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Kinetiko and Renergen: How Domestic Gas Production can help Mitigate South Africa’s Energy Crisis

By NJ Ayuk

The country’s fuel and energy sector is truly in trouble, with power shortages and blackouts worse than ever before

South Africa is facing an energy crisis on a very large scale. It’s not for nothing that President Cyril Ramaphosa took the unprecedented step of declaring a “national disaster” in February. The country’s fuel and energy sector is truly in trouble, with power shortages and blackouts worse than ever before.

There are some hopes for relief, including efforts to find new sources of fuel for thermal power plants (TPPs).

On the one hand, South Africa possesses large offshore natural gas reserves in the Outeniqua basin and may be able to find more in its section of the Orange basin and elsewhere. On the other hand, it shares borders with other two future gas producers – Namibia and Mozambique, both of which have sizeable reserves and smaller populations than South Africa – that may be willing to export some of their bounty under the right conditions.

Nevertheless, these solutions are still some distance away, given that it will take years to bring gas from these large-scale projects to market.

In the meantime, South Africa should not lose sight of the fact that it has other solutions at hand.

It is true that the solutions I’m talking about are considerably smaller in scale and humbler in nature than the massive projects I’ve already mentioned. They don’t target massive reservoirs in deepwater frontier basins, and they won’t deliver hundreds of thousands of barrels of oil equivalent per day  through multi-billion-dollar investments. But they do have the potential to offer crucial support to Africa’s second-largest economy at a time of severe crisis.

I know of two companies that are in a position to offer this kind of support. Nevertheless, these solutions are still some distance away, given that it will take years to bring gas from these large-scale projects to market.

In the meantime, South Africa should not lose sight of the fact that it has other solutions at hand.

  • Kinetiko Energy: Onshore Gas Supplies to Local Power Stations

One of them is Kinetiko Energy, an Australian company that is working to develop conventional gas reserves in southern Africa. Its primary focus is the Amersfoort-to-Volksrustregion, which focuses on a large gas deposit in the Mpumalanga province, southeast of Johannesburg. Kinetiko is still working to determine exactly how much gas its licenses contain, but it is optimistic in light of the fact that the area has long been known to hold very high-quality methane in shallow sediments and coal-beds, and it has estimated its 2C resource at 4.9Trillion cubic feet.

On January 30, 2023, the company issued a statement extolling the “record breaking” results achieved from a new core well, 271-23C, during logging and core-sample testing after the completion of a three-well drilling program. The statement included some insights into the well’s geology, but it also quoted Kinetiko CEO Nick de Blocq as saying that 271-23C was in a favorable geographic location. Specifically, he drew attention to the well’s position in Block ER271, close enough to the Majuba TPP to represent a field which could supply it with gas in addition to coal, its usual fuel.

Meanwhile, de Blocq also drew attention to 270-03C and 270-06C, the other wells drilled during the three-well drilling campaign. He pointed out that the Lily Pipeline runs through all of Kinetiko’s current blocks, including Block ER270. This is South Africa’s largest gas conduit, which transports (primarily Mozambican) gas from Sasol’s Secunda plant to coastal cities and to industrial consumers in the KwaZulu Natal region. “The proximate location of our southernmost boreholes in ER270 to the steel-smelting and manufacturing centre of Newcastle could mean a simplified logistical solution to get the gas to an increasingly hungry thermal industry market,” he stated.

Of course, it is true that Kinetiko is still working to finalize its plans. It has yet to determine exactly when it can begin commercial production, having started the activities required to evolve their Exploration Right into a Production Right, and it is busy negotiating with midstream players who bring downstream offtakers and financing. But it is optimistic about its ability to launch small-scale development quickly — and about its ability to make a local power-generating entity one of its very first clients. This is the sort of initiative and drive that has the potential to benefit South Africans greatly on a local level while larger-scale solutions come together, and I hope to see more of it.

INDEED, IF SOUTH AFRICA WAS WILLING to take steps to open up more of the onshore basins that might hold gas — such as the Karoo basin— it would be giving investors a signal that it was ready to entertain new solutions to a problem that has persisted for far too long.

