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Volkswagen Pushes for Incentives to Join Egypt’s Autogas Plan

By Toyin Akinosho, Publisher

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

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

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

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 Japanese car making giants Toyota and Nissan have also expressed interest, but Nissan has withdrawn, while Toyota is, like Volkswagen, pushing for incentives.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

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

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

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

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

 

 


Cairo Based East Mediterranean Gas Forum Finally takes Off

By Toyin Akinosho, Publisher

Six of the seven founding states of the Eastern Mediterranean Gas Forum signed its charter September 22, 2020, marking the official commencement of the body.

The East Mediterranean region has flashed brightly on the global hydrocarbon map in the last ten years, with the discoveries and development of over 50 Trillion of cubic feet of gas off Egypt (Zohr, 30Tcf, 2015, discovered by ENI); Israel (Leviathan, 22Tcf, 2010, discovered by Noble Energy) and Cyprus (Aphrodite, 5Tcf, 2011, discovered by Noble Energy).

Egypt, Greece, Cyprus, Italy, Israel, Jordan, and Palestine have all signed. Palestine was absent and will sign later. France has formally requested to be a member and the United States has registered intention to be a permanent observer. While Turkey is keen, its politics has appeared to rile up some members.

Turkey has been exploring for hydrocarbons in contested areas of the eastern Mediterranean, Cyprus and Greece have argued.

For Egypt, whose capital Cairo is the forum’s headquarters, it was a major step in the ambition to be the region’s energy hub.

The organization will serve as a market platform for natural gas producers, consumers, and transit countries in the region to develop existing resources and develop the infrastructure for future exploitation, in addition to regulating natural gas policies in the region that protect the rights of member states to preserve their resources, the signatories said in a joint statement after the online ceremony.

Member states will exchange information and seismic data studies on potential gas wells and delineate new gas finds that straddle maritime borders. Member states could even get preferential rates on each other’s gas supplies, as well as preferential access to liquefaction facilities, he said.

The forum had a launch meeting in 2019, during which the founding members agreed to move ahead with creating a regional market to develop the eastern Mediterranean’s estimated 122 Trillion cubic feet of gas reserves.

 


Egypt Faces Headwinds to Mass Autogas Conversion

By Mohammed Jetutu, in Cairo

Egypt is facing considerable obstacle to its plan to convert close to Two Million Vehicles into dual fired engines that could be fueled by both gasoline and natural gas in the next three years.

Japanese auto companies Nissan, and Toyota, two key early supporters of the plan, are no longer as enthusiastic as they once were.

Nissan has withdrawn. Toyota is playing hardball, asking for more incentives.

The two companies were to convert thousands of minibuses to run on dual fired engines.

Toyota had been far more supportive of the project, which targets 1.8 Million vehicles. Toyota had tentatively agreed it would manufacture 240,000 minibuses running on dual fired engines.

Toyota is now requesting for customs and VAT exemptions from the authorities and the negotiations are dragging out.

Apart from Toyota and Nissan, there are two local distributors of minibuses; Al Amal and Modern Motors. They are still fully engaged with the project.

Ultimately, President Abdel Fatah el-Sisi has said, Vehice licencing will be conditional on cars being equipped with natural gas engines.

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

In the meantime, Egypt’s Mass Transit Authority (MTA) says it would work with the Military Production Ministry to convert 300 buses to run on natural gas as a first phase, The MTA plans to convert the engines on its entire 3,500-bus fleet within two years.

The national conversion project follows up on a 2009 scheme that sought to replace 70,000 old taxicabs with zero- interest loan new vehicles fitted with dual fuel engines

Although the programme fits into the standard Egyptian government’s effort to utilize natural gas in the country, officials say that this scheme is targeted at ameliorating the cost of living. Whereas a litre of 80-octane gasoline, (the cheapest) fetches $0.39, the same volume of natural gas can be purchased for $0.21, at any of Egypt’s filling stations.

 


Nigeria to Continue Price Control of Natural Gas in the New PIB, Minister Says

By Fred Akanni, Editor in Chief

Producers and consumers of natural gas alike can agree on gas prices on a willing seller willing buyer basis, the Nigerian Minister of State for Petroleum has said.

“However special protections are built in to ensure supply to wholesale customers in strategic sectors which are the power sector, gas-based industries and commercial sectors with significant offtake possibilities”, he declared.

