GHGs) emissions mitigation. “Education and science-oriented exercises play a great role in environmental protection with a view to raise awareness and cultivate a “culture of energy responsible behaviour” or “energy scholarship,” Mr. Sentyurin noted. “The GECF is developing technologies, including ones in relation to reduction of GHGs emissions through the GECF Gas Research Institute, recently established in Algeria, and fully dedicated to discovering new technologies and innovations to achieve the ambitious sustainable development goals in front of us,” the GECF Secretary General added.

“The GECF’s ambition to steward the gas industry into playing a greater role in environmental protection manifests in our Environmental Knowledge and Solutions initiative. This 12-point agenda focuses on many aspects of our activities,” Sentyurin declared, while referring to the 2019 Malabo Declaration adopted by the GECF Heads of State and Government, which calls on the Forum to use natural gas as the core source of energy in the development programmes and climate change policies of developing countries, such as in Africa, to overcome energy poverty and to mitigate CO2 emissions.

As an observer organisation to the UNFCCC (UN Framework Convention on Climate Change), the GECF actively participates in the conference of parties, with the most recent statements made at COP24 and COP25. The Forum is also a regular contributor to the discussions of the UN Economic Commission for Europe (UNECE) Group of Experts on Gas, where it analyses natural gas’ leading role in attaining the 2030 Agenda for Sustainable Development.

“This is complemented by our rapidly growing relationships with the G20, BRICS, and others in the spirit of joint action as regards to humanity’s shared mission of sustainable development,” Sentyurin concluded.

 

 

 

 


Accugas Is One of the Top Four  Nigerian Domestic Gas Suppliers

With 113.5Millon standard cubic feet per day (113.5MMscf/d) averaged in 1H 2020, Accugas Limited has indicated itself as one of the top four natural gas suppliers to the Nigerian economy. The company is a subsidiary of the British headquartered Savannah Petroleum, which bought over the assets of Seven Energy in Nigeria. Accugas’ main hydrocarbon property is the Uquo gas field in Oil Mining Lease (OML) 13 onshore eastern Niger Delta basin.

Accugas’ competitors are Chevron. NDWestern and Seplat, the country’s biggest suppliers of natural gas to the domestic market. But unlike Accugas, all of them are in joint venture with either the Nigerian National Petroleum Corporation or its operating subsidiary, the NPDC. Between January and June 2020, the average gross natural gas output of these three JVs ranged from 222 to 320MMscf/d. This means that, on an equity basis, the output of Chevron, Seplat and NDWestern ranged between 99 and 144MMscf/d. By comparison Accugas’ 113.5MMscf/d average, in that period, is competitive.

The company increased its average gross daily natural gas production from the Uquo gas field  by  22.4% compared to the same period last year, from 92.7 MMscf/d (15.4 KBOEPD) to 113.5 MMscf/d (18.9 KBOEPD).

“In H1 2020, Accugas increased gas supply to the Nigeria power sector by 35% versus Q4 2019. This compares to wider industry performance which saw the gas shortage to supply the Nigerian power grid increasing by 33% versus Q4 2019”, Savanah Petroleum says in a statement.

The company achieved an all-time Nigerian Assets gas production record of 177 MMscf/d on 30 May 2020. While Accugas’ customers achieved an all-time record peak contribution of 11.5% of Nigeria’s electricity generation or 486MW on 23 May 2020, with the contributed electricity being exclusively generated from Accugas sales gas.

On 31 January 2020, Accugas entered into the first new gas sales agreement for the business in over five years with First Independent Power Limited, an affiliate company of the Sahara Group, for the provision of gas to the FIPL Afam power plant. Accugas is in the process of working with FIPL to validate the third-party infrastructure required to enable the commencement of gas sales.

In June 2020, Accugas signed a term sheet with a significant new industrial gas sales customer, a subsidiary of a well-respected international company, for an initial quantity of up to 5 MMscfpd of gas for an initial five-year period.

