The right infrastructure for Angola’s gas

Angola

Manuel Barros, president of the executive council of Sonagás, talks to The Energy Year about the company’s goals for 2021, its initiatives around LPG and renewables, and its approach to international partnerships in the downstream sector. As Angola’s state-owned gas company, Sonagás engages in activities across the gas value chain.

What are Sonagás’ goals for 2021?
We will continue to increase our market share and make gas available to more Angolans. Our focus is on expanding the infrastructure for the natural gas business.
In the area of LPG, our target is to produce more than 400,000 tonnes in 2021. We currently have about 70% of the LPG market share, but as the market is being liberalised we are seeing the emergence of competitors. So, we are consolidating new distribution channels.
We are also focused on running our plants according to international standards of safety and efficiency. We are consolidating those processes and getting the company ready for the competition with others in the downstream sector. And beyond all of this, we are always looking into new opportunities in the natural gas sector.

How is the company’s business distributed?
Sonagás occupies different roles throughout the gas value chain, but we are mainly focused on the downstream part of the gas business. We have the responsibility of making LPG available throughout the country. We are running 14 LPG filling stations and that is our main activity in this area; plus we have 20 mobile containers.
In order to supply the south of Angola, we run our LPG supply vessels [marine carriers] down to the south, where we have a storage facility in Namibe. We fill gas cylinders there and make them available to the population.

What role do gas cylinders play in the coverage of gas demand?
We are very confident about the availability of gas but we need to build the right infrastructure – the distribution channels that the gas cylinders are employed for. We have a target to cover around 80% of Angola’s gas demand through 2025. The gas cylinders are one of the key elements that will allow us to achieve this target.
We just built a strategic gas cylinder factory with Kosan Crisplant, which is a branch of Makeen Energy. The aim was to make the gas cylinders available to the market by lowering their price, helping us to increase the usage of LPG in the country.

What role does natural gas play in diversifying Angola’s energy matrix?
We are also providing natural gas for electricity generation. Recent data shows that Prodel is getting enough production from the electricity side. The problem is in the transportation and distribution part of the value chain. We have two systems interconnected right now, North and Centre. But we don’t have those connections in the South, and that’s where the gas is also needed, and where it can play a major role.
We have identified several opportunities with the Ministry of Energy and Water to convert diesel-powered generators to gas. It is a reality that just by changing from diesel to gas, there are gains from the environmental and economic points of view. But we need to turn those gains into cash and how to do so is the question we have to answer.

What is the main challenge in transporting gas?
The main challenge is the infrastructure. We have gas from the Angola LNG project in the north but our needs are in the south too. But the gas market in the south is not big enough to justify a 1,000-kilometre pipeline. We have to connect the supply with the demand. We are looking now at several technologies to achieve this.
We are principally assessing virtual pipelines: a combination of ships, receiving terminals and some transportation which could be via pipeline or vehicles such as gas trucks to sites where we have the power plant or to any end user. We believe it is feasible and that it could be applied within a short span of time.

What is Sonagás’ involvement in the 750-MW Soyo combined-cycle thermal power plant?
We are providing gas to this plant, which started stable production in 2018. We have 75 mcf [2.12 mcm] per day in favour as opposed to a cheaper source of power from the hydroelectric dams that run at much lower costs.

Are you looking for international partners in the downstream gas sector?
Yes. In fact, we have several proposals right now from companies from different sectors and countries. We are evaluating those since we want to diversify our portfolio. We want to share not only the risks but also the benefits of these projects with other investors.
In general, we are looking for partnerships and trying to make a business case. We continue to consolidate our projects up in the north with the Ministry of Energy and Water. We are also looking for opportunities in the south of Angola, where we do not have the national grid covering the electricity needs.

What opportunities do you foresee in the petrochemicals sector?
We are reviewing several opportunities for building an ammonia fertiliser plant in the Soyo area. We will be getting some of the gas from the Angola LNG plant. We have signed a contract with Prodel [Public Electricity Production Enterprise] for feeding the Soyo combined-cycle power plant and we are in the process of looking for more gas to feed this new opportunity – a plant that is much needed in this country.
Overall, we see that in the coming years the government will also be concentrating on the petrochemicals sector.

How will the 2018 law regulating the monetisation of associated gas affect upstream gas production?
We are very pleased with this initiative. The development of the gas business in Angola is directly related to its regulatory environment. Creating this flexibility and ease in the business environment will attract more investments from upstream companies in producing gas. Sonagás will come in to make that gas into a real project to boost the economy, meaning Sonagás will follow these upstream gas projects and look for opportunities to maximise its use in the downstream sector. So, we are really looking forward to those opportunities that are being made available for the upstream companies to produce more gas.

Is Sonagás becoming more involved in renewable energy generation in 2021?
We are consolidating some of the studies around the potential for renewable energy in the country, discussing partnerships with some of the major IOCs. In addition, we are building our own capabilities for generating renewable energy. So, those are our ambitions for 2021.
We are concentrating on solar energy. However, I strongly believe that we also have opportunities and a large potential for wind energy. As Sonagás, we are going to carry out our own very detailed study on wind energy next year. Once we find an opportunity, of course, we will invite partners to join the project. We don’t want to be in this business alone. We believe in the partnership strategy to build a business.

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