A consortium made up of UAE renewable energy giant MASDAR, an Abu Dhabi state-owned company, Egyptian technology provider Infinity and German project developer Conjuncta, have signed an MOU with Mauritania to set up a $34 billion green hydrogen project.

German newspaper Frankfurter Algemeine Zeitung (FAZ) said yesterday that in a other to develop hydrogen production capacity and set up a supply chain in the MENA region, Germany is now looking at a less obvious partner, Mauritania.

The overall green hydrogen production capacity is set to be 8 million tons of ammonia or other hydrogen related products. The total electrolyzer capacity is set to be around 10GW. 

Conjuncta stated that the first phase of the project, to be located northeast of Mauritania’s capital Nouakchott is to be completed in 2028, representing a 400MW production capacity.

Also Read: LNG: The EU Turns To Buyers’ Cartel To Protect Vulnerable Members

CEO of Conjuncta, Stefan Liebing, said the project will be strongly linked to Germany, not only due to technological input, but also as a potential offtaker of the hydrogen products.

It is a fact that European nations are searching for around 10 million tons of green hydrogen or ammonia imports by 2030, but until now, the short-term supply options are very meager. There are reports indicating that most probably, if Europe’s renewable targets will have to be met and a green hydrogen market is established, Europe will need to import around 25 million tons of green hydrogen/ammonia per year.

The news journal said domestic European green hydrogen production will not yet be available or not competitive at all in 2030. After that Germany, the Netherlands and others, have been clearly targeting the UAE as a possible supplier, others countries are being explored.
Another potentially large supplier could be Saudi Arabia, looking at its ever-growing list of green hydrogen projects being planned lately, or Egypt, where Gulf Arab money is also entering major new hydrogen projects.

According to the report, during the last few weeks, Egypt has been signing several new green hydrogen project agreements, while Saudi state-owned utility giant ACWA had finalized and signed the financing agreements for its $8.5 billion NEOM green hydrogen project.
It said that Mauritania may be one of the less prominent options, but its geographical position makes it a possible contender. The above mentioned $34 billion project could be a gamechanger for the Nouakchott government.

Also Read: Tanzania Seals $30bn LNG Project Deal With Super Majors, Shell And Equinor

Recently, Mauritania also made headlines as oil and gas major Shell reported that it has signed a new E&P contract with Mauritania’s ministry of petroleum, mines and energy.

The E&P deal was signed to conduct exploration activities in Block C2 offshore Mauritania, with Shell holding a 75% stake in the block, and Mauritania’s government 25%.

Block C2 is situated to the south of Block C10, where Shell is already conducting exploration activities.

…Says Exxon will reconsider its role in Europe

America oil giant, Exxon Mobil Corp, has said it will reexamine its supermajor’s role in Europe in light of the new windfall profit taxes.
The group chief executive, Darren Woods, stated this during a CERAWeek panel on Tuesday, adding that the windfall profit taxes serve to discourage investments. Meanwhile, the U.S. supermajor is sinking more money into its U.S. operations.

He referred to Europe’s windfall tax move as the proverbial “stick” in the carrot and stick scenario. Meanwhile, back home in the United States, the Inflation Reduction Act has enticed Exxon to create a new clean energy business venture—a substantial one at that–with CF Industries and Enlink Midstream in Louisiana that Exxon says is only the tip of the iceberg of backlogged projects that will likely now move forward with a quickness.

Also Read: Exxon Is Not Quitting Nigeria, We Are Not Leaving

“I think you may be very simply to describe it as carrots versus sticks,” Woods said in reference to the US Inflation Reduction Act versus Europe’s new tax scheme. “We certainly step back and reevaluate what we are doing in Europe. The IRA is obviously very important for your strategy.”

Exxon is one of Europe’s largest oil and gas producers and a major refiner of crude oil, owning some of the continent’s largest refineries, including Belgium’s Antwerp Refinery, the UK’s Fawley Refinery, and France’s Port Jerome-Bravenchon Refinery.