 

 


Moza’s Floating LNG Facility Nears Completion

By Fred Akanni

Construction of the Coral-Sul FLNG facility, Mozambique’s first Liquefied Natural Gas facility is almost completed. The floating plant will sail-away to the south east African country in 2021 to begin natural gas extraction in the vast offshore Rovuma Basin.

The lifting and installation of the last of the 13 topside modules, “configuring the entire gas treatment and liquefaction plant”, was announced by ENI, the Italian energy company which will operate the facility.

With this milestone, first gas from Coral-Sul FLNG is on course for 2022. “The massive 70 thousand tons topside was lifted onto the hull one module at a time and is now complete. However, construction continues with integration and commissioning activities” declares Roberto Dall’Omo, ENI’s General Manager on the Rovuma Basin project.

ENI discovered the Coral field in Area 4 licence Mozambique in 2012, a year after it encountered the Mamba field in the same basin: Rovuma. It estimates 16Trillion cubic feet estimated recoverable reserves of gas in the former.

The Coral Sul FLNG (meaning Coral South) is one of two projects on the field; farther down the line, the company expects to also develop the reserves in the north of the field under a project christened Coral North. ENI’s partners in Area 4 include ExxonMobil and CNP), Galp, KOGAS and the Mozambican state hydrocarbon company Empresa Nacional de Hidrocarbonetos (ENH) E.P.

These same partners are also involved in another project: the 15MMTPA Rovuma LNG facility, a much bigger, onshore plant which will be operated by ExxonMobil. The Final Investment Decision for that project has stalled.

ENI claims that the Coral-Sul FLNG, with a capacity of 3.4Million tons of liquefied gas per year (MMTPA) is the world’s first newly-built deepwater floating liquefaction plant.

It is based on six ultra-deepwater wells in the Coral Field, at a water depth of around 2,000 metres, feeding via a full flexible system the Coral-Sul FLNG.

 

 


Opportunities Outweigh Cost in Moza’s Gas Development

By Florival Mucave

 

 

 

 

 

 

 

For far too long, descriptions of Mozambique have contained some variation of the following: Mozambique one of the poorest Least Developed Countries in the world faces endemic droughts, floods and widespread poverty.

But we’re closer than ever now to changing that narrative, to being able to say: By strategically managing its vast natural gas resources, monetizing them, and harnessing them to industrialize the country and develop the private sector across the country, Mozambique is ushering in a new era of widespread economic growth and stability.

Unfortunately, not everyone agrees with this vision. A number of environmental organizations argue that the benefits of natural gas production in Mozambique are negligible and not worth the environmental costs.

Last month, NJ Ayuk, Executive Chairman and CEO of the African Energy Chamber, made a case for Mozambique developing its natural gas resources to build its economy. He criticized some environmental groups—UK-based Friends of the Earth in particular — for attempting to interfere with the UK government’s $1 billion funding commitment to Total’s Mozambique Liquified Natural Gas (LNG) Project. (Export credit agency UK Export Finance, had agreed to contribute funding because of the project’s potential to transform Mozambique’s budget and create jobs in the UK.)

Shortly after Ayuk released his piece, journalist Ilham Rawoot, who works for Friends of the Earth Mozambique (Justica Ambiental) and is the coordinator of the organization’s No to Gas! campaign, responded with an equally passionate opinion piece opposing his stance. She took issue with Mr. Ayuk’s commentary on environmentalists’ interference and his views on the potential benefits of LNG projects, asserting that Mozambique would be better off without natural gas production or LNG projects.

I respect Ms. Rawoot’s right to express her views on any matter.

