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Our Latest Edition: AFRICA/ Stepping on The Gas Annual 2021

Africa is in a far better place, today, with gas monetization initiatives, than it was a year ago, in October 2020.

The demand in Ghana, driven by the rise in electricity generation, is expected to rise from the 2020 level of 313Million standard cubic feet per day (313MMscf/d) to some 450MMscf/d.. by 2026. This is an astronomical leap for a country that wasn’t consuming natural gas 11 years ago.

Algerian natural gas output has surged after a 36 month plunge, reaching  10.64Billion standard cubic feet per day (Bsc/d) of sales gas in the first five months of 2021, up 30% year-on-year. More than 4Bscf/d is consumed in the domestic market.

Our latest edition, just released to our global pool of paying subscribers, covers the continent-wide growth and opportunity of the natural gas business.

TOTALEnergies retreated, in April 2021, from the construction site of Africa’s largest single gas monetisation project, in Mozambique.

Islamic insurgents, invading nearby Pemba district in March 2021, killing people, including dozens of  tourists, forced the European oil giant to call a Force Majeure on the 13Million Tonnes Per Annum (13MMTPA) Liquefied Natural Gas Plant.

But the French major didn’t cancel the project; the Mozambican government, undaunted, increased its security arsenal, invited Rwandan armed forces and a multinational SADC force composed of troops from Angola, Botswana, Lesotho, South Africa and Tanzania, to tackle the insurgency. The combined firepower has smoked out the jihadists from most of their camps and haunts. Now there’s frequent talk about TOTALEnergies returning to site by third quarter 2022.

Since our last STEPPING ON THE GAS ANNUAL, in 2020, there have been several encouraging news.  The 3.4MMTPA Coral South FLNG offshore Mozambique is confirmed to deliver first gas in 2022. In the same country, Sasol reached a final investment decision (FID) on the $760Million Temane natural gas project, which includes a 450 MW gas-fired power plant, a liquefied petroleum gas (LPG) facility and an increase in the volume of gas exported from Mozambique to South Africa. In the Ghanian port of Tema, TLTC, an LNG Terminal Company, received a regasification unit (RU) for its 1Million Metric Tonne Per Year project, which also comprises floating storage.

Nigeria has been on a roll: Construction is ongoing at the 8MMTPA Nigerian LNG Train 7. The 600MMscf/d ANOH gas project is cruising towards commissioning by mid-2022 and  AngloDutch Shell has agreed to supply 340MMscf/d to a proposed methanol and fertilizer plant in Odeama, a sleepy town in the Niger Delta region.

Meanwhile, Egypt’s gas demand has skyrocketed, hitting monthly records for each of the first six months of 2021 with the 6.07Bscf/d in 1H 2021 average up 9% on 1H 2020. That is a good problem. In this edition we take a survey of what’s exciting in African Gas.

The Africa Oil+Gas Report is the primer of the hydrocarbon and the growing new energy industry on the continent. It is the market leader in local contextualizing of global developments and policy issues and is the go-to medium for decision makers, whether they be international corporations or local entrepreneurs, technical enterprises or financing institutions, for useful analyses of Africa’s oil and gas industry. Published by the Festac News Press Limited since November 2001, AOGR is a monthly, publication delivered to subscribers around the world. Its website remains www.africaoilgasreport.com and the contact email address is info@africaoilgasreport.com. Contact telephone numbers in our West African regional headquarters in Lagos are +2348038882629, +2348036525979, +2347062420127, +2348023902519.

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NPDC Supplied Half a Trillion Cubic Feet, Earned ₦210Billion, from Natural Gas Supply, in 2020

By Toyin Akinosho

Nigeria Petroleum Development Company (NPDC) supplied 529.7Billion standard cubic feet of gas to 13 companies in 2020, earning ₦210Billion for its effort, according to the audited 2020 annual report of the Nigeria National Petroleum Corporation (NNPC), released in September 2021.

NPDC, the NNPC’s E&P operating subsidiary, supplied close to half of the volumes to NLNG, the report says.

NLNG, intriguingly received 256Bcf of gas throughout the year, or around 700Million standard cubic feet a day.