ExxonMobil filed a lawsuit against the EU over the 33% windfall tax in December after claiming that the windfall tax could cost the company $2 billion in 2023. Exxon argued that the tax would end up being a destructive force for investor confidence.

Also Read: Exxon Posts Record Breaking Profits In Western Oil Company History

“Whether we invest here primarily depends on how attractive and globally competitive Europe will be,” Exxon spokesperson Casey Norton said shortly after the lawsuit was filed.

By Bosco Agba

Energy Information Administration [EIA] has reduced its earlier forecast for natural gas prices for 2023 and 2024. The EIA now sees natural gas prices averaging $3.02 per MMBtu this year, down 11.2% from its previous forecast of $3.40 per MMBtu.

According to the latest edition of the Short-Term Energy Outlook [STEO] released on Tuesday, for comparison, natural gas prices averaged $6.42 per MMBtu in 2022.

The EIA has also lowered its forecast for natural gas prices for next year, to $3.89 per MMBtu, down from its estimate of $4.04 per MMBtu made its previous report.

The EIA sees natural gas consumption averaging 99.1 billion cubic feet per day in Q1, down 5% from the same quarter last year on the back of “very mild temperatures that have reduced demand for space heating.”

Also Read: LNG: The EU Turns To Buyers’ Cartel To Protect Vulnerable Members

The EIA sees the largest decline in residential and commercial natural gas consumption. With this anticipation of lower natural gas consumption, the EIA now expects the United States will close the withdrawal season at the end of March with more than 1.9 trillion cubic feet of natural gas in storage—a figure which is 23% more than the five-year average and 27% more than what the EIA forecast in its January STEO.

The EIA said that preliminary data from the National Oceanic and Atmospheric Administration for January and February indicate the first two months of 2023 may be close to the warmest on record for that period in data going back to 1895.

The mild weather was concentrated in the eastern part of the United States. Natural gas prices fell 12% on Monday—the largest drop since January 30—driven by forecasts for milder weather and lower heating demand.

By Ken Okafor

In addition to being a sociopolitical bloc, the European Union has decided to transform into a buyers’ group on the international gas market next month as it launches the first tender for suppliers.

Report yesterday said this transformation, and tender, follows months of discussions on how best to secure natural gas supplies for the 27-member bloc in such a way as to avoid some member states outbid other member states because of their deeper pockets.

The solution was found in what would effectively be a buyers’ cartel, shopping for gas as one. According to Bloomberg, the first offers, from gas suppliers in the United States, the Middle East, and Africa are to be signed in June.

Also Read: Russia Insists That Price Cap Against Its Oil Is Not Working

The European Commission, vice president, Maros Sefcovic said the total gas needs of the EU plus four neighboring countries amount to 24 billion cubic meters over the next three years. This is a lot of gas to be sourced on the global spot market.

“We clearly need to turn the economic tide in Europe. I believe we’re creating a new system that will increase competition and bring in new suppliers and push energy prices down. Since we started this exercise, there’s enormous interest from international suppliers,” Sefcovic told Bloomberg in an interview.

According to him, some 50 gas suppliers have expressed interest in participating in the EU’s joint gas buying. There is also interest in joint buying from large industrial gas consumers in the EU, Sefcovic also said.

Price, however, remains of crucial importance. Europe has been paying a lot more for its gas than the U.S., for instance, and China, according to Sefcovic. This needs to change if the bloc is to remain competitive on the world stage.

Also Read: Natural Gas Prices Could More Than Double In 2024

“What is increasingly important is that we have to deal with prices. We can’t power our economy at such a huge price differential compared with the US or China,” he said

He stressed that price will be the sticking point in that joint buying exercise. “One of the purposes of the whole endeavor was to keep gas prices low by buying in larger volumes.

“Besides, natural gas prices are currently a lot lower than they were a year ago. Yet the EU needs to buy a lot of gas and such bulk buying may very well push prices higher,” the Bloomberg report said.