I only wish that she, and others who are intent on saying “no to gas” in Mozambique, could start by making a thorough analysis on the pros and cons of Mozambique developing its vast natural gas reserves. The spillover and multiplyer effects in terms of socio-economic development, from training and capacity building, employment, Government revenue, industrialization through domestic gas utilization and energy security. Natural gas production truly represents an opportunity for Mozambicans, and there are solid reasons to believe that Mozambique can take the steps necessary to reap significant benefits from the three LNG projects currently being developed here: the TOTAL led Mozambique LNG project, valued at $23Billion; the ExxonMobil-led Rovuma project valued at $23.9Billion; and the $4.7Billion Coral Floating LNG project. But not only that, I’ve witnessed the positive impact of natural gas industries in other jurisdictions, from Trinidad and Tobago, Qatar, Nigeria, Australia, Norway and the United States of America. These are some of the reasons I’m confident when I say Mozambicans can shift our country’s trajectory for the better: We can transform our reality from poverty despite our resources to prosperity because of them.

We Need This Opportunity

From my perspective, we should welcome Mozambique’s natural gas industry and LNG projects, more importantly because there is empirical evidence demonstrating that in Mozambique, the tangible benefits resulting from LNG projects, outweigh by far any negative impact . Currently, economic opportunities in Mozambique are at a minimum, and natural gas production has the potential to simultaneously meet multiple pressing needs: job creation, capacity building, economic diversification, access to power and more importantly, poverty alleviation.

In order to have a sustainable economic development, through industrialization, Mozambique needs to increase access to power. The Mozambican Petroleum Law 21/2014, states that” Petroleum resources are assets whose proper exploitation can contribute significantly to national development”. This position is also echoed in the Mozambican Gas Masterplan, which suggests that the Government of Mozambique should develop natural resources in a manner that maximizes benefits to Mozambique’s society, in order to improve the quality of life of the people of Mozambique, while minimizing adverse social and environmental impacts.

So many of our struggles in Mozambique are rooted in our lack of reliable electricity: Only 29% of our population has access to power. In order to tackle the limited access to power by Mozambicans, the Petroleum Law 21/2014, incorporates a clause on domestic gas, according to which, 25 % of the natural gas produced in Mozambique must be used domestically. As a result of domestic gas obligations we are starting to see sizeable new investments in gas to power projects in Mozambique, such as the Ressano Garcia CTRG Project, the Kuvaninga project, the upcoming Temane Regional Electricity Project, which will include a 400-megawatt gas-fired power plant and the planned 250-megawatt electricity plant in the Nacala district that will be fueled by gas from the Rovuma LNG project.

Keep the Long Game in Mind

In her opinion piece, Ms. Rawoot states that few of the construction jobs for the TOTAL operated LNG plant have gone to locals, and she’s right. But to be fair, the LNG industry in Mozambique is in its infancy and we don’t yet have the trained labour force capable of participating in the oil & gas industry. As much as we would love to have a 70% majority of Mozambicans building everything, we still need international companies with the necessary skills to get the work done on time and on budget. Training is underway, but the experience and technical know-how are not there yet. However, that doesn’t mean we should kill the projects. We have to push forward, and at the same time, work on building local content laws that promote the inclusive participation of Mozambicans in the oil & gas industry. I hope we’ll see the western environmental community supporting these efforts. They can be a powerful and important voice on the importance of local content that promotes the inclusive and sustainable participation of Mozambicans in oil & gas projects.

When the Mozambican Oil and Gas Chamber and the African Energy Chamber talk about job creation from LNG projects, we’re not simply referring to construction jobs. We’re also talking about qualified and highly skilled jobs in the plants once they’re operational, jobs with local companies contracted by the plant, and also, jobs created as Mozambique harnesses its natural gas industry to industrialize its economy.

Gas Is Only the Beginning

The tourism industry in Southern Africa was growing exponentially before COVID-19 and will return to growth after the pandemic. Mozambique’s, natural gas can be a catalyzer for the growth of the tourism industry. The Mozambican Government has tourism as one of its economic pillars and although the tourism industry has been severely hurt by cyclones and COVID-19, its great potential remains untapped.

