Gas set to shine as African nations wake up to potential

Even the established oil producers are making the move to gas

An employee walks in front of a gas flare at the In Salah Gas (ISG) Krechba Project, run by Sonatrach, British Petroleum (BP), and StatoilHydro, in the Sahara desert near In Salah, Algeria, on Sunday, Dec. 14, 2008. From produced gas, the carbon capture plant, the largest and first of its kind, removes annually the carbon dioxide emissions equivalent of 200,000 automobiles running 30,000 kilometers. The CO2 is then reinjected into a reservoir instead of the atmosphere, with the intention of storing it perpetually. Photographer: Adam Berry/Bloomberg News
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The Cinderella of energy, natural gas, is at last taking to the stage across Africa as countries embrace it as a cheap source of energy.

By 2017 Africa had proven natural gas reserves of 503.3 trillion cubic feet, according to the International Energy Agency. Until recently however, it was oil that was the focus of energy developers.

Where gas was found in quantity such as West Africa, it was largely flared off as waste.

"Gas flaring has resulted, and continues to result, in the burning of huge amount of resources across Africa," NJ Ayuk, CEO of Centurion Law Group in Equatorial Guinea and author of Big Barrels: African Oil and Gas and the Quest for Prosperity, tells The National.

Worldwide demand for gas, which is rising and is projected to keep rising at about 1.6 per cent a year for the next five years, according to the latest IEA estimates, has awakened interest in the resource, Mr Ayuk says.

“Global oil demand remains uncertain, but the continued growth of gas demand, coupled with massive gas discoveries in Tanzania, Mozambique, Senegal and Mauritania, has really been the wake-up call for African hydrocarbon markets.”

Anadarko Petroleum is seeking to raise a record $14 billion to $15bn from banks and export credit agencies for its huge liquefied natural gas (LNG) project in Mozambique, sources close to the matter told Reuters in May.

The US oil major aims to build from scratch a 17,000-acre liquefaction complex in Mozambique’s remote north to chill gas pumped from the Golfinho/Atum fields in its Area 1 deepwater block offshore.

It will produce 12.88 million tonnes per annum of LNG in its initial phase, which can be expanded to 50 mtpa.

Other African states with substantial gas opportunities include Ivory Coast, Angola, Algeria, Egypt, Equatorial Guinea, Republic of Congo and Cameroon, according to the US Energy Information Administration.

Even the established oil producers are making the move to gas. Nigeria intends to pass Malaysia to become the world’s third-largest exporter of liquid natural gas as it seeks to increase cargo shipments around the world.

Vast opportunities

Nigeria’s gas reserves are thought to be the largest in Africa at 5.2 trillion cubic metres, according to BP. Nigeria, like most African energy producers, has traditionally focused on crude oil, which as a liquid is easier to extract and transport. However, oil is also vulnerable to theft, pipeline sabotage and causes headline-grabbing pollution scandals, especially in the conflict-ridden Niger Delta.

“The history of the LNG industry in Nigeria is chequered,” admits the CEO of Nigeria Liquid Natural Gas (NLNG), Tony Attah. NLNG is in the process of commissioning new gas projects to the value of $7 billion, which it hopes will make it one of the world’s largest energy players.

NLNG’s existing processes are already providing 10 per cent of the world’s liquid natural gas supplies. “I believe it is time to reset the narrative,” Mr Attah said. “It is time for gas revolution in Nigeria.”


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Meanwhile, construction of the first transborder gas pipeline in East Africa will soon get underway. Tanzania, which began gas extraction in 2004, has signed a deal with Uganda to supply its capital Kampala with a steady flow of gas.

The two countries have already agreed to develop a crude oil export pipeline to help transport land-locked Uganda's crude reserves from fields in the country's west to offshore markets.

South Africa, the continent’s largest industrial economy, also wants gas to grow from around 1 per cent of its energy mix to 16 per cent by 2030. In August the minister of energy Jeff Radebe released a new long-term vision to reduce coal consumption, increase renewables and use gas to fill in the gaps.

“This begs the welcome question where it will come from,” says Niall Kramer, CEO of the South African Oil and Gas Alliance, an organisation intent on developing downstream economic uses for gas.

South Africa has little by way of verified economic gas resources, although energy producers believe it may be sitting on vast reserves in the Karoo desert region. Companies such as Shell have been ready to test drill since at least 2010, but enabling legislation for exploration licences has been stalled for years as the government mulls environmental concerns, royalties and state shareholding in gas projects.

The US Energy and Information Administration estimated the Karoo Basin’s “technically recoverable shale gas resource” at 390 trillion cubic feet, making it the eighth-largest in the world and second-largest in Africa, behind Algeria. Exploration licences are now expected to be issued later this year.

BJTAPH Oil and gas tankers in Lobito port. Lobito, Benguela, Angola. Africa. Zute Lightfoot / Alamy Stock Photo

Even if the Karoo’s shale deposits are much smaller, as some later studies suggest, gas itself is relatively cheap to acquire and transport.

“ As LNG it may come from anywhere; Mozambique - by ship or pipeline, or Qatar, the US or Australia.” South Africa also has a burgeoning renewable energy industry, including wind, solar and thermal solar projects, Mr Kramer said.

“With the increased focus on renewables and gas we see the role of gas complementing renewables becoming significantly clearer. On the surface we seem to be on the right track towards a least cost and a least regret route.”

Clearly, African states are beginning to see the value of developing gas as a path to electrification, says gas lawyer Mr Ayuk.

“Not only can gas help end Africa’s electricity deficit, it is and should be the primary solution in addressing the continent’s energy access.”