Tanzania has confirmed the completion of talks with supermajors, Shell and Equinor, for the construction of a $30-billion LNG export facility in the country.

The $30billion export facility is expected to the country’s huge offshore natural gas resources, Tanzania’s energy minister January Makamba said.

He further confirmed that while discussions are completed, the parties and experts are about to begin drafting contracts, he said on Twitter.
According to him, one contract is being drafted for the host government agreement, and another is for blocks 1, 2, and 4, which will provide natural gas for the LNG project.

Also Read: Natural Gas Prices Could More Than Double In 2024

After buying BG Group in 2016, Shell became the operator of two offshore blocks in Tanzania, Block 1 and Block 4, together with its partners Medco Energi (Ophir Energy) and Pavilion Energy. A total of 16 trillion cubic feet (Tcf) of natural gas have been discovered in the blocks.
Equinor, for its part, started exploration drilling activities in Block 2 offshore Tanzania in 2011 and has made nine discoveries with estimated volumes of more than 20 Tcf of gas in place.

Regulatory hurdles have weighed on the LNG plans so far, but the progress with the talks gives hope to Tanzania and the majors that they could start monetizing the huge offshore gas resources in the late 2020s or early 2030s.

The minister said Tanzania’s government is looking to reach a final investment decision for the LNG facility in 2025.
Africa could become the key to helping Europe with gas supply now that Russia is no longer a wanted source of energy for the West, analysts and industry executives say.

Also Read: Nigeria’s, Others’ Energy Demand To Grow By 50%, Says Afreximbank

At the end of last year, Italy’s Eni announced the first shipment of LNG produced from the Coral gas field in the ultra-deep waters of the Rovuma Basin offshore Mozambique, Tanzania’s neighbor to the south.

Meanwhile, Shell, the world’s largest LNG trader, issued last month a bullish outlook on the LNG market through 2040. LNG could become a core energy supply for Europe to meet energy security needs, while China could increasingly provide more flexibility to the global LNG market, the supermajor said

By Bosco Agba

…New data says the economy slumped in Q4

A recent data has suggested that the economy of Africa’s most industrialized nation, South Africa, may be heading for recession due to teething unresolved power issues.

Figures from Statistics South Africa showed gross domestic product contracted 1.3% in the fourth quarter compared to the previous three months in seasonally adjusted terms. Analysts had predicted a 0.4% contraction in the October-December period.

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Revised third quarter growth stood at 1.8% quarter on quarter, from a previous estimate of 1.6%, but the country will tip into recession – defined as two consecutive quarters of falling GDP – if it contracts again in the current quarter. The country’s economy reportedly contracted more than envisaged in the last quarter of 2022, whereas an escalation in rolling power cuts contributed to most sectors from agriculture to mining shrinking.

Reuters said this development highlights the damage that the worst electricity outages on record, and prompted the rand to extend losses against the dollar.

Last Monday, the South African President Cyril Ramaphosa, appointed a new electricity minister as part of a cabinet reshuffle that he hopes will improve service delivery and shore up the governing party’s support ahead of a general election next year.

Also Read: Nigeria’s, Others’ Energy Demand To Grow By 50%, Says Afreximbank

According to the report, seven of the 10 industries tracked by Statistics South Africa shrank in October-December, with agricultural output falling 3.3% quarter on quarter, mining 3.2%, finance 2.3%, trade 2.1% and manufacturing 0.9%.

Struggling state electricity utility Eskom’s scheduled power cuts, caused by breakdowns at its ageing fleet of coal-fired power plants, have meant up to 10 hours a day without power in recent months, hurting businesses of all sizes.

After 2.0% economic growth for 2022 as a whole, South Africa’s economy is now 0.3% bigger than it was in 2019 before the COVID-19 pandemic, Stats SA said, adding that the expansion was smaller than a 3.5% rise in the country’s population over the same period.
Gross domestic product grew 0.9% year on year in the fourth quarter, worse than forecasts for a 2.2% expansion.

By Ken Okafor