The Alen project, the first phase of Equatorial Guinea’s mega-project named Gas Mega Hub, was launched last Friday, February 26. The objective of this global project is to transform Equatorial Guinea into an African gas mega-hub. This will be done through the development of several offshore gas centers and the monetization of nearby gas reserves.
Alen Project: 1st phase of the Gas Mega Hub project
The Alen project is the first phase of the Gas Mega Hub project, launched in May 2018 by the Ministry of Mines and Hydrocarbons of Equatorial Guinea. This project aims to gather gas from offshore producers and deliver it to the onshore industry. In the long term, the objective is to develop several offshore gas hubs as well as the monetization of gas reserves near and around the country.
By pooling gas from producers, Equatorial Guinea aims to create a gas mega-hub in Africa. This would create new efficiencies and guarantee a steady production of liquefied natural gas (LNG). Also, this project tends to reduce Equatorial Guinea’s dependence on upstream producers, and instead asserts a leadership position.
Monetizing 16 billion m3 of LNG
Under the Alen project, approximately 16 billion square meters of LNG are expected to be monetized over six years. This monetization takes place through the 68 km pipeline that connects Alen to the Punta Europa operations. The Alen field is located about 30 kilometers off the coast of Bioko, in the Gulf of Guinea.
This project represents an opportunity for Equatorial Guinea, but also for the entire sub-region.
476 million USD of FDI
According to Gabriel Mbaga Obiang Lima, Minister of Mines and Hydrocarbons, who initiated the Gas Mega Hub project, it is a “crucial investment for the economy of Guinea. Indeed, the Alen project is an attractive project, which does not fail to attract international investors. It represents $476 million in foreign direct investment (FDI).
With this Gas Mega Hub project, Equatorial Guinea is becoming the regional leader in gas monetization. The country is home to two gas processing hubs: the Alba field, operated by Marathon Petroleum, and the Alen field, operated by Chevron. This project has opened up the possibility of connecting to previously untapped gas areas.
“Creating jobs during difficult economic times”
These FDIs will benefit both local and international companies operating on the project. These investments will “create jobs during a difficult economic period,” according to the minister. Indeed, although the health crisis has been handled rather well in Equatorial Guinea, the economy has still suffered some recession.
The creation of jobs, which the Minister describes as “jobs of the future”, will have a beneficial impact on the country’s entire economy. Government revenues collected by the state will increase. They can be reinvested in public services.
A Guinean project beneficial to the entire sub-region
Nevertheless, the benefits of this agreement go beyond Equatorial Guinea. Indeed, Equatorial Guinea is currently in talks with Cameroon to facilitate the establishment of cross-border links. According to the Minister, this project will “generate revenue for the governments of the region”.
This project contributes to the development of cross-border relations for gas projects. It opens the door to the creation of new platforms to serve the entire region. In this sense, Equatorial Guinea is negotiating with Cameroon for the monetization of its resources. Indeed, the transboundary Yoyo-Yolanda field could be the second phase of the project.
But also with Nigeria
A bilateral agreement on the possible transport of gas was also signed between Equatorial Guinea and Nigeria. It would consist of the transport of Nigerian gas to Bioko Island. These discussions, combined with those with Cameroon, could lead to new investments in new projects.
In sum, the economic benefits for Equatorial Guinea are considerable. These new projects also demonstrate the country’s ambitions to become the leader in gas monetization in the region.