All posts tagged GAS MONETISATION


Nigerian Government Will Keep Gasoline Import Subsidy in Place, Beyond July 2022

The Nigerian government has suspended its plan to remove subsidy on petroleum products in July 2022 as, according to the Minister of Finance, “the timing is problematic”.

Zainab Ahmed said that the Government made provisions for subsidy in the 2022 budget from January to June 2022, and “all payments on fuel subsidy ordinarily would cease as from July, 2022”. She disclosed that efforts are underway by the Executive arm of government to forward a request to the National Assembly to make additional provision for fuel subsidy from July 2022,  “till a time deemed appropriate for its eventual removal”. Ahmed, speaking at a meeting which involved Timipre Sylva, Minister of State for Petroleum Resources, Ahmed Lawan, the country’s Senate President, as well as Farouk Ahmed, Chief Executive Officer of the Nigerian Midstream and Downstream Regulatory Authority, Mele Kyari, Managing Director of the Nigerian National Petroleum Corporation, and Gbenga Komolafe Chief Executive Officer of the Nigerian Upstream Regulatory Commission, explained that the provision in the budget to end subsidy by the end of June 2022 was made in deference to the Petroleum Industry Act, passed in August 2021, which includes a provision that all products will be deregulated.

“Subsequent to the passage of the Act, we went back with an amended the Fiscal Framework that was submitted to the National Assembly to incorporate this demand, but after the budget was passed we have had consultations with a number of stakeholders. It became clear that the timing is problematic, that practically there is still heightened inflation, and also removal of subsidy will further worsen the situation, thereby, imposing more difficulties on the citizens, and Mr. President clearly does not want to do that”. She said that “what we have to do now is to continue with the discussions we are making, in terms of putting in place a number of measures, one of which is the deployment of an alternative to the Premium Motor Spirit (PMS) and also the roll out of enhanced refining capacity in the country, including the 650,000 barrels per day Dangote refinery and also the rehabilitation of the four national refineries that have a combined capacity of 450,000 barrels per day”.

 

 


Commissioning Hitches at NNPC’s Oredo LPG Plant: Upsets the Nigerian Government

By Macson Obojemuinmoin

Officials at the Nigerian presidency are concerned that the state hydrocarbon company, NPDC, got President Muhammadu Buhari to commission an LPG plant that failed to deliver more than a fraction of the capacity to the market a full year after the President inaugurated it.

NPDC is a subsidiary of NNPC. The second phase of its Oredo Integrated Gas Handling Facility (IGHF-2) in Edo state, in midwestern Nigeria, was commissioned four days to Christmas 2020, and billed to deliver 240,000 metric tonnes of commercial grade liquefied petroleum gas and propane to the domestic market, according to the speech by President Buhari himself.

He said that the plant would “meet 20% of Nigeria’s LPG demand”.

Mele Kyari, NNPC’s Group Managing Director, had promised at the commissioning “a daily load out of 17 trucks of LPG and 22 trucks of propane”.

That has not happened.

Commissioning hitches have hampered the efficacy of the facility and ensured only minimal benefit to the market a full year after the high-powered, widely publicized commissioning. Over half of the 1.2Million tonnes of LPG consumed in Nigeria in 2021 was imported. The Oredo Plant was supposed to boost locally produced LPG, most of which is contributed by Nigeria Liquefied Natural Gas NLNG Ltd (which supplied 400,000Tonnes, or 33% of the entire 2021 consumption).

As demand/supply challenges forced up the prices of the product for most of 2021, the Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM) fingered “inconsistent availability” of the product as a causative factor and called for a policy that “would encourage full domestication of LPG” , a phrase that could be translated as ‘full scale local production’.

Presidency sources say there is a robust campaign to bolster local production of LPG, with a list of projects that is topped by the Oredo Plant, which has now proved disappointing. They are also looking to contributions from Seplat/NGC’S ANOH gas project, Platform Petroleum”s Egaboma Plant, Energia’s Ebendo field and Sterling Exploration’s Kwale Hydrocarbons.

Of the lot, Kwale Hydrocarbons has started supplying the market and it is the next major local supplier after NLNG, although it doesn’t disclose its delivery volumes. LPG distributors interviewed by Africa Oil+Gas Report, have been largely disappointed by the effectiveness of Platform Petroleum”s Egbaoma Plant and Energia’s Ebendo project. The ANOH project is still under heavy construction, and it’s expected to come on stream in late 2022.


NLNG Is Supplying All its Butane Production to Nigeria in January 2022

Nigeria Liquefied Natural Gas (NLNG) Limited supplied its entire Butane (LPG) output to Nigeria’s domestic market in January 2022.

It is also supplying 50% of its propane production to the country (although its propane output is a minuscule fraction of the Butane production).

