• Wednesday, February 28, 2024
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Europe eyes African gas production, to hit 470bcm by 2030

Gas suppliers to Nigeria Govt: Stop dollar payment for petroleum product or we go on strike

Africa, the second largest continent in the world is set to hit 470 billion cubic meters (Bcm) by the late 2030s as Europe looks for new supplies to wean itself from Russian supply, a new report by Rystad Energy says.

This production is equivalent to about 75 percent of the expected amount of gas Russia would produce this year.

Siva Prasad, senior analyst at Rystad Energy said “The geopolitical situation in Europe is changing the landscape for risk globally. While LNG flows from the US are substantial, demand is much higher.”

Prasad said that Asian and European importers will need to consider African priorities as they develop projects, as many African producers are focusing on supplying energy locally as well as to intra-African markets along with catering to global markets.

Existing pipeline infrastructure from Northern Africa to Europe and historical LNG supply relationships make Africa a strong alternative for European markets, post the ban on Russian imports, he noted.

Rystad Energy stated that Nigeria is currently in the process of ramping up capacity at the Nigeria LNG project from 22 million to 30 million tonnes through its Train 7 scheme.

Read also: Nigerian crude oil prices fall as demand drops

In addition, Europe is now considering how gas-rich African nations can be helped to scale up production and exports in the years to come.

The European Union’s decision earlier this year that natural gas investments are equivalent to investments in “green” energy signals that African gas is considered sustainable.

Recall that in March, the European Union said it would reduce its dependence on Russian gas by two-thirds by the end of this year alone and is currently headed for a supply crunch that will reverberate around the globe.
According to the report, even with the number of gas projects being developed or currently delayed, Africa still has significant production potential.

The continent is forecast to increase its gas output from about 260 Bcm in 2022 to as much as 335 Bcm by the end of this decade.

However, if oil and gas operators decide to up the ante on their gas projects on the continent, near and mid-term natural gas production from Africa could surpass the above conservative forecasts.

Russia has historically been the dominant natural gas supplier to Europe, with an average of about 62 percent of overall gas imports to the continent over the past decade. Within this period, Africa has consistently supplied on average about 18 percent of European gas imports.

While noting this, projects in Africa are historically seen as having increased risk and can be delayed or go unsanctioned due to high development costs, challenges accessing financing, issues with fiscal regimes and other above-the-ground risks.

Recent signals from oil and gas majors such as British Oil and Gas (BP), Eni, Equinor, Shell, ExxonMobil and Equinor indicate a shift, however, in strategy towards further investment in Africa.