Despite its great potential, Mozambique’s tourism industry will not be able to grow and flourish without reliable power. Even with our pristine beaches, and some of the most beautiful islands in the world, only a few tourists will come if we don’t have reliable power. We want tourists to be able to enjoy our beautiful country, and we want a dynamic tourism sector that contributes to long-term economic growth and job creation. To achieve that, we need reliable power, we need infrastructure. Mozambique can achieve all of that with LNG production and revenue.

The Impact of Natural Gas Production in Mozambique on the Agriculture Industry

In its five-year economic plan, the Government of Mozambique indicated agriculture as its top priority. Currently, nearly 80% of our population works in the agricultural sector, and it generates about 25% of our GDP. However, due to low productivity levels, too many of our farmers still live in abject poverty. That can be changed, though. Simply by using fertilizers, farmers can enhance their yield by nearly 40%. While imported fertilizers are too expensive for the majority of our farmers, Mozambique can create a more affordable option. By building infrastructure to transform natural gas into nitrogenous fertilizers, Mozambique would help its farmers and also create local job opportunities. Mozambique could reduce significantly its imports of agricultural products from South Africa and become an affordable source of food for domestic consumption.

Natural Gas Monetization Is Doable

I understand why some are skeptical about Mozambique’s ability, and resolve to manage LNG revenues in a way that benefits our population. It’s true: The oil and gas industry hasn’t always been good for Africa’s people. We have seen our share of government rent-seeking and corruption in the African continent. We’ve also seen the impact of resource curse, even pre-resource curse. This is why the Mozambique Oil and Gas Chamber, the African Energy Chamber and other African Oil and Gas Organizations, are working together to change the gloomy narrative of the oil & gas industry in Africa. We are new African voices in the industry, committed to transparency, good governance, economic growth and sustainable development.

I am certain that Mozambique can benefit from the painful lessons some African petroleum-producing countries have learned up to now, from disastrous policies to successful diversification of their economies. We can also learn from positive examples, such as the twin-island of Trinidad and Tobago, which like Mozambique, has sizeable reserves of natural gas. Government initiatives in Trinidad and Tobago led to significant foreign investment into downstream, gas-based projects. And that, in turn, sparked increased activity in the construction, distribution, transport, and manufacturing sectors.

Looking at Emissions in Proportion

Naturally, protecting the environment is a major concern of Ms. Rawoot, Justica Ambiental, and similar organizations — and it’s very important to us.

Global electricity demand is expected to increase by 70% by 2035, gas fired generation almost doubling to facilitate this. It is also expected that the share of natural gas in the global energy mix will be higher than that of coal and oil by 2035.

The projected growth in the energy sector has to take into account the growing concerns regarding climate change. But, combating climate change effectively should not conflict with human progress and poverty alleviation.

With regards to natural gas, its scope in the reduction of carbon dioxide (CO2) emissions is significant, as natural gas with lower default carbon content of 15.3 Kg/GJ, is a cleaner option compared to coking coal (25.8 Kg/GJ) and crude oil (20 Kg/GJ). Natural gas is indeed an option for delivering industrial emission targets. In other words, natural gas is a bridging fuel by providing a low-carbon energy alternative to other fossil fuel sources.

What about the potential environmental impact of using natural gas to power in Africa?

It has been estimated that if we triple electricity consumption in sub-Saharan Africa, all with natural gas, we would produce the equivalent of 0.62% of annual global emissions — less than the average yearly global increase over the last decade.

In Mozambique, given our natural propensity for cyclones and other natural disasters, protecting our natural habitats and wildlife as well as keep the planet healthy for future generations has long been a priority, and will remain one. However, rather than discarding LNG projects, we should be working together to find a way to develop them in an environmentally responsible manner.

