Sub-Saharan Africa’s gas production will grow by 18 percent by 2021 to 9.1 billion cubic feet per day (bcfd) and 34.2 percent of this gas production will be driven by the Nigerian National Petroleum Corporation (NNPC), Global Data, a leading data and Analytics Company says.
Apart from the NNPC, global gas production will be driven by Royal Dutch Shell Plc and Eni SpA who would be responsible for 10.4 and 7.8 percent respectively, according to GlobalData,
“Over 6.4 bcfd of natural gas in 2021 will be produced by conventional gas projects, while coal bed methane (cbm) projects will contribute 8.5 million cubic feet per day (mmcfd) to Sub-Saharan Africa production in 2021. Conventional, unconventional, and heavy oil projects together will contribute about 2.6 bcfd of associated gas by 2021,” says Global Data.
A possible way Nigeria can meet this target is to harness gas flares. Nigeria currently flares approximately 700MMscf/d of gas in 178 flare sites across the country. This is equivalent of the gas in use for power production.
The Federal Government of Nigeria has launched the Nigerian Gas Flare Commercialization Programme (NGFCP). Under the NGFCP, the Federal Government shall exercise its ownership rights of all gas flared in Nigeria. Paragraph 35(b)(i) of the 1st Schedule to the Petroleum Act CAP P10, LFN 2004 provides that the Minister of Petroleum may, in the public interest, impose terms and conditions applying to any natural gas discovered, including the right of the FGN to take any associated gas that would have been flared either free of cost at the flare or at an agreed cost.
To this end, the FGN will, under the NGFCP, grant licences to third parties (i.e. licensees) to access and collect such gas on behalf of the FGN from the flare points of oil producing companies. The licensees will then be required to use necessary technology to set up the facilities for the delivery and collection of gas at the flare points. Under the NGFCP, all identified gas flare points are part of the programme and compliance with the programme will be a licence condition for the award and renewal of all Oil Mining Leases and Marginal Fields.
Carlos Gomes, Oil & Gas Analyst at GlobalData, comments, “Sub-Saharan Africa has 28 key upcoming gas projects, of which, 16 will be producing by 2021. Empresa Nacional de Hidrocarbonetos EP and Eni SpA will lead in greenfield gas projects, with six projects each, followed by Exxon Mobil Corp with five projects in the near future.”
Sub-Saharan Africa is expected to spend $33.0bn as capital expenditure (capex) on conventional gas and CBM projects between 2018 and 2021, with spending peaking in 2021 at $11.8bn. Average full cycle capex per barrel of oil equivalent (boe) for Sub-Saharan Africa gas projects is $4.5. CBM projects have full-cycle capex of $5.3 per boe, while conventional gas projects need $4.5 per boe in full cycle capex. Deepwater projects have the highest average full cycle capex of $7.0 per boe, followed by shallow-water, ultra-deepwater and onshore projects with an average full cycle capex per boe of $5.4, $5.0 and $2.7 respectively.
New gas projects average $5.1 per boe in capex and need a gas price of $6.0 per thousand cubic feet (mcf) to break even over the development timeline. Average development break-even price for planned and announced ultra-deepwater projects in Sub-Saharan Africa is $6.4 per mcf, while the shallow water and deepwater projects have a development break-even price of $6.9 and $5.0 per mcf respectively. Onshore projects require a gas price of $3.9 per mcf to break even.
