The Russians and Kudu Gas!

[Michael Alexander]

Well there appears to be movement in this saga..... at last!

" LUANDA, June 26 (Reuters) - Gazprom International, a unit of Russia's gas export monopoly Gazprom (GAZP.MM: Quote, Profile, Research), has signed a memorandum of understanding with Namibia's Namcor to help fund the country's Kudu gas project, an official said on Friday.

Head of Gazprom International Boris Ivanov said the firm was in advanced talks with South Africa's utility Eskom [ESCJ.UL] to sign a power purchase agreement for the electricity to be generated at the combined cycle gas power station in the south of Namibia.

Under the agreement, Eskom would use 500 MW of the power generated, while Namibia would use the remaining 300 MW.

"We are at an advanced stage of talks with the South African national energy company ... (the contract) will become a guarantee for financing of the project by Gazprom Bank and a pool of international lenders ... mainly from the Middle East and in Lebanon in particular," Ivanov told reporters in Luanda.

Ivanov said that while the company's mandate was limited to organising the finances for now, it would also try to attract Russian contractors for the $1.2 billion project, including Technostroiexport and Stroitransgaz.

He said the declared deposits are estimated at 45 billion cubic metres and the construction would take up to four years.

"This is a pilot project ... to ensure the realisation of our concept of complex exploration from gas well to kilowatts, to the final consumer. This is what we are trying to do in Russia and other countries," he said. "

[Michael Alexander]

and this one

"WINDHOEK (AFP) – Russian energy giant Gazprom said Friday its banking unit had struck a one-billion-dollar (711-million-euro) deal with Namibian energy company Namcor to build a new power plant in Namibia.

Under the deal, Russia would build a power plant generating energy for both Namibia and South Africa, getting a foothold in the lucrative Kudu gas field, Namibia's only commercial field to date.

The deal was reached during a visit to Windhoek by Russian President Dmitry Medvedev, who left Namibia for Angola on Friday as he wraps up a four-nation African tour that has focused on tapping the continent's energy wealth.

"Our Namibian partners have offered us to organise a financing scheme to monetise gas resources," the head of Gazprom International Boris Ivanov told reporters in Luanda.

"The cost of the project is around 1.0 to 1.2 billion dollars," he said, adding that the price tag includes the power station, a pipeline and other infrastructure, with construction taking up to four years.

"It's not a large deposit but has enough reserves," he said about the Kudu field. "It's a pilot project in Namibia but its economic efficiency is very high."

Gazprombank said in a statement that much of the power generated would be exported to South Africa, which is struggling to meet its growing energy needs.

"There are plans to use gas from the Kudu field for the power plant. A considerable part of the electricity to be generated will be supplied to South Africa," the company said.

The Kudu field, located about 140 kilometres (85 miles) offshore, is estimated to contain 3.3 trillion cubic feet of proven reserves, but years of negotiations over the reserves have yet to yield concrete projects.

Medvedev and his counterpart President Hifikepunye Pohamba witnessed the signing of the agreement during his visit to Windhoek.

Windhoek and Moscow pledged closer cooperation, a joint communique said on Friday after the first visit by a Kremlin chief to the uranium-rich southern African nation.

"Agreement was also reached on the expansion of Russian investments to develop and introduce new large-scale projects in the Namibian economy, in particular in mining, oil exploration and energy," it said"

[Michael Alexander]

and..

"Gazprombank and the National Petroleum Corporation of Namibia (NAMCOR) have signed a deal to finance the construction of a 800 MW gas turbine power plant, which forms part of the Kudu Gas Project.
The agreement was signed in the presence of Russian president Dmitry Medvedev and president Hifikepunye Pohamba at the new State House
Medvedev visited Namibia this week.
"As a mineral resource base, there are plans to use gas from the Kudu field for the power plant. A considerable part of the electricity to be generated will be supplied to South Africa," the Russian bank said.
Tullow Oil (70%), Itochu Corporation (20%) and the National Petroleum Corporation of Namibia (NAMCOR) hold the Kudu license. The deposit has proven natural gas reserves of over 1.3 trillion cubic feet.
In a related development further signalling that Kudu may finally see the light of day, Gigajoule Africa, a South African energy company, said it will be able to begin supplying natural gas to South Africa's Western Cape by 2014.
Gigajoule said in a statement that it has applied to the National Energy Regulator of South Africa for a license to supply, transmit, distribute and trade the gas.
The gas will either be sourced from Namibia's Kudu gas field or from international suppliers, who would deliver it to a terminal offshore South Africa's west coast, the statement said.
Another, Russian bank, Troika Dialog Group is exploring opportunities to finance Russian commercial projects in Namibia, managing director, Andrei Sharonov said in Windhoek.
"My trip to Namibia is meant to introduce members of the Russian delegation to Standard Bank Namibia and explore opportunities for financing Russian projects in the country," h said.
Standard Bank recently announced that it will be entering into a strategic partnership with Troika Dialog under which the bank intends to become a 33% shareholder in Troika Dialog.
"I am aware of Namibia's strategic position as a leading producer of uranium and other minerals, which make it attractive as a potential trade partner with the Russian Federation, which is seeking, amongst other interests, to examine opportunities in the energy sector, which may be available for future investment," said Sharonov.
Namibia and Russia signed three agreements this week aimed at further strengthening bilateral relations.
Minister of Trade and Industry, Hage Geingob, and Andrey Stepnew, Deputy Minister of Economic Development of the Russian Federation, signed the agreement on reciprocal investment promotion and protection.
The second agreement was signed by fisheries and marine resources minister Abraham Iyambo and Andrey Krayniy, Russia's head of the federal agency for fisheries.
The third agreement is a memorandum of understanding between NAMCOR and Gazprombank."