Of course, when I call for new solutions, I don’t mean it’s time to give free rein to polluters and forget about environmental concerns entirely. If South Africa is going to develop an onshore gas industry, the government ought to be making plans to develop the regulatory regime accordingly, and investors ought to be keeping environmental concerns front and center as well.

But there’s good news: Some of them are already doing so.

(2) Renergen: Demand for Gas Beyond Power Generation

And that brings me to my second example: Renergen, the native South African company that is carrying out the Virginia gas project.

Renergen has been working to develop three conventional gas fields in Free State – Theunissen, Virginia, and Welkom, which are collectively estimated to hold nearly 407Billion cubic feet  of conventional natural gas in proved and probable (2P) reserves. It is keen to monetize these fields because they contain relatively high levels of helium — a commodity that is both valuable and rare — as well as gas. As such, it has worked to transform its initial compressed natural gas (CNG) initiative into a larger-scale and considerably more ambitious liquefied natural gas (LNG) project.

In September of last year, Renergen started up its onshore gas liquefaction plant, becoming South Africa’s very first producer of LNG. The company touted its environmental credentials in a Twitter post announcing the launch, noting that the plant’s output would help reduce the country’s carbon footprint by making a new type of fuel with lower emissions intensity than diesel available for trucking and other commercial uses. It was referring to a deal signed in the summer of 2020 with Total South Africa, a subsidiary of the French major TOTALEnergies on joint marketing and distribution of LNG. Under that deal, Renergen agreed to deliver some of the LNG from the first phase of its plant to Total-branded filling stations along the N3 road, a major highway connecting Durban and Johannesburg, for sale as a long-haul trucking fuel. It also pledged to make more LNG available for distribution and sale via Total stations along other key highways once the second phase of its plant came online, saying that expanding the use of LNG in the road freight sector would help curb the rise in carbon emissions.

But Renergen has not confined its efforts to transport. It has also targeted industrial customers, and in August 2021 it signed a five-year supply agreement with Ardagh Glass Packing (previously known as Consol Glass), a supplier of glass packaging materials based in Johannesburg. Then in February 2022, it followed that with another five-year deal — this time, with Ceramic Industries Group, based in Vereeniging. Both Ardagh and Ceramic Industries are subsidiaries of Italtile, based in Cape Town; Ardagh has said it intends to use the LNG to replace liquid petroleum gas (LPG) at its Belville operation in the Western Cape area, while Ceramic Industries will use LNG to supplement the gas supplies it receives via pipeline. Renergen made its very first shipment of LNG to Ardagh’s Belville site in December 2022 after setting up turn-key delivery facilities per the terms of its contract.

At that time, the company said it had received expressions of interest in its LNG from multiple South African businesses, including independent power producers (IPPs), large-scale industrial manufacturers, and heavy logistics operators. It did not name any potential new clients, and since then, its efforts to drum up new business may have been overshadowed by the escalating energy crisis.

Nevertheless, Renergen’s efforts to establish a foothold in the industrial and transport sectors are important. They demonstrate that there is ample room for natural gas in South Africa – that there are opportunities for gasification in the country that are not confined to the power-generating sector.

Yes, South Africa urgently needs gas to help resolve its energy emergency. Gas will help South Africa find ways to produce the additional electricity it needs to provide all of its citizens with reliable and secure power — both in the longer run as new offshore fields come online and in the shorter term as companies such as Kinetiko and Renergen develop onshore resources.

But South Africa could also use gas for other purposes. It could use gas as a substitute for diesel in long-haul trucking — and thereby reduce emissions in the transport sector. It could introduce LNG as a fuel for industrial customers — and thereby reduce emissions in that part of the economy, while also reducing the drain on the national transmission grid. It could create markets that can be sustained and made profitable even beyond the time when (I hope) the current crisis will be nothing but a memory.

Let us give South Africa’s smaller-scale gas producers a chance to grow.

NJ Ayuk is the Executive Chairman of the African Energy Chamber (www.EnergyChamber.org) and Author of “A Just Transition: Making Energy Poverty History with an Energy Mix”.


Chariot Envisages 105MMscf/d for a Start in Moroccan Project

UK listed junior Chariot has requested Engineering, Procurement and Construction (EPC) commercial proposals after completing the Front-End Engineering and Design (FEED) on the key components of its Anchois gas development project, offshore Morocco.

