The Angola Liquefied Natural Gas (LNG) project represents the single largest investment ever made in Angola. At approximately $8-10 billion US dollars, the total construction costs of the project are almost double the annual total GDP of Malawi.

Approximately 6500 workers – more than half of whom are from Angola and the remaining comprised from over 50 different nationalities – are working day and night to prepare the plant in time for its opening in 2012.

The scale of the project is vast. Once complete, it will process one billion cubic feet (BCF) of natural gas every day – over 5 million tonnes per year. Approximately 500 km of high-pressure pipeline will deliver gas to the plant from four offshore sites. Processed LNG will be stored in two 160,000m3 containment tanks and transported offshore by seven 160,000m3 specially designed carrier ships.

Situated on the southern bank of the mouth of the River Congo in Zaire Province, the coastal town of Soyo is widely considered the epicentre of the Angolan oil and gas industry. Chevron and several other multinational oil majors have been operating in the region since the late 1960s. Deep-water discoveries in the past 25 years have transformed the seas off Zaire Province into one of the most lucrative oil regions in Sub-Saharan Africa.

 

Angolan Natural Gas

Differing from the natural gas reservoirs of Egypt and Qatar, natural gas in Angola is largely a by-product of the oil fields. Without significant investment in the infrastructure used to transport, contain and process the gas, companies extracting oil have, until recently, either re-injected the gas back into the oil fields, vented or flared it.

One of the primary reasons for developing the Angola LNG project was to provide a clean and beneficial alternative to the practice of venting or flaring. Gas flares, visible from space, cause significant damage to the environment – pumping various toxins into the atmosphere, causing corrosive acid rain, and polluting the surrounding soils.

Gas flaring in Nigeria has wreaked havoc on the communities within the Niger Delta region contributing to the gradual destruction of the agricultural viability of the region and resulting in numerous associated health concerns including respiratory infections, and skin and eye conditions caused by the fumes.

The massive expansion of the Angolan oil industry witnessed since the end of civil war in 2002 coincided with a resurgent international interest in natural gas. Throughout the 1980s and 90s, with cheap oil flooding international markets, the development of the oil-associated natural gas industry was considered economically unviable.

The steady rise in oil prices since 2003, due to the huge increases in demand caused by the rapid growth of countries such as China and India, combined with worldwide production stagnation, has resulted in renewed popularity of the natural gas industry.

Worldwide consumption of natural gas is estimated to increase from 100 trillion cubic feet (TCF) in 2004 to 163 TCF in 2030. The World Bank now estimates that global demand for natural gas will outstrip demand for oil by as soon as 2025.

Yet the recent volatility of the international energy market looks set to continue. Instability in the Middle East and North Africa, combined with the aggressive tactics of the Russian gas monopoly, Gazprom, have left many states eyeing up the potential of Sub-Saharan Africa as an important energy source.

 

US Interest

The United States of America has taken a particularly special interest in Angola as a vital source of energy. The Angola LNG project demonstrates the increasingly close commercial ties between the two countries. Angola LNG originated from a joint-feasibility study conducted by Sonangol and Chevron (the second largest oil company in the United States after ExxonMobil) in 1999.

Chevron now holds the largest stake in Angola LNG at 36.4%, followed by Sonangol at 22.8% (British Petroleum, France’s Total and Italy’s ENI each hold 13.6% stakes). North American energy companies have largely missed out on Sub-Saharan Africa’s other natural gas giant, Nigeria LNG, potentially offering some explanation to why Chevron has been at the forefront of the industry in Angola.

Construction began in November 2008 with the U.S. engineering company, Bechtel Corporation, alongside U.S. based multinational energy corporation, ConocoPhillips overseeing the project. Having just completed a similar LNG facility in Equatorial Guinea, Bechtel and ConocoPhillips were perfectly suited to take responsibility of the plant. ConocoPhillips, with over four decades of industry experience, is considered a global leader in LNG innovation, while Bechtel have engineered numerous other mega-structures including, famously, the Hoover Dam in 1930.

Once completed and operational, the primary customer of Angola LNG is expected to be the Gulf LNG Terminal in Mississippi in the United States from where it will supply natural gas to consumers and industrial users throughout the southern states of America.

 

Local Dynamics
Despite being a hub for the Angolan oil industry for some time now, construction of the LNG plant has irreversibly changed Soyo. Once chosen to site the LNG plant, large-scale dredging began under the auspices of a joint venture between the Dutch construction company Boskalis International, and Belgian company Jan de Nul. 125 hectares of land on Kwanda Island was raised while a further 65 hectares of new land was created in the Congo River estuary.

A workforce from all four corners of the globe flies in and out of the small provincial airport each day. The national policy of Angolanization ensures that the project is contributing towards a growing highly-trained Angolan workforce involved in all disciplines – from senior management to design engineering to accountancy and human resources. Foreign companies are dependent on Angolan workers to manage operations in the country. 90 per cent of Chevron’s professional, technical and managerial staff are Angolan.

The rising influx of a large international workforce has resulted in a rapid growth of service industries including hotels and restaurants. Once a conglomeration of numerous small villages, Soyo is now a bustling town. Rapid urbanisation is not without consequences. Yet thus far, local inhabitants appear to have weathered the changes well.

Prior to the commencement of construction a comprehensive Environment, Social and Health Impact Assessment was conducted in the region. Education outreach programmes were conducted to raise awareness in the region of the effects that this mega-structure is likely to have. An information centre in the Soyo town is open to all people living in the region and provides advice on the local impact of the LNG plant and the development projects it supports.

Conservation and biodiversity projects have been launched to mitigate the impact on the local environment. Commonly sited in company literature is the sea turtle awareness campaign, which has resulted in 17km of beach being regularly patrolled by researchers, and turtle nests protected along 6km of the Atlantic coast.

 

Stark Contrasts

The Angola LNG project symbolizes the rapid development of Angola today. Less than twenty years ago Soyo was the scene of fierce fighting when UNITA rebels launched an all-out offensive and managed to capture many of the oil facilities. Today it hosts one of the largest construction projects on the continent.

While oil production in Angola expands so will the volumes of the oil-associated natural gas. This gas can either be used productively or it can be vented or flared. Angola LNG represents the desire of the Angolan government and international oil companies to make use of this hitherto considered by-product of oil and turn it into a major source of local employment, domestic energy consumption and export revenue.

For more information see the Angola LNG Website: www.AngolaLNG.com