Gas

APT has a gas sales agreement with TPDC. (Image source: Adobe Stock)

ARA Petroleum Tanzania and its development partner Aminex Plc have received a 25-year development licence over the Ntorya Gas discovery in Tanzania from the Deputy Prime Minister and Minister for Energy of Tanzania, Doto Mashaka Biteko

“We were honoured to receive this licence from Deputy Prime Minister Doto Biteko at such a prestigious event. This ceremony marked a significant milestone in our commitment to harness Tanzania’s gas resources for the benefit of its people. Our ambition for this serious endeavour is that it results in boosting economic development, alleviating energy poverty and supporting the country’s energy transition,” said Erhan Saygi, general manager, ARA Petroleum Tanzania, commenting on the handover ceremony that took place in Mtwara.

APT has acquired land for the installation of upstream processing facilities, and the Chikumbi-1 appraisal well location, while expanding an adjacent site to accommodate the construction of a camp and storage yard. It is also putting into place the logistics necessary to conduct the subsurface work that will lead to first gas production. This includes conducting a well-test on Ntorya-2 and converting it to a producing well, drilling the Chikumbi-1 appraisal well with a view to converting it to a producing well and carrying out a well workover at Ntorya-1, before turning it into a producing well. 

The company is aiming the completion of pipeline placement from Ntorya to Madimba by early next year, working in line with the Tanzanian government's ambitions to enable gas delivery for electricity generation in the Mtwara region. 

According to a Gas Sales Agreement signed with the Tanzanian Petroleum Development Corporation (TPDC) earlier this year, APT expects an initial yield of 40 to 60 mn st cu/ft a day in the first year, gradually boosting production to 140 mn st cu/ft over the next few years. 

This estimate is backed by strikingly positive 3D seismic datasets from the region, indicating significant potential gas volumes in other untested structures over the wider licence area. To emphasise just how significant the potential gas volumes might be, Charles Santos, the executive chairman of Aminex, has said that the Ntorya accumulation can become the largest onshore gas discovery in East Africa. 

This, however, will require investment in a phased development of the Ntorya gas field and the maturing of domestic industries as gas offtakers, such as fertiliser, cement and plastics production plants, vehicle CNG stations, domestic LPG suppliers and additional gas-fired power stations for industrial and residential use.

Ntorya gas hub

“We are excited about further exploration and appraisal work in this area as we consider it to hold truly enormous volumes of gas. We believe this could be game-changing for Tanzania’s energy security, for Mtwara’s industrial development and for Tanzanians’ prosperity. We look forward to building strong partnerships with local businesses and entrepreneurs to share knowledge, impart expertise and build a home-grown industry around a Ntorya gas hub,” said Saygi.

APT has been actively involved in the Ruvuma Asset since 2020, before its interests in the region accumulated to 75% post acquisition from Scirocco Energy last year. The remaining 25% interest in the Ruvuma Asset is held by Aminex.

This project features a dedicated train system. (Image source: Petredec)

LPG value chain company, Petredec, and South Africa’s state-owned logistics infrastructure company, Transnet, has announced a rail freight solution

This project features a dedicated train system, modern LPG intermodal hub and storage facility at Sentrarand in Gauteng. The hub will receive bulk LPG via rail from the initial load point at the Richards Bay LPG terminal in KwaZulu-Natal, developed in partnership with Bidvest Tank Terminals in 2020.

Petredec will introduce South Africa’s first scheduled LPG train system, with each 75-wagon trainset capable of transporting over 2,500t of LPG. Initially operating up to three times per week, this enhanced logistics system will further improve the efficiency, cost-effectiveness and environmental friendliness of LPG distribution in the country.

“The strategic partnership between Petredec and Transnet Freight Rail marks a significant step in improving LPG accessibility in South Africa. This investment reflects our commitment to developing key LPG infrastructure and implementing more efficient, optimised logistical solutions - ultimately making LPG more affordable to end users. Our goal is clear: to make clean cooking solutions like LPG more accessible to those who need it, thus contributing to a broader vision of improved energy security, public health, energy affordability and environmental conservation in South Africa and beyond,” said Jonathan Fancher, CEO of Petredec.

Michelle Phillips, Transnet group chief executive, said, “This landmark project marks a major advancement in the supply of LPG across the country, enabling bulk distribution of LPG on a scale never before achieved in Africa. The Sentrarand LPG hub and rail freight solution is critical infrastructure that will support South Africa’s long-term energy security and developmental ambitions.”

Project engineering and construction will be undertaken by long-standing technical partner Lloyd Jones Construction with the intended commissioning of the Sentrarand facility and operation of first trains commencing in 1H 2028.

