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Angola joins league of world LNG producers

By Michael Eboh, with agency report

After an 18-month delay, the Angola LNG plant in the country’s northeast Soyo region has been completed. The US $10 billion plant with a capacity to produce 5.2 million metric tons per year (MMmt/y) of LNG has commenced initial production.

The project will collect and transport natural gas from offshore Angola to an onshore liquefaction plant on the coast near the Congo River and will produce 63,000 b/d of natural gas liquids for export and 125 MMcf/d of natural gas for domestic consumption in addition to LNG, Cabinda Gulf Oil Co. Ltd. (CGOCL), a subsidiary of Chevron Corp., said in a statement.

The plant’s first LNG cargo was sold to Angola’s state oil and gas company, Sonangol, and was shipped June 16, 2013, to Brazil aboard the SS Sonangol Sambiganza, one of seven 160,000 cm LNG vessels that are under long-term charter to the Angola LNG project, Rob Foyle, communications advisor of Angola LNG Marketing Ltd., said in a statement.

“Angola LNG is entering the market at an exciting time,” said Artur Pereira, CEO of Angola LNG Marketing Ltd. “The world LNG market is expected to remain tight over the coming years, with very limited new LNG capacity coming on-stream.”
The announcement of Angola LNG’s first shipment marked a milestone in “the continued development of Angola’s oil and gas resources,” Foyle added. “As the largest single investment in the Angolan oil and gas industry, the project is set to play a key part in the financial prosperity of Angola.”
The contract to build the one-train Angola LNG plant was awarded to Bechtel in 2007.

According to Angola LNG, the project required importing vast quantities of materials and equipment –more than 1 million tons in total – while the project team hired approximately 8,300 local workers during the course of the project. It added that 6,500 non-locals were hired for the construction of the plant.
Several Angolan companies also worked on the project as subcontractors, the company said. They built, among other things, the foundations for the project units and permanent buildings, and were active partners in the consortium that built the project’s five giant tanks. Angola LNG plans to use associated natural gas produced from existing crude oil operations operated by Chevron and other partners as well as non-associated gas from offshore fields, CGOCL said.
Angola is reported to have more than 10 Tcf of gas reserves available from offshore blocks 0, 1, 2, 14, 15, 17, and 18, according to the Angola LNG company. The country produces about 1.8 MMb/d of oil.

The country has ample proven gas resources to supply the new plant with gas for 20 years, Angola LNG said, adding that much of Angola’s deep and ultra-deep water areas are considered to be highly prospective and remain to be explored. As oil fields mature and associated gas production declines, non-associated gas from previously discovered gas fields will feed the new plant.

The company said the project is central to the country’s plans to develop and benefit from its natural resources and reduce gas flaring and greenhouse gas emissions. The associated natural gas had previously been flared or re-injected into the oil reservoirs.

“Angola LNG’s vision is to be a reliable and competitive supplier, a strong community partner, and a role model for the economic and development of Angola,” said Antonio Orfao, chairman of Angola LNG Ltd. “The project provides a solution to minimize flaring and environmental pollution by gathering associated gas from Angola’s offshore oil fields to provide clean and reliable energy to our customers and a return on investment for our shareholders.”

The LNG project is expected to facilitate continued offshore oil development since it can use the non-associated gas from new oil fields.
Angola LNG was originally set to start exporting LNG in early 2012 but the plan was repeatedly delayed. Angolan national oil company officials blamed the delay on “technical problems.”

Oil and gas experts say the plant is expected to be the only new LNG facility in the world to start shipping cargoes in 2013.

Angola now joins the league of world LNG suppliers that include Qatar, Australia, Nigeria, Equatorial Guinea, and Mozambique, which is planning to construct four LNG trains, each with a capacity of 5 MMmt/y with first LNG delivery set for 2018. There are also proposals to build new LNG plants Australia, Canada, and the US.
Boyle said a large number of master LNG sale and purchase agreements have been executed with energy companies across the world, providing Angola LNG with a “robust and diverse portfolio of customers.” Further agreements are being negotiated.

BP is reportedly one of the customers, with expectations to ship LNG to European buyers. The Angola LNG plant also previously had plans to deliver gas to markets in the US, but the shale oil boom in the US means this may no longer be possible. Oil and gas officials said Angola now has to look for new buyers in Asia and Europe.

Angola LNG Supply Services LLC (ALSS), a US-registered company owned by the affiliates of Sonagas, Chevron, BP, Total, and Eni, is to transport LNG for Angola LNG using seven ships, each with a capacity of 160,000 cm. The company said four of the ships were built by Samsung (SHI) and three built by Daewoo both in Korea and are chartered to ALSS on a long term basis.

Shareholders of Angola LNG are Sonangol (22%), Chevron (36.4%), BP (13.6%), Eni (13.6%), and Total (13.6%).


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