Understanding natural gas and LNG options



LNG exports are poised to be an important catalyst for economic growth in African countries. Natural gas and LNG development can enable economic development and stimulate further investment in national infrastructure. The recent large offshore natural gas discoveries in Africa have focused the attention of the international oil and gas industry on large LNG export projects which are essential to monetise these resources.

Large offshore resources are expensive to develop and projects may not be able to clear investment hurdles if dedicated solely to the domestic gas market. Developing an LNG export project and reserving a portion of the gas production for the domestic market – with the full support of the host government – can make natural gas available for local use in addition to earning foreign revenue.

This is the introduction to the handbook.

Click here to download the handbook

This can enable the development of a diverse market for gas including power generation, local and regional industrial and commercial enterprises, transport, feedstock for petrochemical manufacturing, and other domestic uses of gas for the local population. LNG imports could also enable the development of domestic gas markets.

Floating storage and regasification units (FSRUs) are increasingly being used to provide a flexible, effective way to receive and process shipments of LNG to meet gas demand in onshore markets or as a temporary solution until domestic gas is developed or onshore facilities are built.

This handbook attempts to cover a broad spectrum of topics involved with developing and financing an LNG project, covering in depth the considerations for an LNG export project and development of a diverse domestic market. The book also addresses LNG import projects for intra- Africa LNG sales as an alternative to country-to-country pipelines.

We discuss the decisions that need to be made and the lenses through which to view the factors leading to these decisions. Each country will need to make its own decisions based on its specific national priorities, trade agreements, GDP goals, and assessments of changing political and market dynamics. In the following chapters, the reader will find overviews of the global gas market, LNG and domestic gas value chains, and domestic and interconnected regional markets for LNG and natural gas. We discuss project structure, government roles, capacity building, LNG export project development, environment, social impact, and safety.

We also review pricing, contracts, financing, risk management, local content, LNG import projects, and new and emerging markets and technologies for natural gas and LNG – touching on successes from other markets such as the EU, Asia and the US that might inform future natural gas and policy decisions in Africa.

This reference is not intended to be comprehensive and African governments would also likely need to employ the services of experienced advisors in legal, contractual, financial, technical and strategic areas. This advice should be directed at rapidly promoting the training of governmental staff, using all means available, including well-established academic institutions that focus on the oil and gas or LNG sectors.

This is the introduction to the handbook.

Click here to download the handbook

This handbook is the result of an effort by a diverse group of global experts who created this handbook in the hope that it can facilitate a shared understanding between government officials and companies about the technical, commercial, and economic factors that will spur investment gas and power. This handbook is intended to inform decision making on options to develop natural gas. It does not promote any specific business model, but rather promotes better understanding of the stakeholders’ shared aims in developing natural gas and Liquefied Natural Gas (LNG) projects and opening markets for LNG trade.

The contributing authors of this handbook are based in Ghana, Ivory Coast, Mozambique, Nigeria, Tanzania, the United States and the United Kingdom.

Contact David Drinkard, US Embassy Pretoria, Tel 012 431-4681, drinkarddj@state.gov

 

 

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