Tag: gas

When Investment in Refinery and Petrochemicals is driven by Innovation and Efficiency

Posted by khaoula on

The ongoing investment in refining, petrochemicals, fertilizer, and gas is driven by the desire to bring innovation and efficiency into all aspects of Nigeria’s oil and gas sector, the President/Chief Executive, Aliko Dangote has said.

Dangote, who made this disclosure yesterday at the ongoing Nigeria International Petroleum Summit in Abuja, said the company is committed to the concept of energy efficiency and innovation in the oil and gas sector.

The business mogul, whose 650,000 barrels-per-day capacity refinery is the largest in Africa, was represented by the Group Executive Director, Government and Strategic Relations, Dangote Industries Limited (Dangote.com), Engr. Ahmed Mansur.

Addressing participants at the forum, Mansur said the theme of the conference, “Shaping the Future through Efficiency and Innovation”, was quite apt; given Nigeria’s quest for economic transformation.

According to him, Aliko Dangote is passionate about efficiency and innovation in the oil & gas sector through adding value to the hydrocarbon process.

Mansur said the company’s passion and drive is seen in the building of the project, which will become the world largest single train refinery on completion and therefore a boost to Nigeria’s economy.

He stated: “The Refinery can meet 100% of the domestic requirement of all liquid petroleum products (Gasoline, Diesel, Kerosene and Aviation Jet), leaving the surplus for export.

“This high volume of PMS output from the Dangote Refinery will transform Nigeria from a petrol import-dependent country to an exporter of refined petroleum products. The refinery is designed to accommodate multiple grades of domestic and foreign crude and process these into high-quality gasoline, diesel, kerosene, and aviation fuels that meet Euro V emissions specifications, plus polypropylene”, he said.

Mansur disclosed that Dangote is also constructing the largest fertilizer Plant in West Africa with the capacity to produce 3.0 million tonnes of Urea per year as part of the gigantic economic transformation project. He explained that the Dangote Fertiliser complex consists of Ammonia and Urea plants with associated facilities and infrastructure.

“Nigeria will be able to save $0.5 billion from import substitution and provide $0.4 billion from exports of products from the fertilizer plant. Thus, supply of fertiliser from the plant, which is set for commissioning before the second quarter of 2019, will be enough for the Nigerian market and neighboring countries,” he added.

Speaking further, he said at a time when the oil and gas industry and the global economy is in a state of flux, it is most appropriate that attention should be given to the future especially given the incredible speed and quantum of change taking place in every facet of human endeavour.

“Our economy, in particular, cannot afford to ignore these massive changes. Our decades of dependence on this industry for our economic well-being and the urgent need for diversification has been widely recognized and is clearly the most critical challenge for our policymakers.

“But even as we seek to diversity from oil, and we are, indeed, making observable progress in this regard, we cannot ignore the need to continue to exploit this God-given resources in a more efficient and innovative manner,” he added.

He commended the Management of the Nigerian National Petroleum Corporation (NNPC) for its unwavering support in Dangote’s quest to make Nigeria self-sufficient in the production of petroleum products.

Distributed by APO Group on behalf of Dangote Group.

Africa pioneers floating liquefied natural gas

Posted by khaoula on

Africa has become a key testing ground for floating liquefied natural gas pioneers. FNLG spending in Africa is forecasted to reach $15.4bn out of a global total of $42bn, in the period 2019-24.

When the first wave of floating liquefied natural gas (FLNG) projects was conceived at the beginning of this decade, it was hard to envisage that Africa would become a prime testing ground for the technology. The idea of liquefying gas for export in a floating facility located above offshore gas reserves made as much sense in Africa as anywhere else. The technology offered a cheaper way to exploit offshore gas reserves than building pipelines and developing permanent onshore infrastructure.

In particular, it could make possible the exploitation of smaller “stranded” reserves, whose economics wouldn’t stack up with a costly onshore development. And re-usability helped too – when a field’s reserves were depleted, an FLNG facility could simply be moved somewhere else. But the highest profile project, Shell’s Prelude facility – the world’s largest floating structure – was destined for offshore Western Australia and had an estimated price tag of $12bn or more – way beyond the scale of investment usually ploughed into African hydrocarbons projects, even in established exporting nations such as Nigeria and Angola.

But, in May 2018 – nearly six years after Prelude’s construction started and before it was operational – Golar LNG’s Hilli Episeyo, moored off Kribi, Cameroon, became only the world’s second FLNG facility to start production. The first was Petronas’ PFLNG Satu in Malaysia. In late August, Golar’s chief executive, said on a media conference call, that the facility was poised to ship its sixth cargo. He said that all four trains on the facility had been successfully tested, though only two, producing a total of 1.2m t/y of LNG, were currently being used. On the other side of the continent, a consortium led by Italy’s Eni is already building a 3.4m t/y FLNG facility to operate on the Coral South development from 2022. These will be the first exports from Mozambique’s huge offshore reserves In the Rovuma Basin

And there’s more planned for West Africa. BP plans to use a Golar design for FLNG exports from the Tortue/Ahmeyim gas field that straddles the maritime border between Senegal and Mauritania from around 2021 (see also Senegal article). UK-based Ophir Energy also plans to use a Golar design to liquefy gas from its Fortuna LNG project off Equatorial Guinea, if it can secure the investment it needs. Meanwhile, London-based New Age is seeking to develop FLNG projects in Cameroon and Congo-Brazzaville. Westwood Energy, a consultancy, forecasts FLNG spending in Africa will amount to $15.4bn out of a global total of $42bn, in the period 2019-24.

