Hawilti releases Nigeria LPG Watch Q3 2021

Hawilti has released today its Nigeria LPG Watch for Q3 2021. The report brings you the latest on market trends currently affecting Nigeria’s liquefied petroleum gas value-chain, from supply disruptions to prices fluctuations.

After a record LPG supply into Nigeria in Q2 this year, Q3 witnessed more moderate deliveries as global supply chain disruptions affect imports and rapidly evolving prices make it challenging to operate business as usual. 

Record high global gas prices coupled with Nigeria’s currency crisis have notably sent LPG cylinder prices up the roof, potentially affecting demand growth in the short term. 

QoQ LPG supply into Nigeria was down -4.87% in Q3 with almost 266,000 tonnes discharged at Nigerian jetties. Domestic supply continues to grow and recorded its highest volumes on record, with over 144,000 tonnes of LPG sourced domestically in Q3. Both Q2 and Q3 saw higher domestic supplies than imports, confirming the growth of Nigeria’s local LPG supply. 

The full report is available in the “Research” section within your Hawilti+ research terminal.

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BW Energy moves to develop giant Namibian gas field first discovered in 1974

BW Energy has just signed an agreement with Aquadrill LLC to acquire the semisubmersible drilling rig “Leo” for a total consideration of $14m. Surprisingly, the rig is not to be used for the company’s flagship Gabonese nor Brazilian assets, but for the development of the Kudu gas field offshore Namibia. The acquisition of the “Leo” drilling rig follows indeed a new revised development plan for Kudu under which BW Energy plans to use a repurposed semisubmersible drilling rig as a Floating Production Unit (FPU). 1.3 Tcf of Gas Within Namibia’s Sole Production License Despite about 1.3 trillion cubic feet (Tcf) of gas discovered and its ability to transform Namibia’s energy sector and resolve the country’s energy crisis, the Kudu gas field has remained undeveloped since its first discovery by ChevronTexaco in 1974. Located 170 km off the coast of Namibia, Kudu has been subject to substantial drilling with seven appraisal wells drilled since its discovery: two by Swakor in 1987 and 1988, four by Shell in the 1990s, and one by Tullow Oil in 2007. The field has had several operators as well since it was discovered: ChevronTexaco was followed by Swakor in the 1980s then Shell in the 1990s, then Energy Africa in the 2000s before the company was acquired by Tullow Oil in 2004 which led to the issuance of Production License 001 in 2005. In the more recent past, Gazprom and national oil company NAMCOR took over the field for a short while in 2010 and 2011 (Production License 002) before operatorship was given back to Tullow Oil in 2011 (Production License 003). The British multinational finally withdrew with its Japanese partners in 2014, and BW Energy has been operator since 2017 with a firm intention to bring the project to final investment decision (FID). From the inability of parties to agree on a gas price to delays in obtaining governmental support packages and finalising costs, several factors have contributed over the years to constantly reschedule the project’s FID. BW Energy Take Over and Revives Namibia’s Gas Ambitions When BW Energy acquired the field in 2017, Kudu was estimated to contain 1C contingent resource of 755 billion standard cubic feet (Bscf), with 2C contingent resources estimated at 1.33 Tcf and 3C ones at 2.3 Tcf. The development of the field still calls for the establishment of an integrated upstream-midstream-downstream venture to produce gas via a floating production unit (FPU) before exporting it to shore to generate electricity. While initial plans envisioned a gas-to-power plant of up to 885 MW, the facility is expected to finally have half that capacity if commissioned. The latest Contingent Resources Report prepared by ERC Equipoise Ltd for BW Energy in January 2020 notably estimates gross contingent gas resources at 587 Bscf, enough to justify a 440 MW gas-to-power plant. Full details on the Kudu Gas Project are available in the “Projects” section within your Hawilti+ research terminal.

Negotiations on $30 bn Tanzania LNG project to start on November 8

Tanzanian Energy Minister January Makamba has declared that negotiations would officially start on November 8 to get the Tanzania LNG project off the ground. This notably follows a meeting today in Dar es Salaam with Paul McCafferty, Equinor’s Vice President Exploration & Production International – Africa. On October 4th, Tanzanian President Samia Suhulu Hassan and Minister Makamba had also held a similar meeting, virtually, with Shell’s CEO Ben van Beurden. The development of the $30bn Tanzania LNG project in Lindi, in southern Tanzania, has been on the table for several years but talks had been suspended since the end of 2019. Last January, Equinor had even decided to write down the value of the project by $982 million, saying that its current economics did not justify keeping it on the balance sheet. But things changed when President John Magufuli died in March and his Vice President Samia Hassan took over the country’s top job. She made a direct mention of the project during her inauguration speech, giving clear signals of her intention to revive it. Since then, the Government of Tanzania has had several talks and discussions with Equinor and Shell in order to address pending issues and pave the way for the project’s development. Tanzania LNG would monetise almost 50 trillion cubic feet of gas (Tcf) discovered in offshore blocks 1, 2 and 4. Block 2 is operated by Equinor (65%) along with its partner ExxonMobil (35%) while the national oil company TPDC has the right to participate with a 10% interest. The partners have drilled a total of 15 exploration wells since 2011, resulting in nine discoveries with an estimated volume of over 20 Tcf. On the other side, Blocks 1 and 4 are operated by Shell (60%) along with Singaporean partner Pavilion Energy (20%) and Indonesian partner Medco Energi (20%). The base case development plan envisages a two-train onshore facility with a combined capacity of 10 million tonnes per annum (mtpa). On the Tanzanian side, hopes are that construction could start by mid-2023 for a commissioning by June 2028.