The FEED, the company says, confirms the individual components of the initial development, which includes:

Three initial subsea producer wells, including the Anchois-2 well drilled by Chariot in 2022, with multi zone completions to enable gas recovery across multiple stacked sands;

  • Subsea infrastructure (SURF and SPS) capable of delivering produced hydrocarbons from the wells to the onshore facilities via a subsea flowline and controlling the wells via an umbilical, with future expansion capabilities to tie-back additional wells;
  • Onshore central processing facility (CPF) to process the hydrocarbons and to deliver treated gas and condensate to market, with an initial capacity of one hundred and five million standard cubic feet of gas er day (105MMscf/d); and
  • Onshore gas pipeline to deliver the gas to the anchor gas offtakers via the Maghreb Europe Gas Pipeline (GME), for which a tie-in agreement has already been signed.

The Anchois gas field is located within the Lixus Offshore licence area in which Chariot holds a 75% interest and operatorship, alongside ONHYM which holds a 25% interest.

The FEED was initiated in June 2022, in conjunction with the subsurface development studies, this work

Chariot says that other technical work has been progressing in parallel with the FEED, in the lead up to development sanction, including:

  • Environmental, Social Impact Assessment (ESIA), for which onshore and offshore environmental baseline surveys (EBS) have already been conducted;
  • Field Development Plan (“FDP”) is being finalised by the Lixus joint venture partnership to enable the award of the production concession;
  • Development drilling planning is ongoing which can further evaluate the potential of an additional 754 Bcf of 2U prospective gas resources for minimal additional cost. The targets identified have an independently assessed geological chance of success (“Pg”) ranging from 49-61%.


Mozambique’s LNG Projects: Becoming a Reality?

An Opinion piece, By Gerard Kreeft

On 23 November 2022, the President of Mozambique, Filipe Jacinto Nyusi, visited and inaugurated the Coral-Sul Floating Liquefied Natural Gas FLNG facility. The event was attended by Carlos Zacarias, the country’s Minister of Mineral Resources and Energy and other government representatives. ENI’s delegation at the commissioning was led by Guido Brusco, Chief Operating Officer Natural Resources.  The event took place after the shipment of the first LNG cargo on 13 November from Coral Sul FLNG.

The inauguration of ENI operated Coral Sul FLNG project in Area 4 acreage offshore Mozambique deserves special attention. This focus is due at a time when the two of the country’s most highly touted LNG projects—Rovuma and Mozambique LNG– continue to be on security hold.

While LNG markets throughout 2022 and most likely in 2023 are scrambling to meet European and global gas demands, there has been radio silence on two of Africa’s most touted LNG projects located in Mozambique: Rovuma owned by a consortium consisting of ExxonMobil, ENI, China National Petroleum Company, Galp, Kogas and ENH; and Mozambique LNG owned by TOTALEnergies, Mitsui Group, ENH, ONGC, Bharat Petroleum, PTTEP, and Oil India.

Because of the security situation in the north of Cabo Delgado province, both projects have been at a standstill since 2021. In February 2023 TOTALEnergies sent an independent mission to Mozambique to evaluate the security status. The key question: will both TOTALEnergies and ExxonMobil resume their potential projects in the short-term?

Security clearance aside, a number of hurdles remain.

The TOTALEnergies project took Final Investment Decision in 2019. The ExxonMobil led project withheld its FID and has not taken that decision. Even if TOTAL returns to the project in 2023-2024 the earliest delivery of LNG would be 2027-2028, based on past project planning scenarios. We have no idea when ExxonMobil will take FID.  What we know is that the LNG global marketplace is shifting and could provide the Mozambique project planners some additional headaches.

LNG’s Present Situation

In its recent Global LNG Outlook 20230-2027, the Institute for Energy Economics and Financial Analysis (IEEFA) provides a somewhat sobering picture for new LNG projects. The institute  “expects that sustained high global LNG prices; weak LNG demand growth and elevated price sensitivity in Asia; declines in gas consumption in Europe; and a multi-year string of global capital investments in cost-competitive energy alternatives will undermine global LNG demand growth over the next several years.”

