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African FLNG Might Disrupt Global Gas Trade

Off the coast of Mauritania and Senegal, Cameroon, Congo Brazzaville and Mozambique, four floating liquid natural gas (FLNG) liquefaction plants will be in operation by 2022, in readiness to process new supplies of African natural gas. Compared with onshore liquefaction facilities, FLNG liquefaction plants are cheaper and faster to construct, as they are typically based on converted oil tankers with the equipment needed to process and super-cool gas raised from subsea wells, ready for loading into LNG tankers.

FLNG or FPSO diagram

FLNG Advantages

The key advantages of most floating LNG liquefaction plants over onshore plants are cost, greater speed, and smaller scale. The typical FLNG is a refitted oil tanker costing as little as US$1.2bn compared to an onshore LNG plant, which costs at least $4 billion and takes 4-5 years to construct. Smaller in scale than onshore plants, FLNG can commercialize small-to-medium size gas reserves. Lower costs, greater speed, and ability to simply disengage for new waters, make FLNG an attractive option in Africa, where commercial risk linked to the political environment is moderate to high.

Africa’s onshore LNG export projects have struggled to secure the long-term, oil price linked off-take contracts with strong credit-worthy buyers who are key to attracting the necessary capital from investors and banks. African LNG output is predicted to double from 40 million tons a year today to 80 million tons by 2030 according to Bloomberg New Energy Finance. Consequently,  “Africa is the hot spot for floating LNG” as noted by Lucas Schmitt,  senior gas analyst at consultants Wood Mackenzie Ltd .

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