All posts tagged GAS MONETISATION


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


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.

 


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”.


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.


Egypt’s Bus Owners Can Apply for Natural Gas Vehicle Swap

By Toyin Akinosho

Owners of intercity and intracity buses in Egypt will be able to swap their gasoline powered minibuses for natural gas powered ones, in the first phase of the government’s natural gas vehicle swap scheme starting July, 2021.

A key requirement for this phase is that the vehicles must be older than 20 years old. The scheme will initially be rolled out in Cairo, Giza, Qalyubia, Alexandria, Suez, Port Said, and the Red Sea. 

The vehicle swap programme entails private transport companies getting brand new natural gas-powered vehicles for their old mini buses.

The government has also announced that 2,300 Public Buses (owned by governorates and municipalitities) in Cairo and Alexandria will be converted to run on natural gas at a total cost of $77Million (or EGP 1.2Billion), under a joint agreement signed between the ministries of petroleum, local development and military production as well as the public transport authorities of both cities.

Egypt’s plan to displace gasoline and diesel with natural gas, as the country’s default fuel of transportation, had initially scheduled 15,000 minibuses (Egypt’s equivalent of Kenya’s Matatus and Nigeria’s Danfos).

But outside the pulic transport system, the government has now scaled up the planed number of cars to be converted to run on natural gas by 2023, from 250,000 to 450,000 cars.

Egypt’s finance ministry is backing the effort of Taqa Arabia, the country’s largest private sector energy distribution company, in the natural gas conversion scheme. The company, last week, announced the receipt of a $58Million loan from the National Bank of Egypt to help finance the construction of natural gas filling stations. Master Gas, a subsidiary of Taqa Arabia, will use the finance to build 40 new filling stations in a number of governorates, to support the growing shift to natural gas vehicles. Taqa Arabia has indicated it would invest $231Million (or EGP 3.6Billion) in expanding its number of natural gas stations to 180 by 2023. The company says it will spend $51 (EGP 800Million) to construct 40 stations in 2021, $77Million (or EGP 1.2Billion) on 60 stations in 2022 and $102Million (or EGP 1.6Billion) on 80 stations in 2023. Taqa currently operates 23 natural gas stations.


Platform Breaks into the “Nigerian Gas Grid” System

Platform Petroleum has become a gas supplier of some reckoning in the Nigerian domestic gas market.

The marginal field operator currently supplies 22Million standard cubic feet of gas per day (22MMscf/d) to a pipeline operated by the Nigerian Gas Company (NGC).

“All of this is essentially lean gas that comes from the stripping process that is achieved by the PNG gas plant, located on the Egbeoma (marginal) field in the north-western Niger Delta, according to Osa Owieadolor, the company’s outgoing Chief Executive Officer. Platform Petroleum is the operator of that field.

That makes Platform the marginal field operator with the second highest volume of lean gas supplied to the local market. Savannah Petroleum, another marginal field operator, supplies about 100MMscf/d, processed from the Uquo marginal field to the domestic market, mainly to power plants in Calabar and Ikot Abasi, in the east of the country.

The Nigerian domestic gas market is relatively small, with the total volume (supplied to power plants, fertiliser plants and industries) coming to less than 1,500MMscf/d, so two marginal fields supplying 122MMscf/d is a big deal.

“Prior to this process, we were flaring significant volumes”, Owieadolor told Africa Oil+Gas Report. “Now we’re delivering about 1.2MM cf/d of gas to PowerGas for their CNG plant”, he explained. “We have significantly reduced our flaring by over 80%, and we should achieve a total flare-down in our field before the end of the year, because we have also commissioned a compression system that will enable us to do that”.

Platform achieved its first commercial lean gas delivery to the Nigerian Gas Marketing Company (NGMC) a subsidiary of the NGC, in November 2020, following the commissioning of a section of the OB3 gas pipeline.

“Prior to this time, we had executed a Gas Sales and Purchase Agreement with NGMC, that happened over two years ago”, Owieadolor told Africa Oil+Gas Report. “We did same with PowerGas and one or two other Third Party companies. The model has been willing buyer-willing seller”.

