Article31 May 2017 15:51
Biya and SNH chief block Cameroon’s Etinde
By Miriam Malek
30 May 2017
The president of Cameroon, Paul Biya, and the head of state-owned oil company SNH, Adolphe Moudiki, are blocking development of the Etinde gas field despite its approval by parliament more than two years ago, two sources involved with the matter have told Interfax Natural Gas Daily.
Jersey-based explorer NewAge and Russia’s Lukoil each hold 30% stakes in the project, while Edinburgh-based Bowleven has 20% equity and SNH holds the remaining 20%.
The government initially agreed to SNH taking a 20% paying interest stake in Etinde, which requires the government to also put forward funding for the permit. However, SNH would now like its share for free and is not willing to contribute financing. Cash-strapped SNH has rejected a funding proposal by NewAge.
There has been disagreement about how gas from Etinde should be used. The government of Cameroon would like to use the gas to develop fertilisers. NewAge and its partners would like to send the gas to an FLNG project, which could export LNG to global markets.
A campaign to convince the government to allow the project to proceed is under way and has the support of Philémon Yang, the prime minister of Cameroon, but Biya and Moudiki are refusing to meet with the companies, the sources said. NewAge and Lukoil have also approached the UK’s high commissioner as well as the UK and Russian embassies to support their case. The project stakeholders have arranged at least three meetings with Biya, but all have subsequently been cancelled.
Drilling demands
A legal source in Yaoundé told Interfax Natural Gas Daily that SNH is demanding NewAge drills at least two more wells to guarantee sufficient reserves will be available to run an FLNG project.
The two extra wells would need to shore up enough reserves to feed both the FLNG vessel and a domestic fertiliser plant.
There are plans by NewAge to drill an appraisal well on the Intra-Isongo field in the Etinde permit in Q4 2017 and another well in 2018, Jean-Baptiste Bouzard, senior West Africa analyst at Wood Mackenzie, told Interfax Natural Gas Daily.
Around 14 development wells would need to be drilled after the appraisal wells, the project sources said.
"The government would like gas from Etinde to supply a power and fertiliser plant near the town of Limbe," Bouzard said. "However, there is currently no experienced company to build and operate these plants. Given the absence of local offtaker, upstream partners continue to favour export options."
The government has been prioritising the development of so-called legacy projects, the Etinde sources said. "They want projects that they can point to and say ‘we did that’, not ones that are offshore and out of sight," one source said. "The fact that the government can’t make money [on the fertiliser plant] seems to be irrelevant."
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