Gabon exposes clear vision on what to do with its natural gas

Gabon is thought to hold anywhere between 3 to 5 trillion cubic feet (Tcf) of gas, although the country remains a small gas producer. To date, most of its gas has remained on the ground or flared – with only small quantities monetised domestically for power generation in Libreville and Port Gentil.

But as Gabon implements an ambitious “Green Gabon” environmental policy and seeks to diversify its economy, the country wants to cut routine flaring altogether and monetise it for the benefits of its industries, households, and economy. The recent Gabon Oil, Gas & Energy Summit organized by IN-VR in Libreville last October notably exposed the alignment of most parties on the need to monetise gas instead of flaring it.

A New Gas Strategy in the Making

To achieve its gas ambitions, Gabon is currently working on a new Gas Master Plan with Wood Mackenzie and the World Bank’s Global Gas Flaring Reduction Partnership (GGFR). The plan will have four major ambitions: reduce gas flaring, increase energy security, expand access to affordable energy and attract investments into gas projects. Gabon’s flared gas currently emits about 2,244,500 tonnes of CO2 per year, enough to generate 500 MW of power.

Natural gas also features prominently within the country’s 2021-2023 Plan to Accelerate Transformation (PAT), which includes a dedicated Gas Task Force headed by former Gabon Oil executive Yann Pierre A. Livulibutt Yangari.

“Our gas strategy is targeting actions across the whole value-chain. In upstream, we want to get operators to explore for gas and stop considering it as a risk. In midstream, we want to see flared gas being monetised for the benefits of the Gabonese economy. Finally in downstream, we want to improve gas supplies especially of liquefied petroleum gas (LPG), compressed natural gas (CNG) and liquefied natural gas (LNG),” Yangari said during IN-VR’s summit.

As it stands, Gabon intends to primarily monetise flared gas to generate power, manufacture urea and produce methanol. These are the major industries identified based on existing gas reserves and technology available from existing investors and operators in the country. Once these are developed, hopes are that by-products would follow, especially when it comes to LPG, CNG (Autogas) and micro-LNG.

Source: DGEPF

“We are working on supporting the development of a gas-based economic network to support local content development, promote technology adoption and support industrialisation,” Yangari added.  

While Gabon has not discovered enough gas reserves to justify the development of more significant industries like LNG for export or gas-to-liquids, the country remains hopeful. Its 12th Licensing Bid Round has resulted in the award of new exploration blocks, and upcoming drilling campaigns could result in new gas discoveries supporting further gas developments in the medium-term.

To justify the investment, Gabon is putting forward its growing industrial base driving demand for both power and gas. Last September, the Gabon Power Company (GPC) notably signed a landmark Concession Agreement with Wärtsilä for the development, supply, construction, operation, and maintenance of a new 120 MW gas-to-power project in Owendo, next to the capital city of Libreville.

But beyond just the power sector, Gabon wants to provide gas to its mining, forestry, agro-industry, and steel industries. In parallel, its logistics network is expanding with railways and maritime industries both positioned to be potential off-takers sooner than later.

An Opportunity for Small-Scale Gas Projects

Gabon’s vision relies on the monetization of gas into CNG for transport and micro-LNG for industries. A key strategy is to expand the country’s CNG network but use micro-LNG for any remote industries located over 400km from producing fields, especially mining industries.

To support such expansion, the country is seeking investors across several projects such as LPG plants, LNG and CNG plants, LNG and CNG storage, onsite regasification and bi-fuel conversion. Chief amongst them is the need to secure 30,000 cubic metres of additional butane storage capacity, up from only 4 to 5,000 cubic metres now.

Source: DGEPF

Port Gentil features prominently within that vision as a pilot city to grow the CNG industry. It is there that Perenco already runs a private gas retail station for 40 of its own vehicles. Now, Gabon wants to grow the market by constructing public CNG stations in partnership with oil marketers and develop a new pricing structure for CNG. The aim is clear: reduce petroleum products imports while generating additional revenues from domestic gas.

Perenco Takes the Lead

Perenco will be a key actor of that transition to gas. The operator is the country’s sole commercial gas producer and currently supplies gas feedstock to the power stations of Port Gentil and Libreville. In fact, 100% of Port Gentil’s power relies on Perenco’s gas while 70% of Libreville’s power is generated from the operator’s gas supply.

“We have invested $500m into the development of a 400km onshore and offshore gas gathering system in Gabon that supplies gas to power plants but also key industries such as Sobraga. In the process, we created 150 jobs,” Director General Adrien Broche said during the IN-VR Summit.

Perenco is now increasing its investments and leveraging on its existing infrastructure to commission a 10 to 15,000 tonnes per annum (tpa) LPG plant in Batanga by 2023. Batanga is currently the cornerstone of its gas business and is equipped with enough compressors to compress gas to over 100 bars so it can be transported across the country.

“The Libreville and Port Gentil power stations currently represent an off-take of about 40 MMscfd,” Broche explained. “While only half of that capacity was coming from flared gas, we are installing additional compression capacity so all feedstock supplied to power plants comes from previously flared gas. We have installed two onshore compressors this year and are now expecting additional ones for offshore operations. By mid-2022 or early 2023, all gas we send onshore for power generation will come from previously burned resources,” he added.

The Need for an Industry and Policy Consensus

But to furter monetise gas and create jobs, Gabon must first find a way to aggregate and collect all volumes currently flared by several operators. The need for an industry consensus on mutualising efforts around the gathering, collection and transport of flared gas emerged as a key challenge during the Gabon Oil, Gas & Energy Summit last month.

“Increasing gas-to-power capacity from flared gas alone would require a stable regulatory and economic framework and additional incentives for all operators to come together around the collection and treatment of their flared gas,” said Bertrand Rose, Managing Director of Trafigura Energy Gabon.

To provide such incentives, the 2019 Hydrocarbons Code translated Gabon’s strong political will to promote gas and already provides a framework for its monetization. But more needs to be done, and the Directorate General of Hydrocarbons is now working on a new Gas Code.

Meanwhile, Gabon’s Investment Code is currently being reviewed by an inter-ministerial committee and is one of the country’s much-anticipated piece of legislation. “The new Investment Code will harmonise all regulatory and fiscal aspects of investing in Gabon and establish the right monitoring bodies for its efficient implementation,” declared last month Ghislain Moandza Mboma, CEO of the National Agency for Investment Promotion (ANPI-Gabon).  

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