All posts tagged GAS MONETISATION


BP Starts Up 600MMscf/d Field for Egypt’s Domestic Gas Market

British supermajor BP has commissioned the Raven gas field in Egypt’s West Nile Delta, producing 600Million standard cubic feet per day (600MMscf/d) into the country’s natural gas grid for a start.

The field produces into a new onshore processing facility, alongside the existing West Nile Delta onshore processing plant.

At its peak, Raven has the potential to produce 900MMsscf/d and 30,000 barrels per day of condensate.

 

 

Raven is the third of three projects in BP’s West Nile Delta (WND) development off the Mediterranean coast of Egypt. It follows the Taurus/Libra and Giza/Fayoum projects, which started production in 2017 and 2019 respectively.

The approximately $9Billion WND development includes five gas fields across the North Alexandria and West Mediterranean Deepwater offshore concession blocks in the Mediterranean Sea. BP and its partners, working with the Ministry of Petroleum, have developed the WND in three stages.

 Egypt is Africa’s most absorptive market for natural gas, consuming over 6Billion standard cubic feet per day (6Bscf/d), most of it in its 55,000MW electricity generation market.

Bernard Looney, BP’s chief executive, says that the WNDprojects “will make an important contribution to meeting Egypt’s growing energy needs by providing a cost-competitive and resilient gas supply from the country’s own resources.” 


Accugas Agrees to Supply 2.5MMscf/d of Gas to Mansour Group

By Foluso Ogunsan

Nigerian natural gas supplier Accugas has entered into a new gas sales agreement (GSA) with Mulak Energy Limited.

Accugas is a subsidiary of Savannah Energy PLC, the British independent.

The GSA is initially for a seven-year term. It envisages the supply of gas produced by Savannah’s majority-owned Uquo field for an initial two-year period on an interruptible basis (the “Interruptible Gas Delivery Period”) and the subsequent five years on a firm contract basis (the “Firm Delivery Period”). During the Interruptible Gas Delivery Period, Mulak is able to nominate a maximum daily quantity of up to 2.5 MMscf/d (MMscf/d means Million standard cubic feet of gas per day).

Volumes in the Firm Delivery Period will be agreed by the parties before the end of the Interruptible Gas Delivery Period.

The GSA is priced to reflect Mulak’s status as an industrial customer; Accugas, therefore, expects to see its weighted average gas sales price realisation increase as a result of this contract, without the need for any incremental capital expenditure beyond our previously announced plans.

Sales under the GSA benefit from a bank guarantee arrangement from an investment grade credit rated international bank.

Mulak is a member of the Mansour Group, an Egyptian multinational conglomerate which claims operations in more than 100 countries and annual revenues exceeding $7.5Billion.

Mulak says it initially plans to distribute CNG to its industrial customers in Rivers State with the CNG to be substituted for diesel in generators supplied by the Mantrac Group, also a member of the Mansour Group and one of the world’s largest dealers in Caterpillar machinery, power systems and equipment.

“Mulak is in a unique position to exploit the synergies with Mantrac’s business in Nigeria through the conversion of Mantrac’s existing customer base of approximately 400MW of diesel-fuelled generators to CNG-fuelled generators”, Accugas says in a release. “Sales under the GSA are expected to commence in 2022 and, following the initial two-year period, Mulak has indicated that it is seeking to expand its CNG sales on a pan-Nigeria basis to Mantrac customers”.

 

 


New Debt Arrangement Completes the $680Million Financing of the ANOH Project

The ANOH Gas Processing Company (AGPC), has successfully raised $260Million in debt to fund completion of its ANOH Gas Processing Plant.

The 300 Million standard cubic feet per day (300MMscfd) capacity ANOH plant, located on OML 53 in Imo State, is being built by AGPC, which is an IJV owned equally between Seplat-the dual listed company on the London and Nigerian stock exchanges, and the Nigerian Gas Company (NGC), a wholly owned subsidiary of Nigerian National Petroleum Corporation (“NNPC”).

Seplat and NGC have previously provided a combined $420Million in equity funding and the project is now fully funded.

The $260Million funding was provided by a consortium of seven banks: Stanbic IBTC Bank Plc (advisor), United Bank for Africa Plc, Zenith Bank Plc, FirstRand Bank Limited (London Branch) / RMB Nigeria Limited, The Mauritius Commercial Bank Limited, Union Bank of Nigeria Plc and FCMB Capital Markets Limited. It allows for an additional $60Million accordion at the time of completion to fund an equity rebalancing payment at that time, if considered appropriate. Funding commitments of more than $450Million were received by the company, which is a significant oversubscription and a strong sign of confidence in the project.

Following a cost optimisation programme, the AGPC construction cost is now expected to be no more than $650Million, inclusive of financing costs and taxes, significantly lower than the original projected cost of $700Million.

