Eni to Invest US$3B in Republic of Congo; Focus on Tar Sands and Palm Biodiesel
20 May 2008
Italy-based oil and gas major Eni will invest US$3 billion in the Republic of Congo over the next four years, generating an expected equity production of 150 million barrels of oil equivalent from tar sands and biodiesel production.
Eni reached an agreement with the government for the exploration and exploitation of non-conventional oil in tar sands in Tchikatanga and Tchikatanga-Makola, two areas covering a total of 1,790 square km. According to preliminary studies undertaken on a 100 square km area, recoverable reserves are estimated at between 2.5 billion barrels unrisked and 500 million barrels risked.
Eni will carry out an exploration phase that will include geological and geophysical studies, prospecting and laboratory tests aimed at defining the technical feasibility of the industrial development of the areas.
The exploration phase, which will last three years and may be renewed for an additional four years, involves geological and geophysical studies, high resolution 2D seismic studies and the drilling of three wells.
A second, commercial phase envisages sending the extracted tar sands to the Commercial Demonstration Plant of the Eni refinery in Taranto (CDP EST) to carry out a test lasting 3-4 months relating to the extraction of the tar from the sands, its storage, dilution, transformation into a commercial product and its shipment. The Republic of Congo would be the first country in Africa where large amount of tar sands have been discovered and valorized.
The third phase involves marketing on an industrial scale, assessing the installation of an Eni Slurry Technology (EST) plant at the refinery in Pointe Noire, fueled by gas from the M’Boundi field. (Earlier post.)
The project, which Eni calls “of great strategic value,” will allow the company to develop and consolidate specific skills in tar sands, taking advantage of proprietary Eni Slurry Technology (EST) for the treatment and improvement of the quality of heavy oils, opening up a new field of research in Africa.
The project will also benefit from synergies resulting from the close proximity of the M’Boundi oilfield. Gas associated with oil production in this area can also be used to supply the EST plant and enrich the heavy oil, while achieving the goal of reducing atmospheric emissions under the Kyoto protocol.
A Memorandum of Understanding on a Food Plus Biodiesel project outlines a framework for collaboration in the use of vegetable oils from palm tree cultivation on approximately 70,000 unfarmed hectares in the Niari region, in the North West of the Country. This land is expected to produce approximately 340 thousand tons/year of crude palm oil, enough to cover domestic demand for food uses and produce 250,000 tons/year of biodiesel.
Crude vegetable oil that will not be used for food will be destined to biodiesel production using Eni’s proprietary Ultra-Bio-Diesel technology. After a first pilot phase, the feasibility of building a bio-refinery in the Congo will be considered.
As part of a larger umbrella cooperation agreement with the Republic of Congo, Eni will build a 300 MW open cycle power station, which can be expanded to a 450 MW combined cycle station by installing steam turbines. The power station is due to be completed by the end of 2009 and will supply important industrial customers who currently have to generate their own electricity because of frequent interruptions in the electricity supply.
The power plant, which will cover more than 80% of the national electrical requirement, will be owned by a new joint stock company of which the shareholders are Eni Congo 8 (20%) and the Republic of Congo (80%). The new plant will be fueled by natural gas associated with the M’Boundi oilfields and at a later date by the offshore discoveries of Marine Permit XII, assigned to Eni in April 2007.
“70,000 unfarmed hectares in the Niari region,” > translation > another huge area of rain forest destruction and wild habitat destruction for a bit of oil.
I'm all in favor of another third world country becoming energy positive, but worry about the associated environmental costs.
Posted by: John Taylor | 20 May 2008 at 01:56 PM
Planetary destruction in progress
Posted by: Lulu | 20 May 2008 at 02:24 PM
About the same destruction is being done next door (but in a much larger scale) in Alberta, Canada to export oil south of the border. The latest request for added exploitation areas was temporarily refused because it would destroy many more thousand hectares of forest land.
There is another method, (in situ) to extract oil with less land damage but since it is more costly and would reduce profits, it is not used.
Big Oil should not be given the choice, i.e. do it cleanly or don't do it.
Posted by: Harvey D | 20 May 2008 at 02:52 PM
Wow, this is great news.
GCC forgot to mention the most important bit: the project results in 10,000 formal jobs in a desperately poor country.
That's exaclty what people need there in order to protect the environment: formal jobs, the income of which can be invested in more sustainable agriculture and energy.
Higher incomes and social development are also strictly correlated with lower fertility rates. Another must for a sustainable future.
