Amid gas scramble, Africa leads a boom in nimble export facilities
(Reuters) - Africa is at the forefront of a global wave of new floating gas facilities as countries on the continent seek to meet surging demand in Europe as quickly and cheaply as possible, analysts and energy companies told Reuters.
Eni, BP and smaller independent players such as Nigeria's UTM Offshore are driving the surge with projects on Africa's east and west coasts.
Floating Liquefied Natural Gas (FLNG) vessels shipped Mozambique's first-ever gas exports last November, and the Republic of Congo is preparing for its first LNG exports in December.
Africa currently exports 40 million tons per annum (mmtpa) of gas, and Westwood Global Energy group expects the continent to add 10.2 mmpta in new FLNG capacity by 2027, with projects in Mozambique, Nigeria, Senegal, Mauritania and Republic of the Congo.
"We believe FLNG will be a nice tool of developing gas in a quicker and more efficient way," Luca Vignati, Eni's upstream director told Reuters.
Over the next five years Westwood forecasts $13 billion in spending on FLNG, with Africa accounting for just under 60% of the 18.3 mmpta of added FLNG capacity by 2027. It expects a further 36.5 mmpta to start up after 2027 valued at $22 billion.
TAKING TO THE SEA
FLNG facilities are ships that can pump, liquefy, store and export gas directly from offshore fields. They bypass extensive – and costly – infrastructure needed to process gas onshore, and keep a distance from communities who often protest against having projects nearby.
Operators, energy companies and bankers say improvements in vessel technology and turnaround times have hastened demand since Shell's pioneering but delayed FLNG vessel Prelude, anchored off Australia.
"A typical FLNG can be done for a fraction of the cost of a traditional (LNG production) train," Fola Fagbule, senior vice president with the African Finance Corporation, which has helped fund FLNG projects in Africa.
Illustrating potential savings, one analyst said capex costs for Cameroon's Golar FLNG facility, a repurposed vessel, could be as low as $550 a ton, compared to $900-$1,100 for a new onshore terminal on the U.S. Gulf Coast.
Africa has struggled to pump its gas despite record prices following Russia's invasion of Ukraine as the energy transition focus hit fossil fuel financing.
The energy transition has also made investors cautious about multi-billion-dollar projects with 20-30-year investment cycles. FLNG has a quicker turnaround, with Eni targeting new-build ships to produce just four years after investment.
"You don't need to have a 25-year plateau for huge reserves. You may be there for five or 10 years, and then you move to the next field, and this is the flexibility we want," Eni's Vignati told Reuters.
AT THE CENTRE
Africa currently has more than 50% of the world's FLNG capacity. The offshore ships also bypass safety issues, such as those that delayed TotalEnergies' $20 billion Afungi terminal in northern Mozambique - adding to their appeal.
"Africa is the center right now ... and its going to grow," Gavin Thompson, vice chair research at Wood Mackenzie told Reuters on the sidelines of an African energy conference in Cape Town.
"Interestingly it's not one single country or one single region, we are seeing around both East and West Africa," he said, adding, "they are competing against each other".
The lower costs are also crucial. Wood Mackenzie data showed that the total amount of upstream capital expenditure across Africa is falling.
Eni is deploying two vessels, one repurposed and another larger new vessel, to the Republic of the Congo for a total expected output of 3 mmtpa by 2025.
It also plans to make a final investment decision with its JV partners regarding a second 3.4 mmtpa FLNG project in Mozambique's Rovuma Basin by June next year.
Bruno Itoua, hydrocarbons minister for Congo Republic, told the Cape Town energy conference that its first exports would come by December 2023.
"It's not only an investment opportunity but also an extraordinary chance to build a legacy," he said.
African gas exports can be controversial, as around 600 million people, half of those on the continent, lack access to electricity.
But governments, some of which are in debt crises, are under pressure to rake in royalties and taxes while prices are hot.
Fagbule of the AFC said it was not unusual for governments to earmark some gas from FLNG facilities for domestic consumption, but that full-scale projects targeting domestic markets are tough to finance due to a limited amount of customers able to pay.
"They see the amount of demand for seaborne natural gas that can be delivered across the globe, and they are trying to get that as soon as possible," he said.
Related News
Related News
- Japan's Mitsubishi to acquire stake in Petronas LNG plant
- McDermott awarded Rovuma LNG Phase 1 FEED contract in Mozambique
- Fincantieri LNG-powered Star Princess launched in Monfalcone
- Wood leads industry project to accelerate CCUS with guidelines for CO2 specifications
- Picarro launches handheld solution for natural gas leak investigation and closed-loop leak management
- Picarro launches handheld solution for natural gas leak investigation and closed-loop leak management
- Fincantieri LNG-powered Star Princess launched in Monfalcone
- Sonatrach, Saudi Aramco raise prices for LPG by 3%–4% in October
- Amarinth secures $1-MM order of API 610 pumps for Coral North FLNG project in Mozambique
Comments