Claudio Descalzi, Chief Executive Officer of the Italian major ENI, was in Algiers, in Algeria, over the weekend, meeting with Prime Minister Aymen Benabderrahmane; Minister of Energy, Mohamed Arkab and Sonatrach CEO, Toufik Hakkar, to define, among other things “further opportunities for supplying gas to Italy”.
Since the security of supply of gas to Europe became unbearably challenged by Russia’s invasion of Ukraine, ENI has played the role of the champion of alternative supply from the African front.
The company has scraped together some calculations of its African gas resources: Its Coral South Floating LNG in Mozambique, close to first cargo; its planned LNG project in Congo Brazaville; the possibility of increasing gas export from out of Egypt; its fast track of the new Ivorian discovery and even a participation in an Angolan gas output initiative.
In Algiers over the last weekend, (April 2, 2022), Descalzi discussed with Algerian authorities “the issue of gas supply and reviewed the short- and medium-term initiatives underway to increase supplies through the TransMed / Enrico Mattei gas pipeline”.
Descalzi’s business diplomacy in Algiers, to encourage Algerian authorities to prioritize ENI’s planned and ongoing gas export projects, mirrors his meeting, in Cairo, last Thursday (March 31, 2022), with the Egyptian President Abdel Fattah el-Sisi and the country’s petroleum minister Tarek El-Molla, at which “the main issues were the production of natural gas and LNG exports, areas in which Egypt has acquired a central role in the Mediterranean since ENI’s discovery of Zohr”.
ENI says that the meeting in Algiers was also “an opportunity to confirm the will to accelerate the development of new oil and gas projects in the area of the Berkine South contract, which entered into force on 6 March”. The project includes the fast-track construction of a new oil and gas development hub in the region, leveraging synergies with the existing MLE-CAFC assets (Block 405b)”.
Output and export from the Nigeria Liquefied Natural Gas (NLNG) Ltd’s six -train Bonny Plant dropped to 16.8Million Tonnes in 2021, from 20.7Million Tonnes in 2020 and 2019.
“The decrease was mainly due to feed gas constraints and higher maintenance activities”, Shell said in its 2021 annual report.
The partners, (Shell, TOTAL, ENI and NNPC) could not take optimum advantage of the Global demand for natural gas, which rose by an estimated 4.6% in 2021, after the COVID-19 pandemic caused consumption to decline by around 1.2% in 2020.
“The (Global) 2021 rate represents a return to around the historical norms of growth for gas”, Shell said in the report, “and is roughly the same as the pre-pandemic growth rate of 2019”.
Shell holds 25.6% in NLNG Ltd. Its share of the output dropped to 4.3MMTPA in 2021, compared with 5.3MMTPA in 2020 and 2019.
The completion of the western arm of the OB-3 gas trunkline enabled the coming to being of the 300MMscf/d Kwale Gas Gathering (KGG) facility on Oil Mining Lease (OML) 56, Africa Oil+Gas Report has learned.
Prior to the completion of that arm of OB-3, most of the gas produced in marginal fields in the so called mid-west cluster (including Umusadege, operated by Midwestern Oil&Gas; Ebendo, operated by Energia; Umuseti, operated by Pillar Oil and Matsogo, operated by Chorus Energy) were stranded, because the closest manifold to the cluster was the Eriemu manifold, which is 55Km from the cluster.
With the OB-3 running much closer to the cluster, the gas from these fields can be pumped into the OB-3, after being collected, processed and or metred at the KGG hub, which has been tied-in to the NGC-owned and operated 48-inch OB-3 gas trunk line.
It should be noted that the eastern arm of the OB3 is not yet completed and the entire project, under construction by the NNPC for the past 12 years, is struggling in the finishing line. But that is not the focus of this article.
The KGG was built by Nedogas Development Company Limited (NDCL), a joint venture company between Xenergi Limited and the Nigerian Content Development Monitoring Board (NCDMB), in partnership with the Nigerian Gas Company (NGC), a subsidiary of the NNPC.
It is designed to handle stranded gas resources in the cluster by providing the opportunity for independent operators in the area to monetize natural gas from their fields through the gas gathering, compression, injection and metering infrastructure of the KGG for quick access to market.