Posted by: Jonas | 20 May 2008 at 03:05 PM
Sorry Jonas, but it's a Faustian bargain. Two of the most environmentally destructive practices on the planet, palm oil plantations and tar sands exploitation, in one country in exchange for an unlikely sustainable future.
How much unsustainable development do we need to get to your vision of a sustainable future? I'm sorry but it just doesn't work that way. Indonesia is a much more developed country but rampant corruption and climate change are ensuring that their once vast rainforests will soon vanish.Where is the sustainability in that?
There are much more sustainble ways to encourage development, such as tourism.By the way, I'm not in the business of bashing developing countries. We in the West already made the same mistakes, and some much worse.
Posted by: critta | 20 May 2008 at 04:02 PM
"the project results in 10,000 formal jobs in a desperately poor country."
2.5 billion barrels of oil is completely insignificant.
10,000 near-term jobs in a country of 14.5 million workers (potential and otherwise) isn't a blip on the economic radar.
What the DRC needs is political stability, and an economic plan that doesn't include wasteful and pointlessly destructive 20th century extractive industries. Especially ones that include producing substances where demand is expected to drop in the coming decades.
Eni has sold the DRC a piece of the past when they should be looking towards the future.
Posted by: | 20 May 2008 at 04:19 PM
Short term gain but long term devastation, the oil sands in Canada is one of the most energy hungy processes know, not to metion the acres of poisoned tailings water. The Congo will get sc**wed just like the poor are in western Africa with their oil extraction. The problem is the oil companies have no real interest in long term solutions or the environment so 'strong' government is needed to keep them in check, just what Africa lacks and Canada lacks for that matter.
Posted by: Mark M | 20 May 2008 at 04:21 PM
no worries, it will get nationalized anyways..
In any case, starving people dont care about the enviroment, just where their next meal is coming from.
Posted by: Herm | 20 May 2008 at 05:39 PM
Can all you wise and wonderful armchair critics please go away and get to work and find a solution to our energy/fuel problem and when you have then come back and tell us all how we can fix it without destroying the planet. It's too bad we can't harness critisism, there seems to be enough of that around to power the world just by itself.
Posted by: Merv Nash | 20 May 2008 at 10:00 PM
Right behind you Merv...
Posted by: | 20 May 2008 at 10:37 PM
Merv: some stories just deserve criticism. You'll find lots of enthusiasm around here for the numerous solutions that do work.
Posted by: Neil | 20 May 2008 at 11:35 PM
We at GCC do have a lot of criticism for this project, and it is well deserved. Destroying rain forest, and polluting the water supply with oil mining and oil farming are a very very bad path to energy production. Other ideas should be looked at.
For US$3 billion one could install a huge number of wind machines, and have very little adverse ecological impact, and at the same time produce a near nation wide electrical grid in the Republic of Congo. This would produce readily available power in all currently developed parts of the country while leaving the undeveloped rain forest pristine. The average price for large, modern wind farms is around 1000 USD per kilowatt electrical power installed. A typical Danish 600 kW turbine gives about 1.5 million kilowatt hours of energy per year. With a small amount of battery storage at each unit, the power supplied is quite consistent.
The down side to a wind project? It doesn't produce any diesel oil for running SUVs around Italy.
Posted by: John Taylor | 21 May 2008 at 02:48 AM
Merv Nash:
You must be kidding. There are many well known ways to transport oneself and goods around without Oil or Coal.
The world is just about to back track 100+ years and rediscover clean electric vehicles and electric trains.
Dirty coal fired power plants are (also) not needed to produce the extra electricity required. Combined Hydro, Wind, Solar, Waves, Geothermal and Nuclear can produce all the electrical energy required (and much more).
Cost was the main road block, but Oil at $150 to $200 a barrel will take care of that within another year or two.
Note: We export huge amount of clean electricity to our neighbours including Eastern USA. The average selling price went down from 8.5 cents/KWh in 2007 to 8.0 cents/KWh in 2008 (- 6%) delivered to NY State while oil went up over 60%. Unbelievable but true. Electrified vehicles may correct this unbalance somewhat but electricity will remain much cheaper.
Posted by: Harvey D | 21 May 2008 at 09:01 AM
JT,
Wind energy should be developed to the maximum extent that is economically feasible, beginning in geographies where the potential is greatest. Unfortunately, the wind doesn't blow much in tropical jungles. Maybe solar would be a better investment.
