Norway’s BW Energy has struck a deal to buy a semi-submersible that is set to be the hub of a gas-to-power project designed to exploit 1.3 trillion cubic feet of gas in its Kudu field offshore Namibia.

The acquisition is part of a revamped development plan for the shallow water field that could eventually see Oslo-listed BW become involved in the power generation aspects of the project.

Kudu was discovered in 1974, since when many operators including Shell, Chevron and Tullow Oil have tried and failed to get a commercial scheme off the ground.

The base-case development plan has always been to send the gas to a newbuild power plant at Uubvlei near Oranjemund, but the sticking points have always been about the size of the onshore plant, as well as the challenges of forming commercial arrangements with power offtakers and securing finance.

Many African countries with their own natural gas resources are looking at how to cost-effectively commercialise these resources for domestic use.

News that BW has now acquired a semisub for Kudu offers much-needed impetus to a long-delayed project and could offer a way for a host of other gas-to-power projects in Africa to be brought online cheaply.

BW has signed an agreement to acquire the Leo semisub from Aquadrill for $14 million.

BW Energy chief executive Carl Arnet said the company decided “to take advantage of the availability this high-quality semisub at an attractive price.”

The rig will be converted into a floating production unit that will process gas and liquids from subsea wells at Kudu, string the liquids to be offloaded to shuttle tankers and sending about 125 million cubic feet per day of gas via a 170-kilometre pipeline to the power plant near Oranjemund.

Repurposing of the rig to an FPU will optimise the project timeline, according to the operator, and “significantly” reduce capital investments compared to previous development concepts.

Arnet said: “The revised development concept offers tangible financial, schedule and environmental benefits.”

“The re-use of existing facilities also supports a substantial reduction in field development related greenhouse gas emissions compared to a new-build,” he added.

Electrification opportunities

Arnet also believes the Kudu gas-to-power scheme will both reduce Namibia’s reliance on imported power and its carbon footprint while ensuring “power stability for the future.”

Kudu’s revised integrated development plan aims to supply competitive power to a growing African market with significant upside potential, argued BW.

Upstream attempted to contact BW and Namibia's state-owned Namcor about this new development scheme, but responses were not forthcoming at press time

The Oslo-listed player added that Kudu represents “an attractive opportunity” for the company “to engage in the electricity market and - potentially - fully or partially assume a position as an independent power producer through strategic partnering.”

“We consider the electrification of the African economies as a significant long-term growth opportunity for BW Energy and a potential avenue for us to develop a new strategic position closer to the end customers of energy,” said Arnet.

The timing of the final project sanctioning is subject to realising a project financing solution for the Kudu gas-to-power project.

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BW has a 56% stake in Kudu and is partnered by state oil company Namcor.

It is unclear if a deal signed previously to increase BW’s interest to 95% and reduce Namcor’s to 5% has been approved by the government in Windhoek.