The KGG is now fully commissioned with an initial 30MMscfd of pipeline quality gas currently being injected into it from the Nedogas Plant, located 3km away in Energia’s Ebendo field. Plan is ongoing to ramp that up to 50-60MMsf/d. Other cluster producers are progressing projects to connect to the hub. The first one is gas from Chorus Energy’s Matsogo field, planned for Q2, 2022.
In addition to the cluser producers, who are all located in OML 56, First Hydrocarbon Nigeria (FHN), whose asset, OML 26 is nearby, is progressing plans to bring its gas to the KGG.
Mozambique will start monetizing the natural gas accumulations in the deepwater Rovuma basin, in the Indian Ocean, from October 2022.
That is the date the first cargo of Liquefied Natural Gas (LNG) will be exported from the 3.4Million Tonne Per Annum (3.4MMTPA) Floating LNG on the Coral South field in the basin’s Area 4 concession.
The gas is contracted to bp for 20 years with an option for a 10-year extension; it could help in Europe’s gas supply crisis.
October 2022 will be roughly 12 years and eight months since Anadarko-the now defunct American independent- discovered the giant accumulations of natural gas in Area 1 in deepwater Rovuma basin. It will be about 11 years after ENI discovered similar resources in Area 4, adjacent to Area 1.
Thus, for the otherwise aggressive operator ENI, Coral South FLNG is one of its longest discovery- to- market hydrocarbon projects, at least in Africa.
ENI, in 2015, discovered the giant Zohr in deepwater Mediterranean, offshore Egypt. By 2017, the field was in production, supplying mostly Egyptian power plants.
Area 4 is operated by Mozambique Rovuma Venture (MRV), a joint venture led by ENI and consisting of ExxonMobil and CNPC (China), which holds a 70% participating interest in the concession contract. Galp, KOGAS (South Korea) and Empresa Nacional de Hidrocarbonetos (Mozambique) each hold 10% stakes.
The Coral South FLNG platform has storage tanks on the hull and 13 modules on top, including a liquefaction plant, an eight-story module that can accommodate 350 people and a helicopter runway.
The Utorogu gas field in the western Niger Delta is the site of the second largest gas gathering and processing facility for the supply of natural gas to the Nigerian domestic market.
The field is one of the several producers in the Oil Mining Lease (OML) 34, which is jointly operated by NDWestern Ltd, a homegrown, private Nigerian independent and the Nigerian Petroleum Development Company (NPDC), a state-owned firm which is a subsidiary of the NNPC Ltd.
In February 2022, OML 34 averaged 355Million standard cubic feet per day, retaining its position as the largest gas producing asset in the country, run by an entirely Nigerian Joint Venture.
The partners have commenced the process of developing Utorogu into an industrial park. At the heart of the proposed hub are natural gas delivery, crude oil refining and power supply to co-located factories. There are plans for an export route, featuring a rail line for transporting the manufactured products to the Warri wharf and out to sea.
As part of our series of interviews with Chief Executives of producing companies, regulators and ranking agencies, Eberechukwu Oji, managing director and chief executive officer of ND Western, tells Africa Oil+Gas Report’s Akpelu Paul Kelechi, that NDWestern is filling the gap left by Shell’s exit from Warri and the Niger Delta, and establishing significant projects to industrialize the area. Excerpts from the conversation:
AOGR: The Nigerian government has declared this decade as a decade of gas. Where do you think you want ND Western to be in 2037?
Eberechukwu Oji: If you look at the trajectory of the company, ND Western will grow to be a global integrated Energy Company by 2037 playing not just in Nigeria but well across Africa and most definitely playing globally.
As the Chief Executive of a key Nigerian Independent, what keeps you most awake at night, of all the risks that challenge your company’s growth plans?
On the now and immediate, we have the security challenges in the Niger Delta, pipeline vandalism, crude oil theft, illegal refinery, as you know. These are pressing issues and they affect our production quite significantly. It’s a battle against criminals to ensure that the oil we produce actually gets to the terminal. I think that’s the most significant threat and most significant challenge on the security front that affects our production and that could impact our growth.