The least offtaker of gas from NPDC in 2020 was Dangote Fertilizer, which is also NPDC’s newest customer, as it started operations in 2020.

The NLNG data is intriguing because the only acreages in NPDC portfolio…Click here to read full article


Cameroon Will Import 120,000MT of LPG in 2021

Cameroon’s Bipaga Liquefied Petroleum Gas (LPG) plant, owned and operated the country’s National Hydrocarbons Corporation (SNH), supplied 25,092 metric tons (MT) of LPG to the local market in 2020, representing 16.93% of the national supply, according to SNH data. 

In 2021, this supply could rise to 34,000 MT, due particularly to the optimization of the natural gas (from Sanaga Sud) treatment process, the SNH adds. 

But the country consumes around 150,000MT per year.

Since Cameroon became a natural gas producer in 2018, then it has been processing part of its production to supply households. 

The Bipaga LPG depot, indeed, was commissioned in the same year. However, its production is currently unable to meet local demand. So, the country resorts to imports to fill the gas demand. For instance, to cover the needs this year, the country plans to import 120,000 metric tons of domestic gas.


Mozambique’s Floating LNG will Reach First Gas in 2022

By Toyin Akinosho

There is a clear line of sight for ENI operated Coral South Floating Liquefied Natural Gas (FLNG) to commence commercial production in 2022.

It is official.

Ernesto Max Elias Tonela, Mozambique’s energy minister, says the 3.4Million Tonnes Per Annum (3.4MMTPA) capacity production facility offshore Mozambique is on track to start as planned in 2022.

Coral South — which moved to final investment decision in 2017 — is based on the 16 Trillion cubic feet of resources in the Coral field in Area 4, offshore Mozambique.

But it is an entirely different project from the ExxonMobil led Rovuma LNG project, an onshore based 15MMTPA LNG facility which will monetise resources from the Mamba field in the same Area 4.

“This is the very first step, but a significant step, for Mozambique to join the LNG producing countries,” Tonela says.

In addition to the Coral South FLNG and Rovuma LNG (R-LNG) is the Mozambique LNG (M-LNG) project, a TOTALEnergies operated development which is 13MMTPA in scope.

Collectively, these three LNG projects add up to more than 30MMTPA of LNG production capacity under development, but they are evolving at varying speeds.

Whereas the Coral South FLNG is close to first gas, M-LNG took final investment decision in 2019, but construction has been obstructed by Islamic insurgency in the vicinity of the gas project. The Rovuma LNG facility, meanwhile, remains on hold with no final investment decision yet.

In late March, dozens of people were killed during attacks on the town of Palma, prompting TotalEnergies in April to declare force majeure on work at the M-LNG plant.

Tonela said the Coral South floating LNG vessel was due to arrive in the last two months of 2021 from a shipyard in South Korea. In 2016, ENI and its Area 4 partners signed an agreement with BP to take the entire volume of LNG to be produced by the project for over 20 years.

 


Mozambique Gets Very Little of Rovuma Gas for Domestic Market

The sale of nearly 90% of the production of the Mozambique LNG project has been secured by long-term contracts for delivery to customers in Asia and Europe, according to TOTALEnergies, operator of the 13Million Metric Tonne Project.

“Part of the remaining gas is expected to be kept for the domestic market in order to contribute to the country’s economic development. The first LNG shipments are expected in 2024”, TOTALEnergies explains in a briefing.

But even if TOTALEnergies was ready to set aside more gas for the country’s domestic market, the government wasn’t exactly bullish about pushing homegrown natural gas utilization.

As the country became surer about the likelihood of Final Investment Decision (FID) for the two massive LNG projects, (28Million Tons Per Year in total), the government selected several initiatives that would benefit from the domestic gas that the LNG partners were obliged to make available to the state. But all of the project promoters have been forced on the backfoot.

The Norwegian fertilizer company Yara International, which had been given the nod to build a petrochemicals plant supplied with gas from TOTAL operated Area 1 (after development), has since left, after raising several concerns about the slow pace of regulatory discussions between it and the authorities. Even if the gas was not going to be available until the first cargo of LNG is exported, there needed to be a framework. But the government’s wholesale focus on the export has sucked out all the energy in the room.

