On June 5 2012, GE Oil & Gas, the oil and gas services business of American conglomerate General Electric, signed a long-term contractual service agreement (CSA) with Angola LNG, operator of Angola's first LNG liquefaction and export facility. Under the terms of the contract, GE's services will 'increase overall plant efficiency' and 'provide maximum availability' for the plant's key gas-compression equipment.

GE's services will pertain to two GE gas turbine-driven compression trains that are used in Angola LNG. According to GE's press release, it will perform the following duties for Angola LNG:Continuous technical assistance;Maintenance.

GE will provide an on-site team of GE field services engineers for these services, while day-to-day service operations will be supervised by a local contractual performance manager.

The US$10bn Angola LNG project is owned by a consortium comprising of Angola's national oil company (NOC) Sociedade Nacional de Combustíveis de Angola (Sonangol), Chevron, Eni, Total and BP. Chevron is the biggest stakeholder, with a 36.4% share in the project, followed by Sonangol (22.8%). Eni, Total and BP all hold a 13.6% interest each. The plant is based in Soyo, within the Zaire province and will have an export capacity of 6.8bn cubic metres (bcm) per year. It will source gas from producing offshore fields in Blocks 0, 1, 2, 14, 15, 17 and 18, which are all located in the Lower Congo Basin. According to Angola's oil minister, José Maria Botelho de Vasconcelos, Angola LNG is set for commercial production in June 2012.

Inspired By Gas Boom

Associated gas from offshore oil discoveries, which were made in the early 2000s, has been the main addition to Angola's proven gas reserves. Data from the US Energy Information Administration (EIA) shows Angola's gas reserves to have significantly jumped from 50bcm in 2006 to 270bcm in 2007; continued exploration in Angola makes it likely that discoveries could bring this figure up to 310bcm by 2021. However, low domestic consumption of gas means that Angola will have an excess capacity of gas.

Angola LNG provides a means through which the country can monetise its rich gas assets, as production is set to increase nine-fold from 0.74bcm in 2011 to 7.23bcm by 2021. With the Angola LNG plant, which liquefies gas produced for export, Angola can market its abundant supply of gas to lucrative LNG markets in Asia, which contain the world's largest LNG consumers (Japan and South Korea) and the world's fastest growing markets for LNG (India and China).

Next Destination: East Africa

Just as Angola LNG was conceptualised following huge commercial discoveries in the country, recent windfall gas finds in East Africa will also inspire a boom in LNG export projects, given that gas discoveries to date have already outstripped domestic demand. Discoveries in Mozambique have increased its total recoverable gas resources to 2.01-2.83trn cubic metres (tcm), while Tanzanian finds have amounted to 298-352bcm of recoverable gas - the total amount of which can supply populations in France, Germany, Britain and Italy for at least a year.

Anadarko Petroleum, one of the players in Mozambique's nascent gas industry, has already outlined plans for a multi-train, 13.8bcm per year LNG export facility in the country. Italian oil company Eni also has similar plans (see BMI's Gas Boon Grows Again, May 17 2012). Bloomberg also reported on June 8 2012 that the European Union (EU), Tanzania's biggest trading partner, would 'scale up' its funding to the country and for energy and transport for the period 2014-2020. With Tanzania's gas potential, a LNG export project would most likely be considered by the EU as it seeks to diversify its gas import reliance from Russian gas monopoly Gazprom.

These projects in Africa provide opportunities for engineering and energy services companies, given the continent's shortage of skilled labour and technology. Although project costs are high, these countries should be able to secure sufficient project financing, with big oil companies such as Eni and organisations such as the EU likely to back them. Other possible sources of funding include LNG-hungry companies in East Asia; a plausible candidate is South Korea's Kogas, as its upstream interest in Mozambique gives it an incentive to gain an operating share in a LNG export facility so as to secure supplies for its domestic market (see BMI's Kogas Shops For Overseas Upstream Assets, May 30 2012). Services, such as those offered by GE Oil & Gas to Angola LNG, will be in high demand when these projects materialise in the foreseeable future.