Utorogu Gas Plant: We have been successful in our operation in stemming crude theft over a 12km pipeline and we’ve done that with a combination of technology. We have drone flights that basically patrol that line to give us on the spot and real-time pictures of what is going on.
Investors keep hearing all this news and it makes them a little bit hesitant to put money into projects in the Niger Delta. So that affects our funding not just on the immediate but on the long term. In the medium term, we have to understand the implementation of the PIA because some of these regulations are good on paper but implementation is always a challenge. The industry needs to be engaged as government begins to implement the PIA so that we are sure that we bank the benefits of the PIA.
In the long term, I worry about regulatory activism around the energy transition and climate change. It’s important that we pay attention to the levels of carbon emission and limiting emission as has been increasingly recognized. However, many people today don’t have energy of any sort. People are dying from the use of charcoal and firewood and the lives of those people do matter. So it’s important that we balance climate change and its impact in the future with the realities of today, especially in Africa, where there are huge numbers of people who are energy denied.
Is there a global solution to the vandalism and crude theft in the entire nooks and crannies of the Niger Delta?
We have been successful in our operation in stemming crude theft over a 12km pipeline and we’ve done that with a combination of technology. We have drone flights that basically patrol that line to give us on the spot and real-time pictures of what is going on. We have what we call Ground Trotting, which means we have people patrolling the line over the 12km and they’re able to report any unusual activity. And then we have the cover of the government security agents who then can respond when something is noticed. And I said we’ve been successful over a very short length of pipeline which is 12km, but in this 12 km of pipeline, we were able to remove 300 crude theft points: 300 over 12 km of pipe.
So, if you then use that as a corollary and then look at the hundreds if not thousands of kilometres of pipeline across the country, it gives you a sense of how much theft is going on. And the effort that we should take to keep those lines free from illegal crude tapings is just enormous. So there needs to be more than just the mechanical interventions to ensure that the crude theft doesn’t happen. More needs be done with the socio-economic status of the Niger Delta which fuels the desire or intention to go into this line of criminal activity and we can have some conversation around what should be done about that.
Crude oil prices have experienced a see -saw, from the plunge in the first two quarters of 2020 to the sky-high prices of today.
Nobody can accurately predict oil price and its direction. One major incident and it goes north, because crude oil is sold in futures. That’s what people don’t realize. There is some forecasting that go behind crude oil prices and there are geopolitical incidents that drive the forecasting. As you know, the West and Russia are in tension over Ukraine, with anticipation that war could break out and there will be severe supply disruptions. Second, there was pent-up demand during the lockdown in terms of the supply chain and companies are trying to catch up and are putting pressure on the supply chain. There is also an unusual cold winter that we’ve seen in parts of the world. Cold winter means more energy use, to keep homes warm.
So, a combination of those factors are currently in the mix and driving prices northward. Some of those could be resolved quite quickly; for instance, if the Security Council’s efforts to diffuse tension with Ukraine, works, then you will see an unwinding [in] the market.
As a company, we have a very clear growth strategy that is not based on crude oil price forecast. If the prices are good we take advantages of it. When it slumps, we try to make sure that our unit cost of production is low. But in this business, we’ve been around for some time, prices are up today and they’re down tomorrow.
Are there specific, key pillars to ND Western’s growth in the next 10 years?
Our growth projection is built around [the 4Ps]. If you take the people for instance, we now have in place the ND Western networks. We have the ND Western Future Leaders Network and that is essentially recognizing that 10 years from now, we need new highly experienced, well-trained managers who will run this business and continue its growth trajectory and all these things we are projecting 20-30 years away. People will make it happen and you must train them today.
We have the Women Network and that is recognizing that STEM studies for women need to be promoted. They bring a certain diversity of views into the workplace and it’s important for us that we harness the capability that our women bring. So, those are two critical networks that we have in ND Western. We’re working to re-introduce the former Shell Intensive Training Program. Now, we just call it Intensive Training Program. Essentially, this is a learning Hub in Ejeba that was originally built by Shell which is now owned by OML 34 JV of ND Western and NPDC. We want to bring it back. We will invest in the young industry professionals of today so that they will be competitive in the future with all the advances in technology that are coming their way.
So, it’s going to be a massive intervention to develop specialist skills that is needed to fuel our growth ambition. We call it Growing Our Own Timber to make sure that we train our people to the level that we need them to be able to perform to deliver our growth aspiration.