Rosy demand outlook

So, what happened to pique the interest of investors in this pioneering technology? One important factor is that global LNG demand has been rising fast in recent years, lifting prospects for the whole sector. While the massive expansion of onshore LNG export capacity in Australia and the advent of US LNG exports have saturated the market in the last two years, most forecasters believe demand will start outstripping supply in the early 2020s, providing the prospect of healthy returns for those that can get LNG to market then. Golar said in its second-quarter 2018 results statement that it expected the LNG market to balance in 2022, with a supply gap of around 50m t/y by 2025.

But perhaps the most important change has been falling costs. Since Prelude was conceived, the investment needed to build FLNG has dropped sharply. Whereas Shell estimated that Prelude would cost some $3.5bn per million tonnes of annual production capacity, the figure for LNG from Golar’s Hilli Episeyo is thought to be well under $1bn per million tonnes.

That has been achieved largely by using off-the-peg, modular technology bolted onto a converted LNG carrier. It’s a no-frills approach compared to Prelude, which was built from scratch to produce a range of products besides LNG and to operate in much more demanding ocean conditions than those likely to encountered by Golar’s conversions.       

FLNG also has the added advantage of keeping hydrocarbons investment clear of the perceived risks associated with developing onshore projects in coastal regions that may be remote from main population centres with limited access to infrastructure and skilled labour.

Lower risk

A project involving a vessel built in an Asian shipyard and then deployed without necessarily even going to port in the country where it is deployed is an attractive one for risk-averse international investors. It’s a similar rationale to that already evident with the successful development of offshore oil developments using floating production storage and offtaking vessels (FPSOs) in countries such as Angola and Nigeria, where onshore developments may be considered a risk.

That doesn’t always go down well with those who want the local economy to benefit directly from construction jobs and infrastructure development. But increasingly, African governments seem to be taking the view that if the choice is between export revenues from FLNG or no LNG investment at all, then FLNG is worth going with.

A willingness to sanction relatively low-risk FLNG can also help get the onshore industry rolling, once an export industry has established. In Mozambique, following ENI’s decision in June 2017 to go ahead with the Coral South FLNG project, consortiums led by ExxonMobil and Anadarko are now pushing on with plans for onshore LNG plants in the northern Cabo Delgado region. If they are built, these will create local jobs, require local content and supply gas domestically as well as for export markets.

Credits to Ian Lewis (African Business Magazine)

African Oil and Gas Industry set for Rebound

Posted by khaoula on

Africa’s offshore oil and gas industry after seeing tough times in recent years, it is becoming more dynamic again.

With the oil price back at levels last seen in late 2014, and oil company coffers swelling, Africa’s leading hydrocarbons producers are hopeful that they can draw investment back to the continent’s upstream oil and gas sector after some lean years. Both Nigeria and Angola, Africa’s largest oil producers were already finding it tough to launch large offshore oil developments before the oil price nose-dived from over $110 a barrel in mid-2014 to below $30/b in early in the following year.

In August 2018, Nigerian crude production averaged around 1.85m barrels a day (b/d), while Angola’s averaged 1.38m b/d, according to Opec data. Both countries are producing less than past peaks – over 2m b/d for Nigeria and around 1.8m b/d for Angola. Nigeria’s failure to nail down new legislative and financial frameworks for exploration and production agreements, along with the ever-uncertain security situation in the oil-rich Niger Delta, had already prompted some of the majors to scale down operations in the country.

Meanwhile, Angola’s state energy firm Sonangol was finding it hard to stimulate sufficient fresh exploration to replace fast-depleting reserves of existing developments, not least because of the high cost of operating there. Both countries’ oil sectors were also tainted by a lack of transparency and the impact of oil sector-related corruption scandals. In the last few months, both nations have been trying to heal their relationships with foreign investors by pushing ahead with plans for industry restructuring, though it remains to be seen how successful they will be in implementing meaningful change.

Nigeria’s legislative overhaul

In Nigeria, the Petroleum Industry Governance Bill (PIGB), a key piece of legislation affecting future investment – and the first of four related bills – had been passed by both houses of Nigeria’s parliament by early 2018. After a decade of fruitless negotiations, this potential breakthrough offered the prospect of a more clearly defined investment framework for major oil and gas projects. “I don’t think the PIGB was ever the silver bullet that some people thought it was going to be. But there was a body of opinion that said it would at least be a bit better than the current status quo,” says Gail Anderson, Research Director at consultancy Wood Mackenzie.

