LNG projects: Nige­ria faces com­pe­ti­tion from African peers

The Punch - - MONEY - ’Femi Asu

Agrow­ing num­ber of African coun­tries are push­ing ahead with Liq­ue­fied Nat­u­ral Gas projects to de­velop and mon­e­tise their huge gas re­sources, pos­ing a threat to Nige­ria’s share of the global mar­ket.

Four LNG plants are cur­rently op­er­a­tional on the con­ti­nent, with at least eight projects on­go­ing or pro­posed.

Nige­ria LNG has a ca­pac­ity of 22 mil­lion tonnes per an­num; Angola LNG, 5.2 mtpa; Cameroon Hilli Episeyo FLNG, 2.4 mtpa; and Equatorial Guinea LNG, 3.7 mtpa 2018.

Last week, the Nige­ria LNG Lim­ited took the long-awaited fi­nal in­vest­ment de­ci­sion on the com­pany’s Train 7 project, af­ter over 10 years of de­lay.

The Train 7 project aims to in­crease the com­pany’s pro­duc­tion ca­pac­ity from 22 MTPA to about 30 mpta, and will form part of the in­vest­ment of over $10bn in­clud­ing the up­stream scope of the LNG value chain, ac­cord­ing to the com­pany.

“We shall build more trains and in­crease Nige­ria’s LNG ca­pac­ity to match our peers around the world,” the Chair­man, NLNG Board of Di­rec­tors, Dr Osobonye Longjohn, was quoted as say­ing.

Ac­cord­ing to the Africa En­ergy Cham­ber, sub-sa­ha­ran Africa ac­counted for 9.1 per cent of the global LNG ex­ports as of 2018, with Nige­ria ex­port­ing 20.5 mt; Angola, 4.1 mt; Equatorial Guinea, 3.5 mt; and Cameroon, 0.6 mt.

The AEC, in its Africa En­ergy Out­look re­leased in Novem­ber, said over the last decade, huge dis­cov­er­ies in Mozam­bique, Tan­za­nia, Sene­gal and Mau­ri­ta­nia had de­liv­ered a com­bined to­tal of around 200 tril­lion cu­bic feet of re­cov­er­able gas.

“That is enough to pro­vide two thirds of cur­rent global sup­ply for around 20 years. On top of this, Nige­ria alone has 200 tril­lion cu­bic feet of proven re­serves. Cur­rently, sub-sa­ha­ran Africa has the ca­pac­ity to pro­duce 34 mil­lion tonnes of LNG per an­num,” it added.

In De­cem­ber 2017, the Coral FLNG Project in Mozam­bique was Africa’s largest ever project fi­nanc­ing (at $5bn), ac­cord­ing to the re­port.

It said since then, Anadarko Petroleum Cor­po­ra­tion (whose stake in the project was ac­quired by To­tal in Septem­ber 2019) sanc­tioned the $15bn Afungi mega project in mid-2019.

The $30bn Rovuma LNG project, jointly led by Eni and Exxonmo­bil, is ex­pected to reach FID in early 2020, ac­cord­ing to the re­port.

“These projects will see

Mozam­bique’s LNG ex­port ca­pac­ity reach 30 mtpa by 2025, with to­tal in­vest­ment up­ward of $50bn,” the AEC said.

The re­port said Float­ing LNG op­er­a­tions had proved pop­u­lar in Africa for early mon­eti­sa­tion of large re­source.

It said, “For ex­am­ple, in Sene­gal/mau­ri­ta­nia, BP and Kos­mos sanc­tioned the Tortue FLNG project (in De­cem­ber 2018), less than four years af­ter the 15 tcf dis­cov­ery. Phase 1 of the de­vel­op­ment in­volved a 2.5-mtpa fa­cil­ity. There are plans to green­light a fur­ther two ves­sels in 2020 at a to­tal cost of $10bn. This would in­crease out­put ca­pac­ity to 10 mtpa.

“In fron­tier mar­kets, op­er­a­tors are us­ing FLNG to ex­ploit smaller plays that do not jus­tify in­vest­ment in an on­shore plant. Cameroon is a prime ex­am­ple and this trend is set to con­tinue in 2020. In Ethiopia, a Chi­ne­sespon­sored 3 mtpa near-shore FLNG project is ex­pected to com­mence in 2020.”

Ac­cord­ing to the re­port, while the 2 mtpa For­tuna FLNG project in Equatorial Guinea – which was ready for FID be­fore Ophir En­ergy failed to se­cure fi­nanc­ing – could be sanc­tioned in 2020.

It said sim­i­lar float­ing so­lu­tions were be­ing mooted for projects in Gabon, the Repub­lic of Congo and Nige­ria, to de­velop smaller stranded gas fields in­stead.

The AEC said, “Tan­za­nia has tremen­dous re­source po­ten­tial with some 50 tcf of gas dis­cov­ered the coun­try’s off­shore by ma­jors in­clud­ing Exxon, Shell and Equinor but po­lit­i­cal mis­man­age­ment has slowed the de­vel­op­ment of these projects.

“Mau­ri­ta­nia has the po­ten­tial to de­velop its own 10 mtpa FLNG project at the Bi­ral­lah Hub while in Sene­gal, the Yakaar and Teranga dis­cov­er­ies could be de­vel­oped through a 10 mtpa on­shore plant. Nige­ria has strong growth po­ten­tial but the Brass (10 mtpa) and Olokola (10 mtpa) LNG projects do not look likely to progress.”

High­light­ing the op­por­tu­ni­ties in the mid and down­stream sec­tors, the re­port said plans for a Nige­ri­ato-morocco gas pipe­line would in­crease in­ter­con­nec­tiv­ity be­tween West and North Africa.

It, how­ever, said the po­lit­i­cal and fi­nanc­ing chal­lenges of such a project could be pro­hib­i­tive.

The AEC said, “The ex­ist­ing West Africa Gas Pipe­line (Nige­ria-benin-togo-ghana) has been plagued by sup­ply and pay­ment prob­lems. As a re­sult, some coun­tries in Africa with­out sub­stan­tial gas re­sources are turn­ing to LNG im­ports.

“Ghana, for ex­am­ple, will in­stall a new float­ing re­gasi­fi­ca­tion unit in 2020. Other coun­tries such as Ivory Coast, Morocco and South Africa have also looked at in­stalling such units.”

Newspapers in English

Newspapers from Nigeria

© PressReader. All rights reserved.