And there are other things that we’re doing in that capability space. Currently our plant capacity in terms of gas is 600MMscf/d. Oil is about 120,000 barrels a day. So that’s significant capacity increase in the plants. We must keep the plants full which means that we must grow our production to take up all our available capacity and then that buys us time to grow and build and build more capacity.
In terms of production, yes, I just mentioned we’ve got 120,000BOPD capacity but of course, all of it is not oil, some of that will be water coming with production. But when it is full, even at 50% BS&W, so that’s already 60,000 barrels a day of production capacity from our current 20 to 30,000 barrels a day and we produce around 360MMScf/d [of gas] now and our short-term ambition is to take it to 400MMscf/d and in the longer term, take it to 600MMscf/d and then we begin to grow from there.
For processes, we make work process, effective, efficient, sustainable, etc. So those are the key pillars of growth for our company.
What were your thoughts on creating an Industrial Park?
There are many imperatives behind the industrial park. Number one, our industry utilizes a lot of capital resources, but employment is low. So, the oil industry [can’t] provide all the employment that is needed in the Niger Delta. The restiveness in the Niger Delta is not going to be solved by the oil companies alone. So, we need manufacturing, we need to industrialize the Niger Delta and as ND Western, we have a unique opportunity to promote to other industrial investors that they can come within our vicinity, and we can challenge the assumption that Niger Delta is unsafe because we are there, and we have been there for many years. If we can operate there anybody else can operate.
Transcorp is also there and have been operating for many years; the Delta Glass company is also there, and they have been operating for many years. Delta Steel Company is also there. This whole assumption that the Niger Delta is unsafe is not true. Folks need to come down, visit the place, make an assessment for themselves and then they can see the viability of locating new plants and manufacturing concerns around the Utorogu Industrial Park.
Since 2021 when we began to promote the industrial park, we have received very strong interest from many potential, anchor tenants in the Utorogu Industrial Park. It totally makes sense if you locate your plants in our industrial park and we have our gas plant supply gas directly to you, you have already saved yourself transport costs because the gas will be piped directly to your plant. Apart from the power that we will provide eventually for industrial park, Transcorp can also provide you power. The security architecture that we have will extend to cover the entire industrial park. So [there are] a lot of benefits in co-locating.
We are also working on an export route. There is a rail line and a short portion could extend it to Warri wharf. Manufacturers in the park who need it for export could take their products straight to the port for export. Before that infrastructure is built, [they could use] a short road trip to Warri wharf and then export. The Warri airport, can be extended into a proper cargo airport to export products from the Industrial Park.
We are building a mini refinery in that park to stake our claim to the park and our belief, that it would work.
What is the capacity of the mini refinery? Will ND Western be able to supply all the gas that would be needed in that cluster?
The government has implemented the gas network code, which means that ultimately, it won’t be only ND-Western gas that is used in industrial park. Our refinery is a 10,000 barrel a day mini refinery and there is a discussion on another 10,000 barrel a day condensate refinery with NNPC.
ND-Western is the upstream supplier of gas into the West African Gas Pipeline, through NGas. If the Ghanaians complain of perpetually low gas supply into the line (less than 70MMscf/d) does this bother you at all?
There was a technical issue, a very well-known technical issue with a force majeure on the line for some time but that force majeure has been lifted towards the end of last year. So, the technical issue is resolved. [There] is a commercial issue around the terms of the ongoing supply agreement; we like to supply more if the Ghanaians want to take more gas.
Is carbon capture something that is in the horizon of ND Western, and are you looking at virtual pipeline?
Some of these concepts are nice to talk about but there’s no limitation from our side to assess or utilize technology. To make a virtual pipeline work, there are several things, one is that you must have Compressed Natural Gas so then you can do virtual pipelines for short distances, or you can have Liquefied Natural Gas so that you can do virtual pipeline for long distances. We have some key players in the market who are proving the concept on both CNG and domestic LNG. We’ll watch these companies to see if the demand is real.