Timipre Sylva told a webinar hosted by the Nigerian Association of Petroleum Explorationists (NAPE) last weekend that the proposed Petroleum Industry Bill (PIB), expected to be engaged at the National Assembly within a few weeks, “establishes an attractive fiscal framework for gas that allows low royalty and corporate income tax and a variety of small taxes and levies.”

The bill, he explained, “will establish a gas base price that is higher than current levels for producers and this base price will increase over time. This price level should be sufficiently attractive to increase gas production significantly since this gas price will be comparable with gas prices in other emerging economies with considerable gas production.

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

Sylva said the proposed bill also will establish a flexible and comprehensive framework for midstream gas development. “Gas pipelines and gas processing plants can be built on own account of the investor. In addition, a midstream gas infrastructure fund Is being proposed in the PIB with the narrow focus of unleashing private investment to process gas and transport by pipelines”.

The webinar was part of the series of engagement by the 7,000-member strong NAPE, the largest umbrella group of technical professionals in Africa, with industry regulators and policy makers. NAPE has hosted, since April, Mele Kyari, Group Managing Director of the state hydrocarbon company NNPC, Sarki Auwallu, Chief Executive Officer Department of Petroleum Resources, the regulatory agency and Timipre Sylva, Minister of State For Petroleum Resources.

 


Cameroon Exported 6Billion Cubic Feet of LNG in Five Months

Cameroon shipped 158,000Tons of liquefied natural gas in the first five months of 2020, according to the National Hydrocarbons Corporation Société Nationale des Hydrocarbures (SNH) du Cameroun.

Converted to standard cubic feet, the volume is 6.1Billion cubic feet of gas, or 6.2Trillon British Thermal Units (BTU).

The molecules were exported in seven cargoes to markets in Asia, notably India, China, and Taiwan, an SNH report indicated.

Since 2018, Cameroon has been producing LNG from the Sanaga South field, northwest of the coastal town of Kribi in the northern part of the Douala basin.

The gas is liquefied in a floating facility, Hilli Episeyo, located off Kribi. The capacity is 1.2Million tonnes per year.

Small as it is, Hilli Episeyo Floating LNG project is the first floating natural gas liquefaction plant in the world to be built as a result of the conversion of an LNG carrier.

The project is operated by Perenco, the French-British independent, with the state hydrocarbon company as partner. The sole offtaker is Gazprom Marketing & Trading, a unit of Russian energy giant Gazprom.

Output increased in 2019 compared with 2018. In 2019 Cameroon shipped 19 loads of LNG (7 more than in 2018) to Asia.

 

 


High Rainfalls Crimp Natural Gas Demand in Tanzania

Natural gas demand by power plants in Tanzania were impacted by sustained and significant rainfalls that enabled the Tanzania Electricity Supply Company (TANESCO) to operate its hydro facilities at high utilization rates, Orca Petroleum has reported.

The country is now entering the dry season and gas demand is expected to increase for the remainder of the year.

But the state energy firm has remained a diligent customer to its gas suppliers.

“Despite the lower demand for gas from the power sector, TANESCO has continued to pay back its arrears during the first six months of the year”, Orca Petroleum says in a release.

Orca Petroleum produces natural gas from the Songo Songo gas field on Songo Songo Island onshore Tanzania. It is the biggest single supplier to the Tanzanian domestic gas market.

The company says it has carefully managed an operational team that has enabled it to maintain production on Songo Songo Island has enabled throughout the COVID-19 pandemic.

In seond quarter 2020, Orca’s production averaged around 85MMscf/d, comprising additional gas sales, which is what the company is entitled to earn revenue from and protected gas, which is what the Tanzanian Petroleum Development Company (TPDC) is assigned in the contract.


Mozambique: Shared Value, Local Partnerships and The Future of Work

By Mario Fernades, Deloitte

Two LNG projects are currently under construction in Mozambique.

Several others are imminent.

The proposed ‘LNG System’ in the country will effectively be rolled out in four stages.

The Coral FLNG, operated by ENI, sanctioned in 2017, will produce about 3.4Million tonnes per annum by 2024.

The TOTAL operated Mozambique LNG in Area 1, sanctioned mid-2019, will be producing 12.8MMTPA  by 2026.

Final Investment Decisions FID has been delayed for the ExxonMobil led Area 4, but the project is aiming to produce about 15.2Million tonnes per annum.