It is the first time the company would not export a single tonne of Butane. NLNG Ltd says it will do the same thing for Propane by January 2023, that is: its entire production of Propane will be supplied to the domestic market.

In 2021, the company increased its LPG supply commitment from 350,000 metric tonnes (or 28Million 12.5kg cylinders) to actual delivery of  400,000 metric tonnes (or 32Million 12.5kg cylinders) thereby directing most of its production into the domestic market. “But this was not enough for NLNG, hence this commitment to do all that we possibly can and supply 100% of our LPG production to the domestic market,” says Phillip Mshelbila, NLNG’s Chief Executive Officer.

The quantity of Butane supplied to the Nigerian market in 2021 was 378,000Tonnes. Propane volume was 21,000Tonnes. “Actual production of LPG depends on the volume and composition of feedgas we get from our gas suppliers”, says Andy Odeh, NLNG Ltd’s General Manager, External Relations and Sustainable Development. With this commitment it is expected that NLNGLtd will supply about 600,000Tonnes of both Butane and Propane into the Nigerian market in 2022. The volume of LPG consumed in Nigeria in 2021 was around 1.2Million Tonnes, according to government data.

 

 


Coral Sul FLNG Arrives Mozambican Waters

The Coral Sul Floating Liquefied Natural Gas (FLNG) Vessel has entered Mozambican waters, 45 days after it set sail from the Samsung Heavy Industries shipyard in Geoje, South Korea.

It will be moored at its operating site in the Rovuma basin offshore Mozambique. The FLNG will receive feedstock from the Coral gas field in the Area 4 of the deepwater Rovuma Basin in the Indian Ocean. Italian major ENI discovered Coral back in May 2012. The field holds about 16 Trillion cubic feet (Tcf) of gas in place.

Following the mooring, hook-up operations will begin at a water depth of around 2,000 metres.

Production startup, scheduled for the second half of 2022, may now be earlier. Coral Sul FLNG will contribute to increase gas availability in a tight market, with a gas liquefaction capacity of 3.4Million tons per year (MTPA) of gas. BP will buy all of the LNG produced at the unit as part of a long-term deal.

The 432 metre long and 66-metre-wide unit was constructed by the TJS consortium, consisting of Technip Energies, JGC Corp, and Samsung. It is the first floating LNG facility ever to be deployed in Africa’s deep waters, but it is the second FLNG on the continent, coming after the Hilli Episeyo, the 2.4MMTPA floater in shallow waters off Cameroon’s Kribi coast.

Italian major ENI operates the Coral Sul (South) project on behalf of the Area 4 partners.

These include Mozambique Rovuma Venture, a firm owned by Eni, ExxonMobil and China´s CNPC, Galp, Kogas and (the state hydrocarbon firm) Empresa Nacional de Hidrocarbonetos (ENH).

The Coral South Project achieved Final Investment Decision in 2017, only 36 months after the last appraisal well. “FLNG fabrication and construction activities started in 2018 and were completed on cost and on time, despite the pandemic”, ENI has always maintained.


N-Gas’ Profit Jumps by >50%, Despite No Increase in WAGP Export

By Toyin Akinosho

NNPC’s 62.35% owned gas delivery subsidiary N-Gas recorded a leap in profit from $6.217Million in 2019 to $9.532Million in 2020.

Most of the profit came, not from gas delivery, but from difference in Finance cost between 2019 and 2020, according to 2020 Annual report by N-GAS, one of the 21 NNPC subsidiaries whose audited reports were published in September 2021.

Finance cost was higher in 2019: $5.13Million, than in 2020: $1.88Million. This made all the difference in terms of profit after tax in 2020.

In terms of gas delivery itself, 2020 volumes were slightly lower than 2019 supplies, but that reflected extensive pigging operations in the pipeline in the first few months of the year.

N-Gas is jointly owned with NNPC by Chevron and Shell and its work is to purchase and deliver Nigerian gas to customers in Benin Republic, Togo and Ghana, through the West African pipeline.

This means that it pays upstream suppliers like NDWestern and NPDC for taking their gas and pays the pipeline owners for ferrying the gas through the line.

The bulk of the revenue should be from the delivery charges on sale of gas to Volta River Authority (VRA) and Communaute Electrique du Benin- Lome/ Cotonou (CEB) under their respective gas sales agreements, but that’s not what happened.

 

N-Gas Limited was incorporated in 2004 as a private limited liability Company. The Company is jointly owned by the Nigerian National Petroleum Corporation (62.35%), Chevron N-Gas Limited (20.00%) and Shell Overseas Holdings Limited (17.65%). The Company’s main activity is to buy and sell natural gas shipped through the Escravos-Lagos Pipeline System (ELPS – NGC) and the West African Gas Pipeline (WAGP) to its customers in the countries of Ghana, Togo and Benin.