To your point about carbon capture, Nigeria should not be talking about carbon capture. I think Nigeria should be talking about commercializing all our gas. Carbon capture is about producing excessive amount of CO2 and you want to capture it and strip it. Our biggest carbon comes from the flares, so this is gas that can be used but we are burning it to produce CO2. There is a good initiative around gas flare commercialization that is ongoing. I think we need to accelerate [it to] utilize all the gas we produce.
If you were to advice the government on implementing Petroleum Industry Act, what would be top on the list?
We should engage the industry. The government did very well in their engagement strategy before the PIA was passed. They need to sustain that engagement. In the Nigerian parlance, they say, you must tell someone before you shave his head. So, if the PIA is meant to grow the industry, industry players must be squarely integrated, properly engaged in the implementation.
In the wake of the departure of Shell from Warri, how does ND Western feel it should bring back what is perceived as Warri’s lost glory?
We are in Warri today and the glory is not lost completely. ND Western owns the Ejeba estate formerly owned by Shell. Today that estate is over 90% occupied, from around 15%. The same for Ogunu. We have basically refurbished the bungalows, repopulated, maxed out their use. There is the former SITP now called the Intensive Training Programme which we’re bringing up and we are just commissioning Delta Plus, the IPPG/ NPDC/ND Western Test Laboratories.
ND Western is already helping to restore the glory of Warri as a city and the Niger Delta. Our Utorogu Industrial Park and our refinery, and the port, the airport [will create new jobs].
What else do you want the government to put in place to escalate investments into this industry?
You must take care of your current investors. They are your biggest advocate for future investors. ND Western like many other companies are currently investing or we have invested in Nigeria. We need to be taken care of so that we do extremely well and that becomes the biggest PR or marketing campaign for the country to say if investors like NDWestern have done so well, then others can come.
If someone asked you: “what is your bestselling plan as ND Western to host communities,” what would you say?
We firmly believe in the government’s plan to set up a Community Trust. Our shareholder partner NDPR pioneered Host Community Trust investment which has now become law in the PIA. We now need to implement it rigorously and make it work, ensure that community trusts are set up, are well-funded, have the right caliber of people in their boards to administer these funds, [then have a] conversation with the community around what direction should things go in terms of developing the community.
We have a very robust Community engagement strategy, committee management strategy; we have a very well-funded GMoU, very functional GMoU, which deploys quite a lot of resources into the community, and we have excellent relationship with the community. We are yet to have any Community related shutdown of our facility and that is incredible in the Niger Delta.
Russia’s invasion of Ukraine has expanded the meaning of “energy transition” in Europe.
Usually, that term means moving away from the fossil fuels that have driven progress for generations and turning, instead, to emerging green energy sources. But with the U.K. phasing out Russian oil imports following the U.S.’s ban — and more EU countries expected to follow suit — this time the transition refers to finding new hydrocarbon sources.
Currently, Russia supplies about a third of Europe’s crude oil imports and nearly half of its natural gas, some 150 to 190Billion cubic metres of gas per year. It will require a producer with sizable resources to take Russia’s place.
The world is wondering, and rightfully so, if Africa’s gas reserves — an estimated 221.6Trillion cubic feet — could be part of the energy solution Europe so desperately needs.
My answer: Yes, African countries can help fill the gap. They can provide the “Freiheits Gas” that will wrest Europe from its dependence on Russian pipelines.
But getting there will be tough. African countries will need months to ramp up their gas production, especially since until very recently, Western leaders and environmental organizations were aggressively pushing for a rapid halt to African gas investment in the name of climate protection — an effort that sent foreign companies running for cover.
Reducing the time required to get natural gas flowing and exported will require speedy action on the part of European and African stakeholders.
For one thing, while Africa has a wealth of natural gas reserves, it is considerably lacking in gas infrastructure. Without a prompt and significant uptake in investments by European countries, financial institutions, and energy companies, there’s no way Africa will have enough pipelines, storage capacity, or processing facilities to adequately meet Europe’s gas needs.
African leaders must act decisively as well, to smooth the way for European entities to successfully invest in African oil and gas infrastructure projects, make deals rather than engage in unreasonable delays, and get gas production and transportation in motion. And, at the same time, African governments must do as much as possible to consider African needs, even as they attempt to meet Europe’s.
