All posts tagged GAS MONETISATION


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.


Where is the Gas Market, in Africa Itself?

Egypt couldn’t get enough natural gas, before COVID-19 intruded, to fire its power turbines, feed its methanol plants and heat the boilers in its industries.

A 30 Trillion cubic feet (30Tcf) discovery, made five years ago, in 2,000 metres of water, is already producing over 2Billion cubic feet a day for the local economy.

That kind of absorptive capacity is not comparable with anywhere else in Africa.

South Africa is a potentially large market for gas, but we won’t find out until the country, boldly takes actions, to invite inward investment that allow natural gas inflow into the economy.

That not many countries in Africa can consume even midsize volumes of these light hydrocarbon molecules, is the reason why the continent’s highly populated countries are forever scurrying around the globe looking to export either by LNG or piped gas.

We’ve been tracking the domestic gas markets all over Africa for over five years and what we get is creeping increases, not a surge.

Construction is underway at the 13Million Tonnes per Annum (MMMTPA) Mozambican LNG, the 8MMTPA Nigerian LNG Train 7 and the 600MMscf/d ANOH gas projects, because the Financial Investment Decisions were taken on these projects last year.

We are inclined to single out the ANOH project for salutation because it is dedicated to the domestic market, but pulling off the deals for those two large LNG projects are also, in themselves, the stuff of true grit.

Let us take a survey of what’s exciting in African Gas. Click here.

The Africa Oil+Gas Report provides peerless perspective and insight on policy issues and technical innovation, backgrounded by high quality energy intelligence to guide everyone from the prospecting E&P company to the project finance institution. Published by the Festac News Press Limited since November 2001, AOGR is a paid subscription based monthly, hardcopy and pdf (e-copy) publication delivered 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 +2348130733523, +2347062420127, +2348036525979 and +2348023902519.

 


Natural Gas at a Turning Point: Notes From Gas Cartel Workshop

Increased cooperation between producers and buyers, digitalisation across the value-chain, investment in infrastructure and research and development in innovative technologies will play a pivotal role in positioning natural gas as a fuel of choice for the 21st century global economy.
These were some of the key messages of the distinguished line-up of international gas industry leaders and panellists who participated in the 3rd GECF Annual Workshop on Promotion of Natural Gas Demand.

The widely attended workshop, held virtually, was organised by the GECF (Gas Exporting Countries Forum) at a critical time for the gas industry which is facing unprecedented levels of complexity and market upheaval brought on by the COVID-19 pandemic and persistently mild winter. In spite of this, the speakers opined that natural gas is the fuel that can achieve the UN Sustainable Development Goals and the objectives of Paris Agreement as its credentials far outweigh that of other energy sources such as coal and oil.

Welcoming the audience, Yury Sentyurin the GECF Secretary General, outlined the salient points that leverage gas industry’s growth and highlighted the Forum’s efforts in promotion of natural gas, in line with the GECF Statute, the GECF Long-Term Strategy, and the Declaration of Malabo at the conclusion the 5th GECF Summit of Heads of States and Government, all of which guide the GECF to advocate for the versatility of natural gas based on fair pricing policies and a level playing field, amongst other factors.

“We recognise the vital role that natural gas has to play in energy transition and sustainable development as we strive for energy security for all nations. Now more than ever, there must be a spirit of collective collaboration amongst industry players in order to sustain existing markets, and more so to create new promising ones,” said Mr. Sentyurin.

“We also recognise the crucial role of digitalisation as we strive to reduce cost across the natural gas value chain and enhance the competitiveness of natural gas.”

The Secretary General noted that the workshop was instrumental in increasing awareness of natural gas within the framework of global energy security and provided potential strategies to promote natural gas demand, some of which include the crucial role of advocacy for natural gas, government policies that need to encourage natural gas utilisation, cooperation amongst market stakeholders, the role of technological disruptions, importance of robust pricing mechanisms to secure sustainability of supply, investment in infrastructure in consumer countries, and other actions that will be studied further in the GECF Secretariat for future actions.