Mozambicans do have a say in the Afungi Relocation Process

In her opinion piece, Ms. Rawoot argues that the TOTAL operated Moambique LNG plant not only represents an environmental threat, but also one to local people and communities. TOTAL, she writes, took the homes of 556 families for their LNG plant project and failed to compensate them fairly. Those claims are unfounded. This is a matter that was comprehensively discussed between the civil society and the Mozambican Government. Currently, the government is engaged in productive conversations with citizens and businesses on this matter. Furthermore, the oil and gas companies in Mozambique have been very sensitive to issues that impact communities and have encouraged communities to be active in the land acquisition process, a process that includes relocation, compensation, restoration of livelihoods and the creation of a community development fund for resettlement-affected communities. Additionally, through a non-government organization (NGO), legal assistance has been provided to households signing compensation and resettlement agreements.

Let’s Remove a Motivator for Violence

I won’t deny Ms. Rawoot’s point that Mozambique has struggles, including armed conflict and terrorist attacks. Insurgency in Cabo-Delgado is a fact and there is no simple solution to this dilemma. I do however believe that our government in partnership with the civil society and international community will reach a durable peaceful solution, a sine qua non condition for the viable exploitation of natural gas in Cabo-Delgado.

I also agree with journalist Oscar Kimanuka of Rwanda, who recently noted that unemployment in Northern Mozambique may be a key factor for youths to join the extremists.

It seems logical, then, that creating employment opportunities could, at least, make it more difficult for extremist militant groups and terrorists to recruit our young people. Therefore, harnessing our natural gas resources to grow our economy is a sustainable solution.

Mozambicans Deserve Chance to Help Themselves

I understand that Mozambique has its share of complex challenges, and natural gas isn’t a perfect solution. At the same time, it is preposterous for Ms. Rawoot to suggest that Mozambique must jeopardize a projected LNG investment of approximately $55Billion, equivalent to four times the size of the country’s GDP and forgo Government revenues over the next 25 years that are estimated to increase by US$ 4-5 billion per annum.

Mozambique cannot afford to continue being a country where our Government budget depends on international donor’s good will. We want Mozambicans to have the dignity of work and of building an inclusive and respectable nation. Harnessing natural gas to address poverty alleviation is a suitable solution.

Florival Mucave is Executive Chairman, Mozambique Oil and Gas Chamber (http://EnergyChamber.org)

 


Natural Gas Base Price Inches Up in Nigeria, according to the PIB

By Toyin Akinosho

The domestic base price, the price at which Nigerian gas producers are to sell to Power Plants, will be $3.2 per Million British Thermal Units (MMBtu), beginning from January 1, 2021, if the Petroleum Industry Bill (PIB) is passed into law in its current form.

But the price at which the gas-based industry, comprising companies which produce methanol, fertilizer (urea, ammonia), polypropylene, etc., will purchase natural gas, can be as low as $1.5 per MMbtu, the incoming law says. That price is special and it is calculated from a formula.

Gas users outside the power sector and the gas-based industry will pay at least $0.5 higher than $3.2 per MMbtu, and their cost of purchase will depend on negotiations with their suppliers.

The domestic base price -$3.2per MMBtu- which is specified in the third schedule of the bill, currently being debated at the Nigerian National Assembly, shall be increased every year by $ 0.05 per MMBtu until 2037, when a price of $ 4.00 per MMBtu will apply for that year and future years.

The Midstream and Downstream Regulatory Authority, “may, by regulations, change the domestic base price and the yearly increase) to reflect changed market conditions and supply frameworks”, says the bill, submitted two weeks ago by President Muhammadu Buhari.

“The objective is to establish a fully functioning free market in natural gas for domestic supplies. This is to be achieved through the voluntary supplies. Where insufficient voluntary supplies are occurring, the Authority may increase the domestic base price and, or the yearly increases. At the same time, the Authority shall monitor the gas prices in other major emerging countries and ensure that Nigeria continuous to have a price level for natural gas that is less than the average of these emerging countries in order to promote the non-oil sectors in the Nigerian economy”.

