By Innocent Obasi
Africa is in a good position to solidify its role as a global natural gas exporter by leveraging its abundant natural gas potential, long-standing gas trade relations with Europe, and geographical proximity to demand centres, according to analysts at Africa Energy Chamber (AEC).
The energy law group, in a report titled “The State of African Energy 2023”, said African gas output will be largely driven by the top three producers, namely, Nigeria, Algeria and Egypt over the period 2022 – 2023.
Highlighting possible challenges and expectations in the forecast period, the report noted that although large volumes are expected to come online, the continent’s overall natural gas output is expected to experience a marginal decline from 2022 through 2025.
It however pointed out that a large output is expected through the second half of the decade as Mozambique ramps up its LNG output and new gas start- ups across the continent come online, taking the output on an increasing trend.
The energy chamber therefore, recommended some ways to boost LNG flows, noting that an increased focus on LNG exports is apparent with an expected uptick in near-term LNG flows from the continent.
Moreso, Nigeria and Algeria are expected to drive the majority of these export volumes with additional flows coming from Egypt, Equatorial Guinea, Mozambique and waters off Senegal – Mauritania. The recommendations include:
Long-standing gas trade relations
Assessing the impact of the long-standing gas trade relations with European gas imports on Africa, the report said some African countries are in a good position to maintain their supplies to Europe.
“African nations that have historically been gas suppliers to Europe continue to be well-placed to continue their exports. In addition to this, large-scale discoveries offshore the likes of Mozambique, Tanzania, Senegal, Mauritania and South Africa could yield additional natural gas export hubs in the future,” said the report.
Existing infrastructure
Considering the existing infrastructure for exporting gas to Europe, the report said onshore investments are expected to be the single largest category followed by subsea tiebacks and offshore platforms.
The expected breakdown of the estimated investments towards 2025 derived from contingent projects, or in other words projects yet to make an investment decision per development concept, suggests that onshore investments constitute the single greatest category with investments reaching almost $11 billion across the period 2022 – 2025.
The AEC also noted that subsea tiebacks are likely to be as common as the onshore developments, with a cumulative 2022 – 2025 expected investment of about 10.65 billion, because of the commercial benefit it makes to piggyback smaller hydrocarbon accumulations on existing infrastructure, wherein using such a development solution results in a very competitive breakeven.
“The category also includes the offshore related part of LNG developments which further boosts this category, considering the mega-projects expected in both eastern and western sides of the continent. Investments related to offshore platforms take the third biggest spot as the investments in these categories are expected to be about US$8.4 billion,” it said.
It also noted that continued drilling of new wells and other improvements are needed to address production decline in the mature areas of African onshore production.
Geographical proximity to demand centres
On the aspect of Africa’s geographical proximity to demand centres, the report said Africa is in an excellent position to find a market for its gas given the current geopolitical environment and the continent’s abundance of gas resources.
According to the report, the current geopolitical climate coupled with Africa’s abundance of gas resources places Africa in a very good position to find a market for its gas. It also noted that certain operators had already begun looking at their African projects targeting European markets. It added that UK major BP and Italian major Eni are currently taking steps to export their North African and sub-Saharan African gas volumes to Europe.
Natural gas potential
Looking at the current market situation the report said Africa’s near-term natural gas projection was expected to see a marginal decline from an estimated 255 billion cubic metres output in 2022 to 235 billion cubic metres in 2025. However, it said the positive side was projected to commence during the second half of the decade when a number of the ongoing developing and pre-FEED (Front End Engineering Design) projects come online and result in a growing production trend boosting the output to 340Bcm by 2030.
It cited some natural gas developments across the continent that are expected to be completed in many countries such as Nigeria, Mozambique, Algeria, Egypt, Angola, Libya, Senegal, Mauritania, Equatorial Guinea, the Republic of the Congo and South Africa, aimed at reversing the trend in the continent’s natural gas output.
Beyond 2030, it said Africa has additional opportunities to extend the run, adding that the continent’s current recoverable natural gas reserves are projected to be approximately 80 billion barrels of oil equivalent (boe).
Therefore, it said there is no dearth of under-the-ground potential if Africa aims to play a larger role as a global natural gas producer and exporter in the future.
The report also noted that the continent needs massive greenfield investment to enhance development of upstream fields to supply gas and LNG/pipeline infrastructure to transport gas to domestic and international markets.
“An estimated greenfield – brownfield expenditure of about $375 billion over the next ten to twelve years is required to maintain the production from the existing producing fields, bring online the new fields that currently hold undeveloped potential and also construct the required midstream infrastructure to take the gas from the well head and process it for the destination markets,” the report said.
It further emphasised that additional expenditure can be expected if the exports happen via pipelines from the processing plants to the end destination.
Pipelines like the Trans Saharan Gas Pipeline (TSGP) and Nigeria – Morocco Gas Pipeline (NMGP) are currently being valued at $13 billion and $25 billion, respectively,” it noted.
