Africa’s natural gas prospects look rosier for this year and beyond, as global consumption rises and the continent’s gas production grew by 8% between 2017 and 2018 largely attributed to Egypt, according to the “Africa Oil and Gas Outlook” report released by Africa Oil Week and Mena Associates.
Global consumption rose by 195 billion cubic metres (bcm) or 5.3% between 2017 and 2018, largely driven by the US, China, Russia and Iran. Global production grew by 190 bcm or 5.2%. Much of Africa’s gas consumption is being driven by North Africa, and particularly rapidly increasing Egyptian domestic demand.
Significant attention is being put on gas-to-power initiatives to both supply rapidly escalating demand for electricity, while also reducing gas flaring from stranded gas fields in Nigeria and elsewhere.
Rapid increases in population — particularly in gas producing countries such as Egypt, Algeria, Nigeria and Ghana — is one of the key drivers for this growth.
In terms of opportunities, sub-Saharan Africa’s two largest producers of oil – Nigeria and Angola – are expected to launch bidding rounds this year. Equatorial Guinea, Uganda, Gabon and Congo-Brazzaville have ongoing rounds, while Ghana launched its first licencing round at the 2018 edition of Africa Oil Week, and Madagascar is hoped to offer a number of blocks this year.
The report also said a number of large projects were moving ahead quickly, with the Senegal and Mauritania’s bilateral agreement and BP’s final investment decision (FID) for the cross-border Greater Tortue Ahmeyim development described as very encouraging for West Africa.
Nigeria has already seen the launch of the Total-operated US$3.3 billion Egina field floating production storage and offloading (FPSO) facility which will add 200 000 barrels per day (b/d) to the country’s total production.
A final investment decision is also expected on Shell’s offshore Bonga South West field which could produce another 180 000 b/d. Mozambique is also moving forward with Eni’s Coral South floating liquefied natural gas (FLNG) project, and the recent final investment decision on the Anadarko-led Mozambique LNG (liquid-to-natural gas) project is very encouraging.
However, despite these positive developments, there are still major challenges. The ongoing US-China trade war is not onli impacting negatively on the global economy, but it is also seen to be affecting foreign direct investment (FDI) into Africa, the report said.
“Geopolitical tensions between the two countries is slowing China’s domestic manufacturing sector which, in turn, is having a knock on effect on its oil and gas imports from Africa. Rising US unconventional oil and gas production is also putting pressure on demand for African oil,” the report explained.
Corruption and transparency is a second significant challenge, as it is seen to be complicating and lengthening investment and project development, and increasing poverty on the continent.
Several billions of Africa’s oil money are believed to have disappeared from the state coffers of various Africa’s oil and gas producers, including Nigeria, Angola and Ghana. The continent is thought to be losing more than 148 billion dollars every year due to corruption, according to the African Development Bank (AfDB).
Despite being the continent’s largest oil producer, Nigeria has nearly 100 million people still living under the poverty line out of a population of 200 million, according to the latest Global World Poverty Report.
Africa Oil Week will feature two days dedicated to national showcases and bidding rounds at their upcoming event with 16 countries – including Côte d’Ivoire, Equatorial Guinea and Mozambique presenting their national hydrocarbon sector to Africa Oil Week’s audience.