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Floating LNG May Be Key To Repositioning Gas In Africa
Floating LNG May be Key to Repositioning Gas in Africa

Floating LNG May be Key to Repositioning Gas in Africa

For over 50 years, Liquefied Natural Gas (LNG) has existed as a means of transporting huge amounts of natural gas over long distances. The first commercial LNG (Liquefied Natural Gas) plant was delivered in 1964, in Arzew, Algeria, and the first commercial trade of LNG occurred in 1964 between the UK and Algeria.

As estimated in the International Energy Outlook 2016 (IEO2016), consumption of natural gas worldwide is projected to increase from 120 trillion cubic feet (Tcf) as measured in 2012 to 203 Tcf in 2040.

Today, the growing demand for LNG, coupled with environmental and community challenges, high costs of infrastructure and slow time-to-market for land-based LNG projects has encouraged several leading LNG players such as Shell, Petronas and ExxonMobil to develop Floating LNG plants as alternatives to land-based plants.

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The Oil and Gas Industry: Versatile vs Volatile

The global oil and gas industry has experienced a steady decline in the last three years primarily driven by the African and Middle East region, but the current instability in the industry does not deter a positive outlook as operators are positive that the industry will continue to grow over the next three years. It is expected that the industry will continue to be profitable based on an average benchmark oil price of $85-$90 per barrel.

Operators are implementing cost reduction strategies and focusing on operational excellence and innovation as a way of increasing their profitability despite declining revenue.

Local content has become a significant issue for the oil & gas industry, especially across Africa. Given the drive by governments to enable locals play more significant roles within the energy sector, we would expect increased pressure on operators to justify the utilisation of ‘non’ local resources. Nigeria has recorded some measure of success in this light.

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