The projects for Phase 2 trains have not yet been decided, but the operators are starting to think about them and they could potentially add another 30Million tonnes per annum, with FID probably around about 2024. So, of what is potentially on the cards and being planned is about 31Million tonnes per annum. This is enormous. This could make Mozambique the fourth largest in the world. Qatar which is the largest, is producing about 77Million tonnes per annum and it took them 14 years and it brought tremendous economic benefits for the country. The EPC contractors for Area 1 are largely led by Saipem, Chiyoda and McDermott.  Area 4 EPCs include TechniqFMC, JGC and Fluor.

Opportunities for Local Investors and Their Partners-, TOTAL for Area 1 is targeting to spend about $2.5Billion for Mozambican registered or owned companies. It allows for foreign investors who want to come into the country and invest with local players or establish operations in the country. Area 1 project has already spent about $850Million over the last five years. What’s important are the priority industries that investors could look forward to considering.

Some of the lower values but highly mature markets where you’ll see some of the local players in Mozambique get involved because it doesn’t have a lot of technical complexities are areas like food and water supply, accounting services and general consulting. Where we believe this need to evolve to and it’s the opportunities for foreign direct investments, is higher value and more mature investments including Civil construction services, transport and logistics, mechanical and electrical instrumentation, IT Systems, Pipes, Vessels, Metallurgy and welding activities. This is where the real value is going to be developed over the next few years and represents significant investment opportunities. Given the low maturity of some of the industries in the country, you’d probably see in the future, a lot of collaboration between the government, operators in EPCs, local companies, the business associations in Mozambique, as well as any foreign investors who are interested in investing in some of these value chains. Key value chains and opportunities like civil construction, are not well understood and there will be a need to identify the gaps and opportunities for business out there, both local and foreign. Another thing is what is being done currently by these big operators and the EPC’s to close the gap on the skills and the local business in Mozambique. There are plans to establish the Enterprise Development Centres (EDCs) where the objective is to build capabilities, expose these local companies to international OEMs and expertise promote collaboration and certification which is a big requirement from a lot of these big capital projects, that these companies have the right levels of certification in order to provide services. Critical to sustaining the value and the expectation that everyone has of these projects, is to drive the concept of shared value. This is building on lessons from the past in the country. The concept of “Shared value” is how can both shareholders who looking for a financial return on their investments, government stakeholders are looking for a return in the country and citizens who live in the remote areas of where this gas was found or in the country itself, achieve the kind of benefits that they’re looking for. It is complex to match and balance these expectations. Very often we tend to see that companies tend to do the “pickbox compliance” approach but we believe you have to go beyond some of these. It’s important that these companies, governments and so forth create a platform in which collaboration can happen. The government creates the right policy around employment and procurement to ensure that companies are incentivized to invest in local procurement and so forth.

From the operators’ perspectives and the companies building the infrastructure, it’s important to be top of mind to be relevant to these communities and to really develop processes to effectively measure the social returns that these stakeholders are looking for. It is easy to measure the financial return, but quite another thing to measure the social economic return in a holistic manner.

The Future of Work -Challenges like COVID-19 are really disrupting the way projects are executed, and are forcing companies to plan on how they would operate in this new normal. Companies need to rethink how work would change in this new normal. For example, how do you enable effective remote supervision? It’s one thing to work in a desktop type job, it’s quite another to build the infrastructure of the magnitude that we’re talking. The same restrictions that we’re all facing in challenges like COVID-19 are also being felt in large projects like this. How do you define new roles and responsibilities for the workforce that is there? Probably you don’t need to have as many people on site and you have to adopt concepts of social distancing, how do you redefine these roles? What tools and technologies will you need to enable this kind of new reality of the future of work? Companies will have to decide what tools and policies, what labour policies will be put in place in order to enable these future work teams? Lastly, I want to talk with you about innovation. We think that digital is going to be a key enabler here. Concepts that we all thought were very futuristic are now a reality and being thought through as real tools to ensure that the project continues to be delivered on budget and as scheduled. Another thing we’re trying to see as well is a lot of these safety analytics and how persons are wearing safety gear, helmets and video imaging which detects if a person is wearing protective gear or not, and then take corrective action. Another big innovation area that we’re starting to see is around “Sentiment Analysis”, which is all about how to use technology to collect and measure the pulse of your workforce of your communities that are impacted by the project and quickly identify and innovate with them to understand what their needs are so that you can quickly adapt your actions to that. Sentiment Analysis is all about measuring the pulse of your stakeholders.

