Nigeria, Africa’s biggest exporter of Liquefied Natural Gas (LNG), is expected to export 16.2 million tonnes of LNG this year, according to a report by the Independent Commodity Intelligence Services (ICIS).
This development will attract foreign exchange earnings for the country.
According to ICIS, Nigeria’s LNG exports dropped significantly in 2022, falling 15 percent compared with 2021, following periods of maintenance, weather-related outages and sabotage to pipes supplying Bonny.
“We forecast Nigerian exports will rise slightly to 16.2 million tonnes, but still below the 17.1 million tonnes exported in 2021,” the report said.
The report also said that the prospect of Africa re-starting LNG imports in 2022 failed to materialise due to the soaring cost of LNG following the start of the war in Ukraine.
“Ghana, Senegal and Mozambique were all expected to receive their first cargoes to support power generation, but we no longer consider this viable in any noteworthy volume in the short-term,” the report said.
According to ICIS, while fuel oil remains competitive relative to LNG, the floating power plants of Senegal and Mozambique are unlikely to switch to gas-fired generation. This is despite the start of LNG production in Mozambique and the expected output from Senegal.
“In Ghana, the Floating Storage and Regasification Unit (FSRU) that was briefly stationed at the Tema terminal – the Vasant – is now set to act as the new floating terminal for Turkey. The originally designated FSRU, the Torman II, remains in the Singapore shipyards,” it said.
According to the report, Italian company ENI’s 3.4 mtpa Coral South floating LNG project started producing offshore Mozambique in late 2022, exporting its first cargo in November and a further two in December.
For Egypt, the report said the government hopes to operate the country’s gas liquefaction plants at total capacity throughout 2023. This follows from steep increases in flows from Israel. In addition, ICIS expects Egypt’s exports to rise by 0.5 million tonnes in 2023.
“After a weak second half of the year in 2022, Angola’s 5.4 mtpa Soyo plant finished the year strongly, and ICIS forecasts a slight recovery of around 0.4 million tonnes to around 3.8 million tonnes in 2023,” according to the report.
“Algeria experienced a weak 2022 in terms of LNG exports, seeing a drop of 1.5 million tonnes year-on-year. In 2023, however, ICIS expects a recovery of around 0.8 million to 11 million tonnes.”
The report added that over 2023, we expect 410 million tonnes to be exported worldwide, which, once delivered, will be equivalent to 404 million tonnes, up three percent year-on-year.
“ICIS expects 2023 LNG demand to reach 395 million tonnes, a dip of -1 percent relative to 2022,” the report said.
According to ICIS, Europe is expected to remain a major source of LNG demand this year, especially as new import terminals come online and the scramble to end Russian reliance continues.
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“EU gas demand savings over the winter have been significant, but the summer-time storage injection campaign will still be challenging in the face of little-to-no Russian pipe gas,” the report said.
“Additional new supply to the global market is likely to be very limited, but the resumption of the US Freeport plant, following a fire in 2022, will no doubt ease some supply concerns in the Atlantic.”
The report also said that with spot levels still likely to be unfavourable for a rebound in demand in many price-sensitive markets – from many Indian sectors, industrial demand in the EU and China – we see the market as balanced.
ICIS expects pockets of tightness at the start and end of the year, with some slack over the summer, with a net 9 million tonnes length in play over 2023, once supply is measured at the point of a destination rather than at the point of production.
“The role of price-response cannot be understated in keeping the market balanced in the year ahead. It is market signals which provided the signal for a wave of LNG to arrive in Europe and for gas savings to occur worldwide in 2022,” the report said.
“The same will be true of 2023, assuming newly introduced pricing rules in Europe do not blunt the one effective tool the continent has at its disposal to manage supply and demand.”