Gas: Africa’s big hope

Sub-Saharan Africa accounts for just 1% of global natural gas production. Output reached 1.69 trillion cubic feet in 2011, but this is still a fairly low figure in comparison with the region’s total reserves of 221 trillion cubic feet. This proportion could increase over the next few years as a result of the development of a new LNG plant in Mozambique, possibly another LNG facility in Tanzania and gas fired power plants in Nigeria.

There are only four gas exporters in the whole of sub-Saharan Africa: Nigeria and Equatorial Guinea were joined by Angola as LNG producers last year, while Mozambique exports gas to South Africa from its Temane and Pande fields in the south of the country.

Production on those two fields has been increased from 120m gigajoules a year to 180m gigajoules a year by South African firm Sasol. Most gas is piped to its Secunda synthetic fuel plant in South Africa but an increasing amount will be marketed domestically. Electricidade de Mocambique (EdM) hopes to develop a 1 GW gas-fired power plant to supply the entire Southern African Power Pool (SAPP) and reduce Mozambique’s own dependence on the Cahora Bassa hydro scheme. Plans for the development of an LNG plant in northern Mozambique are discussed later.

Nigeria has by far the biggest proven gas reserves in the region at 184 trillion cu ft. The Nigeria LNG (NLNG) plant on Bonny Island has six trains with production capacity of 22m tonnes a year. NLNG has long hoped to develop a seventh train with capacity of 8.5m tonnes a year but upstream operators cannot sign the required long-term gas supply agreements until the repeatedly delayed Petroleum Investment Bill (PIB) is passed. Among other things, the PIB will set out the terms of investment for gas suppliers and royalty structures for both oil and gas production.

Other LNG projects that have the backing of large oil companies would add another 40m tonnes a year to national production capacity.

Progress on the proposed 4,300 km Trans-Sahara Gas Pipeline (TSGP) has also been glacially slow. Nigeria continues to flare about 25% of total production, despite government attempts to implement a ban from 2008 onwards. Producers are currently forced by regulated prices to sell gas to domestic Nigerian customers at below production cost. Nigeria also exports a small amount of natural gas via the West African Gas Pipeline.

Nigeria was the fourth-biggest LNG producer in the world in 2012, just behind Australia and Malaysia but well behind Qatar. It accounted for about 8% of global LNG production but its market share will fall over the next few years as new production capacity is brought on stream around the world. Europe was previously the biggest market for Nigerian LNG but Asia took top spot in 2012 because of rocketing demand from Japan. Asia’s second-biggest economy is the world’s biggest national LNG market and its imports have risen sharply as a result of the crisis in its nuclear industry.

In Equatorial Guinea, EG LNG, which is led by Marathon of the US, produces 3.7m tonnes of LNG a year. A second 4.4m tonnes-a-year train is to be constructed but progress has been slow because of the lack of available reserves.

Gas is also supplied to the Atlantic Methanol Production Company (Ampco) methanol plant and other gas-consuming ventures are planned on the island of Bioko. Angola LNG operates a single 5.2m tonnes a year train at Soyo, and Sonangol and Eni have signed a preliminary agreement on the development of a second train.

Associated gas from the floating production storage and offloading (FPSO) vessel on Ghana’s Jubilee field will supply a new gas transmission grid, which is being developed by state-owned Ghana National Petroleum Corporation in the south of the country. Many of the more recent offshore hydrocarbon discoveries in Ghana contain at least partly gas and could provide more supplies for the grid, which will connect new gas-fired generating capacity.

According to the United States’ Energy Information Administration’s (EIA) International Energy Outlook, gas production in sub-Saharan Africa is forecast to increase by an average of 5% a year between 2010 and 2040, ahead of the global average.

Other potential exporters include Tanzania, with proposed LNG production, although the planned gas pipeline to Kenya now looks unlikely to be developed as a result of gas finds in Kenya itself.

Cameroon has proven gas reserves of 5 trillion cu ft, most of which have been ring-fenced for an LNG plant that is planned by a consortium led by GDF Suez. The country’s remaining reserves are being developed to supply the 216 MW Kribi power plant and industrial customers in Douala.