Anglo Dutch Shell’s plan to construct a Gas to Liquid Plant with the same Cabo Delgado gas was also stalled. So, Shell has left, as has GL Africa Energy, which won the bid for a 250-MW gas-fired power station. The three projects were meant to process at least 411 Million standard cubic feet of gas a day (411MMscf/d) after the commencement of the LNG production, with job opportunities.


TOTALEnergies May Return to Mozambique Gas Site by Mid 2022

TOTALEnergies is mulling the possibility of returning to construction site on the massive gas project in Mozambique by the first half of 2022.

“We are in constant discussion with them (TOTALEnergies)”, says Francesco Caio, CEO of Saipem, a key contractor on the project: a 13Million Metric Tonne Per Annum Liquefaction Plant in the north of the country. “The hypothesis, obviously depending on the evolution of the situation in the country, is that work can be resumed in the first half of next year”. 

Caio says that the project in Mozambique, which is the largest in which Saipem is currently involved, “remains in the order book as of June 30, 2021 for an amount of approximately 3.6Billion euros with a reshaping of construction times”.

TOTALEnergies declared the force majeure on the LNG Mozambique project on April 26, 2021, citing security reasons. The operator and its contractors evacuated the site.

Since then, however, the Mozambican government has boosted security by engaging the Rwandan army as well as the entire Southern Africa Development Commission, initiatives which have led to the deployment of military troops from South Africa, Botswana, Angola, and Malawi. President Fillipe Nyusi is keen on getting TOTALEnergies back to the project site on the Afungi Peninsula, for Africa’s largest ongoing gas processing plant. And despite the challenges, the French major itself has not taken the project off its radar.

“TOTALEnergies has always anticipated to us that this suspension would have lasted a minimum of 12 months”, says Maurizio Coratella, Saipem’s Chief Operating Officer of the Onshore Engineering and Construction Division. “The suspension started in the mid of April 2021. Therefore, all our numbers are reflecting a resumption of activities in the first quarter of 2022”.


With a Surging Domestic Gas Market, Ghana Defies the Sceptics

With 2020 consumption in excess of 315Million standard cubic feet per day (320MMscf/d), Ghana’s domestic gas market is growing faster than was assumed by energy experts, (mostly non-Ghanaian), just three years ago.

In 2018, it wasn’t so clear if Ghana could absorb, by 2020, the entire peak gas supply (180MMscf/d) prognosed to come from the (then) newly commissioned Sankofa field, operated by ENI.

But 165MMscf/d of Sankofa field production is already accounted for in the 2020 consumption, with Nigerian gas (coming from the West Africa Gas Pipeline) delivering over 65MMsf/d, in 2020, a figure that is still short of the contracted 123MMscf/d but is at least growing. Gas from Tullow Oil operated Jubilee field and TEN clusters of fields accounted for the rest:  around 85MMscf/d.

Ghana’s gas consumption increased from 115MMsscf/d in 2017 to 315MMscf/d in 2020.

“Gas demand in Ghana will be driven by the rise in electricity generation”, says Mike Fulwood, a senior research fellow at the Oxford Institute for Energy Studies (OEIS). “Based on a 45% increase by 2026, this would see a rise in gas demand from the 2020 level” of around 310MMscf/d to some 455MMsf/d. Fullwood says that the power plants in the Takoradi area (in Ghana’s western region) operated at a higher utilization rate in 2020 than those in the Tema area (a port town close to Accra in the east), at around 52% to 41% – for those plants fully operational. “Some of the older plants in the Takoradi area have had operational issues but the newer ones, including the Karpowership, are operating at high utilization rates and are very much baseload plants. “Over time we assume that the utilization of the Takoradi plants rises to some 60% but that any new power generation capacity is added at Tema”, Mr. Fulwood reports.