And speaking of investments, stable government and the rule of law are the most important things a country needs to attract investment. Congo has neither. Oil is apparently the only commodity that is profitable enough to justify such a big risk. I wish it wasn't so.
Posted by: JamesEE | 21 May 2008 at 09:02 AM
JamesEE:
The Congo River and its many affluents have huge undeveloped Hydro potential. The same $$ billions invested in Hydro plants and power distribution grids would create more jobs, much less GHG and benefit many more people with essential electrical energy for many decades to come.
Wind and Solar power may not be suited (or urgent) where you have very large undeveloped hydro potential.
Posted by: Harvey D | 21 May 2008 at 09:25 AM
Given the massive investments in pots and pans that tar sands development requires, I'm amazed that anyone would invest that much in a country that's about as stable as a table with two legs.
Posted by: Neil | 21 May 2008 at 03:25 PM
John Taylor, where did you read that the Niari region is densely forested?
Or has it become fashionable nowadays to just assume that oil palm trees in Africa imply deforestation? They're even growing in Kenya's mountains for Christ's sake.
So please stop the propaganda. Niari is a highly degraded forest zone. Palm trees there would sequester a lot of carbon.
Posted by: Jonas | 21 May 2008 at 03:47 PM
I see there is some confusion.
The Republic of Congo and the Democratic Republic of Congo are two different countries.
So the anonymous person who wrote this:
================
10,000 near-term jobs in a country of 14.5 million workers (potential and otherwise) isn't a blip on the economic radar.
What the DRC needs is political stability, and an economic plan that doesn't include wasteful and pointlessly destructive 20th century extractive industries. Especially ones that include producing substances where demand is expected to drop in the coming decades.
Eni has sold the DRC a piece of the past when they should be looking towards the future."
===============
We can only say that he should look at a map, before writing such things, which are of course totally wrong because based on mixing up two hugely different countries.
There are 4 million people in Congo-Brazzaville, which we are talking about here. 2 million of those are of working age. 20% of those have a formal job, the rest works as susbsistence farmers and in the informal economy.
ENI's 10,000 formal jobs thus offer 1 in 200 Congolese a real job with wages and according to rules that have to be followed.
This is huge for a country like Congo with its tiny population.
That would be like offering 1 million new jobs in the U.S. with a single project!
Posted by: Jonas | 21 May 2008 at 04:38 PM
The only problem is that, to my best knowledge, the Niari valley is not in the nothern part of the Congo, but in the southern part ; and that, unfortunately, that area is not suitable for thte cultivation of the oil palm. So, the targeted production will not be reached.
Posted by: amanengone | 22 May 2008 at 03:13 AM
The only problem is that, to my best knowledge, the Niari valley is not in the nothern part of the Congo, but in the southern part ; and that, unfortunately, that area is not suitable for thte cultivation of the oil palm. So, the targeted production will not be reached.
Posted by: amanengone | 22 May 2008 at 03:17 AM
The only problem is that, to my best knowledge, the Niari valley is not in the nothern part of the Congo, but in the southern part ; and that, unfortunately, that area is not suitable for thte cultivation of the oil palm. So, the targeted production will not be reached.
Posted by: amanengone | 22 May 2008 at 03:17 AM
The only problem is that, to my best knowledge, the Niari valley is not in the nothern part of the Congo, but in the southern part ; and that, unfortunately, that area is not suitable for thte cultivation of the oil palm. So, the targeted production will not be reached.
Posted by: amanengone | 22 May 2008 at 03:17 AM
The only problem is that, to my best knowledge, the Niari valley is not in the nothern part of the Congo, but in the southern part ; and that, unfortunately, that area is not suitable for thte cultivation of the oil palm. So, the targeted production will not be reached.
Posted by: amanengone | 22 May 2008 at 03:17 AM
The only problem is that, to my best knowledge, the Niari valley is not in the nothern part of the Congo, but in the southern part ; and that, unfortunately, that area is not suitable for thte cultivation of the oil palm. So, the targeted production will not be reached.
Posted by: amanengone | 22 May 2008 at 03:17 AM
Amanegone, do you really think a company like Eni would invest billions into such a project without knowing where palms can grow? That would be pretty absurd! :-)
Oil palms grow all over the tropical belt. I'm sure they chose the Niari region because it is relatively close to export infrastructures and close to Brazzaville; the best areas to grow the palm are far up North, but that region is inaccessible.
Posted by: Jonas | 22 May 2008 at 07:49 AM