[Michael Alexander]

Nobody in Oranjemund seems to be aware of this story..... perhaps after so many false starts with this Kudu Gas, they have given up..... People this is BIG news...very big, this will go a long way in securing Oranjemund's future......

[SandyB]

Hold thumbs ...

[Michael Alexander]

I sent an email to Tullow oil, the company that owns 70% of the Kudu Gas field. It was a pleasure , although not good news, to get a response from the General Manager of Tullow Oil. Here is is my email followed by Peter's response:


"Good Afternoon to Tullow Oil People,

My Name is Mike Alexander and I reside in Oranjemund Namibia. I have been following the recent media news whereby Gazprom has signed a deal with a Namibian Company to build a Gas Cycle Powerstation in Namibia and to develop the Kudu Gas field.

I however was under the impression that Tullow Oil was the majority stakeholder (70%) in the Kudu Gas field . Does your company have any interest in  this project?

I also need to know, that the discussion about where the said powerstation would be constructed, is causing great concern to my fellow Oranjemunders, as our town, which for decades has depended on the DeBeers group, is steadly experiencing a financial downturn due to the depletion of diamond stocks in the area. There has been talk of the powerstation being built at Walvis Bay.

In closing, we need this project to be developed at Oranjemund to ensure our town's future, afterall the gas is here and not in Walvis...

Yours sincerely

Mike Alexander
(Oranjemundonline Administrator)"

REPLY

"Dear Mr. Alexander

We fully appreciate your concern about the future prosperity of Oranjemund and your interest in reports in the media indicating that Gazprom is in talks with Eskom to establish a power station near Oranjemund.

We can inform you that, as operator of the Kudu Production Licence, Tullow Oil has not been approached by Gazprom regarding the supply of gas to a power station.  NAMCOR, the National Oil Company, have entered into a Memorandum of Understanding (MOU) with GazpromBank.  Our understanding is that under the MOU GazpromBank will assist NAMCOR with some much needed finance and that both companies will cooperate in seeking other oil and gas opportunities in Namibia.  NAMCOR are using their 10% interest in the Kudu Field as security for the financial assistance.  We are informed by NAMCOR that there is no agreement between GazpromBank and themselves for Gazprom to either develop the Kudu gas field or build a power station. We are aware that NamPower has not been approached by Gazprom on this matter. Tullow Oil has not been approached either and so we cannot substantiate any of the statements attributed to Gazprom in the press. 

Notwithstanding the confusion being caused by Gazprom's statements, we hope the following brief history of events since Tullow Oil were awarded the Kudu Production licence in August 2005, will help you understand why the proposed location of the power station has moved to Walvis Bay

As you are probably aware, NamPower were originally planning to build an 800MW base load power station near Oranjemund supplied by gas from the Kudu gas field located 170 kms offshore.  A power station of this size requires electricity in excess of Namibia's needs to be exported and sold to Eskom in neighbouring South Africa.  After talks on the sale of electricity to Eskom broke down in late 2006, due to the fact that the cost of electricity from the Namibian power station could not compete with the lower cost of electricity generated by South African coal-fired plants, consideration was given to building a smaller power station near Oranjemund with the excess gas being piped to Eskom's power station at Atlantis.  At their plant in Atlantis, Eskom intended using the gas to generate higher priced mid-merit and peak electricity.  At the end of 2007, however, Eskom withdrew from talks for various reasons. 