According to IEEFA the global demand for LNG is slowing:

Europe, although maintaining a high degree of importing LNG is also increasing  energy efficiency measures and wind and solar projects have become commonplace;

Japan and Korea, historically dependable LNG importers, are increasingly turning to nuclear, and renewables;

China decreased its LNG imports by 20% in 2022 and is turning to pipeline gas supplied by Russia as well as domestic gas supplies;

South Asia, including India, Pakistan, and Bangladesh slashed purchases by 16% in 2022 and suppliers often defaulted on contracts to obtain higher prices elsewhere.

“After several years of weak supply growth, IEEFA anticipates that the global LNG market will see a tidal wave of new projects come online starting in mid-2025. The wave will likely crest in 2026, with the addition of 64Million metric tonnes of annual (64MMTPA) liquefaction capacity—the most in the history of the global LNG industry. The supply additions will boost global liquefaction capacity by roughly 13% in a single year. Liquefaction projects targeting in-service after 2026 may be entering a much smaller demand pool than bullish market forecasts anticipate. As new supply floods the market, today’s tight markets may give way to a supply glut, with lower-than-anticipated prices, smaller netbacks, tighter margins, and lower profits for LNG exporters.”

According to IEEFA’s forecast in 2023 only 5.8MMTPA of liquefaction production will be developed, and in 2024 9.1MMTPA. Total LNG production capacity is currently 456MMTPA.

The turning point will be 2025.

“IEEFA anticipates that roughly 17MMTPA of liquefaction projects are likely to come online around the world in 2025—more than in 2023 and 2024 combined. New capacity additions will crest in 2026, with an estimated 64MMTPA of capacity coming online in a single year, and continue into 2027, when 37MMTPA of new capacity is expected to begin operating”.…

Much of the new production will come from Qatar, USA and Australia. If 2026 and 2027 will see a sharp upturn in LNG liquefaction production, how will this affect Mozambique’s two LNG projects which could potentially add 38.1MMTPA when fully functioning? Long term delays can only threaten project viability. And not proceeding sooner rather than later increases the chances of these projects being listed as stranded assets.

A more immediate threat is that of ENI’s Coral South project already in operation. BP has contracted the entire output of Coral Sul for 20 years, having signed a free on board (FOB) contract with the project partners. In July 2022, it was reported that ENI was considering the possibility of deploying a second floating liquefied natural gas vessel in Mozambique. What does this mean for Rovuma and Mozambique LNG?

The Players and their Strategies

ENI, ExxonMobil and TOTALEnergies have varying strategies. So, how they will potentially address their Mozambique LNG projects?

A key ENI strategy is developing a series of joint-ventures to ensure that ENI can achieve maximum leverage for its current oil and gas assets and at the same pursuing new strategies as part of its energy transition plan. A key example is Azule Energy, Angola, a 50-50 joint venture between ENI and BP formed in 2022 to include both companies’ upstream assets, LNG and solar business. Azule Energy is now Angola’s largest independent equity producer of oil and gas, holding 2Billion barrels equivalent of net resources and growing to about 250,000 barrels equivalent per day (BOEPD) of equity oil and gas production over the next 5 years. It holds stakes in 16 licences (of which 6 are exploration blocks) and a participation in Angola LNG JV. The company also participates in the New Gas Consortium(NGC), the first non-associated gas project in the country.

TOTALEnergies is currently testing the waters: in February 2023 Patrick Pouyanné, Chairman and CEO of TOTALEnergies, visited the Cabo Delgado province of Mozambique to review the security and humanitarian situation and evaluate the actions taken by Mozambique LNG.

ExxonMobil has in the past followed the security precedents of TOTALEnergies and will no doubt do this again. That ExxonMobil is a partner in the Coral South project could strengthen its bargaining hand.

That LNG plays a pivotal role in the energy transition for both ExxonMobil and TOTALEnergies is beyond dispute.

ENI’s pole position that the company has with its Coral South project cannot be underestimated. And with Rovuma and Mozambique LNG scheduled to come on stream possibly in 2027, with a weakened global demand for LNG, both ExxonMobil and TOTALEnergies may have to go cap-in-hand to ENI to discuss possible project options. Finally, do not forget that the Government of Mozambique will seek an orderly development of its LNG resources. Certainly, a story of musical chairs in the make.