Still, while Ghana’s gas consumption is expected to keep increasing as electricity production and consumption increases, Fulwood doesn’t see the economic value in the country’s plan to import Liquefied Natural Gas (LNG). The LNG Terminal facility, already sited at Tema, received its floating regasification unit (FRU), built by Jiangnan Shipbuilding, in January 2021. The LNG FRU is designed for a regasification capacity of around 1.7Million Tonnes Per Annum (1.7MMTPA)tpa and is contracted to operate for approximately 20 years. The FRU will work in conjunction with a dedicated storage vessel (FSU), which is the newbuild 180,000cubic metres Vasant 1, and arrived at Tema port on May 26, 2021, having delivered just one cargo from Darwin in Australia to Yung An in Taiwan in February. The Vasant 1 is on a charter until July 1, 2022, and will then be replaced with an alternative FSU.

Fulwood cautions: “Ghana’s desire to import LNG is very different from other countries who are recent new LNG importers such as Malta, Gibraltar, and Myanmar. All these countries have dedicated power plants linked to the LNG imports so LNG is baseload and the economics can make sense. For Ghana, it is more diversity of supply, which is not a bad thing but can be expensive. The Vasant 1 FSU is on a charter until July 2022, reportedly at a charter rate in the low $20,000 a day– significantly below current market levels, especially given it is a new-build vessel. It is understood the lower rate is linked to the vessel’s speed limitation of 12 knots, making it less attractive on the standard market. The FRU also has to be paid for or chartered and if that was at a similar rate then a total of $50,000 a day would amount to some $18Million/year. Around 6 cargoes/year are needed to get the cost/MMBTU down to $1, which is reasonably cost-effective. At 2 cargoes/year, the effective cost is over $3/MMBTU, which is starting to make LNG look very expensive, once the commodity cost of LNG is included – currently $9 or $10 – and whatever costs are charged for the upgraded port facilities and the pipeline connections to the power plants”.


Advance Military Teams from SADC Arrive Mozambique

Advance teams from the Southern African Development Community (SADC) have arrived in Mozambique to support the battle against the Islamist terrorist groups, known locally as “Al-Shabaab”.

Colonel Omar Saranga, the Ministry’s spokesperson dismissed the news that the regional bloc’s full Standby Force, was already in the country.

The advance teams, he explained, are in Maputo and in Palma (a town in the province of Cabo Delgado), to prepare the deployment of the main force.

Saranga confirmed that General Xolani Mankayi, head of South Africa’s 43 Brigade, the rapid intervention unit of the South African National Defence Force (SANDF), will command the SADC Full Standby Force. Mankayi is already in Mozambique, “and he has been received by the Defence Minister and by the Chief of Staff of the Mozambican Armed Forces. He has received a briefing on the situation”, Saranga said. Last August, the energy press speculated that General Manyi had instructed the 43 Brigade to begin an intensive training programme for possible action in Cabo Delgado if President Cyril Ramaphosa decides to intervene. “Questions of command have been outlined in the combined planning”, Saranga offered. “Right now, what is important to say is not who will command or cease to command. The troops will be led by their respective commands, but the chief coordinator is the Republic of Mozambique”.

Islamic insurgents have killed hundreds of people and turned thousands to refugees in towns and villages located in the province and close to the Afungi Peninsula, where the TOTALEnergies operated 13 Million Metric Tonnes Per Annum Liquefied Natural Gas project is sited.

In late March 2021, just when TOTALEnergies’ workers returned to site in Afungi to continue construction, Islamic insurgents made their most sweeping attack on the neighboring Palma town.

TOTALEnergies pulled out its workers after that attack and Mozambique has since been looking for a way to permanently root out renewed attacks. Part of the effort was to call on member countries of the Southern African Development Commission (SADC) to provide military assistance.

Saranga waved aside questions regarding combat operations of Rwandan troops who arrived in the week of July 12, 2021. The questions referenced report by the independent newssheet “Carta de Mocambique, that soldiers of the Rwanda Defence Force (RDF) left their base on the Afungi Peninsula to patrol a forested area close to the town of Palma. They reportedly found a terrorist group in the Quionga administrative post, retreating towards the Tanzanian border, engaged them and killed 30 terrorists. Saranga said that questions about Rwandan forces “are operational question and I can’t answer it. It’s the force commander who can answer. The enemy may be watching our actions to see what direction we are going to take”. But he volunteered that the SADC member states who will take part in the Standby Force are South Africa, Tanzania, Angola, and Botswana, “and we are confident that, during the operations, more countries may express an interest in supporting Mozambique”.