Without a buyer of either surplus electricity or excess gas the Kudu gas to power project is not viable.  So in 2008 both Tullow Oil and NamPower undertook to seek an alternative solution.  NamPower looked into the possibility of selling excess electricity directly to bulk electricity users in South Africa, but they were unable to secure buyers. Tullow undertook a study into the feasibility of an emerging new technology for the transport of gas as Compressed Natural Gas (CNG) using ships to deliver gas to shore.  Satisfied that a CNG development of Kudu is feasible, we are now in talks with NamPower for the sale of gas to a power station of sufficient capacity for Namibian requirements with the excess gas being exported by ship to South Africa to be sold as a replacement for diesel and other liquid petroleum products in the industrial, transport and power generation sectors. 

Unfortunately, the coastline and met-ocean conditions near Oranjemund are not appropriate for the delivery of gas to shore by CNG vessels.  A sheltered harbour is required for the safe delivery of CNG ashore and so we are currently in talks with NamPower with a view to establishing a power station in Walvis Bay.

We realise that nothing contained in this response provides you with any real comfort but if Gazprom's aspirations are founded on reality, Tullow Oil still retains the option to supply gas by pipeline to a power station near Oranjemund.

May we suggest that you direct further queries to either NAMCOR, who have entered into the MOU with GazpromBank, or the Ministry of Mines and Energy.



With best wishes



Peter Owens

General Manager

Tullow Kudu Limited"

[SandyB]

Nice of them to reply  and yes  to  state that there is still an option for piping the gas   to closest  site that being OM  , pretty much  as in Mossgas ..  ships going back and forth makes no sense to me ???

[Bob Molloy]

With respect to Mr Owens, there is already an offshore pipeline installed near Oranjemund though it was originally used for diesel to power the old Omund station. Why isn't it possible to recommission this pipeline and convert it to gas?
Regards,
Bob.

[Michael Alexander]

From what I heard from a person involved in the EAP , was that the plant would have been built at Uubvley and the ideal spot for the pipeline to make landfall would be on the coast directly opposite Uubvley....

[Michael Alexander]

... and here is that statement from the Russians in another article, stating that the bulk of the power would go to South Africa.... By the way , I see JHB is having power outages again.....

"WINDHOEK - The largest gas producer and exporter in Russia, Gazprom, has expressed a firm commitment in Namibia's Kudu Gas Exploration by signing a memorandum of understanding with Namibia Petroleum Corporation of Namibia (Namcor).

Namcor signed the agreement with Gazprombank, a banking arm that Gazprom established to provide banking services to enterprises in gas and fuel industry.

To solidify its intentions, Gazprombank has put down US$20 million (about N$160 million) for Namcor to get the explorations going.

Namcor Managing Director Sam Beukes says Gazprom intends to become an equity partner in the Kudu Gas Exploration and substantial agreements between Gazprom and Namcor will appear in the near future, as the exploration matures.

There are no tangible figures to put down to the exploration stage, says Beukes, hence the US$20 million loan is a start up "to get operations going."

"Namcor needs assistance to do exploration work, technical assistance," said Beukes adding that Gazprom is the world major player in gas industry. "They manage 500,000 kilometre long gas pipelines," says Beukes.

The two signed the agreement in the presence of Presidents Hifikepunye Pohamba and Dmitry Medvedev
Meanwhile, Gazprombank has issued a statement saying that its agreement with Namcor, includes a deal to finance the construction of 800MW gas turbine power plant in Namibia.

"As a mineral resource base, there are plans to use gas from the Kudu field for the power plant. A considerable part of the electricity to be generated will be supplied to South Africa," Gazprombank said in the statement."

[Michael Alexander]

Gigajoule is planning to invest up to R2.5 billion on building infrastructure in the Western Cape that will move up to 40 million gigajoules of natural gas a year by the middle of 2015, Gigajoule chief executive Johan de Vos said on Friday.

The project is expected to generate 250 jobs during construction and 50 permanent jobs on completion.

The fuel would be extracted from the Kudu gas field off the Namibian coast, shipped to six offload points along the Western Cape coast and then piped along 225km of pipeline to up to 180 potential mainly industrual customers in Saldanha, Atlantis and the greater Cape Town areas.

Gigajoule has applied to the National Energy Regulator of SA (Nersa) for a licence to supply, transmit, distribute and trade gas in the Western Cape.

De Vos said he hoped the Nersa permit would be received by September.

Once the Nersa licence had been obtained, Gigajoule would conclude agreements with gas suppliers and buyers.

The environmental impact assessment as well as the design of the gas infrastructure was still being conducted, De Vos said.