Mario Fernades- Partner at Deloitte Consulting, based in Mozambique, heading up the practice there. Deloitte offers Consulting, Risk Advisory, Taxation, Audit & Assurance and Green Dot(Future of Energy and Goods). Fernades spoke at an Africa Oil Week produced webinar panel including Paul Eardley-Taylor, head of Oil and Gas Southern Africa, Standard Bank,and Trey (Lyman) Armstrong, MD, Project and Structured Finance, US EXIM Bank. It was moderated by Dexter Wang, Asia Market Engagement Partner at S&P Global Platts. This is an abridged version of the conversation, monitored in Lagos, Nigeria and transcribed by Foluso Ogunsan and Akpelu Paul Kelechi.

 


Egypt to Triple Natural Gas Stations, as it Converts 1.8Million Cars

The Egyptian government plans to triple the number of natural gas filling stations in the country from 190 to 556 in 2020.

It is part of the five-year national programme, announced earlier this year, to convert 1.8Million cars to run on both natural gas and gasoline.

Ultimately, President Abdel Fatah el-Sisi has said, Vehice licencing will be conditional on cars being equipped with natural gas engines.

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

A key player in the government’s implementation of this programme is the Egyptian International Gas Technology (Gastec), a joint stock company affiliated to the Egyptian Ministry of Petroleum, established on June 1996 pursuant to the Egyptian Investment Law # 8 of year 1997 on the Investment Guarantees and incentives with 60% participation of Egyptian companies and 40% of ENI International B.V.

Gastec runs 100 out of the 190 natural gas filling stations currently in the country. It plans to open 23 new natural gas filling stations and five integrated natural gas and gasoline stations in 2020.

Manufacturers in the country have shown interest in the scheme. Toyota agreed to manufacture 240,000 natural gas-powered minibuses. Volkswagen said it was keen to produce natural gas cars locally. 11 global auto companies were approached by The Arab Organisation for industrialization to partner on replacing diesel buses with natural gas-powered vehicles.

The national conversion project follows up on a 2009 scheme that sought to replace 70,000 old taxicabs with zero- interest loan new vehicles fitted with dual fuel engines

Although the programme fits into the standard Egyptian government’s effort to utilize natural gas in the country, officials say that this scheme is targeted at ameliorating the cost of living. Whereas a litter of 80-octane gasoline, (the cheapest) fetches $0.39, the same volume of natural gas can be purchased for $0.21, at any of Egypt’s filling stations.


AKK: Why the Viability is Fuzzy and Delivery Timeline in Doubt

By Toyin Akinosho, Publisher Africa Oil+Gas Report

At 614 kilometres long, and running through four states, the Ajaokuta -Kaduna-Kano (AKK) National Gas Pipeline in Nigeria is the kind of infrastructure project that is described in the country’s Economic Growth Plan as transformational.

If the theory holds true that gas utilisation projects have a way of following the availability of the core trunk lines. and that every $1 spent investing in gas development and infrastructure will translate to a $3 increase in GDP, we should applaud the inauguration of AKK’s construction.

What has invited so much scrutiny is the Nigerian government’s decision to provide Sovereign Guarantees for the loan taken to construct the Project.

It is so, in part because, this is the first of several gas pipeline projects by NNPC that would come with a loan tag. The state hydrocarbon company constructed the Escravos Lagos Pipeline System and the Oben Ajaokuta gas pipeline from its balance sheet. NNPC has not disclosed that it is borrowing money to construct the 130km, 48 inch Oben-Obiafu /Obrikom pipeline, the biggest such infrastructure in the country.

But with the AKK project, the cash strapped petrostate is staking money from its depleted treasury to shoulder as much as $2.1Billion, net of interest, should there be the most extreme default in paying the loan from The Bank of China and Sinosure, a Chinese export and credit insurance corporation.

The timing and prioritization of the AKK project, in the context of other urgent deliverables in the Nigerian gas grid, the opportunity deliberately thrown away for private sector investment in our infrastructure queue as well as NNPC’s poor record of project delivery, are other issues that make the state’s financing of the AKK quite concerning.

Lenders, as a rule, call for offtake agreements as well as evidence of ability to pay, as preconditions for loans to gas projects.