Oweiadolor clarified that Platform is not the current operator of the PNG Gas Processing Plant, “but we are an investor there and our involvement is more like an oversight function at the board level. But outside of that, because of the relationship on the board level, we also provide some bit of support based on our experience. That’s how it relates to the operatorship of the plant”.

 


Will Nigeria’s LPG Demand Buckle under the Weight of the Country’s Forex Problems?

By Bunmi Aduloju, NAREP Fellow

…Some say that growing in-country LPG production should mitigate these concerns, but..

When Vitalis Obinna, an LPG retailer and dealer in gas cylinders and accessories in Festac Town, a western suburb of Lagos, Nigeria, caught sight of a figure advancing towards his shop, he jumped to his feet with an anticipatory flash of excitement. Surrounded by other LPG retailers at the location, a new customer would mean more sales for the day. Soon, his interaction with this reporter took a turn of business reality.

“Since last year, business has been very dull,” he said. ‘But when the year began, it became really bad. There’s been no profit in cooking gas. We buy gas for about ₦4300 and sell it for about ₦4500. 

“Before now, we used to make profit of at least ₦600 on 12.5kg of cooking gas but now, our profit is ₦150 to about ₦200 for 12.5kg of gas.”

Asides a drop in profit, he also has to put up with reduced customer patronage. 

“Before the price increased, I used to refill at least 10 cylinders everyday but now, I hardly refill three cylinders. In fact, when I think some customers are going to refill their 12.5kg cylinders, you would be surprised that they will only buy ₦500 worth of cooking gas,” he added. 

Nike Kazeem and Christiana Sikiru, both petty traders (selling provisions and groceries) in makeshift stalls, express concern about the increased price of the product in the first quarter of 2021.

Whereas Mrs. Kazeem, who says she’s been using LPG for decades, has resorted to kerosene stove to cook for her family in the meantime, Mrs. Sikiru switched to cooking gas in January “because she found that “Kerosene dries up quickly.” She said that the increase was a normal trend with commodities. “There has been an increase in price but I understand that things are now expensive,” she explained.

Fluctuations in LPG Price Lead to Regional Distortions

According to the National Bureau of Statistics (NBS), the national repository for statistics in Nigeria, the average cost of refilling 12.5kg cylinder of cooking gas was ₦4,117.55 in January, and ₦4,363.51 in February but it fell to ₦4,359.23 in March. 

The average price for refilling 5kg LPG cylinder increased from ₦1,949.02 in January to ₦2,018.91 in February and inched up again, in March, to ₦2,057.71.

In 2021, the total average price for refilling 12.5kg in Q1, stood at ₦12,900.28. However, in 2020, the total average price for refilling LPG cylinder was ₦12,542.04.

Eyono Fatai-Williams, General Manager, NLNG responding to a Thisday enquiry about the increasing price of Liquefied Petroleum Gas (LPG) in January replied that the dependence on imported LPG had put undue pressure on the price of the commodity.

In the same vein, two LPG stakeholders gave a similar account for the increase.

“Gas price is highly seasonal. LPG is a global commodity and during the winter seasons, prices are usually high and then, they go down towards the end of the summer. Then again, by the end of 2020 and early 2021, because of forex changes in Nigeria, it took the prices higher than normal,” says Mr. Bashir Koledoye, Managing Director, Dharmattan Gas and Power Products Ltd, adding that the prices “will continue to drop until the summer”.

Fatai Ogungbenle, Head, Business Development and Sales (LPG), Kwale Hydrocarbon Nigeria Limited, an independent downstream gas company, agrees that the increased price of LPG is tied to the seasonal demand for LPG in Europe during the winter seasons.”

“Europe has more of sustained cold season this year because of global warming. It added to the issue of high demand in Europe and part of America, making us to price highly. But in few weeks to come, I think the price of LPG may likely decrease a bit. But the downside to it is the exchange rate. If nothing is done to it, we may experience this for a longer time more,” he explained. 

“I can remember vividly that a truck of gas in November 2020 was ₦4 Million to ₦4.2 Million. But now, it is around ₦5.5 Million to ₦5.6 Million for over a period of about 6 months,” he added.

