A week ago, Cameroon was getting ready to jostle for space in a global LNG market already crowded with new supplies from the US and Russia. Now the extra output could not come at a better time, reports Bloomberg.
France’s Perenco SA and US-traded Golar LNG Ltd. will start shipments from their US$1.2 billion LNG project off Cameroon in February. That will be just in time for a surge of almost a third in European imports, after a cold snap and disruptions at supply hubs in Austria, the UK and Norway sent gas prices to a four-year high.
Cameroon enjoys a geographical advantage in the European market. It takes about 11 days to ship a cargo to Britain, while a tanker from Qatar, Europe’s biggest supplier of LNG, takes about two weeks. Saving a few days may prove crucial during freezing weather or a sudden supply crisis – a growing risk as the region’s own gas infrastructure ages and becomes vulnerable to breakdown.
The Cameroon project – named Hilli Episeyo after its production vessel – is only the second FLNG facility to come into production worldwide, after Malaysia launched a vessel last year. While the latter was built from scratch, the Cameroon unit is a converted LNG tanker. Its success could trigger more investments in the technology, potentially helping companies such as Ophir Energy Plc, which needs funds for a project off Equatorial Guinea.
The recent price jump on the continent has made northwest Europe a more attractive destination for tankers carrying the super-chilled fuel. The UK is now set to take the first LNG from Russia’s Yamal project, rather than Asia as initially expected. The US$27 billion plant in northern Siberia started production earlier this month, while Cove Point in Maryland is readying for operations too.
The premium for LNG supplies into northeast Asia, the biggest buyer, over southwestern Europe narrowed to US$0.80 per million British thermal units this week from as high as US$2 in October.
Russia’s Gazprom PJSC has an eight-year contract to sell Hilli Episeyo’s LNG. While the project is reasonably small – 2.4 million tpy compared with 5.5 million t from Yamal’s first of three planned units – it will make Cameroon a net gas exporter and the sixth African nation to supply LNG. Neighboring Nigeria is the biggest, while Angola, Algeria, Equatorial Guinea and Egypt also produce the fuel.
LNG projects such as Hilli Episeyo, while small, could be vital for meeting accelerating demand.
Read the article online at: https://www.lngindustry.com/liquefaction/18122017/african-gas-comes-at-the-right-time-for-europe/