The NNPC, promoter of this wide diameter (40 inch) line, does not have any Gas Sales Agreement with any factory, manufacturer, or plant, for gas from the project. Instead, it has pledged its entire receivables from gas flows from the existing pipelines today (Escravos Lagos Pipeline System ELPS, Oben-Ajaokuta Pipeline and West Africa Gas Pipeline WAGP) and used that to pledge in terms of the tariff. The tariff-receiving companies are the two gas subsidiaries of the NNPC: Nigerian Gas Processing and Transportation Company and the Nigerian Gas Marketing Company.

NNPC has admitted, in public, that generating the revenue to pay the loan is a tall order. Indeed, the need to convince the lenders it could raise financing for the project, hastened the government’s decision to launch the Gas Transmission Network Code, which takes off in mid-August 2020.

“We didn’t want to burden the National Treasury with funding the construction of the AKK pipeline”, Yussuf Usman, the corporation’s Chief Operating Officer Gas and Power, told a panel session at the Sub Sahara Africa International Petroleum Conference (SAIPEC) in Lagos in late February 2020.  “But when we went out to financiers, and told them we would guarantee the loan with payment from the gas in the various domestic gas transmission pipelines, they asked for volumes”, he explained. “The volumes did not add up”, he said.  “We knew we had to launch the Gas Network Code so that there would be assured volumes and they can be determined”.

President Muhammadu Buhari declares that the pipeline would provide gas for the generation of power and for gas-based industries to facilitate the development of new industries. The president promises that AKK would “ensure the revival of moribund industries along transit towns in Kogi, Abuja, Niger, Kaduna and Kano states”.

For one, the power plant Mr. Buhari refers to, is still on the drawing board.  It was only last February that NNPC received a USAID grant for its feasibility studies.

For another, moribund industries along the AKK corridor notwithstanding, the anticipated industrialization will take time to fledge, but the loan repayment will start being called before any sizeable industrial project takes hold.

Supporters of the AKK project stretch the argument when they compare this project with the ELPS, which some recall, in the original plan, was proposed to be a 12 inch pipeline. “NNPC in its wisdom decided to build a 36” pipeline”, these supporters contend. “As of ten years ago, that capacity, 1Billion standard cubic feet per day (1Bscf/d), was already filled up because gas is about availability”, they enthuse. “Today, we are building a loop around ELPS to double the capacity”, they cheer.

These “facts” have hidden one uncomfortable truth: the ELPS never achieves 100% uptime, so the 1Bscf/d, under NNPC management, has been a façade.

35 years ago, as a young energy reporter for The Guardian of Lagos, I was at the commissioning of the 1,300MW Egbin Power Station in Ikorodu, in the north of Lagos. Tam David West, who was then the Nigerian Minister of Power, said that the nation was anticipating the construction of the ELPS to deliver the gas that would replace the High Pour Fuel Oil, that was being used to fire the turbines at Egbin at the time.

When the ELPS was commissioned 14 years later, the market was ready with, apart from the largest power plant in the country, industrial enterprises along the Ikeja-Ikorodu corridor that were offtakers of natural gas.

The AKK is unlikely to be delivering, in the near future, to that sort of market, so its funding should have been differently thought through. And a key question is why NNPC is insistent on throwing itself at this project which started with the Korea National Oil Company proposing to execute-net of Nigerian national treasury-as part of their taking up two deepwater exploration acreages?.

NNPC, as project manager and executor, is itself a poor advertising for the timeous delivery of any project. It has been constructing two similar grid length gas pipelines, planned for four year execution, for over eight years without visible indication of their completion. It has been looping (constructing a parallel line of the same length) the Escravos Lagos Pipeline System since 2012.  It has also been constructing the Obiafu-Obrikom Oben (OB3) pipeline since 2012. There is no clear line of sight to completion of these projects. And in none of its reports has there been indication of what the delays on the projects mean in terms of haemorraging value.

These two projects are more urgent, in respect of immediate inflow of investment and cash to the Nigerian economy, than the AKK.

Take a few examples.

The ELPS is the primary ferry from the biggest gas processing plants, aimed at the domestic market. These processing plants; Chevron operated Escravos Gas Processing Plant, Seplat operated Oben Gas Plant, and NPDC operated, with NDWestern, Utorogu and Ughelli plants, have the combined capacity to deliver 1.3Billlion standard cubic feet of gas per day, but persistent downtime on the ELPS ensures the gas volumes cannot fully be pumped into this artery and our power plants, those of them that could offtake, don’t receive what they could. So, while NNPC claims it is doubling the capacity of the ELPS, neither the “original” line, nor the “new” line under construction, combined, is delivering anywhere near 80% of a single line (800MMscf/d).