The keynote speakers included Joe M. Kang, the President of International Gas Union (IGU), N. J. Ayuk, Executive Chairman of African Energy Chamber Magdy Galal, Chairman of Egyptian Natural Gas Holding Company (EGAS), and Shamsairi Mohd Ibrahim, Vice President LNG Marketing & Trading of Petronas.

The session was followed by two immersive panel sessions.

In his intervention, Mr. Kang referred to the messages published in the IGU’s latest report, ‘Gas Technology and Innovation for a Sustainable Future’, and focused his remarks on the potential that technology can offer in reducing greenhouse gas emissions and improving energy access. He also highlighted the urgency of investment decisions to be made if this potential is to be realised.

Mr. Ayuk thanked the GECF for bringing the natural gas agenda to Africa, particularly by hosting the Forum’s Summit in Equatorial Guinea, and thereby in Africa for the first time, in 2019. He also appreciated the GECF’s work in promoting further cooperation with African countries to use gas as the core source of energy in the development programmes and climate change policies, in delivering energy to the continent’s consumers, more broadly in alleviating energy poverty. Mr. Ayuk emphasised the crucial need for development of the gas industry in Africa through investment in infrastructure and industries.

Following this, Dr. Galal pointed out the steps taken by the Egyptian government in stemming the decline in consumption in Egypt due to the COVID-19 impact, which has seen a drop in demand by 13% between January and May 2020 compared to last year. According to him, whilst the government lowered the price of gas in the industrial sector, more incentives needed to be provided by it, especially in the upstream activity by providing flexible terms in the concession agreements. Over the long-term, he said, serious actions should be considered by the gas industry in terms of adapting new strategies to ensure sustainability of the business. This might include significant structural and organisational changes.

Mr. Ibrahim of Petronas pointed out that the rising number of LNG importing countries from merely 15 in 2005 to 39 countries in 2019 shows that LNG is well positioned to prosper as the most significant source of energy in the future. He also highlighted some creative LNG solutions including LNG bunkering, virtual pipeline system, small-scale break-bulking and vertical integration that will create new and niche markets. Furthermore, Mr Ibrahim stated that the value of natural gas should be preserved while creating a level-playing field between producers and consumers.

The GECF Gas Market Analysis Department Head Ms Mahdjouba Belaifa then spoke about the importance of this annual workshop for the industry and the GECF’s role in aligning many voices as one voice. She explained that in the previous two workshops the key identified areas for natural gas were held with a focus on cost competitiveness, policy advocacy, importance of long-term oil indexed contracts for the security of supply, development of infrastructure, and new business models. She highlighted some of the proposed actions after the workshops such as reinforcement of dialogue, role of R&D, fair access to technology, engagement of policymakers in advocacy for fair policies towards natural gas, the role of social media to sensitise various segments of the public, as well as digital technologies to improve productivity.

In the first panel discussion, ‘Improving the competitiveness of natural gas through Cost Optimisation and Digitalisation’, the participants discussed a number of themes affecting the global gas and LNG markets. Moderated by Stuart Elliot, Senior Writer of European Gas & LNG at S&P Global Platts, joining this debate were Robbin Mills, CEO of Qamar Energy and Vincent Demoury, General Delegate of International Group of LNG Importers (GIIGNL).

Mr. Mills focused his views on the Middle East region, where he mentioned that gas demand growth is expected to shift from power to the industrial sector in the long-term due to increasing renewables deployment and improved efficiency. As it relates to a gas surplus in the region, this could bring several opportunities, including new lighter industries, intra-regional export projects (gas, LNG and electricity), enhanced oil recovery, hydrogen production, and expansion of e-vehicles, which will support a growth in electricity demand.

Mr. Demoury held the view that although LNG has been growing at a healthy pace over the last few years it faces several challenges in a post-COVID-19 world, including economic growth, volatility, affordability, and environmental policies. As such, there is a need that producers, consumers, and policymakers work together to develop methodologies and invest in technology for decarbonising the gas industry and innovation to improve its competitiveness and sustainability.

