Connect with us

Oil & Energy

Europe Banks on African Gas To Check Dependence On Russian Imports

Published

on

Africa is conservatively forecast to reach peak gas production at 470 billion cubic meters (Bcm) by the late 2030s, equivalent to about 75% of the expected amount of gas produced by Russia in 2022, according to Rystad Energy research.
In early March, the European Union announced that it aims to reduce its dependence on Russian gas by two-thirds by the end of this year alone and is currently headed for a supply crunch that will reverberate around the globe.
Even with the number of gas projects being developed or currently delayed, Africa still has significant production potential. The continent is forecast to increase its gas output from about 260 Bcm in 2022 to as much as 335 Bcm by the end of this decade.
If oil and gas operators decide to up the ante on their gas projects on the continent, near and mid-term natural gas production from Africa could surpass the above conservative forecasts.
Russia has historically been the dominant natural gas supplier to Europe, with an average of about 62% of overall gas imports to the continent over the past decade.
Africa has also been a consistent gas exporter to Europe during that time, with an average of 18% of European gas imports coming from Africa.
Projects in Africa are, however, historically seen as having increased risk and can be delayed or go unsanctioned due to high development costs, challenges accessing financing, issues with fiscal regimes and other above-the-ground risks.
Recent signals from oil and gas majors such as BP, Eni, Equinor, Shell, ExxonMobil and Equinor indicate a shift, however, in strategy towards further investment in Africa, with several projects that were previously on ice – including liquefied natural gas (LNG) projects –  as they consider restarting or accelerating previously shelved projects in response to rising global demand.
“The geopolitical situation in Europe is changing the landscape for risk globally. While LNG flows from the US are substantial, demand is much higher. “
Asian and European importers will need to consider African priorities as they develop projects, as many African producers are focusing on supplying energy locally as well as to intra-African markets along with catering to global markets.
“Existing pipeline infrastructure from Northern Africa to Europe and historical LNG supply relationships make Africa a strong alternative for European markets, post the ban on Russian imports,” says Siva Prasad, senior analyst at Rystad Energy.
African nations that have historically been gas suppliers to Europe are well placed to scale up their exports. Africa’s advantage is that it already has existing pipelines connected with the wider European gas grid.
Current pipeline exports from Africa to Europe run through Algeria into Spain and from Libya into Italy. Talks of long-distance pipelines connecting gas fields in Southern Nigeria to Algeria via the onshore Trans Saharan Gas Pipeline (TSGP) and the offshore Nigeria Morocco Gas Pipeline (NMGP) have picked up in recent months.
While the TSGP aims to utilize existing pipelines from Algeria to tap into European markets, NMGP aims to extend the existing West Africa Gas Pipeline (WAGP) all the way to Europe via West African coastal nations and Morocco.
Further afield, African LNG exports have predominantly come from Nigeria and Algeria, with smaller volumes from Egypt, Angola, and a fraction from Equatorial Guinea.
In addition, large-scale discoveries offshore in Mozambique, Tanzania, Senegal, Mauritania, and South Africa have the potential to yield additional natural gas exports once developed.
Europe is now considering how gas-rich African nations can be helped to scale up production and exports in the years to come. The European Union’s decision earlier this year that all natural gas investments are equivalent to investments in “green” energy signal that African gas is considered sustainable.
The supply crisis driven by security interests may push Europe to fund projects that will also help with energy affordability back home. For instance, Europe could be a key financer of the proposed $13-billion TSGP project.
BP’s Russia exit: A boost for uncontracted gas in Senegal-Mauritania
BP Chie Executive, Bernard Looney, has said the decision to exit Russia is not only the right thing to do but is also in the company’s long-term interests.
The UK giant recently booked pre-tax charges of $24 billion and $1.5 billion in its first-quarter 2022 financial results due to its decision to pull out of Russia. The company is now looking to African projects to seize the opportunity to target European markets with gas supplies.
BP has several big gas projects in Senegal and Mauritania – the Greater Tortue Ahmeyim (GTA), Yakaar-Terenga and BirAllah LNG projects. LNG volumes from the 2.5 million tonnes-per-annum (tps) GTA floating LNG (FLNG) Phase 1 have already been sold, and some gas from Yakaar will be used as feedstock for Senegal’s gas-to-power plant.
Meanwhile, gas from GTA LNG Phase 2, the remaining gas from Yakaar–Teranga and BirAllah are still uncontracted and these volumes could benefit from what is expected to be a supply-constrained LNG market in the coming years.
GTA FLNG Phase 2 has a planned capacity of 2.5 million tpa, while the Yakaar–Teranga and BirAllah LNG facilities could have capacity of 10 million tpa.
However, front-end engineering and design (FEED) on Yakaar–Teranga, which was kicked off in November 2021, will determine the final capacity for the project, and BP is also currently carrying out studies to see whether to accelerate development of the Bir Allah project targeting sales to Europe. Like BP, other major companies might also look towards their African gas portfolios to address the likely gas supply deficit.
Eni plans ramp up of African gas to Italy
Italian major Eni has said that it can alleviate Europe’s dependence on Russian gas to an extent through supply from its African projects, including in Algeria, Egypt, Nigeria, Angola and Congo-Brazzaville.
In the past month, Italy, in association with Eni, signed deals to boost gas imports from the North African nations of Algeria and Egypt, and then more recently, two more gas supply agreements with two Sub-Saharan African nations, Congo-Brazzaville and Angola.
Other African nations where Eni holds important upstream portfolios on the back of which the Italian authorities could potentially sign gas-related deals include Mozambique, Nigeria, Ghana, Cote d’Ivoire and Libya.
Nigeria is currently in the process of ramping up capacity at the Nigeria LNG project from 22 million to 30 million tpa through its Train 7 scheme and debottlenecking, and Eni is a stakeholder in many upstream fields that provide feed gas to the LNG plant as well as in the processing plant.
Equinor, Shell and ExxonMobil exit Russia: Re-focus for Mozambique and Tanzania LNG assets
Equinor, ExxonMobil and Shell, like BP, have significant LNG portfolios in Africa that are yet to be developed, and they can look to these massive gas resources to counter the potential gas supply deficit in the future. ExxonMobil has a 25% stake in Area 4 in Mozambique, with significant potential to add further expansion trains.
Mozambique was expected to benefit from the EU’s move to classify gas investments as green, even after an Islamist insurgency in the gas-rich Cabo Delgado province had paralyzed planned investments. The current scenario of a potential gas supply crunch could see the country accelerate the development of its gas resources.

