Building a Mega Hub

Equatorial Guinea’s ambitious Gas Mega Hub plan took its first step forward with the signing of definitive agreements between Noble Energy, Marathon Oil and the Republic of Equatorial Guinea to monetize gas from the Alen field. With first gas expected in 2021, the gas monetization project is set to boost fuel exports and allow for the establishment of additional hubs to follow.

Last year, the Ministry of Mines and Hydrocarbons announced its plans to transform Equatorial Guinea into a Gas Mega Hub by developing several offshore gas hubs and monetizing neighboring gas reserves, driving industrial development and economic growth in the process. Aggregating gas from upstream producers and delivering it to onshore industry, the Mega Hub would create new efficiencies and safeguard the steady production of liquified natural gas (LNG) in the face of declining reserves from the Alba field.

One year later, the first step toward executing Equatorial Guinea’s vision of becoming a regional gas megahub has been taken. In April, Noble Energy made a key investment decision through its agreement to transport gas from the Alen and Aseng fields and process it through the onshore Punta Europa gas complex, which includes the Atlantic Methanol Production Company methanol plant, the Alba liquified petroleum gas (LPG) plant and the EG LNG plant and terminal. The implications of the agreement are extensive. Located north of Bioko Island and close to countries such as Cameroon and Nigeria, the project facilitates a cross-border link with gas projects in those countries and opens the door for establishing new hubs to service the region. The Gas Mega Hub reduces dependency on single upstream producers for industrial development, and combined with new subsea pipelines linking the Aseng, Alen and Alba fields, the agreement will replace gas production lost and allow gas to be re-directed to where it finds efficiencies. Utilizing the new Punta Europa-Alba-Alen infrastructure, the Gas Mega Hub will be able to connect to new gas discoveries, driving monetization of stranded gas, increasing fuel exports and boosting revenues.

The First Step Forward

In April, in a critical step toward creating an offshore natural gas hub in Equatorial Guinea, Noble Energy signed definitive agreements with Marathon Oil and the Republic of Equatorial Guinea to develop gas resources from the Alen field via the Alba LPG plant and EG LNG production facility located in Punta Europa. Noble Energy serves as the operator of the offshore Aseng and Alen fields in Blocks I/O, while Marathon Oil represents the majority shareholder in both the Alba LPG plant and the EG LNG plant and terminal. The agreement also increases the shares of state-owned Sonagas in the EG LNG plant from 25 percent to 30 percent.

“This is the kick off of our Gas Mega Hub and we will do more deals on other gas assets in the country that must be developed. Development of the Gas Mega Hub will ensure a thriving Equatorial Guinea gas industry into the future. It is my firm belief that it will create opportunities for development of our citizens in the upstream and downstream segments of the country’s oil and natural gas industry,” said H.E. Gabriel Mbaga Obiang Lima, Minister of Mines and Hydrocarbons.

The Alen field is a liquid-rich gas and condensate field located approximately 32km off the east coast of Bioko island. Since it began operating in 2013, the field has functioned as a condensate production and natural gas recycling project, as well as produced and reinjected natural gas into the reservoir to support enhanced liquids recovery. Primary condensate will continue to be produced and transported to the Aseng field production, storage and offloading vessel for sale. Leveraging current infrastructure, the Alen gas monetization project will serve as a high-return and capital-efficient development, as it utilizes three existing high-capacity production wells on the platform. No modifications are needed to process Alen gas through the EG LNG plant, and only minor modifications are needed to process the gas through the Alba LPG plant, which are currently in progress.

This article will be published in the upcoming Africa Energy Series – Equatorial Guinea report, the most definitive resource produced on Equatorial Guinea’s emerging hydrocarbons and energy markets, which is attracting investors from the upstream to the downstream and power sectors. The book will be launched at the London Investor Forum hosted by Africa Oil & Power on June 11, 2019.

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