The second panel, ‘Adapting to new gas market realities in a post-COVID-19 situation: Low Prices and Weakened Demand’, was moderated by Nikolay Kozhanov, Research Associate Professor at the Gulf Studies Centre at the Qatar University, and featured the presentations of Mr Ayuk, as well as Sergei Komlev, Head of Contract Structuring and Pricing Directorate from Gazprom Export and Mike Fulwood, Senior Research Fellow at the Oxford Institute for Energy Studies.

Mr. Fulwood maintained that while there are opportunities for growth in gas demand in Sub-Saharan Africa and emerging Asian LNG markets, gas will continue to face competition from coal in Asia. On the other hand, Mr. Sergei drew the audience’s attention to spot prices which he believed tended to overreact to even minor market imbalances while in his opinion oil-indexation provided a more stable gas price.

NJ Ayuk reiterated the issue of lack of infrastructure in Africa, in particular, a deficit in regasification facilities. He signalled out the huge potential of gas monetisation in Africa, where gas industry development will trigger social and economic growth and create jobs.

Throughout the workshop, regular Q&A sessions took place whilst a few real-time polls were also conducted.

The Annual Workshop on Promotion of Natural Gas Demand is a premier industry event and is designed to empower professionals and observers in the field of gas market to gain a deeper understanding of the market conditions, look at the common challenges,  and think collectively on ways to promote natural gas to enhance its prospects as the fuel of choice for sustainable development.

This report was written by the public relations department of the Gas Exporting Countries Forum

 


Ghana’s Gas Master Plan is “Outdated”, Critic Claims, and “No Longer Fit for Purpose”

Ghana’s four-year-old Gas Master Plan has been dragged into the national conversation around whether the country’s Gas Company should be subsumed into the flagship state hydrocarbon company, the Ghana National Petroleum Corporation (GNPC), as a subsidiary.
“The infrastructure plan is obsolete and needs revision”, submits Ernest Owusu Bempah, a public policy analyst, “and none of the supply and demand data in the plan are applicable.”
Mr. Bempah was responding to a presentation by the Africa Centre for Energy Policy (ACEP), a policy think tank that is highly revered in the West African country. ACEP had, in that presentation, revisited the lingering debate over whether the Ghana Gas Company should be, like in the Nigerian model, a subsidiary of GNPC or, like in the Egyptian model, be an entity by itself.
But it is the submission that Bempah makes about the Master Plan that the Africa Oil+Gas Report considers most crucial. Part of his summary:
• Gas Master Plans (GMPs) are meant to address two issues: Design Optimization and Operational Optimization.
• The current Gas Master Plan addresses only the former. Ghana Gas Team and their counterparts from Trinidad and Tobago have addressed the latter. Furthermore, a GMP is also a working document, which requires regular update. None of the supply and demand data in the GMP are applicable.
• The infrastructure plan is also obsolete, and needs revision. However, some of the recommendations and procedures are still worth considering. It will also require an expanded scope to include operational optimization
• Ghana Gas’ core business has three key components – Daily operations, which takes about 80% of the life-cycle time, periodic Maintenance which takes about 10% of the time and occasional expansion which takes the remaining 10% of the life cycle time.
• So, Ghana Gas’ key job description is to deliver gas for power generation for Ghanaians, through reliable and uninterrupted operations. Not necessarily expansion projects.
• Ghana’s Gas industry still riddled with legacy that; and Ghana Gas is owed the most by sister agencies. This is a very unusual circumstance by any standard. ACEP should be providing ideas to address this recurring legacy problem in the sector, instead of espousing short sighted band-aid solutions.
• It is important not to base lasting policy decisions, including Institutional Arrangements, just on ability to Finance new facilities or expansion of existing ones or someone’s Balance Sheet as suggested by ACEP.
• The 4 year-old GMP is hardly fit for purpose and requires an update and therefore cannot be used as bases for recommendation by ACEP.