N-Gas has executed agreements with upstream producers in Nigeria (Chevron Nigeria Limited Joint Venture (CNL-JV) and Nigerian Petroleum Development Company/ND Western Joint Venture (NPDC/NDW-JV)) and with gas transportation companies (Nigerian Gas Company Limited (NGC) and West African Petroleum Company (WAPCo) ) for the supply and transportation of gas to its customers. The agreement with NPDC/NDW-JV was previously with Shell, ie SPDC-JV but subsequently novated to NPDC/NDW-JV following the divestment of Shell Petroleum Development Company Joint Venture (SPDC-JV) from the asset that is the source of its upstream gas supplies to N-Gas. The Novation agreement which transferred the rights and obligations of the NNPC/SPDC JV parties to NPDC/NDW JV parties in the NNPC/SPDC GPAs, was finally concluded in December 2014 following the execution of the novated Trust Accounts and Security Deeds (TASDs),

The dividend paid to shareholders in 2020 was $6Million, same as in 2019. In both years, NNPC received $3.741Million as dividend; Chevron received $1.2Million and Shell received $1.059Million.

Originally published in the September 2021 edition of Africa Oil+Gas Report and distributed to paying subscribers.


Algeria Has Ended Its Gas Export to Spain via Morocco

Algerian gas exports to Spain via Morocco have ended.

The contract for Algeria to use the Moroccan section of the Gaz-Maghreb Europe (GME) pipeline to pipe gas to the Iberian Peninsula ended on 31 October, without a new agreement in place for its continued use.

The contract to deliver Algerian gas to Spain and Portugal via Morocco, the 406Billion Cubic Feet Per Year GME pipeline ran for 25 years. The line stopped flowing on November 1, 2021, not out of  any technical challenges, but due to the frosty relations between the hydrocarbon rich Algeria and  hydrocarbon starved Morocco.

In late August 2021, Algeria severed diplomatic ties with  Morocco, over what Ramtane Lamamra, the Algerian foreign minister, called “hostile, unfriendly and malicious actions against our country.”

Morocco responded that though the decision was “expected,” the allegations are “absurd.”

It is unclear whether Algeria will cease exporting gas to Spain, a crucial part of its income, or it would export into Spain through other means.

 


Rumours of ExxonMobil Dumping Moza Gas Project are Exaggerated, Government says

Mozambican authorities say that ExxonMobil has assured them it would continue with its natural gas projects in the north of the country.

Max Tonela, Mozambique’s Minister of Mineral Resources and Energy, says that he and his men have been exchanging information with the US major “and the indication we got was to reaffirm the Afungi project”.

The government is expecting ExxonMobil representatives to visit Maputo in early November 2021, to assess the situation in relation to projects in Mozambique.

ExxonMobil has been quiet about the 15Milllion Metric Tonne Liquefied Natural Gas (LNG) project in Area 4, which it leads. The company had, by 2019, “awarded a contract for the engineering, procurement and construction for the Rovuma LNG onshore liquefied natural gas production complex to a consortium made up of JGC, Fluor and TechnipFMC (JFT)”, it said in a statement which is still on its website. “The award enables the start of activities for the Rovuma LNG project, as approved by the government of Mozambique in June 2019, while the Area 4 partners continue to work toward a final investment decision (FID) in 2020”.

The FID didn’t happen, and of the three majors involved in LNG projects in the country, ExxonMobil is the only one that has not said a word about going forward or cancelling. That silence has bred speculations o about the company’s plans.

The World Street Journal sounded very authoritative in a report in late October 2021, that ExxonMobil Corp board was “debating whether to continue with several major oil and gas projects amid a global push from investors for fossil fuel companies to be more cost-conscious and green-energy friendly”. It said the “board members expressed concerns about …a $30Billion liquefied natural gas development in Mozambique and another multibillion-dollar gas project in Vietnam”. I added that “the annual projected emissions from the Mozambique and Vietnam projects were among the highest in Exxon’s planned pipeline of oil and gas projects, according to a pre-pandemic internal analysis by Exxon, which was reviewed by the paper”.

ExxonMobil has already spent $2.8Billion to acquire its operator role and equity in the Area 4 project. But the immediate pretext for slowing down has been the flare up of terrorism in the natural gas rich Cabo Delgado province. 2020 witnessed a high mark in violent attacks claimed by the extremist group Islamic State which had been growing since 2017.The conflict has led to more than 3,100 deaths, according to the ACLED conflict registration project, and more than 817,000 displaced people, according to Mozambican authorities.

Since July, an offensive by government troops with support from Rwanda which was later joined by the Southern African Development Community (SADC) allowed for increased security, recovering several areas where there was rebel presence, including the town of Mocímboa da Praia, which had been occupied since August 2020.


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.

Editor

 

 


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.

 

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