Timipre Sylva, Minister of State for Petroleum, had given hint of the gas pricing framework last August during a conversation with the Nigeran Association of Petroleum Exlorationists (NAPE). The bill, he explained, “will establish a gas base price that is higher than current levels (The current domestic base price is $2.5 er MMbtu)  for producers and this base price will increase over time”.

Sylva said: “This price level should be sufficiently attractive to increase gas production significantly since this gas price will be comparable with gas prices in other emerging economies with considerable gas production.

“The price will be independent of all gas prices for LNG export and is therefore a stable basis for enhanced domestic gas development, regardless of international oil or energy development”.

 


Morocco’s $9/MMBtu Gas Price Looks Good on Paper

“Gas has been a growing component of Morocco’s power generation mix”, says Chariot Oil&Gas, the London listed minnow who is looking to develop a gas field in the country.

“Attractive gas prices are established for power generation and industry”, the company notes.

The power sector pays $8 per million British thermal units (MMBtu), which roughly equates a thousand cubic feet (Mscf). It the sort of price that gas producers dream about, especially at this time when international prices have shrunk.

It gets even better.

Gas prices  for industry are in the range of $9-11/MMBtu.

Rabat is pushing natural gas as part of the national strategy to reduce imports and transition to lower carbon energy.

A key problem is that coal significantly dominates the energy scene. Although Morocco imports most of its energy needs, facilities for gas commercialization are underutilized. The installed gas fired electricity capacity is 850MW using around 100Million standard cubic feet of gas per day. Natural gas supplies 15% of the country’s electricity. But the Moroccan government isn’t looking at gas as the prime energy fuel in the forseeable future. The country, instead, talks up renewables.

Chariot keeps scouting for investors to develop the Anchois gas find. We are “continuing to engage with off-takers and develop alternative commercialisation routes for gas and liquids”, the company says in its latest update.

 

 

 


Volkswagen Pushes for Incentives to Join Egypt’s Autogas Plan

By Toyin Akinosho, Publisher

German car maker Volkswagen is asking for tax breaks and localization incentives before it agrees to produce natural gas-powered vehicles in Egypt.

It wants the opportunity to bring in foreign staff to work on the local assembly lines it would use to manufacture the vehicles in North Africa’s largest economy.

If the government gives the nod, the company will produce natural gas -powered versions of Crafter and Caddy 5 vans for the Egyptian market.

Volkswagen has been more enthusiastic to be part of Egypt’s Autogas plan than any other automaker. It announced last year that it was planning to invest in the countrywide effort. Japanese car making giants Toyota and Nissan have also expressed interest, but Nissan has withdrawn, while Toyota is, like Volkswagen, pushing for incentives. Toyota’s plan is to manufacture 240,000 minibuses running on dual fired engines. The Russian car maker Skoda is not in on the local assembly plan. But natural gas-powered versions of its Octavia and Rapid models will be imported into Egypt by local agents.

More than any African country, Egypt is big on domestic use of its natural gas deposits, the third largest in Africa. It holds 76Trillion cubic feet of reserves, less than half of either Nigeria’s or Algeria’s, but it produced 2.3Trillion cubic feet from those tanks in 2019, way higher than Nigeria’s production of 1.74Trillion cubic feet and, more importantly, over 80% of it was for domestic consumption, primarily through the country’s 40,000MWof gas fired electricity supply.

Egypt’s Autogas plan is to convert two million vehicles into dual fired engines that could be fueled by both gasoline and natural gas in the next three years.

Vehice licencing will be conditional on cars being equipped with natural gas engines.

Through the initiative, owners of vehicles over 20 years old will receive low interest loans through Egypt’s MSME Development Agency to purchase new dual-fueled vehicle. Owners of newer vehicles can access zero interest finance to outfit them with new engines.

 

 

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