The full article by Mr Bempah was published in The Ghanaweb and the June 2020 edition of Africa Oil+Gas Report.


Most of Ghana’s Gas Is Stranded

By Foluso Ogunsan

More than half of natural gas produced in Ghana in 2019 has had to be reinjected for lack of availability of off takers, the country’s annual petroleum industry report has indicated.

“In spite of the fact that Ghana National Gas Company(GNGC), managed to bring on stream new off takers during the reporting period, namely Amandi Energy at Aboadze, Karpowership at Sekondi, Genser, at Tarkwa, and shipment of gas from Takoradi to Tema, through the West Africa Gas Pipeline, a substantial amount of the country’s gas remains stranded”, the Public Interest Accountability Committee (PIAC) notes in its 2019 annual report, released recently.

More than half (56.87%) of total gas produced from Jubilee, TEN, and SGN had to be reinjected during the period.

The committee says that “2018 price of lean gas was slashed by 31.23% in 2019. The reduction means cheaper fuel for thermal power generation”.

The PIAC is Ghana’s equivalent of an Extractive Industry Transparency Initiative (EITI).

The report says that Ghana National Petroleum Corporation (GNPC), supplied $334,636,806.22 (~$334.6Million) worth of raw gas to GNGC, but no payment was received, largely on account of the inability of the Volta River Authority, the state power utility, to pay GNGC for the lean gas supplied.

“Added to the outstanding balance of $333,481,539.82 (~$333Million), this brings the total indebtedness of GNGC to GNPC in respect of lean gas supplies to $668,118,346.04 (~$668Million).

The GNGC is on course to become Africa’s most indebted state hydrocarbon company.

 

 


Sasol Closer to Selling Stakes in EGTL, Moza Gas Pipeline

By Toyin Akinosho

South African synfuels giant Sasol, says it has signed an agreement with Chevron Corporation for the sale of its indirect beneficial interest in the Escravos Gas to Liquids (EGTL) plant, in Nigeria.

The company has also inched close to finalizing the sale of its equity in the Republic of Mozambique Pipeline Investment Company (Rompco) and the Central Termica de Ressano Garcia gas-fired power plant, also in Mozambique.

EGTL commenced beneficial operations in June 2014, 15 years after the idea first came on the drawing board. Its original cost started out at $1.9Billion, when Final Investment Decision was taken in 2005. The cost rose to $5.9Bllion in 2009 but continued to escalate, raising government and partner concerns.  The plant has an initial capacity of 34,000 barrels per day.

Chevron Corp signed global JV with Sasol Ltd as well as the global JV supplementary agreement that specifically related to Nigeria. In the beginning it was 50:50 risk sharing agreement between the two companies. The agreement with Sasol is offshore and managed as such. In Nigeria, state owned firm NNPC took 25% and Chevron Nigeria had 75%. As costs escalated and the project was delayed, Sasol drastically reduced its stake.

 In its release, Sasol did not disclose how much it expected to make for the EGTL disposal, but it did say that the transaction had an agreed economic effective date of September 1, 2019.

The Rompco pipeline, an 865km facility which transports around 500Million standard cubic feet a day of gas from Sasol’s Pande and Temane gasfields, in southern Mozambique, to South Africa, is a more strategic asset to Sasol.

The other shareholders in the pipeline include the Mozambican state hydrocarbon company Companhia Mocambiçana de Gasoduto (25%) and the South African Gas Development Company (25%), also known as iGas, a subsidiary of South Africa’s Central Energy Fund (CEF).

Sasol is aiming to realise between $2- and $5-Billion in proceeds from the disposals, initiated to help reduce its $10Billion debt burden by $6-billion by the end of its 2021 financial year.


TOTAL To Commence Sale of LNG In South Africa From Late 2021

By Sully Manope, in Cape Town

TOTAL South Africa has signed an agreement with Renergen for marketing and distribution of Liquefied Natural Gas produced by Renergen.

