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ENI Delivers LNG From Algeria to a New Italian Terminal

Italian major ENI has reported delivering a gas cargo of 3.1Billion cubic feet from Algeria to the SNAM regasification terminal in Piombino, Italy.

Unloading operations took place following the completion of the test phase and mark the beginning of the terminal’s commercial operation.

“The cargo was produced at the Sonatrach liquefaction plant in Betihoua, Algeria”, ENI says in a release. The partnership with Sonatrach and Algeria plays a central role in ENI’s strategy to diversify supplies and expand its gas portfolio, with investments in fast-track projects that will increase available volumes for the Italian and European markets”, it explains.

ENI is bullish on Algerian assets as evidenced by its recent $4.9Billion acquisition of a piece of Neptune Energy, which holds large gas properties in Algeria, including the Touat gas project, a joint venture with Sonatrach and ENGIE, considered an important source of supply for mainland Europe. Groupement Touat Gaz consists of Neptune Energy Touat (65%) and Sonatrach (35%).

“ENI targets growth in its LNG activities with contracted volumes expected to rise to over 18Million tonnes in 2026, more than double that of 2022. It is an important component of a reshaped global gas portfolio that will contribute to the security of supply and increasingly leverage equity production”.

NMDPRA Gazettes Regulation on Gas Transportation Tariff

Nigerian Midstream Downstream Petroleum Regulatory Agency has gazetted a number of regulations under the Petroleum Industry Act (PIA), a key one of which is on Gas Transportation Tariff.

The regulation says that Shippers (“Shipper” means a person other than an operator licenced by the Authority to ship gas through a system) shall be charged transportation tariff for capacity charge, commodity charge and any other charge as may be prescribed by relevant code.

(2) The transportation tariffs shall be determined and charged in United States Dollars or other foreign currency, and payment shall be made in such respective foreign currency or its Naira equivalent at the open market rate published by the Central Bank of Nigeria.

(3) Transportation tariff shall be paid by shippers on monthly basis in arrears.

(4) Notwithstanding regulation 6(2) of these Regulations, the provisions of the Gas Network Code Framework Agreement shall apply.

(5) A gas transportation agreement existing under a gas transportation pipeline on open access or gas transportation network, shall from the commencement of these Regulations cease to be effective and is replaced by a gas network code framework agreement.

(6) For the purposes of this regulation — which is the (a) “capacity charge” means a charge determined by the amount of a shipper’s registered system entry capacity at a system entry point, or registered system exit capacity at a system exit point and payable by the shipper irrespective of whether the reserved capacity is utilised or not; and (b) “commodity charge” is a charge determined by the quantity of gas flow at a system point attributed to a shipper that varies in direct proportion to actual throughput of natural gas by a shipper. 4.—(1) The Authority may approve different classes of capacity charge for the same gas transportation pipeline or gas transportation network. (2) The classes of capacity charge under regulation 7(1) of these Regulations may be determined —(a) with reference to gas transportation networks and gas transportation pipelines on open access, —(i) types and industries of the end-users of the natural gas transported by shippers, based on the criteria approved by the Authority, (ii) agreements with shippers facilitating the financing of new gas transportation pipeline, and (iii) other basis as may be approved by the Authority ; (b) with respect to gas transportation pipelines for its own account of an operator.


ENI Targets 2027 Date for First Cargo from Coral North FLNG; Submits Plan to Moza Government

Italian explorer ENI has submitted a formal proposal to the Mozambican government for the Coral North project, its second Floating LNG aimed at monetizing the Coral gas field in ultradeepwater Area 4 in the Indian Ocean.

The facility will be sited — around 10 kilometres north of the existing Coral South FLNG, 50 kilometres off the coast of Palma in Cabo Delgado Province.

Coral North will cost around $7Billion and ENI officials expect liquefaction and export to commence in 2027.

