Angola: Green Light for New $4B LNG Plant

After years of discussion, the final investment decision (FID) has finally been taken on the Angola LNG project US firm Chevron has put pen to paper on a deal with Angolan state owned oil and gas company Sonangol to develop the project. According to the project consortium, gas will be supplied to the plant from associated gas fields, thereby helping to avoid gas flaring and enabling the production of oil on associated fields.

The development consortium comprises Chevron subsidiary Cabinda Gulf oil Company (36.4%), Sonangol offshoot Sonagas (22.8%), BP (13.6%), Enl (13.6%) and Total (13.6%).

A single liquefied natural gas (LNG) train with production capacity of 5.2 million tonnes a year will be developed on the Angolan coast dose to the city of Soyo, about 350 km north of Luanda. The plant, which has a projected lifespan of 30 years, win consume about 1 billion cubic feet of gas a day, which will be collected from offshore gas fields on blocks 14,15,17 and 18, while the operating company will also supply up to 125 million cubic feet of gas a day to Sonangol for use within Angola.

Apart from LNG, the plant will also produce propane, butane and condensate. Gas is expected to be shipped from the Soyo plant from the first quarter of 2012 to Gulf LNG's regasification terminal in Mississippi for sale across the US. George Kirkland, Chevron executive vice president upstream and gas, said that the scheme would "establish Angola as a competitive source of LNG to the emerging global natural gas market." Alan Kleter, the managing director of Chevron's Southern Africa operations, added: "Chevron has worked and been in partnership with Angola for the past 50 years, and we appreciate the government of Angola's strong support for the project The benefits of Angola LNG are broad: the project is expected to commercialize the country's natural gas resources, facilitate more oil development and natural gas exploration and provide natural gas for domestic use to stimulate further economic development."

According to Angolan sources, the project will cost $4 billion to develop, making it the single biggest individual Investment in the country. Italian firm Eni joined the consortium as the result of a strategic co-operation agreement with Sonangol in December 2006.

One year later, Eni signed a participation agreement to join another consortium, led by Sonagas with a 40% stake, which will assess proven gas reserves with a view to developing a second LNG plant that would also be fed by offshore reserves.