ANOH is one of Nigeria’s most strategic gas projects. It will help Nigeria to accelerate its transition away from small-scale diesel generators to cleaner, less expensive fuels such as natural gas for power generation.

Seplat is a leading provider of natural gas to Nigeria’s power sector, supplying around 30% of gas used for electricity generation.

 

 

 


New York City Pension Funds Pull Out of Fossil Fuel Holdings

New York City’s largest pension funds have voted to initiate full fossil fuel divestment, selling off an estimated $4Billion of holdings in fossil fuel corporations, such as ExxonMobil.

The city’s announcement fulfills its commitment to divest from fossil fuels.

NYC’s pension funds, valued at $239Billion, are the largest municipal pension funds to divest globally.

The city’s divestment commitment, made in 2018, inspired further action worldwide. It was followed by commitments from many other large funds, including the City of London, the Norwegian Sovereign Fund, and the New York State Common Retirement Fund. Today’s announcement confirms the City’s commitment to divest from fossil fuels within five years.

Divestment has exploded over the past decade from a symbolic action by small college endowments into a worldwide movement that has led to over $14Trillion worth of investment funds divesting or committing to divest from the oil, gas or coal industries.

In order to fulfill the Paris climate agreement’s goals of staving off catastrophic climate change, all major finance of fossil fuels and deforestation must end by 2030.


Tlou Looks for Money to Fund Botswana Power Project

By Bunmi Christiana Aduloju

Tlou Energy is currently seeking funding for development of the Lesedi Power Project in Botswana, with plans to develop gas and solar power generation assets with the sale of electricity into the regional power grid.

The London listed company claims it has completed formalities for a 2MW Power Purchase Agreement (PPA) with Botswana Power Corporation (BPC) and has received the signed PPA and Grid Connection Agreement.

The project covers an area of approximately 3,800 Km2 and consists of four Coal and Coal Bed Methane (CBM) Prospecting Licences (PL) and a Mining Licence (ML).  The Mining Licence area is currently the focal point for Tlou’s operations and includes the Lesedi production wells or ‘pods’.

“Tlou has the only independently certified CBM gas reserves in Botswana, with 252 Billion Cubic Feet (Bcf) of 3P gas reserves certified in the Lesedi project area”, the company claims.  “In addition, the 3C Contingent Gas Resources are approximately 3 Trillion Cubic Feet (Tcf)”.

Phase one involves transmission line construction, transformers, grid connection, electricity generators and potentially the drilling of additional gas wells. The ~100 Km transmission line will run from the Lesedi project to the town of Serowe where it will connect to the existing power grid. Initial generation is proposed to be up to 2MW of electricity. Funding required for phase one is ~ $10Million which can be staged if necessary or prudent to do so. “

Phase two funding is for the expansion of electricity generation up to 10MW. This will involve drilling more gas wells and the purchase of additional electricity generation assets. Funding required for phase two is ~ $20Million. Upon successful completion of phase one and two, the Company plans to expand the project beyond 10MW.

Funding discussions are progressing well, in particular with Botswana based institutions with which the Company is in ongoing discussions. Should technical and risk assessments on Tlou’s operations be successful, the relevant parties would then seek internal approval to proceed, followed by legal and other due diligence. If such approval is granted, which is currently expected towards the later end of Q1 2021, Tlou would then be in a position to announce further details of the proposed deal.

Tlou is also considering what further progress can be made at Lesedi prior to conclusion of any Botswana based finance. Activities could include the purchase of land for gas and solar development, preparatory work on transmission line infrastructure, and drilling operations. Undertaking this work in the near term and in advance of the conclusion of the ongoing discussions in Botswana could facilitate a more rapid development of the project – all subject to funding as well as any pandemic related restrictions that may be in place.

 


Energean to Top Up Egypt’s Gas Output with 90MMscf/d

By Toyin Akinosho

Energean’s Final Investment Decision on the NEA/NI project in Egypt, calls for a $235Million spend to deliver natural gas at 90Million standard cubic feet per day at peak.

TechnipFMC has been awarded the EPIC contract to deliver the project.

Energean Plc is a London listed firm with focus on the Mediterranean.

NEA/NI refers to North El Amriya and North Idku concessions, which are, though not contiguous, being jointly developed.  The project is a shallow offshore subsea tieback.

The NEA concession contains two discovered and appraised gas fields (Yazzi and Python) while the NI concession contains four discovered gas fields, one of which is readied for development.

NEA/NI, with 49Million Barrels of Oil Equivalent (BOE) of 2P reserves, 87% of which is gas, is due to deliver first gas in the second half of 2022. Some 1,000Barrels per day of condensate will also be produced.