Gerard Kreeft, BA (Calvin University, Grand Rapids, USA) and MA (Carleton University, Ottawa, Canada), Energy Transition Adviser, was founder and owner of EnergyWise.  He has managed and implemented energy conferences, seminars and university master classes in Alaska, Angola, Brazil, Canada, India, Libya, Kazakhstan, Russia and throughout Europe.  Kreeft has Dutch and Canadian citizenship and resides in the Netherlands.  He writes on a regular basis for Africa Oil + Gas Report and is a guest contributor to IEEFA(Institute for Energy Economics and Financial Analysis) based in Cleveland, Ohio, USA. His book ‘The 10 Commandments of the Energy Transition ‘is on sale at https://books.friesenpress.com/store/title/119734000211674846/Gerard-Kreeft-The-10-Commandments-of-the-Energy-Transition


BP Takes a Stab at Second Phase of GTA LNG Project 

bp and partners have confirmed the development concept for the second phase of the bp-operated Greater Tortue Ahmeyim (GTA) liquefied natural gas (LNG) project that they will take forward to the next stage of evaluation.

The partnership – composed of bp, PETROSEN, Société Mauritanienne des Hydrocarbures (SMH) and Kosmos Energy – will evaluate a gravity-based structure (GBS) as the basis for the GTA Phase 2 expansion project (GTA2) with total capacity of between 2.5-3.0Million Tonnes per Annum.

GBS LNG developments have a static connection to the seabed with the structure providing LNG storage and a foundation for liquefication facilities.

The concept design will also include new wells and subsea equipment, integrating with and expanding on existing GTA infrastructure. The partnership will consider powering LNG liquefication using electricity to help drive operational emissions lower. bp and its partners are now working with contractors to progress the concept towards the pre-FEED stage.

GTA is located in water depth of 2,850metres, one of the deepest subsea developments in Africa. Phase 1 – currently under development – will export gas to an FPSO approximately 40kilometres offshore where the gas will be processed and liquids separated, before exporting gas onward to floating LNG facilities 10kilometres offshore. It is expected to produce around 2.3Million tonnes of LNG per year when operations commence.

In July 2021, the GTA project was granted the status of ‘National Project of Strategic Importance’ by the Presidents of Mauritania and Senegal. This recognition demonstrates the commitment of the host governments and the significance of the project to both countries.

bp and the two Governments already have a long-standing and wide-ranging cooperation encompassing the GTA project and other potential energy developments. In October 2022, bp announced the signature of an exploration and production sharing contract for the BirAllah gas resource in Mauritania. In addition, bp continues to work with partners on the development of a major gas-to-power project in Senegal, Yakaar Teranga.

Most recently, bp signed a memorandum of understanding (MoU) with the Government of Mauritania to deliver a programme exploring the potential for large-scale production of green hydrogen in the country.


BWE Seeks Project Financing Solution for Namibia’s Kudu Gas to Power Development

Norwegian operator BW Energy, has reported the most far-fetched advancement in the development of Kudu gas field offshore Namibia in the last five years.

The company says it signed, earlier in February 2023, an Engagement Protocol with the local power company NamPower Corp. BWE also says it has made significant progress in understanding the complicated Kudu gas reservoir system, consisting of aeolian sands and volcanics, a factor which has challenged the field’s development fifty years after discovery.

The Engagement Protocol covers the project feasibility process and a term sheet for the Power Purchase Agreement and plan for final negotiations. The timing of final sanction Kudu gas-to-power development is subject to realising a project financing solution as well as negotiating power sales agreements.

“Two years of detailed subsurface work in Kudu has highlighted potential additional gas resources and shallower oil targets, of which the latter have been de-risked by recent discoveries in Namibia”, the operator explains. “BW Energy is currently acquiring a modern three dimensional (3D) seismic, gravity and magnetic dataset over the license This will further enhance the depositional model, de-risk additional upside targets, and provide better data to support FEED programmes in addition to potential future farm-in discussions”.