The company continues its environmental impact assessment process for the project and has announced two public consultation meetings: in Maputo on June 30 at the Radisson Blu Hotel, and in Pemba (in the Cabo Delgado Province) on July 4.

Coral North will have a production capacity of 3.5Million tonnes per year, like Coral Sul FLNG, which began exporting gas in November 2022. The molecules will be delivered from six subsea from the Coral offshore reservoir, located in Area 4 of the Rovuma Basin.

Onshore logistics operations for the project will be carried out from three designated bases: in the Port of Pemba, at a logistics base in Pemba, and at the Pemba Airport. ENI will run the project from its offices in Maputo and Pemba. Equipment requiring the use of a deepwater port will be unloaded at the Port of Nacala in Nampula province, south of Cabo Delgado.

ENI decided to move ahead with s the second floating gas production facility, as larger, onshore projects, planned by TOTAL led Mozambique LNG (13MMTPA) and ExxonMobil led Rovuma LNG, stall as a result of insecurity issues in

Coral South FLNG was built in South Korea by Samsung Heavy Industries; it was the first in deep water globally and the sixth FLNG platform set up anywhere in the world.

Moza Wants to Connect Large Gas Projects to Small and Medium Companies

Adriano Maleiane, Mozambique’s Prime Minister, says the Government has been promoting and encouraging the connection between large hydrocarbon projects and small and medium companies in the scope of the Country’s industrialisation

He told a recent conference in the city of Pemba in the gas rich Cabo Delgado Province that those companies are the main vectors for job and income generation, and government wants them to take “full advantage” of the ongoing gas exploration projects in Cabo Delgado province, in the north of the country.

Mozambique is keen on to seeing its homegrown entrepreneurs doing business with the multinational companies operating in the Rovuma basin. The governor wants the country’s industrialisation to be based on the transformation of local raw materials, “with the perspective of adding value“, Mr. Maleiane said.

According to the Prime Minister, the cabinet has been betting on the valorisation of the mining and energy potential that the Country holds, through the implementation of projects that contribute to the development of the industrial sector.

“It was based on this approach that we adopted several measures and actions to encourage the development of specialized human capital, integrated infrastructures, preservation of the environment and conservation of biodiversity,” he said.

Tanzania’s AutoGas Market Bolstered by Global Shift in CNG Demand

Justine Njoroge, in Nairobi

Orca Energy has reported a bolstering of the Compressed Natural Gas market in Tanzania, in the context of a global shift in gas supply and demand.

Russia’s invasion of Ukraine, and the subsequent and significant rise in Tanzanian domestic fuel prices, coupled with an increase in awareness of CNG as a vehicular fuel, has resulted in rapid growth of Natural Gas Vehicles (NGVs) and by extension a 400% increase in revenues generated from the CNG station over the past five years the company has noted in a report.

CNG business is a secondary opportunity for Orca, the operator of the 86.8Millon standard cubic feet per day (86.8MMscf/d) Songo Songo gas field, one of Tanzania’s two main natural gas projects.

But the company has continued its programne of preventative maintenance and improvement at its sole service station in Ubungo, (a district in Dar es Salam), which has included a 20,000 hour CNG compressor overhaul.

“Downstream CNG operations are rapidly becoming a critical service we provide to the citizens of Dar es Salaam”, company management says. “With an ever-increasing number of domestic and industrial transportation customers, as well as a number of off-network industries supported through virtual pipelines, the demand for CNG has increased considerably.

“System availability and increased demand also necessitated an increase in personnel to operate the facility 24/7, and the Company hired new CNG operators to ensure that the service for which we have become known is not impacted”, Orca explains in the statement.

Downstream demand continued to increase through 2022, driven primarily by increased power generation requirements and low hydropower production. Discussions and negotiations were held, and in some cases Gas Sales Agreements (GSAs) signed with several other customers seeking Piped Natural Gas (PNG) and CNG, and we expect to connect them in 2023.