Nor is the higher price restricted to the gas molecules alone. The cost of the equipment too is rising. Vitalis Obinna said that he sells a 6kg gas cylinder with an accompanying burner for ₦11,000, a 30% jump increase from ₦8,500 which he sold the two equipment just five months ago, in December 2020 

Koledoye explains that “demand dips with higher prices, but because Nigeria is rapidly adopting LPG, the effect is not significant”. He admits that there are challenges with the Forex situation, “but increase in in-country LPG production is expected to reduce this problem very soon”. In general, he feels comfortable with the way the market is now.

In Q1 2021, 55.7% of LPG consumed was imported. This contrasts with 58.4% of LPG consumption, which was imported in Q1 2020, according to the Petroleum Products Pricing Regulatory Agency (PPPRA), a monitoring and regulatory agency of petroleum products in Nigeria. In both quarters, importation took the lead. 

Apart from the price volatility of LPG in Nigeria and enormous dependence on imported products, the price in each State in the country is largely determined by the landing cost of the product. 

In March 2021, Cross River State paid the highest for cooking gas at ₦4762.65 and Zamfara State, ₦3,749.06, accounting for the lowest.

Similarly, Lagos paid ₦4,435.45 to refill 12.5kg cooking gas cylinder. 

Cross River state residents paid the highest price in the nation for 12.5kg LPG in Q1 2021, with a sum of ₦14,407.89 while Kaduna paid the lowest with ₦10,900.79 in total.

Different Retail Prices

An LPG retailer at New Site, Satellite Town, a sprawling housing estate in the west of Lagos, who pleaded anonymity, says that LPG price varies among retailers too.

“The price of cooking gas differs depending on who we buy from. If we buy at a high cost, we sell at a high cost. If we buy at a lower cost, we sell at a lower cost. The gas station sold 12.5kg of cooking gas to me at ₦4,500, I sell it at ₦4,600.”

“The business of LPG has always been a good business but it is just that now, it is not really yielding money like it used to. Last year, it was sold to us at ₦4,000 naira but since January, it increased”, he added. 

Abundant Resources, Lack of Utilization

Nigeria has the largest gas reserve in Africa. As of June 2020, Nigeria’s proven gas reserve was 203.16 Trillion cubic feet (Tcf), according to a report by the Department of Petroleum Resources (DPR) 

In the report, Sarki Auwalu, the director of DPR, said that even with this huge proven gas reserve, gas utilisation was only about 5.5%. 

Mr. Ogungbenle of Kwale Hydrocarbons expressed dissatisfaction at the underutilisation of Nigeria’s gas potential.

“For domestic use of LPG, we are doing less than 25%, far below what we can do,” he said. 

Some of the challenges that the domestic LPG market is faced with include uneven terminal distribution, lack of adequate transport facilities and administrative charges on the domestic sales of LPG, although deregulated.

INTERVENTION PLANS

Nigeria’s federal government set up the LPG Penetration Framework to encourage the use of LPG in households, power generation, auto-gas and industrial applications in order to attain five million Metric Tonnes of local consumption of LPG in 2022, according to the Federal Ministry of Petroleum Resources (FMPR).

The government’s objective of attaining Five million MT of LPG consumption by 2022, puts the national consumption target of LPG at an estimated 83.33 thousand MT per month from 2018 to 2022. 

In 2021 Q1, only March’s LPG consumption met this monthly target at 87, 199.846 Metric Tonnes (MT). 

Even though the calorific content of Liquefied Petroleum Gas (LPG) is higher than kerosene and other cooking fuels, LPG is more capital intensive than most cooking fuels in Nigeria. 

This initial cost of switching to LPG is a contributing factor to the 43% population without access to clean cooking, as at 2018. 

The LPG Gas Expansion Plan was introduced to increase the consumption of LPG in the nation, as the domestic energy mix consist of 60% firewood, 30% kerosene, 5% LPG, 5% charcoal. 

With plans to increase usage of LPG, the federal government will be injecting 10Million cylinders in ten years to the market, according to Dayo Adeshina, Programme manager of the national LPG expansion plan, during a sensitisation workshop on LPG adoption and implementation for industry stakeholders, in Lagos. 

This story was produced under the NAREP Media Oil and Gas 2021 Fellowship of the Premium Times Centre for Investigative Journalism.

 


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.” 

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