NJ Ayuk
Although Africa’s natural gas production is expected to remain relatively flat over the next two years — increasing only slightly, from 268 billion cubic meters (bcm) today to 272 bcm in 2025 — there’s room for optimism about the continent’s potential, says the African Energy Chamber’s (AEC) “The State of African Energy Q1 2023 Report.”
For Africa to move forward and grow its natural gas output, a two-pronged approach is required: gas producers must continue to pump from existing fields while countries with new discoveries must get the undeveloped projects to the final investment decision (FID) stage as quickly as possible.
A worrying decline in production
Here’s the reason for the urgency: many of Africa’s gas production fields, particularly those in the north and west, are maturing or in decline, meaning they are quickly reaching the end of their productive lives.
For example, Nigeria, Angola and Equatorial Guinea account for 85% of the total gas output from the West Africa region, and volume is expected to remain the same until 2025. After that, levels will gradually decline: to 75% by 2030, 70% by 2035, and 60% by 2040. Although the fields are considered crucial for sustained production, the need for new projects to come online is critical to prevent a stall in output.
Fortunately, many major new gas finds have been announced in recent years, including finds in Senegal, Mauritania, Angola, Ghana, South Africa, Namibia and the Ivory Coast.
In Namibia alone, Shell’s Graff discovery holds approximately two billion barrels of oil equivalent (BOE). The new gas discoveries will, however, remain dormant potential unless African governments and gas producers come together quickly to forge realistic actionable plans to capitalise on the vast new resources. Otherwise, new hopes will simply fade into the past as yet more symbols of lost opportunity.
Some good news
The fields, along with newly discovered pre-final investment decision projects have the potential to supercharge output. As the AEC report notes, any new production growth expected over the next decade will come from pre-FID potential — such as emerging upstream economies like Mozambique, Tanzania, Mauritania, Senegal, South Africa, and Ethiopia — and mature producers like Nigeria, Libya and Algeria.
At a conservative forecast, production from the pre-FID projects is expected to double year-on-year from 2025 to 2029, with a continued gradual increase until around the late 2030s. Currently, just over 10% of Africa’s gas production comes from the pre-FID volumes and will increase to more than half of the total output. Therefore, the volumes play a critical role in the continent’s natural gas export aspirations, and in becoming a true player in international markets.
There is also great excitement building around the growth of Africa’s liquefied natural gas (LNG) export business. As “The State of African Energy Q1 2023 Report” asserts:
“Africa LNG export infrastructure also is shaping in a similar way to the natural gas forecast. Between the bigger producers like Algeria, Nigeria and Egypt, Algeria and Egypt are expected to maintain their existing LNG infrastructure capacity of about 29 million tonnes per annum (MMtpa) and 12.7 MMtpa, respectively. Nigeria’s plans involve increasing its LNG infrastructure capacity from the existing 22 MMtpa to 30 MMtpa via the Nigeria LNG (NLNG) Train 7 development and further marginally to just over 31 MMtpa via UTM Offshore’s FLNG project.”
Some further good news is Mozambique’s aspirations to increase its LNG export capacity from 3.4 MMtpa to 43.5 MMtpa by the end of the next decade — by far the largest increase the contentment is likely to see if all the obstacles can be overcome. Last, the BP-Kosmos-owned LNG project in the waters off Senegal and Mauritania is also expected to see an increase in the cumulative capacity output of both countries, from 2.5 MMtpa to 22.5 MMpta, by the end of the next decade.
African governments must do all they can to eliminate any restrictive red tape to ensure speedy turnarounds between hydrocarbon discoveries and FID.
Natural gas will benefit Africa, its people and the planet
Natural will be a key investment topic at the African Energy Week in Cape Town, South Africa from October 16 to 20. Despite living on a continent with an abundance of untapped natural gas resources, energy poverty is a daily reality for more than 600 million Africans. By harnessing our vast hydrocarbon resources, it’s possible to transform the quality of these people’s lives, industrialise their economies, build gas-to-power plants, create jobs and provide energy for clean cooking.
Fortunately, we are seeing a movement in the right direction. Around a dozen African countries are generating their own electricity with gas they either produce themselves or import.
In addition to having the potential to resolve energy poverty in Africa, natural gas is indispensable in many industries. Natural gas, for example, plays a key role in the production of fertilisers used internationally to grow the food that sustains the entire global population.
Since the Russia-Ukraine conflict started in early 2022, food and fertiliser prices shot up significantly. According to the UN, more than 60 countries are struggling to import food, many of which are African states. Not only can Africa itself benefit by developing its natural gas resources, but it also appears to have an obligation to do so to secure domestic and global food supplies.
Natural gas can also be used as a feedstock for liquid transport fuels, paraffin, base oils and naphtha, which can generate additional revenues to help build infrastructure, set up new businesses and bring down unemployment levels.
Gas feedstock can be used in residential and commercial heating, and used as fuel in manufacturing, food processing and chemical production.
Natural gas also can be used to produce hydrogen, which is needed in various industries including refineries, ammonia production and the emerging hydrogen economy.
Developing Africa’s natural gas resources will create a plethora of new fiscal opportunities. It will also empower the continent’s residents to make a good living, which in turn, will stimulate and diversify economies through sustained long-term growth.
It is clear to me that Africa’s natural gas production is on the verge of cosmic growth, but I must reiterate: Africa’s new natural gas discoveries will remain just that — discoveries — until leaders start taking a proactive approach to quickly developing and capitalising on them. At the moment, however, nations are not fully reaping the enormous benefits of their dormant resources.
I urge all African leaders to do the right thing for themselves and their people. Use the unique and lucrative opportunities natural gas offers, monetise your gas, grow your economies, and allow your people access to energy and a decent standard of living.
NJ Ayuk is the executive chairperson of the African Energy Chamber.
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