Print Friendly, PDF & Email
Continue Reading

Oil & Energy

Ex-Lawmaker Volunteers For Petroleum Sector Deregulation 

Published

on

An ex-lawmaker, Sen. Ben Murray Bruce, has announced that he is willing to serve as a volunteer in deregulating the country’s petroleum sector.
This follows the ex-lawmaker’s faulting of Nigeria losing over N5trilion annually as a result of fuel subsidy.
Bruce, who represented Bayelsa East Senatorial District in the 8th Senate, on his verified Twitter handle, decried what he described as ignorance and ineptitude of government agencies responsible for fuel subsidy.
“We cannot keep losing five trillion naira annually. I am able and willing, and I volunteer myself to lead the team to deregulate our petroleum sector.
“I will execute this flawlessly such that no Nigerian will be on the street protesting.
“The ineptitude and ignorance of the government agencies responsible for this are mind-boggling,” Bruce tweeted.

Print Friendly, PDF & Email
Continue Reading

Oil & Energy

Stakeholders Urge FG To Shift From Fossil Fuel

Published

on

Stakeholders in the extractive industry have said that as a fossil fuel dependent country, Nigeria must develop its own strategy to engage in shifting global focus away from oil.
This was the conversation at a recent one day capacity building workshop for media and Civil Society Organisations in Nigeria, organised by the Centre for Journalism Innovation and Development, through its Natural Resource and Extractive Programme, in partnership with Natural Resource Governance Institute.
The hybrid workshop, themed, “Oil Dependency in Nigeria: Imagining a Future Beyond Oil”, had over 50 participants, including journalists from the extractive sector, CSOs, and social media influencers in attendance.
The workshop, according to the organisers, was geared towards improving the understanding of oil dependency and the nexus with energy transition to better communicate the impact on Nigeria and the Nigerian economy.
Senior Officer, NRGI, Ms. Tengi George-Ikoli, explained that Nigeria was at a critical point in its development, hence as a fossil fuel-dependent country, it is important that Nigeria develops its own strategy to engage the shifting global focus away from oil.
“Nigeria must develop its own medium to long term strategy to mitigate the likely export and government revenue losses from a shrinking market base as these countries look to reducing oil reliance beyond 2030.
“Nigeria must make strategic decisions in the way it spends its limited revenues, take economic diversification more seriously, leveraging regional and global opportunities beyond oil, and including new frontier possibilities available in the green economy”, she said.
Also, Deputy Director, Development Practice, CJID, Mr. Akintunde Babatunde, said as energy transition persists globally, Nigeria as a monolithic fossil fuel dependent economy has to prepare for what the shift to cleaner energy sources means for its economy.
“Data is pointing us to the fact that Nigeria will likely lose a majority of its foreign exchange earnings and revenues for both the federal and subnational government.
“In fact, it is already happening, because Nigeria is at a critical point in its development process, it is important for professionals to discuss the way forward on how the decisions we make as a country are more important now than ever”, he said.
Earlier, the Acting Executive Director at CJID, Tobi Oluwatola, harped on the need for capacity building for the media and CSOs, noting that they are in the best position to enlighten the public from an informed perspective.
“It is time for Civil Society Organisations, journalists, and policy experts to have this discussion, most especially as Nigeria plans to achieve net zero by 2060. There is a need for CSOs to be empowered with the right skills to be able to do the right advocacy and accountability work in Nigeria”, he stated.

Print Friendly, PDF & Email
Continue Reading

Oil & Energy

Nigeria To Construct Gas Pipeline To Europe Through Morocco

Published

on

Nigeria has given the state-run Nigerian National Petroleum Corporation Limited (NNPC) the greenlight to implement a deal on construction of a gas pipeline to Europe through Morocco.
This follows reports of surging demand for African energy supplies from the EU that is seeking to wean itself of dependence on Russian oil and gas.
“This gas pipeline is to take gas to 15 West African countries and to Europe and through Morocco to Spain and others,” said the Minister of State for Petroleum Resources, Timipre Sylva.
“It is only after the engineering design of the pipeline has been made that we will know exactly (what) the cost of the pipeline will be. When that time comes, we will be talking about funding,” he added.
Nigeria is a member of the Opec group of major oil producers and has huge gas reserves – the largest proven reserves in Africa and the seventh largest globally.
On May 30, Tanzania transported 60,000 tonnes of coal to the Netherlands.
Last month, Botswana’s President, Mokgweetsi Masisi, said European nations had “flooded” his country with requests to supply coal.

Print Friendly, PDF & Email
Continue Reading

Trending