Johannesburg Stock Exchange (JSE) listed Renergen is in the construction phase of South Africa’s first commercial LNG plant, and is anticipating a turn-on date of the plant around the third quarter 2021. “The customer base for the LNG will predominantly be logistics companies operating trucks along the main routes across the country, with a significant portion of the initial production already allocated to customers”, Renergen says.

“This agreement is intended to provide ideal filling locations for our customers along strategic routes across the country, and the union will create a powerful first mover advantage in this exciting space in South Africa,” said Stefano Marani, CEO of Renergen. The first route targeted under the agreement will be the N3 between Johannesburg and Durban, followed by the corridors leading to the other major cities once Renergen’s Phase 2 project comes into production.

“The LNG displaces diesel usage, reducing operating costs and helping customers meet their sustainability targets due to the significantly lower greenhouse gas emissions from natural gas over diesel”.

 


Kenya To Restart Distributing Small LPG Cylinders to Poor Households

$28Million project had been stalled by a court case for two years.

After a two-year court case, in which it was accused of distributing substandard cylinders, the National Oil Corporation of Kenya (NOCK) will start the distribution of the six-kilogramme (6kg) Gas Yetu cylinders to poor households in the country.

East Africa’s largest economy wants to wean its poorest people from the use of dirty wood fuel. A total of 109,649 six-kilogramme cylinders, 329,422 burners and 329,260 grills have been lying in the corporation’s warehouses since the distribution was discontinued on court orders in 2018.

The government had allocated $28Million for purchase of the cylinders to be sold at a subsidised $19 rate with complete accessories under the Gas Yetu brand. It’s a steep discount from the market price of $47 for the 6kg gas cylinder with cooking accessories.

The operation was disrupted by the discovery that fraudulent contractors supplied 67,251 faulty gas cylinders. The discovery indicated that 40% of the cylinders supplied to NOCK were sub-standard, including having faulty valves that posed the danger of fire eruptions.

The court case, instituted by the Consumer Federation of Kenya (COFEK) was dropped after certain conditions were met including bringing on board the third party cylinder inspector. “The exercise by a third party cylinder inspector to independently test the cylinders and confirm the integrity and safety of the same ahead of distribution to Mwananchi starts on Monday, May 25, 2020,” Leparan Gideon Morintat told, NOCK’s chief executive officer told the Energy Committee of the Senate, the upper house of Kenya’s bicameral legislature.

 


Angola Needs to Drill More Oil Wells to Produce Gas

By Sully Manope, in Soyo

Angola’s LNG plant has dropped in production as a result of reduced amount of natural gas that come from the crude oil platforms that supply it.

It sounds intriguing, but the plant relies entirely on associated gas: natural gas which cohabits in the same reservoirs as crude oil.

ALNG’s production capacity is 5.2 Million Tonnes Per Annum (5.2MMTPA). The train can process up to 1.1 billion cubic feet of natural gas per day,

Diamantino Azevedo, Angolan Minister of Mineral Resources and Oil is quoted by Angolan state news agency Angop, as saying that additional investments are needed in drilling more oil wells in the country, in order to increase the natural gas that is channelled to ALNG plant “to reach the installed production capacity.” The minister reportedly added: “This is a challenge that Angola LNG and the country have to take on, in order to achieve capacity and maintain project stability over a long period of time”.

The immediate challenge to Mr. Azevedo’s wish is the immediate status of Angolan rig count. Angolan rig activity figures had crashed from robust 22 in September 2015 to 4 in August 2018, according to the August /September 2018 edition of the monthly Africa Oil+Gas Report.

Angolan LNG has had its fair share of challenges since it came on line in 2013. Barely a year after commissioning, it faced an extended plant shutdown of more than two years from April 2014 to June 2016 to fix a number of design issues that caused an incident on 10 April 2014

That situation led Chevron, the operator, to create an internal project management system to better track contractors and subcontractors on major projects. Chevron is the largest stakeholder in the facility, holding a 36.4% interest, with partners that include Sonangol, 22.8%, and BP,  ENI and TOTAL, with 13.6% each.

 

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