The construction of the gas pipeline and related infrastructure was likely to start next year and would be complete by 2014. A market study conducted since 2007 showed there was sufficient interest from the industrial, commercial, transport and power generation sectors on the West Coast to switch to natural gas.



Gigajoule has signed a memorandum of understanding with the shareholders of Tullow Kudu, which include Tullow Oil (70 percent), Itochu Corporation of Japan (20 percent) and the National Petroleum Corporation of Namibia (10 percent), in order to work together to establish the technical and commercial viability for the supply of natural gas from the Kudu gas field.

The gas from the Kudu field will replace other forms of energy used in the Western Cape, including heavy fuel oil, diesel and liquefied petroleum gas.

De Vos said natural gas had environmental advantages including the fact that it emitted no sulphur and particulate pollution. When burned it would produce less carbon dioxide compared to other fuels

[Michael Alexander]

THE National Petroleum Corporation of Namibia (Namcor) is in serious trouble with its other partners in the Kudu gas field and the energy sector after it signed a memorandum of understanding (MoU) with Russia's gas and oil exploration heavyweight Gazprom.

The agreement will help Namcor access US$20 million and the Russian energy company will also assist them technically for oil and gas exploration.
However, Gazprom International Chief, Boris Ivanov, also announced that his company – through Gazprombank – was also very keen to get involved in the construction of an 800MW gas turbine power plant at Walvis Bay as part of the gas-to-power Kudu Gas project.
"It is quite a nice, sexy little project," Ivanov said, adding that Gazprom would like to get involved as soon as possible.
Although Namcor Managing Director Sam Beukes was cautiously optimistic about the development and told The Namibian earlier that Gazprom's involvement must still be negotiated, the announcement by the Russians have infuriated both NamPower and Tullow Oil who were excluded from the negotiations.
Tullow Oil has a 70 per cent share in the Kudu licence while Namcor only has a 10 per cent share. The remaining 20 per cent belongs to Itochu Corporation.
"They are very insignificant shareholders and have no mandate to talk on behalf of the rest of the group," said one source.

A source at NamPower confirmed that they were arranging a media briefing together with Tullow Oil where Namcor is expected to explain who gave the Russian delegation the information as well as what their role was in the negotiations.
"We know that they are in financial trouble and needed an injection of around N$200 million but that's not how you go about doing business," one source said.
Beukes had earlier said that the agreement was the beginning of setting Namcor up to strengthen its balance sheet.
"For now it is a MoU to explore opportunities and substantive agreements will come with time, but Gazprom wants to play a bigger role in Kudu gas field," Beukes said earlier.
The Kudu natural gas deposit, some 130 km off the southern coast of Namibia, is the country's only commercial hydrocarbon deposit to date.
The deposit has proven natural gas reserves of over 40 billion cubic metres.
Gazprom subsequently announced on their website that the deal they signed with Namcor was to finance the construction of an 800 MW gas turbine power plant in Namibia.
"That left us fuming because Namcor has got nothing to do with energy generation apart from Kudu," said a NamPower source.
NamPower Managing Director Paulinus Shilamba is also believed to be fuming while on a trip abroad.
"As a mineral resource base, there are plans to use gas from the Kudu field for the power plant. A considerable part of the electricity to be generated will be supplied to South Africa," Gazprom said.

[Michael Alexander]

Nuwe planne vir Kudu-gas
DIE bou van 'n gasaangedrewe kragsentrale op Oranjemund teen 'n koste van meer as N$7 miljard is blykbaar van die baan.

Die ontwikkeling van die Kudu-gasveld gaan egter voort met die eerste gas vir nywerheidsdoeleindes wat so vroeg as 2013 op land gelewer kan word.

Te midde van grootskaalse verwarring oor die jongste verwikkelinge by die Kudu-gasveld, een van die land se grootste ekonomiese bates, het NamPower besluit om sy planne vir Namibië in geheimsinnigheid te hul. Navrae aan NamPower en selfs skriftelike versoeke aan die staatsmaatskappy om duidelikheid oor die toekoms van die Oranjemund-projek te verkry, het dusver onbeantwoord gebly.

"Soveel verwarring en bespiegelinge heers nou dat ons besluit het om later 'n nuuskonferensie te hou waar alle vrae beantwoord sal word," het mnr. John Kaimu, bestuurder: bemarking en korporatiewe kommunikasie van NamPower aan Republikein gesê.

Mnr. Kaimu is genader nadat dit aan die lig gekom het dat NamPower skynbaar reeds 'n besluit geneem het om die ontwikkeling van die Oranjemund-kragsentrale vir die volgende 15 tot 20 jaar op die lange baan te skuif en eerder voorrang aan die bou van 'n gas- of steenkoolaangedrewe kragsentrale op Walvisbaai te skenk.