 


Ghana’s LPG Consumption in Sharp Decline

Consumption of Liquefied Petroleum Gas (LPG) has dropped sharply Y-o-Y in Ghana, as a result of higher prices.

The country’s National Petroleum Authority (NPA) reports a 12% decline in the consumption from 345, 477.075Tonnes in 2021 to 305,076.2Tonnes in 2022.

LPG prices shot up by as much as 100% from 2021 to 2022, reaching as high as $20 (or GH¢250) for the content of the 14.5 kilos cylinder in the latter part of the year.

Most of Ghana’s LPG is imported. In 2021, the Ghana National Gas Company (GNGC), a state owned hydrocarbon firm, produced only 90,327Tonnes, about 26% of the local consumption, according to data by the Public Interest Accountability Committee (PIAC).

Consumption in Greater Accra alone, at 106,000Tonnes, was higher than the overall in-country production

There have been strident arguments for the reduction of taxes on the product. Mustapha Abdul-Hamid, Chief Executive Officer of NPA, is on record as having promised to make a case for Cabinet to remove some of the taxes. Ghana imposes a price and stabilisation and recovery levy on petroleum products sold in the country.


AKK Is 43% Done, With High Ambition for 2023 Commissioning

By Prospectus Mojjido, in Abuja

The 614 kilometre Ajaokuta to Abuja to Kano (AKK) gas pipeline in Nigeria is 43% completed.

Construction of the two sections of the line, ground broken in 2020, have been interrupted by insurgency, kidnapping, community challenges over right of way, as well as the chronically inept logistics overview that usually attends any project superintended by the NNPC Ltd, Nigeria’s state hydrocarbon firm.

But the project is ongoing, despite widespread misgivings that it had been scuppered by the decision by China to pull out the funding.

The NNPC has essentially funded the project since the Chinese left.

AKK’s objective is to pump natural gas from Niger Delta fields entering Ajaokuta from Oben, in Nigeria’s mid-west, to Kano in the north of the country. There is also the probability that the gas will continue from Kano to Algeria, en route to Europe in a subsequent project named Trans Sahara Gas Pipeline. That subsequent project is not anywhere yet in concrete form.

The AKK emerged as part of the National Gas Master Plan, approved in 2008, which envisaged connection of the gas networks in the western and eastern parts of the country, building new transport pipelines from the south to Ajaokuta Steel, on to Abuja and then to the northernmost reaches of the country. The first part of the infrastructure required the construction of Central Processing Facilities (CPFs) in the Niger Delta region to process wet gas for supply to onshore gas transportation networks and industrial plants.

Although it has taken over two years since the groundbreaking to get to 43% stage, the harmonised schedule between NNPC and the two contractors constructing the facility, is end of 2023. “I can’t let my mind imagine anything outside 2023”, one contractor tells Africa Oil+Gas Report. “The focus helps”. The NNPC Ltd, as a rule, doesn’t respond to interview request by AOGR. This is a developing story.

 

 


Perenco to Build a Minuscule LNG Facility in Gabon

French independent Perenco has reached a final investment decision (FID) for a 0.7Million Tonne Per Annum (0.7MMTPA) Liquefied Natural Gas (LNG) project in Gabon

The facility, with a $1Billion invoice, will be sited at the Cap Lopez terminal.

Scheduled for commissioning in 2026, the Gabon LNG will be the smallest LNG export facility on the continent, coming after Cameroon’s 1.2MMTPA Floating LNG, the Hilli Episayo. which it also operates.

Perenco, currently the largest hydrocarbon upstream operator  in Gabon, hopes to produce 20,000Tonnes of Liquefied Petroleum Gas ( butane) per year for the domestic market, alongside the export LNG product.   The company has not disclosed which hydrocarbon field the gas will be extracted from.

Perenco has been involved in the Gabonese natural gas market since 2007, when it started supplying the molecules to power plants in the country’s two major cities: Libreville and Port-Gentil. The LNG project will be its first gas export facility.

 


Nigeria’s a Sizeable LPG Exporter, But Most of its Consumption is Imported

By Foluso Ogunsan

Chevron and ExxonMobil are still exporting Nigerian produced LPG

Nigeria exported 700,000Tonnes of Liquefied Petroleum Gas (LPG) in 2022, even as it grappled with inadequate local production to satiate domestic demand.