Africans have been arguing that before rushing to renewable energy sources, we need to continue producing natural gas so we can use it to power electricity generation domestically and address the continent’s widespread energy poverty. We have argued that we need time to monetize the natural gas value chain so we can build energy infrastructure, both for fossil fuel and renewable energy operations. Monetizing gas in Africa would create economic opportunities for our young people at home. So many of them today are making the risky journey across the Mediterranean in search of greener pastures in Europe. We can create greener pastures in Africa with clean natural gas and send low carbon LNG and green hydrogen to Europe. African natural gas can be a critical pathway to growing and diversifying African nations’ economies and paving the way for a successful and just energy transition.
As we increase natural gas activity, we must not lose sight of our goals for Africa. We must work together, and strategically, to drive the programs that will make them happen, from commitments to retain some of the natural gas we produce for gas-to-power projects to monetization efforts.
So, yes, let’s work with European countries to help them lessen their dependence on Russian gas, but let’s not fail to meet the pressing needs of African nations at the same time.
Europe, We Must Be Pragmatic
For several years now, European countries, financial institutions, and environmental activities have been placing immense pressure on African countries to abandon gas reserves and make an immediate switch to green energy.
More recently, this pressure has gone further, interfering with foreign investments in African natural gas projects. During the 2021 United Nations Climate Change Conference (COP26) in Glasgow, for example, more than 20 countries and financial institutions pledged to stop public financing for overseas fossil fuel projects.
Environmental concerns that were not backed by science even blocked Dutch multinational Shell from carrying out a seismic survey to prospect for oil and gas reserves along the eastern coast of South Africa last December, despite South Africa’s great need for energy and the role any oil or gas discovered could have played in lessening the country’s energy poverty. (Shell just has a successful discovery in Namibia, and I am confident they will successfully use carbon capture technologies to produce carbon-neutral hydrocarbons.)
But if this pattern of interfering with African oil and gas financing and production continues, existing gas projects in Mozambique, Tanzania, Nigeria, Equatorial Guinea, Mauritania, Congo, and Senegal stand to be at risk. New and expanded gas projects are unlikely. Capital goes where it is welcomed.
Now, with the crisis in Ukraine, it has become clear we are not yet close to the worthy goal of zero-emissions energy, we’re just not there yet. Within days of Russia’s invasion, gasoline prices were already edging higher, a sign of the market’s reliance on crude oil as a transportation feedstock. Today, we’re seeing the highest prices for fuel in decades. As for natural gas, it reached an all-time high in Europe on March 7, 2022 and continues to set records. So, no, Europe isn’t there yet, and neither is Africa. Producing, transporting, and using natural gas, the cleanest of all fossil fuels, is not even a necessary evil. It’s a reasonable means of meeting widespread energy needs while keeping carbon dioxide emissions in check.
WHAT IF WE WERE TO MAKE A COURSE ADJUSTMENT IN RESPONSE TO THE CRISIS IN UKRAINE?
Imagine if the European Investment Bank and other financial institutions were to start funding gas projects. No, it wouldn’t deliver the gas Europe needs today, but it will help longer-term by providing an alternative to Russian energy. It will help by making African countries a reliable, sustainable source of natural gas for Europe well into the future. And it would position Africa to meet its own pressing energy needs.
I have challenged a large number of companies to commit to signing gas and green hydrogen agreements at African Energy Week this October in Cape Town. The recent green hydrogen development deal signed by German energy company, Emerging Energy Corporation, in Niger Republic is a move in the right direction.
A final thought about Europe: It needs to stop handicapping Africa with handouts and foreign aid. The aid must stop. It is not helping us. We’d much rather see Europe cooperate with us and focus on free-market enterprise, economic freedom, and gas monetization.
Africa’s Next Steps
It would be easy to place all of the blame for Africa’s infrastructure shortfalls on the lack of European investments. But African governments share responsibility. We must do for ourselves what we expect others to do for us. It’s not Europe’s responsibility to build Africa.
African countries for years placed far greater importance on crude oil production, and the resulting revenues they received from oil majors, than they did on producing natural gas and monetizing it to fund infrastructure development. Fortunately, that mindset has been evolving with more African countries, including Nigeria, Equatorial Guinea, South Africa, and Ghana, pursuing natural gas monetization initiatives. But these processes take time.