“When Brent prices are above $40/bbl, gas will be sold at $4.6/MMBTU, which is the highest achieved to date for shallow water gas production, offshore Egypt”, Energean says in a statement.

 


Africa’s Electricity Unlikely to Go Green This Decade

PARTNER CONTENT

New research from the University of Oxford predicts that total electricity generation across the African continent will double by 2030, with fossil fuels continuing to dominate the energy mix – posing potential risk to global climate change commitments.

The study, published by Nature Energy, uses a state-of-the art machine-learning technique to analyse the pipeline of more than 2,500 currently-planned power plants and their chances of being successfully commissioned. It shows the share of non-hydro renewables in African electricity generation is likely to remain below 10% in 2030, although this varies by region.

“Africa’s electricity demand is set to increase significantly as the continent strives to industrialise and improve the wellbeing of its people, which offers an opportunity to power this economic development through renewables” says Galina Alova, study lead author and researcher at the Oxford Smith School of Enterprise and the Environment

“There is a prominent narrative in the energy planning community that the continent will be able to take advantage of its vast renewable energy resources and rapidly decreasing clean technology prices to leapfrog to renewables by 2030 – but our analysis shows that overall, it is not currently positioned to do so.”

The study predicts that in 2030, fossil fuels will account for two-thirds of all generated electricity across Africa. While an additional 18% of generation is set to come from hydro-energy projects. These have their own challenges, such as being vulnerable to an increasing number of droughts caused by climate change.

The research also highlights regional differences in the pace of the transition to renewables, with southern Africa leading the way. South Africa alone is forecast to add almost 40% of Africa’s total predicted new solar capacity by 2030.

“Namibia is committed to generate 70% of its electricity needs from renewable sources, including all the major alternative sources such as hydropower, wind and solar generation, by 2030, as specified in the National Energy Policy and in Intended Nationally Determined Contributions under Paris Climate Change Accord,’ says Calle Schlettwein, Namibia Minister of Water (former Minister of Finance and Minister of Industrialisation). “We welcome this study and believe that it will support the refinement of strategies for increasing generation capacity from renewable sources in Africa and facilitate both successful and more effective public and private sector investments in the renewable energy sector.”

“The more data-driven and advanced analytics-based research is available for understanding the risks associated with power generation projects, the better”, Mr. Schlettwein argues. “Some of the risks that could be useful to explore in the future are the uncertainties in hydrological conditions and wind regimes linked to climate change, and economic downturns such as that caused by the COVID-19 pandemic.”

The study suggests that a decisive move towards renewable energy in Africa would require a significant shock to the current system. This includes large-scale cancellation of fossil fuel plants currently being planned. The study also identifies ways in which planned renewable energy projects can be designed to improve their success chances – for example, smaller size, fitting ownership structure, and availability of development finance.

“The development community and African decision makers need to act quickly if the continent wants to avoid being locked into a carbon-intense energy future’ says Philipp Trotter, study author and researcher at the Smith School. ‘Immediate re-directions of development finance from fossil fuels to renewables are an important lever to increase experience with solar and wind energy projects across the continent in the short term, creating critical learning curve effects.”

 

 

 


Savannah Inks Revised Gas Sales Agreement with Lafarge

New deal comes with a price of $7.5 per thousand cubic feet of gas

Savannah’s Accugas subsidiary has entered into a revised Gas Sales Agreement GSA with Lafarge Africa for the supply of gas to its Mfamosing cement plant in Cross River State, Nigeria.

The company says the new deal “establishes a more sustainable long-term contractual position for the benefit of both parties”.

The revised GSA sees the contract term with Lafarge extended for a further five years to January 2037, giving a remaining contract life of 17 years.  The new agreement also allows for an increase in the gas sales price from 2027, with additional US-Consumer Price Index indexation from 1 January 2029.

The revised GSA has a reduction in the daily contracted quantity (DCQ) of gas from 38.7 MMscf/d to 24.2 MMscf/d. This reduction in the DCQ will allow Accugas to release approximately 12 MMscf/d of currently reserved gas processing capacity at its Central Processing Facility (CPF), enabling Accugas to enter into additional long-term GSAs for these volumes, which will increase the business’ future revenues and cashflow potential.

To compensate Accugas for this reduction in DCQ, the revised GSA includes an advance payment of $20Million and a prepayment structure over the period to 2027, which effectively results in a gas price of $7.50/Mscf on take-or-pay volumes during this period.  “This revised structure also allows Lafarge to utilise its accumulated make-up gas balance of approximately $58Million, whilst we have preserved the capacity to supply higher volumes when these are required by Lafarge”, Savannah says in a statement. “Lafarge’s commitments under the revised GSA will continue to be guaranteed by an international investment grade bank guarantee.

