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AfrElec GAS-FIRED GENERATION AfrElec
Tullow signs flaring agreement with Ghana
GHANA
GHANAIAN authorities have reportedly clari- fied the conditions under which Tullow Oil (UK/ Ireland) will be permitted to flare associated gas from its offshore oilfields.
Representatives of Tullow informed Bloomb- erg last week that the company had struck an agreement with Accra on this front. Under the new deal, they said, Tullow will be permitted to burn off excess gas when necessary “to maintain the integrity of the Jubilee and TEN fields.”
The independent company explained that it would not be allowed to flare gas on a regular basis, as its contract calls for delivering all asso- ciated gas extracted from Jubilee and the TEN (Tweneboa-Enyenra-Ntomme) block to Ghana for domestic consumption.
But it said it would be able to do so at times when it had no way to move these volumes to onshore facilities.
These conditions apply occasionally, Bloomb- erg explained, because Ghana National Gas Co. (GNGC) is also contractually entitled to take delivery of associated gas from other investors such as Italy’s Eni. When other producers pro- vide enough gas to fill up local transportation and storage capacity, Tullow’s output is not
needed and becomes surplus, it noted. (This is probably a more frequent occurrence now than it used to be, given that Tullow has reported that GNGC has been requesting lower volumes of gas.)
According to Bloomberg, Tullow declined to divulge full details of the flaring agreement, and Ghana’s Energy Ministry did not respond to requests for further information.
The flaring agreement is expected to help Tullow shore up its development operations in Ghana’s offshore zone. The company has suffered disappointments there over the past year, partly because the decline in deliveries to GNGC has slowed production at Jubilee and partly because reserves have declined at the Enyenra section of the TEN block.
The news agency also said it had learned from sources with knowledge of the matter that Tullow’s only option, in the absence of a flaring agreement, would be to pump its excess associated gas back into its offshore reservoirs. The company is reluctant to do so because it is concerned that gas injection might destabilise the reservoirs and affect future oil flows, an employee said on condition of anonymity.™
Sound Energy moots micro-LNG in Morocco
MOROCCO
UK-LISTED Sound Energy has said it hopes to pursue a small-scale LNG project at the Tendrara licence area in eastern Morocco.
In a statement dated February 17, the com- pany said it was seeking to revise the full-field development plan for Tendrara in order to make the micro-LNG project its first priority. Doing so will help generate early cash flows from the block, it said.
Sound Energy did not reveal many details of the proposed revisions, but it did say that the micro-LNG scheme provided for the construc- tion of a liquefaction plant for natural gas from TE-Horst, a field within Tendrara. It described this solution as “innovative, fast-track [and] cost-efficient” and said it would pave the way towards the execution of the full-field develop- ment plan, with its more expansive outlook and longer timescale, at a later date.
The company said that it hoped to begin pro- ducing LNG and delivering it to industrial users in Morocco sometime in 2021, pending approval from any potential partners in the Tendrara deal. This milestone would follow a final investment decision (FID) in the second quarter of 2020, it added, noting that its existing cash resources
were adequate to cover working capital require- ments until that time.
Sound Energy hopes to move the project for- ward during ongoing negotiations with Moroc- co’s Office National de l’Electricité et de l’Eau Potable on the full field development plan and on a gas sales agreement. In the meantime, it has also started talks with potential end-users and distributors of LNG in Morocco. It is also work- ing towards agreement with potential sources of funding and suppliers of equipment, according to the statement.
The micro-LNG project is coming to light as Sound Energy expands its search for a partner in the Tendrara contract. The company began exclusive negotiations with a potential investor last November, but on February 17 it revealed that the other party had concluded due diligence without signing a sales and purchase agreement (SPA) or providing satisfactory proof of its ability to fund the transaction.
The company did not name any potential partners. But its acting CEO Mohammad Seghiri said that the board of directors had been “active in considering and refining in parallel other options to monetise its asset at Tendrara.”™
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w w w. N E W S B A S E . c o m Week 07 20•February•2020