However, the reform process hit a snag in late August, when news broke that President Muhammadu Buhari decided to withhold his assent for the PIGB, apparently, in part, because it trimmed the amount of oil revenues available for government spending. Ita Enang, a senator and presidential aide, refuted local media reports that the president, who also acts as oil minister, was concerned that the PIGB would reduce his power over the industry by giving more control to independent regulators. Whatever the reason, a further delay – which could be months or even years, given the proximity of next February’s presidential elections – won’t do much for investor confidence in the sector.

There has also been mixed news from the Niger Delta. Militant attacks on oil and gas facilities in the region that have regularly disrupted onshore production and pipeline supply to oil and gas export facilities have eased off over the last year or two. This has enabled export volumes to recover, after Delta disruption caused Nigerian crude production to fall well below 1.3m b/d at some points in 2016. However, a coalition of local militant groups seeking a greater share of the spoils from the oil industry said in September that It would resume attacks if international oil companies did not move their headquarters to the Delta region by the end of 2018 – a demand that is unlikely to be met.

End of an era in Angola

Meanwhile, Angola’s President João Lourenço has announced measures that if implemented would loosen Sonangol’s tight grip over the oil industry there. Under recently unveiled plans, Sonangol, the state-owned company that oversees oil and natural gas production in the country would hand over responsibility for petroleum agreements, oil block sales and their management to an independent National Oil and Gas Agency (ANPG) by the end of 2020.

Lourenço was elected in September 2017, succeeding José Eduardo dos Santos, who stood down as president after 38 years at the top. Since then, his daughter, Isabel dos Santos, has been removed as head of Sonangol and an investigation into possible corruption at Sonangol under her leadership has been launched. She denies any wrongdoing. Both Angola and Nigeria are members of Opec, but their output has been little affected by the cartel’s recent production quotas. In Angola’s case, falling output meant it was producing well below the cap imposed on it. Nigeria was initially excluded from quotas to enable output to recover from the impact of Niger Delta unrest.

Projects advance

Despite the continued uncertainty, the uptick in interest in costly deepwater investments, which look more attractive with today’s higher oil price, has moved some big projects forward in both countries. In Nigeria, Total is considering expanding the scope of its new Egina deepwater project, whose floating production storage and offloading facility (FPSO) is due to start operations in late 2018. The FPSO is set to produce 200,000 b/d of oil from the Egina Main field, whose reserves are estimated at  570m barrels. The French company has said it is now considering connecting its nearby Preowei discovery to the Egina FPSO, after a third appraisal well was successfully drilled there in late 2017.

Prospects also seem brighter for Shell’s delayed expansion of the Bonga deepwater oil field, which had been mired in legal wrangles between Shell and the state-controlled Nigerian National Petroleum Corporation (NNPC) over the terms of the field’s Production Sharing Contract. In early September, Shell Nigeria’s managing director Bayo Ojulari said in a statement that a timetable for a final investment decision would be announced after commercial discussions with the government were concluded. He said those talks could be concluded “soon”. The $10bn Bonga Southwest project could add as much as 175,000 b/d to the field’s output.

In Angola, on the Total-operated Kaombo development on Block 32, the Kaombo Norte FPSO started producing in July, while the Kaombo Sul FPSO is due to start up in 2019. Overall production from the development is expected to peak at some 230,000 b/d. But Angola still needs a lot more exploration than is currently on the cards to make the discoveries it needs to compensate for falling output from now-maturing assets that have been the mainstay of production over the last two decades. Without more investment, production could fall to 1m b/d by 2023, as output from older fields runs down, according to Angola’s Ministry of Mineral Resources and Oil.

Spotlight on gas

Of course, it’s not just about oil anymore. With the era of peak oil fast approaching, many international oil companies (IOCs) are ploughing more money into gas export projects, whose shelf life could be longer. Nigeria remains the kingpin of Africa liquefied natural gas (LNG) exports, but is facing stiff competition not only globally, but also from within the continent, as up to three LNG projects in Mozambique move closer to fruition.

Talk of expanding export capacity from the current 22m tonnes a year (t/y) – all of it from the Nigeria LNG (NLNG) facility on Bonny Island – has been around for years, without progress. But, with the current the global LNG supply glut due to turn into a shortfall in the early 2020s, NLNG’s IOC owners have embarked on efforts to raise finance to build a new production train at the site to add to the existing six. NLNG is owned by Shell (25.6%), Total (15%) and Eni (10.4%), with NNPC holding the other 49%. 

They are seeking some $7bn to cover the cost of building Train 7 and another $5bn for upstream investment in gas supply. The expansion would add 8m t/y to Nigerian export capacity, bringing it to around 30m t/y. That would make the country the world’s third largest exporter, behind Australia and Qatar, based on current production data. Angola also exports LNG from the 5.2m t/y Angola LNG plant, operated by Chevron. The plant, which opened in 2013 has had a chequered history, and had to be shut down for months at a time due to technical problems in the following two years. Its operating record has improved more recently.

The country’s gas production has largely been based on associated gas from oil projects. But the new government has improved terms for gas-focused developments, raising the prospect of possible expansion of Angola LNG, as well as greater supply to the domestic market.    

Ian Lewis