Angola LNG Output Hit by Upstream Problems

Source: Reuters 10/29/2013, Location: Africa

Angola LNG's output will fall short of design capacity through 2014 after upstream problems including a rig disaster forced it to bring forward new supplies from other blocks, a senior executive at state oil company Sonangol said. The $10 billion project is operated by U.S. oil major Chevron with a 36.4 percent shareholding, while Sonangol has a 22.8 percent stake. Other stakeholders include Total, BP and ENI. "We started producing this year but we still have not reached maximum production capacity at Angola LNG, we are at around 20 percent," Paulo Fernandes, an executive at Sonangol's production department told an industry conference in Luanda.

After delays of 18 months caused by technical problems, the 5.2 million tonnes per annum project made its first export shipment in June and has since shipped another four cargoes. But a rig disaster in July that caused one death also delayed efforts to link two offshore blocks with the plant, slowing its drive to bring production to full capacity. The plant's peak production capacity can be achieved only if it receives 1 billion cubic feet of gas daily from the five offshore blocks mandated to supply the facility.

Asked if it could be producing at full capacity by end-2014, Fernandes said: "Yes, probably. We had some problems at the plant's launch stage, but these were resolved and now we're in the phase of commissioning and will progressively get the 100 percent goal."

Rig Disaster Delays Supply

A string of upstream setbacks has significantly dimmed the prospect of realising production goals next year.

On July 1, the drilling rig Perro Negro 6 operated by Italian oil services group Saipem capsized as it was laying a pipeline linking Chevron's Block 0 and 14 with the liquefaction plant. "The accident was at a platform that was going to make the transport links from one of the operators," Fernandes said.

The blocks, which were to be tied to the plant next year, were due to supply up to 170 million cubic feet of gas per day initially to the plant. "It will delay the delivery of gas from one of the operators, but it won't compromise the Angola LNG project entirely as we have other projects for links," Fernandes said. Fernandes said Total's Block 17 is the main supplier to the LNG plant, adding BP's Block 31 is now also supplying some of the gas due to a loss of delivery from other fields.

Angola is Africa's second biggest oil producer after Nigeria and plans to launch 15 new blocks next year. Fernandes said Angola also hoped to tie gas produced from some of the blocks into its liquefaction venture.

A 53-day maintenance shutdown for the plant has been repeatedly delayed due to the discovery of small gas leaks on onshore pipeline. The latest information supplied by site workers suggested that maintenance was due to start from Sept. 29, but Fernandes said that a full shutdown had not yet taken place. "One part of the maintenance has not started yet. We are continuing to send gas from block 17 to feed the plant."

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