African governments have also been much too slow to act when gas production opportunities arise. There is a slew of gas deals that are pending. We must admit that the bureaucracy and the triangulation in negotiations and approving deals have slowed the gas industry in Africa. In many countries that I have worked in, it takes longer to get government negotiation and approval for a gas project than it takes to construct it. Today companies can even line up the financing, and ready to invest but if the negotiation and approval process is slow or broken, there’s no point in doing a gas deal in Africa. We have seen many licensing rounds launched and no agreements were signed. And any proposal that fails to cut red tape won’t work and Africa’s gas potential bonanza will be a disaster. Look at the huge amounts of gas, almost 300 trillion cubic meters, in Nigeria, yet to be produced. Look at existing projects being stalled in Cameroon, Equatorial Guinea, Tanzania and Mozambique.
I was present when Niger, Algeria, and Nigeria signed the Declaration of Niamey last month. The end result of their cooperation is that the long-delayed Trans-Saharan Gas Pipeline will finally move forward. This is important news for a project stymied for more than 20 years by investor concerns over security and governments’ failure to negotiate and push the deal forward. The $2.2Billion, 4,128-kilometer (2565-mile) pipeline is tremendously promising for the African countries involved — it will span from Warri, Nigeria to Hassi R’Mel, Algeria, running through Niger—and for Europe. When complete, it will transport 30Billion cubic meters of gas a year from Nigeria, Algeria, and Niger to Europe.
African countries must start fast-tracking their natural gas projects and get them in motion so market forces can drive them.
African governments also should be encouraging foreign natural gas investments by developing production-sharing contracts specifically for natural gas production, so investors know what to expect.
And, they must reject resource nationalism: This is not the time to demonize international oil companies and foreign operators in Africa. Now, more than ever, it is vitally important to foster cooperation among nations if we’re going to achieve our goals.
Critical Moment
The way I see it, the stakes are high for two continents right now. Africa’s natural gas reserves can meet significant, pressing needs for both. But only if stakeholders in both Europe and Africa step up and commit to working together in a spirit of cooperation. And only if they move decisively. Now let’s change our mindset and get to work.
NJ Ayuk, Executive Chairman, African Energy Chamber. Ayuk is also the CEO of the Centurion International AG, the first African company to be listed on the Dusseldorf stock exchange in Germany.
UK minnow Sound Energy, has announced an extension to the date by which the conditions to its binding gas sale and purchase agreement (GSA) in respect of the Phase 2 development of the Tendrara Production Concession with Morocco’s state-owned power Company ONEE (Office National de l’Electricite et de l’Eau potable) for the sale of natural gas from the Tendrara Concession in Eastern Morocco over a 10 year period are required to be satisfied by a further three months (. The terms of the GSA were announced by the Company on 30 November 2021.
The GSA remains conditional upon, inter alia: (i) all necessary authorisations and permits having been granted for the construction of the Phase 2 gas installations (ii) the final investment decision, when taken, by the Tendrara joint venture partners, being approved by the Moroccan Ministries of Transition Energy and Sustainable Development and Economy and Finance; and (iii) the entry by the Tendrara joint venture partners of an interconnection agreement with the operator of the GME Pipeline, and the commencement of works, for the connection of the Tendrara Production Concession to the GME Pipeline.
Progress has been made in the preparation of pipeline entry agreements, term sheets for financing, approvals and FID and consequently all parties have agreed to a 90 day extension period to the GSA.
The Italian major ENI has reported that it could reduce its reliance on Russian gas to some extent with supply from its African assets.
Russia supplies approximately 20Billion cubic metres (or 706Billon cubic feet) on annual basis to ENI, the company said in an investor update. That comes to roughly 2Billion cubic feet of gas per day. ENI is under pressure to reduce its receipt of gas from Russia, given that country’s military campaign in Ukraine.
ENI said: “In case of reduction of Russian supply, ENI can leverage on the expansion of its equity gas production mainly in North Africa and West Africa as alternative supply sources”.
The statement specifically mentioned North Africa (meaning Egypt, Algeria) and West Africa (Nigeria, Congo, Ghana, and probably Angola).