“One of the GSAs entered into was with an Egypt based company called TAQA ARABIA for the supply of PNG for the generation of CNG for vehicles. This contract will increase the CNG to vehicle services in Tanzania by around 30%, further underpinning the value and availability of the service to customers, which in turn is expected to accelerate an already growing market”.


Moza Earns $34Million from Floating LNG in Six Months

The ENI operated Coral Sul Floating Liquefied Natural Gas (FLNG) has delivered $34Million into the Mozambican treasury as of mid-May 2023.

Coral Sul FLNG has a gas liquefaction capacity of 3.4Million tons per year; it produces LNG from the 16 Trillion cubic feet of gas (estimated recoverable reserves) in the ultradeepwater Coral reservoirs.

The project’s first LNG shipment departed for the market on November 13, 2022.

Carta de Moçambique reports that the earnings will not be used before the approval of the Sovereign Fund, for which a legislative bill is l working its way through Parliament. The purpose of the Sovereign Fund is to manage revenues from natural gas mega-projects. It will be under the purview of the Bank of Mozambique.

$7Billion was invested on the project by ENI and its Area 4 partners, including Mozambique Rovuma Venture (MRV) S.p.A. which is a Joint Venture co-owned by ENI, ExxonMobil and CNODC, with 70% participating interest, Outside of that, the state hydrocarbon company Empresa Nacional de Hidrocarbonetos E.P. (ENH), has 10%; Galp Energia Rovuma B.V. has 10% and KOGAS Mozambique Ltd. holds 10%.

How Natural Gas Market Integration Can Help Increase Energy Security

By Rachel Brasier, Andrea Pescatori, and Martin Stuermer-IMF

Natural gas might be the same commodity everywhere in the world, but prices can vary dramatically because of the complex network of infrastructure needed to transport it.

The result is a partially fragmented global market, mainly because most natural gas moves by pipeline—unlike the market for crude oil, which is more integrated and tends to trade at a single price in most places. Such fragmentation in the natural gas market means not only that prices differ across regions, but also that high prices in one part of the world don’t necessarily transmit to buyers in other places.

Russia’s invasion of Ukraine provided a stark illustration of the effects of segmentation. Pipeline flows to Europe from Russia dropped by 80 percent since mid-2021, sending the continent’s gas prices up 14-fold to a record level in August 2022.  Prices for globally traded liquefied natural gas saw a similar jump. But LNG prices in the United States merely tripled, remaining several times below Europe and Asia.

The disparity in prices, and the US insulation against global gas-market shocks, stems from the idiosyncrasies of gas extraction and transportation. Historically, the US market was linked to crude oil prices because gas was mostly a byproduct of oil drilling, but this relationship, sometimes called artificial integration, has been unwinding over the past decade, mainly because of rising shale gas production. And as gas production surged in the US, which surpassed Russia in 2012 as the world’s largest producer, and export terminals were built, it became easier to sell into markets beyond North America.

Another important factor for gas prices is the technology needed to liquefy and ship the fuel, which must be converted into a compact form—about 600 times smaller by volume than in its gas form—called liquefied natural gas before it can be loaded onto specially designed carriers for transport by sea or road.

LNG export capacity is fixed in the short-term. Facilities for the liquefaction, exporting, importing, and regasification require major investment, so a regional shock, such as Russia’s invasion of Ukraine, can send regional prices moving in different directions.

After the invasion last year, Europe turned to LNG to replace pipeline imports of Russian gas, and US shipments emerged as a key substitute. Why was that possible when US LNG export capacity is fixed? With gas in Europe commanding a temporary price premium during the spring and summer of 2022, Asian customers of US LNG decided to reroute their cargoes to sell in Europe.

There is another important quirk of the natural gas market at play. Pricing formulas for long-term delivery contracts with US companies usually use US prices. That meant Asian customers with long-term deals could buy more cheaply from the US, then reroute tanker ships at sea to sell cargo at the much higher European spot market price.