“The SADC heads of state summit, held in Maputo on 23 June, approved a mandate for the deployment of the Standby Force”, Col. Saranga told reporters. “The objective was to support the national efforts to fight against terrorism in Cabo Delgado. Following up this mandate, in late June there was a joint planning conference, and this event outlined the next steps that should be taken to deploy the force”.

“What is happening right now is the implementation of this plan”, he continued. “The mandate envisaged that the deployment of the force should happen as from 15 July. So from 15 July to now, activities have been undertaken in order to receive this force, which is rather substantial. Steps are being taken so that it can be received and carry out its work. That means there are advance teams that are working with our troops on the ground to receive the force.


Mozambique Ready to Receive Southern African Troops in Cabo Delgado

Jaime Neto, Mozambique’s minister of National Defence, says that everything is ready to receive the troops of the Southern African Development Commission (SADC), who are expected in the country to help fight terrorism in the gas rich province of Cabo Delgado.

Islamic insurgents have killed hundreds of people and turned thousands to refugees in the towns and villages located in the province and close to the Afungi Peninsula, where the TOTALEnergies operated 13 Million Metric Tonnes Per Annum Liquefied Natural Gas project is sited.

In late March 2021, just when TOTALEnergies’ workers returned to site in Afungi to continue construction, Islamic insurgents made their most sweeping attack on the neighbouring Palma town.

“They want to intimidate us”, President Filipe Nyusi, Moazmbique’s head of state, and government said in a speech two weeks after the incident, declaring war. “Following the attack on the town of Palma, the situation in Cabo Delgado has received a lot of national and international attention. All of this attention is legitimate,” the President said. “This town and the adjacent Afungi peninsula are close to the natural gas deposits. It is in this region where the foundations for the exploitation of this resource so important to our economy are being laid. The town serves as the basis for construction works and provides logistical support for works underway in Afungi. So it is that Palma has, in recent years, experienced a rapid evolution in terms of infrastructure, including hotels, banks, and service providers. The Afungi peninsula is also the locus of various other constructions, such as camps and residential areas with access roads and its own aerodrome.”

TOTALEnergies pulled out its workers after that attack and Mozambique has since been looking for a way to permanently root out renewed attacks. Part of the effort was to call on member countries of the Southern African Development Commission (SADC) to provide military assistance.

Mr. Neto, the Defence minister, denies information about the postponement of the arrival of the regional force, due to alleged procedural issues on the part of Mozambique.

“There are already officials in Mozambique who are dealing with the arrival of this SADC intervention force”, the minister explains.

The journal Club of Mozambique quotes Neto as saying that there is no reason, from Mozambique’s point of view not to have the military intervention. “We are prepared”.


Jubilee, TEN Deliver 120MMscf/d of Gas to Ghana’s Atuabo Plant

By John Ankromah, in Tema

Tullow Oil has announced that its oilfield production performance in Ghana “continues to be supported by reliable gas offtake from the Government of Ghana”.

That offtake, from Jubilee field and the TEN cluster of fields, “is regularly averaging between 110 – 130MMscf/d”, the company says in its latest operational statement.

This is a far more upbeat news about gas production than Tullow has had in the last two years.

It suggests that the Ghanaian economy is absorbing an increasing volume of natural gas.  In late 2019, Tullow had lamented that “Gas export from both fields has been limited in 2019 due to low demand from the Ghana National Petroleum Company (GNPC)”, which is the offtaker.

“Discussions on increasing gas offtake are ongoing with GNPC with an increase anticipated towards end of 2019. Sustaining increased levels of gas offtake will reduce the amount of gas being reinjected into the fields, improving oil production over time”, the operator explained.

The gas that Tullow supplies to the Ghanaian government is delivered unprocessed from the two FPSOs (Kwame Krumah for Jubilee and John Atta Mills for TEN) through 12-inchpipelines to the Ghana National Gas Corporation (GNGC) controlled Atuabo plant, which has a processing capacity of 150MMscf/d. Processed gas is evacuated from Atuabo plant through a 20-inch 111km pipeline to (primarily) Volta River Authority’s Thermal Power Stations.

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