Cameroon has decided to start exporting liquefied natural gas (LNG) from its newly designed offshore plant by the end of 2017, focusing on slashing production costs and unlocking the potential of African reserves that were not so far considered economically profitable
Nigeria, Equatorial Guinea and Angola in sub-Saharan Africa already export more than 20mn tonnes of LNG products each year mainly to Europe and Asia. According to the industry analysts, with Cameroon joining the league of LNG exporting countries, the competition will be stiffer between it and Nigeria.
To boost export of LNG products, Cameroon, Equatorial Guinea and Democratic Republic of Congo are in process to developing four offshore plants worth US$6bn. These offshore vessels are expected to do the same job as the onshore facilities, although in smaller volumes, aiming to reduce the cost of production.
Commenting on the development of the offshore plants, Jean-Baptiste Bouzard, sub-Saharan analyst at Wood Mackenzie, said, “Deploying offshore liquefaction facilities bypass some of the difficulties associated with building infrastructure onshore. Sometimes, offshore is simply easier.”
Cameroon’s offshore plant project is a joint venture between Golar, Perenco and Cameroon’s state-run oil National Hydrocarbons Corporation (SNH). It is estimated that the project, once completed, is expected to produce 1.2mn tonnes of LNG each year. Although, the total production of LNG by the four offshore projects is not yet clear.
According to some analysts, the developments of these gas reserves are less imperative as the dominance of cheap diesel and fuel oil already serves the demand in the region’s domestic power markets. “Demand in the region is, at present, insufficient to justify the development of such big gas reserves for domestic consumption only,” remarked CITAC analysts in a report this month on LNG in sub-Saharan Africa.
However, such small-scale offshore plants can be used in supplying cheaper gas to the customers. In 2016, the regional market was glutted with a 7.5 per cent growth in supply. Furthermore, as noted by the analysts, a smaller-scale plant could help in keeping costs down.