Africa “must have natural gas to complement its renewable energy,” African Development Bank president Akinwumi Adesina said on the sidelines of a UN conference earlier this year. That message should resonate strongly in a continent which the International Gas Union reckons boasts natural gas reserves of at least 13bn tonnes, about 8.8% of the world’s total.
With a host of major export-oriented projects underway, Africa has emerged as a global gas hotspot – and, potentially, a viable source of global energy security, especially with Russian gas subject to supply disruption in the past year. Gas comes freighted with advantages for African resource holders. While upstream oil projects remain subject to tougher scrutiny, gas is comparatively less vulnerable to environmental, social and governance (ESG) related concerns. That matters. As Adesina pointed out, even if Africa were to triple its production of natural gas from current levels, its contribution to global emissions would only rise by 0.67%.
There are some exciting new gas markets developing across the continent; but the biggest gas markets remain Algeria and Nigeria, which combined account for at least 55% of the continent’s gas reserves.
Algeria in particular is playing an important role in helping to ensure Europe’s supply security, ramping up exports to its main southern European customers over the past year.
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But there are some important new kids on the block which attest to a much more advanced gas market developing in Africa. The likes of Mozambique, Tanzania, Mauritania and Senegal are just a few of the rapidly growing gas provinces, all with liquefied natural gas (LNG) supplies in the offing.
LNG is the biggest game in town for new export schemes. Based on currently proposed projects, African gas producers have a proposed project pipeline totalling more than 55m tonnes a year (t/y).
Africa’s gas production has been rising annually. The International Gas Union (IGU) estimates this to have grown by a yearly average of 2.5% between 2011 and 2021, above the world average of 2.2%, reaching some 206m tonnes.
This will ensure that Africa emerges as a much more important global supply source. The Gas Exporting Countries Forum (GECF), a grouping of the world’s largest gas producing countries, expects Africa’s global gas market share to rise from 6% in 2021 to over 11% by 2050. That growth will in turn help cement the continent’s status as an anchor of global energy security.
The recent spurt in offshore “floating LNG” (FLNG) production suggests African gas will be hitting markets well before that 2050 deadline. According to consultancy Westwood Global Energy, Africa will account for 56% (10.2m t/y) of additional FLNG capacity due onstream over the 2023-27 period. Four FLNG units destined for the region are currently under construction or reactivation. The first of these is the Golar Gimi FLNG unit allocated for BP’s Greater Tortue Ahmeyim (GTA) project off the shore of Mauritania, due to start production in Q4 of 2023.
Strong growth in North Africa
Analysts see Algeria as being primed to shape much of the continent’s gas growth in the coming years. Algeria’s state-owned Sonatrach is backing a $40bn five-year plan, extending to 2027, of which three-quarters will be allocated to exploration and production activities that have a particular focus on gas projects.
Algeria has seen several gas fields come on stream, while production at the largest existing fields, such as Hassi R’Mel, has been hiked. Over the next two years, new fields in Algeria’s southwest and southeast are expected to be commissioned to meet additional domestic demand and for potential gas exports to Europe, according to the Oxford Institute of Energy Studies. It sees both Algeria and Libya making available 7m to 11m tonnes of incremental annual volumes for exports through the TransMed and Greenstream cross-border gas pipelines to Italy in the next three to five years.
In Libya, the National Oil Corporation and Italian energy company Eni struck an $8bn agreement early in 2023 that will see Eni invest in two offshore gas fields. Egypt, which increased its overall gas exports from 7m tonnes in 2021 to 8m tonnes in 2022, is also sending more gas to Europe.
Developments south of the Sahara
But while North Africa will be focused on keeping European customers well supplied, much of the activity in Africa will be focused on supplying customers elsewhere in the world, and on meeting domestic energy requirements.
Southern Africa is one emerging gas hub still in its infancy. In early 2023, France’s TotalEnergies revealed considerable reserves discovered in Block 11B/12B offshore of South Africa, where it will invest $3bn in developing those reserves. A first phase will see it tap up to 42m tonnes of gas from the Luiperd field, with at least another 20m tonnes in a second phase. The first gas is scheduled to flow in 2026.
In West Africa, Gabon is another entrant to the LNG market. There, independent oil company Perenco will bring on stream a 700,000 t/y floating LNG unit at the Cap Lopez Oil Terminal. In Equatorial Guinea, meanwhile, Marathon Oil is backing the 3.7m t/y Punta Europa LNG plant on Bioko Island.
Further up the coast, Mauritania and Senegal are playing host to ambitious projects sponsored by supermajor BP. The GTA phase 1 scheme will produce 2.3m t/y from Q4 of 2023, once a floating production, storage and offloading vessel (FPSO) arrives this summer. BP and the London-listed Kosmos Energy are now finalising plans for a second phase of GTA, which will see up to 3m t/y added.
In the Republic of Congo, Eni’s Tango FLNG unit is due to start up in December 2023 at the Marine XII block offshore, with a second FLNG unit expected to be installed by 2025.
Bigger LNG increments are due from East Africa, notably Mozambique and Tanzania. TotalEnergies’ Mozambique LNG project will commence exports by 2027, with other LNG schemes backed by international majors following soon after – notably the Rovuma LNG project involving ExxonMobil, where production may reach as high as 18m t/y when it starts up. MLNG is looking at production of more than 13m t/y.
In neighbouring Tanzania, where gas resources of at least 990m tonnes are being developed, the $30bn Lindi LNG project, backed by TotalEnergies and Norway’s Equinor, will develop gas from deep-water resources through a 10m t/y plant.
Catalysing domestic industries
All this project activity underscores an active and much more geographically diverse gas slate in Africa. And while that helps meet global supply needs – whether in Asia or Europe – it will also help to catalyse domestic industries. The International Energy Agency forecast that Africa’s undeveloped gas resources could provide an additional 66m tonnes of gas annually by 2030 for the fertiliser, steel, cement, and water desalination industries.
Meanwhile, the IGU has urged Nigeria and other gas-rich African countries to increase domestic gas to close energy access gaps, arguing they need to adopt gas locally to promote industrialisation, create jobs and expand supply chains with the production of fertilisers and petrochemicals, and develop energy-intensive industries such as cement, steel and desalination.
Then there is the need to address the continent’s electricity gap. As the AFDB’s Adesina has noted, more gas is needed to balance out the electricity supply given the intermittent nature of renewables. Gas and renewables can work in tandem.
“Africa has the highest level of energy poverty in the world,” Adesina said. “My interest is how Africa uses natural gas as part of its energy mix to provide electricity for 600m people today that don’t have access to electricity.”
Given that about 900m Africans are also in need of clean cooking, gas is poised to play a vital role in curbing energy poverty in Africa, just as it helps to provide new supply sources to customers situated much further afield.
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