The project will be implemented in two phases. (Image source: AFC)

Africa Finance Corporation is arranging a project development facility to support Africa’s largest gas-to-methanol plant, with the aim of significantly reducing CO2 emissions by offsetting flaring of natural gas and turning it instead into a valuable chemical for solvents, paints, plastics and car parts

The project in Akwa Ibom, Nigeria, targets producing an initial 1.8 million tonnes per annum (MTPA) of methanol, diversifying the local economy and generating over 18,000 jobs. AFC has committed development stage financing to de-risk the project and enable it reach financial close, along with providing financial advisory services to the sponsors to raise the required project financing and support successful delivery of this transformational project. The venture is led by Blackrose, a project development and investment firm, and co-developed with the International Finance Corporation (IFC), the private sector arm of the World Bank Group, which are co-financing alongside AFC.

Most of Nigeria’s 200 cubic feet of natural gas reserves – the largest in Africa, accounting for a third of the continent’s total – remain unexploited, presenting a substantial opportunity to bolster the country's natural resource beneficiation and enhance climate resilience. Gas flaring has been a significant hazard for local people since the beginning of oil production, emitting chemicals linked to respiratory and other health issues.

“This innovative project is transforming an immense negative for Nigerians into a very significant positive by harnessing this country’s abundant gas reserves as a unique opportunity to become a global leader in low-carbon manufacturing and energy systems,” said Samaila Zubairu, President and CEO of AFC. “This strategic collaboration with Blackrose and IFC underscores our dedication to supporting Africa’s pragmatic transition to net zero, emphasising rapid industrialisation, local job creation, and socio-economic advancement through the production of methanol, a versatile and low-carbon industrial feedstock.”

The project will be implemented in two phases, each with an installed capacity of 1.8 MTPA. Phase one will produce low-carbon methanol, an industrial chemical essential to the manufacturing of hundreds of everyday products, including solvents for the pharmaceutical industry, paints, plastics, automobile parts and construction materials. This is also a lower emissions alternative fuel used in hard-to-decarbonise sectors such as shipping and industrial boilers, with applications for cooking stoves and fuel cell solutions. Phase two of the project will expand methanol production to include ammonia, a critical feedstock for fertiliser production.

Methanol is produced using synthetic gas predominantly from coal and natural gas. By utilising best-in-class energy efficient production methods, the plant will achieve a much lower net carbon intensity compared to traditional methanol synthesis techniques, while also reducing CO2 emissions by converting gas that would otherwise have been flared. Additionally, the project incorporates plans for carbon capture and offset strategies as well as the use of external hydrogen to bring targets even closer to carbon neutrality.

Once operational, the gas-to-methanol plant is expected to generate more than 2,500 local jobs during the construction phase and a further 16,000 jobs indirectly by catalysing manufacturing activity and economic diversification.

There is a potential for an uptick in E&A drilling activity. (Image source: Westwood)

Mozambique can still lead production and drilling in the East African Ruvuma-Rufiji (EARR) Gas Basin through to 2030, if the government continues to take strides to guarantee rapid progression of projects off Cabo Delegado province, writes Michela Francisco, analyst - onshore energy services, Westwood Global Energy Group

According to bp's 2024 Energy Outlook, global liquefied natural gas (LNG) traded volumes are forecast to grow 43% by 2030 from the 543 bn cu/m recorded in 2022

In recent years, LNG exports have been dominated by the United States, Australia and Qatar, which, according to the Energy Information Administration (EIA), held a combined LNG export capacity of approximately 257 mmtpa in 2023 (60% of total global LNG capacity). By 2030, Qatar and the US are projected to add approximately 150 mmtpa in LNG feedstock, securing the top two positions in global LNG export capacity. New additions are anticipated to stem from LNG facilities currently under construction in the US (84.1 mmtpa) and expansion phases of QatarEnergy’s North Field (65mmtpa). Despite this, there is still an appetite for additional LNG supply, given current demand expectations, making the business case for developing long-stalled gas projects from frontier areas stronger.

Mozambique and Tanzania, which house the EARR Gas Basin, could potentially be major beneficiaries of this projected demand, given abundant gas reserves (165.7 trillion cu/ft) and the basin's proximity to South-Asian import markets. However, the burning question remains – how soon can the world expect the EARR Gas Basin to roar amid an increasingly thirsty LNG demand environment?

It is pertinent to state that the EARR Gas Basin has failed to live up to its full potential due to a series of endemic bottlenecks faced in the host countries. In Tanzania, the US$40bn Tanzania LNG project, which aims to receive gas feedstock from six fields across Blocks 1 and 4 (Shell) and Block 2 (Equinor), has been subject to extensive delays due to protracted negotiations rooted in unattractive fiscal terms due to high domestic supply obligations.

The story behind undeveloped gas reserves is quite different for the reserves offshore Mozambique, with the main culprit being the Islamist insurgency in Cabo Delgado province. The conflict has led to delays in final investment decisions (FIDs) and project start-ups, given declarations of force majeure for key projects. An example is TotalEnergies’ enforcing force majeure on the 13 mmtpa Mozambique LNG project, hereby delaying production start from the operator's Golfinho-Atum field into 2028, nine years post sanction.

