Oil & Gas
Shoring up strategic investment for West African Gas projects
by KELECHI EWUZIE
September 13, 2017 | 12:23 am| | | Start Conversation
A cursory look at trends in the global gas industry indicates that the emerging West African natural gas markets will attract pipeline gas and LNG in the near-to-medium term. In neigbouring Ghana for example, natural gas price levels and the high cost of imported alternative fuel are adequate to accommodate LNG imports to complement the other gas supply sources.
The situation is however different in Nigeria because the managers of the economy delayed development of LNG liquefaction projects after NLNG Train 6 to give more attention to delivering natural gas to the domestic market.
The Nigerian government is focusing on the domestic natural gas market, especially for power generation and gas-based industries.
Report indicates that several gas to power projects are under development in West Africa. Ghana and Cote D’Ivoire hydropower potential has reached its limits and with no viable coal options, natural gas is the next best option to meet generation needs.
In Cote D’Ivoire, Endeavor Energy has partnered with local company Star Energie 2073 for the 375 MW LNG to power Songon Independent Power Producer. The IPP will be developed close to Abidjan.
According to a report by Wood Mackenzie, this IPP will include the development of purpose built LNG import infrastructure. Cote D’Ivoire has domestic gas; however the production of domestic gas is declining, forcing Cote D’Ivoire to explore other options.
Recent explorations on the coast of Cote D’Ivoire have shown that there is potential to develop more offshore reserves. However, this is not an immediate opportunity.
In Senegal, state owned utility Senelec has signed a preliminary deal with Japan’s Mitsui and Qatar’s Nebras Power to build an FSRU and 400 MW power stations.
However, Senegal’s proposed LNG to power project is less advanced. Senegal’s objective is to boost the country’s growth through a steady power supply at a competitive cost (the country is presently largely dependent on HFO and diesel to fuel its power plants).
Industry experts opine that the fastest increasing trend in West Africa will be importing LNG to offset maturing domestic gas production and maintain supply. This has notably been the case for traditionally gas producers such as Cote D’Ivoire.
The second trend will be new gas producing countries turning to LNG to increase gas supply security whilst ramping up gas production.
They further observe that West Africa countries like Senegal and Cote D’Ivoire will kick start a regional gas market and small scale LNG projects which will support the further development of gas to power projects.
To achieve this, Government and private sector partners need to develop trust and firm long-term commitments that enable relationships in each part of the chain to endure.
In order to build this trust, compromise, and a cooperative rather than adversarial approach to negotiations is important.
According to industry experts, the development of all portions of the chain must be carefully coordinated to avoid project failures that can result from missed connections.
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