Despite an increasing reliance on LNG as a substitute for Russian pipeline gas, European LNG import capacity turned out not to be a binding constraint on market integration. European import terminals had plenty of spare capacity before Russia’s invasion of Ukraine, and with the addition of mobile floating storage regasification units, Europe has the necessary infrastructure to accommodate higher volumes of LNG imports.

On the other hand, the United States and other gas producers are exporting at the limits of their capacities, and expansions to global LNG export capacity are needed to bring European and Asian prices back to historically normal levels over the longer term. In the United States, these capacities are poised to keep growing, even after already rapid gains. The first LNG export terminal in the country opened in 2016, followed by many more.

Sizable expansion projects already under construction in the United States, Africa, the Middle East, and elsewhere are likely to increase global LNG export capacity by 14 percent by 2025. Other planned projects could bring export capacity to around 1Trillion cubic meters, roughly a quarter of last year’s global gas consumption.

Securing financing to build new terminals, however, can face major hurdles. Companies need 15- to 20-year contracts to obtain bank financing for construction. Terminals usually cost $10Billion to $15Billion and take two to four years to complete. Timelines are less certain for projects without long-term sales contracts, and some may never be built.

Ultimately, expanded LNG export capacity for the United States and other producers may prove crucial to creating truly global gas markets that are balanced across regions. As advanced economies increase reliance on weather-dependent renewable energy from wind and solar, they will likely see critical periods of increased demand for supplemental natural gas to meet power generation needs. Integrating global gas markets and building needed infrastructure allows prices to stimulate demand and supply reactions in larger, more integrated markets. This helps to buffer global energy markets against supply shocks

TOTAL Sets up a $200Milion Foundation for Community Development in Moza’s Gas Rich District

TOTALEnergies has received the report of the human rights advocate it commissioned to evaluate the conflict challenges and living conditions of the communities around its project in Mozambique’s gas rich Cabo Delgado Province.

The French major has elected, based on the report by Jean-Christophe Rufin, to set up a well-heeled foundation with a detailed, comprehensive work programme.

The 800-word press release focuses on improvements in community engagement and makes scant reference to the fatal attacks by Islamic insurgents which drove TOTAL and its contractors away from the LNG plant construction site in April 2021 and led to the commissioning of Mr. Rufin’s investigation.

TOTAL says that itself and its partners in the Mozambique LNG Ltd have approved the following action plan:

– Mozambique LNG shall establish a dedicated Foundation for the implementation a socio-economic development programme covering the whole territory of the Cabo Degaldo province, as part of a consistent and sustainable development strategy. The action of the Foundation will be guided by an objective of shared prosperity in the province, without waiting for the revenues expected during the production phase of the project. In order to sustain its action, this Foundation will be provided with a multi-annual budget of $200Million. The Foundation will be headed by a recognized figure in the field of local economic development and overseen by a Board of Directors including representatives of Mozambique LNG and of the civil society. Its actions will be conducted in a coordinated manner with the activities carried out by the other development stakeholders present in the Cabo Delgado province. This Foundation will act under the name of “Pamoja Tunaweza” (“together we can” in Kiswahili).

– Regarding the populations affected by the development of the Afungi industrial site, the following actions will be implemented:

  • The relocation and compensation process will be audited to identify the corrective actions to be implemented.
  • The resettlement of the Quitupo village residents will be finalized without delay. To that end, Mozambique LNG will complete the construction of the new Quitunda village houses by the end of the Summer 2023. All Quitunda houses shall be equipped with access to solar energy.
  • The inventories of the assets of the populations affected by the project and subject to compensation (constructions, land plots and plantations) will be updated, to ensure that compensations fully reflect the current situation of these assets.
  • The payment of compensations to families affected by the project will be accelerated. A taskforce shall be set up together with the Mozambican authorities to enable all families to obtain, by the end of the summer in 2023, the legal documents required to receive the payments due to them.
  • Access of local communities to agricultural areas will be facilitated and enlarged. Given that the Mozambique LNG industrial facilities do not occupy the entire land area granted by the Government of Mozambique, a surface of about 2,000 hectares located in periphery of the site will be made available to local communities for agricultural activities.
  • Individual transportation means will be provided to the fishermen resettled in Quitunda, to facilitate their access to the various fishing areas.

