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Africa’s gas markets interconnected and in a squeeze

Published by , Editorial Assistant
World Pipelines,

The global gas markets are interconnected. As the recently released report from the African Energy Chamber (AEC), ‘The State of African Energy: 2023 Outlook’, notes, just how closely they’re linked becomes more apparent – and more important – during times of strife, such as the war in Ukraine.

Before invading Ukraine, Russia expected to increase its gas production by 800 billion m3 by 2030, both to expand its presence in the Chinese market and to maintain its European market share. But just as Russia didn’t consider the possibility of a protracted conflict with Ukraine, it seems they also didn’t predict the response across Europe: many customers expressed their outrage by cutting their imports of Russian natural gas.

The significant drop in export volumes to Europe is taking a substantial bite out of Russian revenues, which in turn means that some projects – like developing huge gas condensate resources in east Siberia and the Yamal Peninsula – will be delayed by at least three to four years. The AEC’s latest estimates see Russia’s average production loss at around 140 billion m3/yr between 2022 and 2030.

Changing market partners

Europe’s attempt to wean itself from Russian gas has put it in a precarious situation. The region still needs huge volumes of LNG imports to fulfil their substantial energy needs. The chamber’s report anticipates Europe’s LNG demand to increase by 20 - 40 million tpy through 2030. Europe, wisely, has been considering multiple strategies to replace the gas it had been receiving from Russia, including more imports from Africa.

The AEC expect to see Algeria, Egypt, and Nigeria leading African gas and LNG flows to Europe. This seems like a natural progression. After all, as Africa’s largest energy producers they already supply some natural gas to Europe and have enough capacity to increase production within the next few years.

While the AEC’s report expects to see Africa’s overall natural gas production dip through 2025, LNG exports are expected to pick up in short term in response to Europe’s need. Algeria, for one, is already supplying fuel directly to Spain and Italy through two pipelines across the floor of the Mediterranean Sea. And with overall gas liquefaction capacity of about 75.3 million tpy, this activity could help solve Europe’s energy crunch in the medium term.

As discussed back in August, a few other African countries are pursuing some exciting long-term natural gas developments that seem fit to help Europe free itself from its dependence on Russian gas:

  • Tanzania and Mozambique: LNG plants capable of sending large volumes of fuel to European markets are expected near the end of the decade.
  • Republic of Congo: A medium-scale modular project may begin production a few years earlier than planned.
  • Mauritania and Namibia: Several completely new grassroots greenfield projects are under discussion.
  • Angola: A group of international majors plans to bring new fields online to facilitate LNG production.
  • Fortuna LNG in Equatorial Guinea.
  • GTA in Senegal and Mauritania.

Read the article online at: https://www.worldpipelines.com/special-reports/29112022/africas-gas-markets-interconnected-and-in-a-squeeze/

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