NamPower gaan blykbaar ook nou al sy aandag aan die ontwikkeling van 'n waterkragsentrale in die Kunenerivier en 'n soortgelyke, maar kleiner projek in die Oranjerivier bestee.

Blykbaar is NamPower se vennote in die reuse-projek, Alstom Power van Switserland, die BVS Power Alliance, Fluor SA, General Electric International, Mitsubishi Heavy Industries van Japan, Siemens AG en SNC-Lavalin International saam met General Electric, nog nie van die jongste verwikkelinge in kennis gestel nie.

Tullow Kudu Limited, die hoofaandeelhouer in die Kudu-gasveld en vernaamste rolspeler saam met sy bostroom-ontwikkelingsvennote, NamCor en Itochu Korporasie, het egter die versekering gegee dat hulle voortgaan met planne vir die produksie en verkoop van aardgas uit Kudu.

Die hoofbestuurder van Tullow Kudu, mnr. Peter Owens, het in 'n onderhoud met Republikein bevestig dat sy maatskappy steeds met NamPower in gesprek is oor die benutting van gas uit die gasveld, maar dat die fokus van ontwikkeling nou verskuif het.

Tullow-Kudu beplan nou om die gasveld te ontgin en die gas saam te pers (CNG) om in spesiaal geboude vragskepe na die plaaslike en internasionale markte verskeep te word. Om hierdie projek te verwesenlik, sal Tullow-Kudu 'n drywende produksie-, berging-, laai- , verskeping- en aflaaigeriewe teen 'n koste van sowat N$12,05 miljard bou.

Dit sal meebring dat die beplande pyplyn vanaf die gasveld na Oranjemund oor 'n afstand van 170 km en 'n koste van N$2,8 miljard nie verder oorweeg word nie. Net so sal die beplande gaspyplyn van Oranjemund na Suid-Afrika oor 'n afstand van 690 kilometer en 'n gasaangedrewe kragsentrale op Ankerlig net buite Kaapstad nie 'n werklikheid word nie.

"Ons is nou met NamPower vir die lewering van gas vir sy voorgestelde kragsentrale op Walvisbaai in onderhandelinge gewikkel. Dit is baie positiewe onderhandelinge en ons bly met entoesiasme daarby betrokke om Kudu te laat slaag.

"Indien die onderhandelinge in goeie tyd afgehandel word, kan ons die eerste gas uit Kudu in 2013 of 2014 lewer, want ons moet die skepe bou om die CNG in silinders na Walvisbaai te vervoer. Die slaan van oliegate en die ontwikkeling van die kragsentrale kan drie jaar duur," het mnr. Owens verduidelik.

"Ons onderhandelinge met NamPower is nou vir die lewering van CNG aan Walvisbaai. Ons het nog nie die moontlikheid uitgesluit nie dat gas gelewer sal word aan Oranjemund of naby Oranjemund indien iemand 'n kragsentrale daar sal bou en al die gas sal opneem.

"Vir die laaste vier jaar was dit nie moontlik nie en NamPower was nie in staat om surplus elektrisiteit aan Eskom te verkoop nie," het mnr. Owens gesê.

"Tullow Oil, NamCor en Itochu Korporasie is die lisiensiehouers vir die Kudu-gasveld. Ons mandaat is om gas uit daardie veld tot die voordeel van die land te produseer. Indien dit beteken dat alle gas elders verkoop gaan word as daar 'n mark is wat geld en belasting vir die Regering inbring, dan is dit die besluit wat die Regering moet neem.

"Nou is ons nie geheel en al afhanklik om die gas aan 'n kragsentrale te lewer nie. Ons weet daar is 'n mark waar ons die gas kan verkoop wat gebruik kan word in plek van diesel vir nywerheidsdoeleindes en kragopwekking, want dit is skoner en goedkoper," het mnr. Owens gesê.

[Andrew Darné]

Bob, The old tank farm marine pipeline is just about gone. A good portion of it was ripped when we mined through the G45 area about 5 years ago, including the Tank Farm and old Central Fields Workshops. By now what is left of it can't be of much use to anyone. The tank farm was dismantled and with it went the cathodic protection for the marine piepline. The unit is now being used for the inland diesel line between the new Shell depot and Uubvley. The rest of the diesel line up to 1 Plant was decommissioned and removed between Uubvley and 2 Plant.

[Michael Alexander]

I see in the Economist that , The power station to be built in Walvis is a coal fired monster.... The Russians are still on about a gas machine in the South....