New projects are necessary and important, as is the enactment of new legislation to attract new investment.

Paulo GUEDES General Manager SOMG

Connect the blocks

January 3, 2018

Paulo Guedes, the general manager of Sociedade de Operações e Manutenção de Gasodutos (SOMG), talks to TOGY about the potential to integrate additional fields into the network, the company’s development plans and the upstream project outlook in the country.

SOMG monitors and oversees the transportation of natural gas and NGLs from the offshore structures in Angola’s fields to the Angola LNG (ALNG) plant in Soyo. In September 2017, ALNG announced agreements to supply Vitol, Glencore and RWE Supply & Trading. The facility is expected to produce 3.5 million tonnes for export in 2017, a steep increase from 770,000 tonnes in 2016.

• On increased gas supply: “Given the current market context, and especially the situation of the ALNG plant and gas supply issues, there is a need to review, and if possible, resize the current structure of the different companies which make up the group. In this sense, we have been looking for alternatives and options to optimise SOMG’s current structure as well as reducing existing costs.”

• On investment: “I hope new greenfield developments in Angola’s offshore oil blocks will be approved soon. As we know, without new projects being sanctioned, Angola’s oil production will soon reach a plateau and will then sharply decline. New projects are necessary and important, as is the enactment of new legislation to attract new investment. Clear, competitive, sovereign and unambiguous legislation would be very attractive.”

• On a legal framework for gas: “Gas fiscal terms are also important if Angola wants foreign investment in established gas reserves. When major development projects are being evaluated, they would be able to clearly consider our infrastructure for gas transport. SOMG should be taken into consideration in the development plan for new projects in the Lower Congo Basin and in Cabinda.”

• On network expansion: “ALNG will always consider and plan for future connections to sustain the operability of the plant. When a connection request is made, various pre-engineering work is completed such as hydraulic modelling and basis of design reviews to ensure the connection is viable and how it would affect the overall system. At this point an agreement can be made between the parties.”

 

Most TOGY interviews are published exclusively on our business intelligence platform TOGYiN, but you can find an abridged version of our interview with Paulo Guedes below.

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What plans are there to connect future blocks to the ALNG plant?
Block 31 is already connected and is even supplying gas to the Angola LNG plant under a pipeline utilisation agreement between BP Angola and Angola LNG. The Block 31 extension is being operated by BP since it has not been transferred to Sonangol.
ALNG will always consider and plan for future connections to sustain the operability of the plant. When a connection request is made, various pre-engineering work is completed such as hydraulic modelling and basis of design reviews to ensure the connection is viable and how it would affect the overall system. At this point an agreement can be made between the parties.

What goals for the future does SOMG have?
Today the mission of SOMG is to safely operate and maintain the pipeline network for Angola LNG. We also aim to continue developing as an Angolan pipeline company with the functional and technical competency necessary to meet the requirements of operating the pipeline network. We must meet our obligations under the maintenance agreement and the pipeline service contract in order to allow Sonagás to exercise the option of acquiring the total equity of SOMG as per the shareholders agreement.
SOMG is the operator responsible for the transportation of natural gas that comes from oil platforms, following its path until it enters the plant in Soyo, as well as managing Sonangol’s network, including offshore, nearshore and onshore pipelines. In the future, we can manage and operate not only the pipelines associated with the ALNG project, but also with others that may be required to operate in Angola.
At this time, and already having five years’ operating experience, SOMG continues to follow the same vision. We aim to have the functional and technical competency necessary to operate efficiently and maintain the pipeline network for Angola LNG. This reality has led to a significant effort by the organisation, not only to manage the operations on a day-to-day basis, but also to train national staff in different areas and business processes.

The ALNG plant was intended to supply the USA. Since the advent of shale gas and the need to turn to the spot market, how have operations been impacted?
Given the current market context, and especially the situation of the ALNG plant and gas supply issues, there is a need to review, and if possible, resize the current structure of the different companies which make up the group. In this sense, we have been looking for alternatives and options to optimise SOMG’s current structure as well as reducing existing costs.

How does Angola’s energy future, and potential lack of new projects, hinder the future development of the plant?
I hope new greenfield developments in Angola’s offshore oil blocks will be approved soon. As we know, without new projects being sanctioned, Angola’s oil production will soon reach a plateau and will then sharply decline. New projects are necessary and important, as is the enactment of new legislation to attract new investment. Clear, competitive, sovereign and unambiguous legislation would be very attractive.
Gas fiscal terms are also important if Angola wants foreign investment in established gas reserves. When major development projects are being evaluated, they would be able to clearly consider our infrastructure for gas transport. SOMG should be taken into consideration in the development plan for new projects in the Lower Congo Basin and in Cabinda.
Our ultimate goal is continue be efficient in the gas transportation system from the gas delivery point offshore up to the plant required to achieve the greatest possible value creation in the entire value chain of Angola LNG, ensuring that this pipeline network operates efficiently and that the system is developed to meet future needs. A characteristic feature of gas production is that major investments are needed in transport infrastructure. For us, an increase in transportation capacity is not an issue. Pipeline size is not the concern. It’s the pressure and flow rate.

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