ENI has huge gas assets in Egypt, but most of the output is used to satiate the population’s voracious appetite for natural gas: Egypt consumed close to 7Billion standard cubic feet per day last year, with a large proportion of it used as feedstock for its electricity generation of 55,000MW capacity.
ENI also has a relatively large output in Nigeria; on an operated basis it produces around 700Million standard cubic feet per day in the country (of which it has only 20% share) and holds a 5% stake in Shell operated 19 oil mining leases in Nigeria, many of which are gas prone.
In Congo Brazzaville, ENI has sanctioned two modular Liquefied Natural Gas (LNG) plants, but the volume (2Million Tonnes Per Annum) is too minuscule to be considered as part of alternatives to Russian supply.
ENI’s gas production in Ghana is also maxed out: the 180MMscf/d output from the Sankofa-Gye Nyame field is dedicated to the country’s domestic market.
In Cote D’Ivoire, ENI has sanctioned fast-track development of a recently discovered, elephant sized deepwater hydrocarbon accumulation. The proportion of gas in the pool has not been disclosed.
Other European energy firms have announced exits from Russia since the hostilities began. Shell said it will pull out of Russia entirely, suspending the purchase of Russian crude oil and phasing out involvement in Russian hydrocarbons extending from oil to LNG. The company had already said it would exit its JVs with Russian state-owned gas producer Gazprom. BP also announced it would stop buying Russian energy after last week cutting ties with Rosneft.
ENI said in the investor update that it was responding to “numerous requests over the course of the past few days”.
ENI disclosed the following:
Gas is flowing normally from Russia as per contracted volume
Russia supplies approximately 20Billion cubic metres on annual basis to ENI,
In case of reduction of Russian supply, ENI can leverage on the expansion of its equity gas production mainly in North Africa and West Africa as alternative supply sources
Under extreme conditions, certain contractual protections (as force majeure clauses) and general legal coverage may be called.
British gas producer Savannah Energy has agreed to supply a maximum of five million standard cubic feet per day (5MMscf/d) of gas to Axxela, a Nigerian ‘last mile’ gas distributor.
The gas will be delivered via Savannah’s Ikot Abasi Gas Receiving Facility in southeastern Nigeria and then via third-party gas infrastructure to Central Horizon Gas Company CHGC, a majority-owned subsidiary of Axxela in the Port Harcourt, the commercial hub in the east of the country.
Axxela supplies natural gas to over 185 industrial and commercial customers via its gas infrastructure network across cities in Southern Nigeria including Lagos and Port Harcourt.
CHGC operates a 17km gas pipeline infrastructure network with a throughput capacity of 50 MMscfpd, which provides natural gas to industrial and commercial customers in the Trans Amadi Industrial Area of Port Harcourt as well as the Greater Port Harcourt Area.
The Gas Sales Agreement, GSA is initially for one year but is extendable by mutual agreement. First gas deliveries are expected to commence within the next 12 months and are dependent on CHGC completing certain works to connect to the third-party gas delivery infrastructure. Accugas is not expected to incur any additional capital expenditure in this regard.
TOTAL Energies says it has signed a Memorandum of Understanding (MoU) with the Rwandan Government to develop collaboration on projects related to energies.
The collaboration will be with the Rwanda Development Board, a public institution responsible for accelerating Rwanda’s economic development.
The scope of the agreement covers in particular:
The energy products distribution (including LPG, and electric charging),
The supply of LPG as a substitute for burning biomass,
The renewable hydro-electricity generation,
The development of power storage solutions for the electrical network,
The development of Natural Based Solution for carbon storage,
The implementation of education and training programs on new energies and the energy transition.
TOTALEnergies also announced the incorporation of a local branch TOTALEnergies Marketing Rwanda Ltd, and the opening of a permanent representation office in Kigali.
“The collaboration with TOTALEnergies in the energy sector, particularly the investment they will make in clean energy storage, distribution, partnerships with our private sector companies in Rwanda and beyond, is timely for a country that puts the environment at the heart of its development strategies. Additionally, the skills transfer in critical areas such as renewable energies and energy transition will undoubtedly contribute to the development of local expertise in the energy sector.” said Clare Akamanzi, CEO of the Rwanda Development Board.
