Africa’s pipeline coatings market is poised for a major take off after significant discoveries of oil and gas reserves and increased expenditure in water infrastructure expansion particularly in Southern Africa.
Africa’s liquefied natural gas sector is headed for a major boom if the already unveiled upstream and downstream development plans by Equatorial Guinea, Mozambique, Tanzania, Angola, Ghana and Nigeria are anything to go by.
Discoveries and downstream developments in these countries have been huge with the U.S. Energy Information Administration saying Equatorial Guinea, Mozambique and Nigeria were the only natural gas exporters in sub-Saharan Africa in 2011 at 1.22 trillion cubic feet with Angola becoming the latest entrant in 2013.
The discoveries in Mozambique, Tanzania and additional capacities in countries such as Nigeria, Angola and Equatorial Guinea are set to catalyze infrastructure growth in the remote offshore areas where trillions of cubic feet have been discovered. Several kilometers of pipe and volumes of coatings are set to be used to connect the gas fields to export terminals and refineries.
Mozambique’s offshore LNG discoveries are estimated at 110 trillion cubic feet (tcf) with U.S.-based Anadarko Petroleum and Italy’s integrated energy company Eni projecting more findings in their acreage of Rovuma Area 1 and Rovuma Area 4 respectively.
Mozambique’s offshore acreage has become lucrative with foreign gas explorers scrambling for a share as was seen last year during a tight competition between Shell and Thailand national oil company PTT Exploration and Production for an 8.5 percent Cove Energy interest in Anadarko’s Rovuma Area 1. The country is also developing four liquefaction trains with five million metric tons per annum each.
These developments appear to be in line with previous predictions by global downstream petrochemical specialist AMI Consulting, which forecast a growth in both production and use of gas reserves in the region, hence creating demand for pipelines and related segments such as coatings.
“Pipelines are playing an important role in this change: they are needed not just to gather, transport and distribute the gas, but also to connect LNG import and export terminals, which are mushrooming around the globe,” AMI said in its third edition Steel Pipe Coating market report published last year. “Steel pipe coating is likely to be among the top beneficiaries: as new pipelines tend to operate under harsher conditions in terms of temperature, pressure and external environment, coating is becoming more demanding, more sophisticated and hence more valuable.”
Mozambique has launched a feasibility study for the construction of a $5 billion 2,600- kilometer natural gas pipeline to connect natural gas fields in the country to neighboring South Africa, a major gas-to-power market in the region.
Tanzania is also constructing a 542-kilometer $1.2 billion gas pipeline linking the gas-rich region of Mtwara in the southern part of the country to the capital, Dar es Salaam. The project is financed by China’s Export/Import bank. Tanzania has an estimated 40 tcf of natural gas, which analysts will require several kilometers of pipeline to transport to refining plants and export terminals.
Similar projects are being planned or undertaken in Angola and Nigeria where international oil companies are keen on shipping out their crude or natural gas finds to the global market.
Kenya has also partnered with Uganda to construct a 352-kilometer oil pipeline linking the city of Eldoret in western Kenya to Uganda’s capital Kampala. The pipeline will interconnect the current 14-inch diameter pipeline from Nairobi to Eldoret. At least 14 local and international companies have submitted bids for the project, which is slated for completion in 2016.
Previously, analysts estimated at least 10,755 kilometers of pipelines were planned in Africa with an estimated 1,503 kilometers already under different phases of construction. This expansion of pipeline network in the region has also created opportunity for some investors to launch construction of piping and coating manufacturing plants to meet the rising demand.
Toronto-based ShawCor’s Socotherm pipe coating division has become the latest entrant in the region’s pipeline coatings market after it was awarded a $40 million contract by Tenaris to provide pipeline coatings for the Republic of Congo’s Moho Nord Oil Pipeline project. The company said Moho Nord project, in water depths of 650 meters to 1,150 meters off the coast of Republic Congo, “will be executed primarily at the Socotherm pipe coating facility in Pozzallo, Italy with additional work to be completed at Socotherm’s facilities in Adria, Italy and Escobar, Argentina.”
ShowCor, who said 10 percent of its land pipeline coating revenue has been generated from pipeline replacement, explained that the Congo contract, set to commence this year, involves coating approximately 165 kilometrers of 6” to 16” pipe with 3-layer polypropylene anticorrosion coating, 42 kilometers of 8” to 10” pipe with 5-layer syntactic polypropylene coating and 19 kilometers of 16” pipe with 3-layer polypropylene anticorrosion coating together with concrete weight coating.
Earlier, the company said: “The new, large gas discoveries have positioned East Africa to become a major global LNG exporter.”
ShawCor Ltd. was formerly involved in the supply of concrete weight coating for 598 kilometer of pipe used in the construction of West African Gas Pipeline (WAGP) in Ghana and the expansion of coating facilities in Nigeria.
The $35 million Nigeria contract was executed by ShawCor Ltd.’s subsidiary, Bredero Shaw Pipecoaters Ltd. The line pipe was transported to a Bredero Shaw project facility at Tema in Ghana where the concrete weight coating was applied and anodes installed. The pipeline transports gas from Nigeria to Benin, Togo and Ghana the demand for gas to power electricity generation is growing.
The West African Gas Pipeline Company Limited (WAPCo), a venture consisting mainly of ChevronTexaco, Nigerian National Petroleum Corporation (NNPC), Shell and Takoradi Power Company Limited owns the largest stake in the company.
ShawCor’s subsidiary Bredero Shaw Nigeria Ltd. said in January it is optimistic about West Africa’s pipeline coatings market and is moving ahead with a coating facility in Nigeria’s Onne Oil and Gas Free Zone.
“Due to the increasing demand for anti-corrosion and concrete weight coatings for offshore, swamp and land pipeline projects, the company is moving forward with the installation of a new Bredero Shaw coating facility, which is part of Bredero Shaw’s overall plan to serve the growing West African market and expand capacity for anti-corrosion and concrete weight coatings for pipeline projects in Nigeria and other nearby markets,” the company said.
The demand for potable water in Africa is yet another driver in the anticipated growth in pipeline projects in the continent. South Africa, for example, is projected to provide one of the largest markets for pipeline coatings to protect the many kilometers of pipe to be laid as part of the country’s estimated at R60 billion investment in water infrastructure over the next three years.
The country, jointly with the tiny neighbor of Lesotho, is constructing one of the largest water transfer projects in the world, the Lesotho Highlands Water Project (LHWP).
Africa Pipe Industries (API), famous for welded pipes used in the water and oil and gas industries, said, “The growing water infrastructure needs in South Africa, coupled with the intention of the various national and provincial water authorities to address these needs, prompted the decision to re-enter the market with a brand-new factory.”
API CEO John-Gordon Jansen van Nieuwenhuizen said the company is excited with the current market prospects in South Africa’s steel-pipe manufacturing industry, which lacks capacity to meet the “an estimated national five-year, R5-billion ($466 million) pipeline of work looming in the water sector.”
South Africa is also implementing the R1.7 billion ($158 million) Komati Water Augmentation Scheme, which has a pipeline construction component. Denmark-based Phoenix International A/S has been awarded the contract to supply its Bituguard coating materials for corrosion protection of the 71.5 kilometer Komati Pipeline, which will be coated at Hall Longmore (Pty) Limited. The pipeline has a diameter ranging between 32 inches and 64 inches.
If the ongoing discoveries of crude and natural gas, the new pipeline construction contracts being signed and the rolling out of water infrastructure developments is any thing to go, then the growth of Africa’s pipeline coating market, may have just started.