The Dangote Fertiliser gas offtake agreement (75MMscf/d) with Chevron depends on the flip flop of the ELPS uptime, so does Axxela Ltd’s plan to export gas (30MMscf/d) from the western Niger Delta to Togo. Axxela is even working with NNPC to see how they can complete the looping project. This is the scale of incapacity of a company that wants to “own and operate” one more transmission gas pipeline!

The OB3 gas line is the first attempt to turn our gas transmission lines to a grid. It would deliver gas from the rich reservoirs in the east to the captive markets in the west. It is also the source of the gas that will be pumped into the AKK, because the AKK is to originate from Ajaokuta, which is fed from Oben, the terminal point of the OB3. As it is, NNPC has pushed the completion date of OB3 several times over its eight-year construction span.

A $1+Billion gas production and distribution project that depends on the OB3 is the 600MMscf/d ANOH facility, led by Shell and Seplat. Whereas Shell wants to supply the gas to factories in eastern Nigeria, Seplat wants to pump the molecules into the line, straight to Oben in Edo State, for its offtakers in the west of Nigeria. NNPC even forced itself to construct the short gas lines from the processing plants to the OB3 trunk line. These companies went ahead and took final investment decisions on the midstream part of the project, but are they likely to be idly chewing their thumbs after their plants are completed and they can’t evacuate the gas? Last time I checked; they were scrambling for alternative routes to transport the molecules.

NNPC knows what to do. But if you ask the apparatchiks in the company’s towers to spinoff the Nigerian Gas Transmission Company and the Nigerian Gas Marketing Company and sell hefty stakes to the private sector, they will kick and kick, just as they’ve done with the refineries, holding on to zero value. There is enough gas transportation infrastructure to form a very decent balance sheet for a gas transportation company run efficiently by the private sector. But who cares?


US EXIM Bank Provides the Largest Financing for Moza LNG, with $4.7Billion

United States’ Export Import (EXIM) bank says it has initiated “the process of providing $4.7Billion in financing a major integrated liquefied natural gas (LNG) project in Mozambique”.

The money is the largest committed by any lender to the 13 Million Tonnes Per Annum project, led by French major TOTAL.

The Mozambique LNG project will cost $20Billion to develop, but TOTAL is borrowing $14.9Billion from 28 financiers.

EXIM bank is one of eight Export Credit Agencies financing the project, the priciest hydrocarbon development on the continent. Other ECAs, aprt from US EXIM Bank, are: Japan Bank for International Corporation (JBIC), Nippon Export and Investment Insurance (NEXI), UK Export Finance (UKEF), Servizi Assicurativi del Commercio Estero of Italy (SACE), Export Credit Insurance Corporation of South Africa (ECIC), Atradius Dutch State Business (Atradius), Export-Import Bank of Thailand (EXIM Thailand)”,

There are also 19 commercial banks involved, of which Standard Bank of South Africa, is leading with $485Million loan. The Africa Development Bank, which is neither an ECA nor a commercial bank, is putting $4000Million in financing.

US EXIM bank’s involvement is primarily to support American contractors involved in the project. It says its funding “will support an estimated 16,700 American jobs over the five-year construction period”. Those jobs are at 68 suppliers located in eight states — Florida, Georgia, Louisiana, New York, Oklahoma, Pennsylvania, Tennessee, and Texas — and the District of Columbia. Follow-on sales are expected to support thousands of additional jobs across the United States.

“As the Mozambique LNG project marks further milestones, we want to underscore EXIM’s continuing commitment to this project,” said EXIM President and Chairman Kimberly A. Reed. “This project continues to serve as a great example of how a revitalized EXIM can help ‘Made in the USA’ products and services compete in a fierce global marketplace and counter competition from countries like China and Russia. It also reinforces EXIM’s strong support for President Trump’s Prosper Africa initiative to unlock opportunities for U.S. businesses in Africa. This authorization will stand as a reminder to companies across the board in all industries: EXIM is open, and we want to work with you to help fill financing gaps in the market to support our great American workers and exporters.”

A US EXIM Bank press release says that the transaction supports the Trump Administration’s Prosper Africa Initiative, “a whole-of-government economic effort to substantially increase two-way trade and investment between the United States and Africa.”

Launched in December 2018, Prosper Africa brings together the resources of more than 15 U.S. government agencies, including EXIM, to connect U.S. and African businesses with new buyers, suppliers, and investment opportunities.

 

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