“Overall, the revised terms are expected to have a cumulative positive impact on Accugas’ cash flows over the short and medium term. Following the agreement, Accugas’ aggregate maintenance-adjusted take or pay volume will reduce from 141.4 MMscf/d to 131.8 MMscf/d.


No Oil, Only Gas, in the Future of Sasol

By Fleetwood Grobler Sasol’s President and Chief Executive Officer

 

 

 

 

 

 

 

Future Sasol will comprise two market-focused businesses, Chemicals and Energy.

A key decision as a result of this is the discontinuation of all oil growth activities in West Africa and

resizing our upstream portfolio to focus on gas.

The revision of our strategy aims to have a greater focus on value realization for all stakeholders, business sustainability and enhanced cash generation. It acknowledges the need to streamline what was

previously a complex and wide portfolio.

The Chemicals Business will transform our portfolio towards specialty chemicals in which we enjoy differentiated capabilities and strong market positions that can be expanded over time. We will continue to focus on our commodity chemicals portfolio, however this will diminish over time as we focus more on specialty chemicals.

The Energy Business comprises the Southern African value chain and associated assets and will be positioned for higher cash generation through improved margins, cost efficiency and divesting of assets with low returns. This business will also pursue Greenhouse Gas (GHG) reduction through a focus on gas as a key complementary feedstock and renewables as a secondary energy source. These will be critical enablers to achieve our 2030 GHG reduction target and our longer-term sustainability aspirations.

These two businesses will be fully accountable for profit and loss, management of resources and capabilities. A lean corporate centre will enable the businesses by fostering synergies and integrating activities, setting strategic boundaries and allocating capital. These developments will support improved financial returns.

In tandem, resetting our strategy necessitated a revised operating model, which will become effective on 1 November 2020. The top leadership structure has already been realigned and optimised to enable this new model.

Our intent with Future Sasol is to deliver a Group that is streamlined, focused and positioned to succeed. It is therefore a matter of much regret that not all our employees will be able to make the journey to the new Sasol. In this, unfortunately, we have no choice. We have to put the sustainability of Sasol first, and the steps we are following are taken with only this in mind.

Future Sasol will not only look different, it will behave differently, requiring a change in culture and ways of working, and will be more open to partnering arrangements. It will remain heavily committed to South Africa and plans to work closely with the government to align with the country’s energy and economic goals.

-Sasolburg, August 21, 2020

Published for the benefit of paying subscribers in the August 2020 edition of Africa Oil+Gas Report


Accugas Is One of the Top Four  Nigerian Domestic Gas Suppliers

With 113.5Millon standard cubic feet per day (113.5MMscf/d) averaged in 1H 2020, Accugas Limited has indicated itself as one of the top four natural gas suppliers to the Nigerian economy. The company is a subsidiary of the British headquartered Savannah Petroleum, which bought over the assets of Seven Energy in Nigeria. Accugas’ main hydrocarbon property is the Uquo gas field in Oil Mining Lease (OML) 13 onshore eastern Niger Delta basin.

Accugas’ competitors are Chevron. NDWestern and Seplat, the country’s biggest suppliers of natural gas to the domestic market. But unlike Accugas, all of them are in joint venture with either the Nigerian National Petroleum Corporation or its operating subsidiary, the NPDC. Between January and June 2020, the average gross natural gas output of these three JVs ranged from 222 to 320MMscf/d. This means that, on an equity basis, the output of Chevron, Seplat and NDWestern ranged between 99 and 144MMscf/d. By comparison Accugas’ 113.5MMscf/d average, in that period, is competitive.

The company increased its average gross daily natural gas production from the Uquo gas field  by  22.4% compared to the same period last year, from 92.7 MMscf/d (15.4 KBOEPD) to 113.5 MMscf/d (18.9 KBOEPD).

“In H1 2020, Accugas increased gas supply to the Nigeria power sector by 35% versus Q4 2019. This compares to wider industry performance which saw the gas shortage to supply the Nigerian power grid increasing by 33% versus Q4 2019”, Savanah Petroleum says in a statement.

The company achieved an all-time Nigerian Assets gas production record of 177 MMscf/d on 30 May 2020. While Accugas’ customers achieved an all-time record peak contribution of 11.5% of Nigeria’s electricity generation or 486MW on 23 May 2020, with the contributed electricity being exclusively generated from Accugas sales gas.

On 31 January 2020, Accugas entered into the first new gas sales agreement for the business in over five years with First Independent Power Limited, an affiliate company of the Sahara Group, for the provision of gas to the FIPL Afam power plant. Accugas is in the process of working with FIPL to validate the third-party infrastructure required to enable the commencement of gas sales.

In June 2020, Accugas signed a term sheet with a significant new industrial gas sales customer, a subsidiary of a well-respected international company, for an initial quantity of up to 5 MMscfpd of gas for an initial five-year period.

 

 

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