The global liquefied natural gas (LNG) market is expected to witness exponential growth in the coming decades, with a forecasted demand of 700 million tonnes per annum (mta) by 2040, a 90% increase from 2021. As Europe diversifies away from Russian gas and the demand for LNG surges, Africa stands poised to play a significant role in filling the supply-demand gap. Countries like Algeria, Cameroon, Egypt, Equatorial Guinea, Nigeria, and potentially Tanzania possess untapped potential as LNG exporters. With strategic investments in LNG export projects, Africa can contribute to meeting global energy needs while benefiting from the economic opportunities presented by this booming industry.
Presently, Africa has several LNG-exporting nations catering to the demands of Europe and Asia. However, as global demand continues to escalate, more LNG production capacity will be required by the mid-2020s. According to Shell’s LNG Outlook 2022, there is a projected supply-demand gap that could reach up to 164 mta by 2030 if additional liquefaction facilities are not constructed and operationalized in a timely manner. To avoid price spikes and ensure a reliable and flexible gas supply, both Asia and Europe need to invest in expanding LNG infrastructure.
Opportunities in Africa
Africa, with its favorable geographical location and substantial natural gas reserves, holds tremendous potential to contribute significantly to global LNG supply. Currently, Eni’s Coral-Sul FLNG project in Mozambique is expected to start production by the end of 2022, adding 3.4 mta of LNG to the market. Nigeria is also expanding its LNG production capacity from 22 mta to 30 mta through its Train 7 project, set to be operational by 2024. TotalEnergies is restarting construction at its Mozambique LNG terminal, with commercial operations projected to commence no earlier than 2026. These developments will contribute to bridging the supply-demand gap in the medium term.
Fast LNG Technology and Floating LNG Vessels
To expedite LNG production and enable cost-effective deployment, innovative technologies such as NFE’s Fast LNG liquefaction technology and floating LNG vessels are gaining prominence. NFE’s Fast LNG facility, utilizing modular, midsize liquefaction technology, will be deployed off the coast of the Republic of the Congo by Q3 2023, producing 1.4 mta of LNG. The use of jack-up rigs or similar floating infrastructure allows for lower capital expenditure and quicker implementation compared to traditional liquefaction vessels. This technology can unlock the potential of smaller gas fields and facilitate faster project development.
Tanzania’s Emerging Role
Tanzania, after facing delays in licensing and investment, is emerging as a promising player in the LNG market. With a more favorable administration, the country aims to sign a host government agreement with major oil and gas developers, including Shell, Equinor, ExxonMobil, Pavilion Energy, and Ophir, by the end of May 2022. This agreement will pave the way for a USD 30 billion onshore LNG plant, leveraging significant gas resources in the region. Tanzania’s potential entry into LNG exports could further strengthen Africa’s position in bridging the global supply-demand gap.
Africa’s role in bridging the global LNG supply-demand gap is gaining prominence as the demand for clean and reliable energy continues to surge. With Europe diversifying its gas sources and Shell’s projection of a supply-demand gap emerging in the mid-2020s, Africa’s untapped LNG potential presents a significant opportunity. Countries such as Algeria, Cameroon, Egypt, Equatorial Guinea, Nigeria, and potentially Tanzania are well-positioned to contribute to global LNG supply through investments in infrastructure and technological advancements.
By leveraging existing and upcoming projects, such as Eni’s Coral-Sul FLNG, Nigeria’s Train 7 expansion, and the restarting of TotalEnergies’ Mozambique LNG terminal, Africa can meet the growing demand for LNG in the medium term. Furthermore, innovative technologies like NFE’s Fast LNG liquefaction and floating LNG vessels offer faster deployment and cost-effective solutions for smaller gas fields.
Africa’s proximity to key markets and its abundant natural gas reserves provide a competitive advantage in the global LNG market. As Africa harnesses its potential as a major LNG exporter, it not only contributes to bridging the supply-demand gap but also unlocks economic opportunities, job creation, and energy security for the continent. Strategic partnerships and continued investment will be vital to ensuring Africa’s successful integration into the global LNG trade and sustainable energy future.
