Cameroon looks for increase in gas investments

Aug 03, 2002 02:00 AM

A small port southeast of Douala, Kribi's major commercial activity is the export of timber and local fishing. That may all change if Cameroon can find an operator to develop the nearby Sanga Sud gas field. Speaking at the CWC Gulf of Guinea conference in London in May, Simon Tamfu, deputy exploration manager for Cameroon's state owned oil and gas company Societe Nationale des Hydrocarbures (SNH), called for increased investment in his country's gas sector.
With oil production in the Central African country falling and power rationing becoming a more common occurrence, Tamfu said that the government had decided to focus upon the country's natural gas potential. Cameroon is remaining oil reserves stand at a meagre 200 mm barrels and production has fallen to under 100,000 bpd since it peaked at around 164,000 bpd in the mid-1980s.

A new petroleum law was passed in 1995 to attract investors into marginal fields. This boosted production for a time but its impact has since waned Confidence in undiscovered potential is high The government is confident that there is undiscovered potential in two largely unexplored areas: the Logone Birni and Douala basins. The government is also hoping for a big offshore discovery and although the country has 400 km of coastline, it only has 4,500 sq km of theoretical maritime territory because of the proximity of islands belonging to Equatorial Guinea, and Sao Tome and Principe.
Until now, Cameroon's natural gas reserves have been largely ignored and there is no gas consumption in the country at present. Many fields have not been appraised and the government is not sure how much gas is actually there. However, the reserves are not thought to be great enough for classical export schemes, although they should be substantial enough for domestic consumption.

Apart from power generation, other potential uses for the gas -- such as ammonia, fertiliser and methanol production -- have not been considered profitable by the government in the past. Tamfu pointed to theWest African Gas Pipeline and the Ampco methanol plant in Equatorial Guinea as examples of schemes being developed elsewhere in West and Central Africa to make use of the region's gas reserves.
The new gas code, which is currently completing its passage through parliament, has been devised to attract new investment into the sector. The code aims to introduce tax incentives, guarantee the convertibility of currency for investors, and set up a system of flexible tariffs based on fair user prices and service costs.

Cameroon's Logbaba and Matanda gas fields could be exploited to supply Douala, while the Isango, Kita and Sanaga Sud reserves could be utilised for power generation to supply the country as a whole Gas to provide power Tamfu highlighted the power shortages currently affecting the country as a major incentive behind the government's push for gas investment.
Although installed power capacity stands at 800 MW, dry season capacity is only 450 MW. Many of the country's power plants were built during the 1950s and their ageing state, allied with a lack of maintenance, means that they are operating well below capacity.

Another problem is Cameroon's over reliance upon hydroelectric power (HEP) Cameroon, along with DR Congo, has the greatest HEP power potential in Africa. A total of 110 potential sites for HEP plants have been identified with combined potential capacity of 500,000 MW. However, while the 90 % of installed capacity that is provided by HEP plants is generally reliable during and following the rainy season, it becomes a liability during the dry season and prolonged periods of drought.
As a result, the government wants to diversify power sources and this is where gas comes in. Current average consumption stands at 500 MW and the government needs to satisfy increasing demand from industrial and population growth. This thirst for power will see demand double within the next decade.

The government has realised that the state owned power company Societe Nationale d'Electricite de Cameroon (Sonel) cannot deliver the required improvements. It is therefore keen to privatise Sonel and to attract foreign direct investment. In particular, it wants Independent Power Producers (IPPs) to play a key role and prefers these IPPs to be gas fired, as the gas can be provided domestically and gas plants will provide some much needed diversification during periods of water scarcity.
Not only is the government keen to satisfy current and projected power demand, but it wants to electrify the entire country. Once higher production capacity is in place, it plans a massive rural electrification programme, partly on environmental grounds. Most energy use in Cameroon, as in Africa as a whole, is provided by fuel wood and with a growing population this is causing increasing deforestation.

An additional problem is posed by the fact that there is no national power grid. The distribution systems in the north and south of the country are not connected. The government therefore hopes to develop gas fields across the country. SNH has outlined several fields as being of particular interest to E&P companies.
They are of roughly similar size and are mainly differentiated by their distance from the country's main markets: Isongo RDR is a gas field with eight wells, operated by Euroil. Reserves are estimated at 15 bn cm, enough to run a 100 MW power plant for 100 years. It lies around 80 km from Douala, which is the main point of consumption.

The Matanda DKC has two existing wells and again has reserves of 15 bn cm, enough to generate a 100 MW plant for 94 years. Sanaga Sud DKC is currently without an operator, although there are three existing wells on the 17 bn cm field, sufficient for a 100 MW plant for 125 years.
It lies 140 km from Douala but is only 10 km north-west of the port of Kribi. A licensing round limited to the Sanaga Sud field was launched on May 2 and will close on July 30. Parties interested in the country's other gas and oil fields are encouraged to approach the government at any time. Following the disappointing results of the 2000 licensing round, the government abandoned the system of bidding rounds in favour of a “permanent open-door policy”.

Cameroon's energy sector
Oil production: 84,800 bpd
Oil reserves: 200 mm barrels
Oil consumption: 26,000 bpd
Gas production: 0
Gas reserves:3.9 tcf
Gas consumption: 0
Net oil exports: 58,800 bpd
Refining capacity: 42,000 bpd
Electricity generation capacity: 817 MW
Total electricity generation: 3.4 bn kWh

Source: African Business
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