Second LNG Train Planned for Eq. Guinea: Although Equatorial Guinea's First Liquefied Natural Gas (LNG) Train Is Not Yet Complete, Plans Are Already Afoot to Add Another One. in the near Future, the Gulf of Guinea Could Become One of the World's Most Important Suppliers of Natural Gas
Ford, Neil, African Business
Marathon Oil Corporation of the US has announced that a second liquefied natural gas (LNG) production train is expected to be added to the Punta Europa plant in Equatorial Guinea. The project's first train is not yet complete but the Marathon-led development consortium is confident of success and is keen to expand capacity as soon as possible.
Equatorial Guinea's proven gas reserves are fairly limited but new discoveries are likely in an area that is relatively unexplored. At the same time, the government is keen to attract production from neighbouring states, such as Nigeria, to supply a growing gas processing industry.
While LNG production is becoming an increasingly important element of the global oil and gas industry, sub-Saharan Africa still possesses just a single operational LNG plant. Yet the Nigeria Liquefied Natural Gas (NLNG) facility on Bonny Island in Nigeria has proved such a success that a string of similar ventures are expected to be constructed. At least three multi-train LNG schemes are at various stages of development in Nigeria itself, while another plant is scheduled for construction close to the northern Angolan town of Soyo.
Yet it is Equatorial Guinea that is set to host the region's second LNG project. The first train of the Punta Europa plant was originally expected to come on stream at the end of 2007 but a Marathon spokesperson has revealed that construction work has proceeded more rapidly than expected, so the first production could now be ready for delivery by mid-2007.
Aside from Marathon, which holds a 60% stake in the project, the Punta Europa consortium consists of the Equatoguinean national gas company Sonagas (25%) and two Japanese companies, Mitsui (8.5%) and Marubeni Corporation (6.5%), which both took up equity in the venture in 2005.
Punta Europa lies on the island of Bioko, close to both the capital Malabo and the country's main productive offshore gas fields. The first train will have production capacity of 3.4m tonnes a year (mt/y) and all output will be sold to BG Gas Marketing Ltd under a 17-year free-on-board contract from the end of 2007.
BG will ship the LNG to its Lake Charles LNG terminal in the US state of Louisiana for distribution in North America. The British firm has yet to reveal whether it will also purchase the additional LNG produced because of the train's rapid development.
The front end engineering and design contract "for initial work related to a potential second LNG train" has been awarded to Bechtel, while the final investment decision (FID) on the train's construction is expected during the early part of 2007.
The Bechtel deal relates to gas metering, liquefaction, refrigeration, ethylene storage, boil-off gas compression, product transfer to storage and LNG product metering for a train with production capacity of 4.4 mt/y.
Potential to become regional gas hub
Progress has also been made on turning the government's strategy of developing a regional gas processing hub on Bioko into reality. The government hopes that the existing methanol and liquefied petroleum gas (LPG) capacity can be expanded and complemented by the burgeoning LNG sector.
Despite the development of various LNG projects within Nigeria, it is becoming increasingly likely that some Nigerian gas could be piped to Punta Europa for processing. The Nigerian government's commitment on banning all routine gas flaring by 2008 is well known and markets are being sought for gas produced on the many wells where gas is still flared.
In addition, a string of new deepwater oilfields are due to come on stream in the heart of the Gulf of Guinea over the next few years and the majors that dominate the Nigerian oil industry must secure markets for associated gas on these new fields. As a result of the geography of the Gulf of Guinea, some fields are actually located closer to Bioko than to the Nigerian coast, so Punta Europa could be a financially attractive target for the production of 'unwanted' gas. …