The country consumed 1.4Million Tonnes in the year, out of which 800,000Tonnes were imported, according to data by the Nigeria Midstream Downstream Petroleum Regulatory Agency (NMDPRA).

Only 600,000Tonnes of the 1,4Million Tonnes consumed, was locally produced, NMDPRA says.

As the government scrambles for more domestic LPG output to meet its target demand of 3Million Tonnes for 2023, the question is “why export all that LPG only to import more of the same products”?

One answer is that most of what is locally consumed is Butane, while the variant of LPG that is exported is Propane. The 700,000Tonnes of Propane exports left the country from processing plants run by Chevron and ExxonMobil.

Nigerian authorities aim to reduce all LPG exports to the barest minimum.  “We now need those volumes for sure” says Dayo Adesina, Programme Manager, National LPG Expansion Implementation Plan in the office of the Vice President. “Even the Propane is needed for Autogas, power generation and other sources of energy. Obviously, butane is for cooking”.

Local producers of LPG (in 2022) included Nigeria Liquefied Natural Gas (NLNG) Ltd ( ~350,000Tonnes Per Year), Kwale Hydrocarbon Nigeria Limited, KHNL, a subsidiary of  Sterling Oil Exploration & Energy Production Co. Ltd (~150,000Tonnes Per Year), NNPC E& P Ltd (Intermittent production from the Oredo field integrated gas plant), Platform Petroleum, (~20,000Tonnes Per Year from Egbaoma gas plant).

Adesina: “We need to know what you’re ready to do, what your challenges are, where we can intervene”

Talks are ongoing with Chevron and ExxonMobil on the modalities of retaining all LPG volumes in country. “It Is the Minister of Petroleum Resources that represents the federal government and I guess the joint venture partner in NNPC Limited as well”, Adesina explains, disclosing that one of the companies was “ready to free up 34,000Tonnes a month, (meaning 408,000Tonnes a year), but then the specification (to convert from Propane to Butane), you need to have a splitter on the receiving end”.

Adesina, himself a keen player in the LPG market and a former president of the Nigerian LPG Association, invited stakeholders for a round table discussion on midstream processing of gas on February 9, 2023. His guests included representatives from some E&P companies, including Seplat Energies, Heirs Holdings, Pillar Oil and First E&P; all of whom he challenged to either include LPG in their (planned or ongoing) gas production mix or boost its production in the mix;  NLNG Ltd;   Standard Chartered Bank and Africa Development Bank AfDB), two ranking financiers  who he sought to convince to put more investment into LPG production;  NMDPRA – the regulatory agency focused on LPG market opportunity whose representatives were there to clarify regulatory issues and explain government’s goals; a host of energy consultants including  Argus and Energy Culture as well as a Climate Accelerator expert.  At the session were two representatives of the Nigerian Bureau of Statistics, one of who canvassed vigorous arguments about incentives for choice of butane over kerosene.

Adesina told his guests: “By the time we leave here we should be able to say we have agreed on a Million Tonnes, 2Million Tonnes, half a Million tonnes, less or more over what we are producing now. We need to know what you’re ready to do, what your challenges are, where we can intervene, who we can bring forward. Anybody we need to bring we can bring; that’s the advantage of government. We know that foreign exchange is a problem, some agencies are also a problem too”.

 


Tanzania’s Domestic Gas Output Leaps Above 200MMscf/d

Tanzania is slowly but surely adding the figures required to be described as a ranking domestic gas market.

Its 2022 production is a five-year record-for the two assets which deliver the molecules to power plants and industry.

Combined, the Songo Songo gas field and the Mnazi Bay project output above 200Million standard cubic feet per day (200MMscf/d) in the year.

The Orca Petroleum operated Songo Songo field, the older of the two projects, had a roaring year, with 40% surge in output, to 110MMscf/d

Maurel &Prom and partner Wentworth Resources produced 90MMscf/d from the Mnazi Bay and Msibati fields, a project widely known as Mnazi Bay project.

A severe drought, which crimped water levels in the hydropower dams, forced up the usage of gas fired thermal plants and aided the increase in production of natural gas.

 

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