The report notes that the security situation in the north of Cabo Delgado has evolved positively in 2022 and recommends reviewing the framework of relations between Mozambique LNG and the Mozambican Defense Forces in light of this situation. Mozambique LNG has started a dialogue with the Mozambican authorities to this end.

Finally, a follow-up mission to monitor the implementation of this action plan will be carried out by Jean-Christophe Rufin at the request of Mozambique LNG project partners.

First E& P Plans an Offshore Gas Gathering Hub

FIRST E&P is developing an open-access offshore gas gathering and processing hub around its operated OML 83 and 85 assets. The company is hoping the facility could have the capacity to process 1Billion standard cubic feet per day, from a mix of FIRST E&P’s gas as well as other third-party gas within a 60- to 80-kilometre radius.

First E&P thinks this is an opportunity because there is, in Nigeria, an absence of open-access gas gathering, processing and transportation infrastructure in the offshore terrain.This offshore gas hub will process wet gas to pipeline specifications as well as enhance value from our gas resources with extraction of the condensate and NGLs. Robust gas transportation options in addition to pipelines, such as LNG and CNG, will also be incorporated into the development concept to efficiently serve both local and international markets. The offshore gas hub plant FEED has been launched and is expected to be completed in mid-2023 when the formal project FID is scheduled to be taken to assure first gas is on stream in 2026.

There is no certainty, though, that the FID could be taken this year.

Such a project would fill a vast infrastructure gap, which has obstructed monetization of offshore gas resources in the country.

Unlike crude oil, raw gas must be processed and conditioned to pipeline-specification gas flow, which entails separating the gas liquids, condensates and related heavy ends before moving it onshore or commercialising demand points efficiently.

Negotiations Concluded: HGA, PSA on Tanzanian LNG to Be Signed in a Few Weeks

Norway’s Equinor and UK based Shell Plc have concluded negotiations on key agreements on the Tanzanian LNG development with the Government.

“Subject to successful completion of the assurance process over the coming weeks”, says Jared Kuehl, Shell’s Vice President and Country Chair for Tanzania, “we anticipate signing a Host Government Agreement (HGA) that covers the onshore elements of the project, and a Production Sharing Agreement (PSA) that oversees its upstream component”.

Unni Fjaer, Managing Director of Equinor Tanzania, notes: “Negotiations on key agreements between the international energy companies (IECs) and the Tanzanian government are now concluded, and the documents are now subject to final reviews and approvals before their expected signing in the following weeks”.

Shell’s Kuehl describes the update as “a significant milestone, on the long path to realising such a major project like Tanzania LNG, with the next steps involving a period of time of detailed engineering design work”. He says that Equinor and Shell, “as joint operators, are pleased with the steps forward and remain focused on continuing to work together with our partners (ExxonMobil, MedcoEnergi and Pavilion Energy), TPDC and of course the Government of Tanzania.”

Equinor’s Fjaer thanks “the Tanzanian government, the negotiating team from Equinor, Shell, ExxonMobil, Medco, Pavilion and TPDC for their hard work throughout this process”. She adds that the end of negotiations “paves the way for the series of milestones that need to follow to realize this fantastic LNG opportunity for the country and the world.”

The deal will allow the two European E& P giants to start engineering work on a project that will pump over 1.5Billion cubic feet per day of gas in three deepwater blocks to a 10Million-15Million tonne per annum LNG plant on the Indian Ocean coast town of Lindi.


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