On a similar note, ExxonMobil's Rovuma LNG project also felt the knock-on effect following the declaration of force majeure by TotalEnergies, given that it plans to share some facilities belonging to the Mozambique LNG project. ExxonMobil, however, seized this as an opportunity to cut costs by heavily reconfiguring the design plan from its initial two-train 15.2 mmtpa stick-build facility to an 18 mmtpa facility now being constructed using a modular approach whilst putting some emphasis on mitigating greenhouse gas emissions from the project. To date, ExxonMobil has launched tenders for a front-end engineering and design (FEED) contract and an engineering, procurement, construction and installation (EPCI) option for the subsea-to-shore gas gathering facilities.

Another factor contributing to the untimely development of resources in Mozambique is complicated project economics. TotalEnergies highlighted this in 2023 when it reported that supply chain inflationary pressures further complicated the resumption of the US$20bn Mozambique LNG project. However, there have been signs of positive developments given that TotalEnergies communicated in the company’s April 2024 earnings call that contractors have agreed to reverse contract inflation plans; thus, this is no longer an obstacle to the project’s sanctioning decision.

Despite these challenges, the Basin's inaugural project, Eni's 75,000 boepd Coral South floating liquified natural gas (FLNG) project, came onstream in 2022, signalling that complex, multi-billion-dollar developments could work offshore Mozambique. Output in Mozambique is forecast to remain stable at around 75,000 boepd until 2027 before growing to a peak of 295,000 boepd by 2030, up 296%, driven by TotalEnergies’ Golfinho-Atum and Eni's Coral Phase II fields.

Additionally, Tanzania's inaugural field in the Basin should come onstream in 2026 from Aminex's 7000 boepd Ntorya onshore gas field, boosting total output across the Basin to a peak of approximately 302,000 boepd by 2030, up 305% on 2023. Although there are positive signs for production, the spectre of delays that have been haunting projects remains strong, potentially diluting the positive picture prior to 2030, especially since only one of the three projects expected onstream by 2030 has passed sanctioning (TotalEnergies’ Golfinho-Atum). 

Drilling activity across both countries has been negligible, averaging one well per annum over the 2019-2024 period. Activity is anticipated to liven up over the forecast, driven by approximately 50 wells to be drilled to support upcoming LNG projects in Mozambican deepwater. Of these, 27 subsea trees have already been awarded between 2017 and 2019 for Eni’s Coral South and TotalEnergies’ Golfinho-Atum fields. 30 additional subsea trees are forecast to be awarded, with six awards anticipated for Eni’s Coral North field, scheduled to reach FID before the end of 2024. Onshore drilling activity will remain negligible, with only Aminex’s Chikumbi-1 exploration well set to be spud in 2024, the only onshore E&A well spud in the basin since 2016.

Post 2030, the outlook from the EARR Basin could be more promising, given continued interest from international energy companies (IECs), as well as licencing rounds and concession award announcements made across both countries since 2023. Although projects are few and far between in Tanzania, Shell and Equinor proposed a US$42bn LNG project from three deepwater blocks in March 2023, and this was later followed by CNOOC’s expression of interest in developing a FLNG deepwater project in blocks 4/1B and 4/1C in June 2023. From a regulatory standpoint, the current administration has increased optimism, given ongoing negotiation on fiscal terms with joint venture companies; however, nothing has materialised thus far.

Additionally, it is noteworthy to highlight the potential for an uptick in E&A drilling activity beyond Westwood’s current forecasts. This is due to the semi-autonomous Government of Zanzibar, off-Tanzania, launching its inaugural five-year licensing round in March of 2024, inviting IECs to explore eight offshore blocks.

E&A drilling could also occur in Mozambique, given that the National Hydrocarbon Company approved a concession contract for oil exploration and production in the Angoche A6-C Area in July 2024. However, Westwood is bearish on these progressing into any E&A drilling activity before the second half of the forecast.

When dissecting current developments in the EARR Basin, it is evident that by the onset of the next decade, the Basin could contribute about 295,000 boepd of gas to meet global LNG demand. Westwood anticipates that Mozambique will continue to lead production and drilling in the EARR Basin through to 2030. However, it remains crucial for the Mozambican government to continue to take strides towards eradicating the insurgency to guarantee rapid progression of projects off Cabo Delegado province, which are currently mainly in the FEED stage.

Contrarily, on the Tanzanian side of the Basin, the portrait is more promising than in the hindcast, albeit there is still a need to focus on improving fiscal terms to attract more near-term investment and ensure that current interest from IECs is maintained. Overall, Westwood believes that by 2030, the EARR Gas Basin might start to live up to its potential as projects finally move from potential to reality.