Africa will emerge as a major player in natural gas markets as a producer, consumer and exporter with gas output poised to more than double in the next two decades, according to a new report recently released by International Energy Agency, reported by platts.
This is coming on the heel of a recent report by BusinessDay that Nigeria’s gas reserve has hit 200.79 trillion standard cubic feet (TSC), one year ahead of its planned target. It is about 5 trillion higher than what was obtained in 2018.
However, infrastructural challenges are preventing her from having the full benefits of this resource as many of the potential consumers cannot get it to utilise.
The country’s reserve has for many years hovered around 186 trillion standard cubic feet of gas with most of it coming from associated gas.
The increase is as a result of recent encouragement and policy directives rolled out by the government, which are aimed at increasing the nation’s gas reserve for the purpose of boosting the economy.
According to IEA report, the share of gas in the energy mix in Africa is projected to rise to around 25 percent by 2040 from 5 percent now, the IEA’s Africa Energy Outlook 2019 has revealed.
IEA says the future for gas in the continent could look different due to a series of major discoveries in recent years – Mozambique and Tanzania, Egypt, Senegal and Mauritania, and South Africa, which collectively accounted for over 40 percent of global gas discoveries between 2011 and 2018.
“These developments could fit well with Africa’s push for industrial growth and its need for reliable electricity supply,” the report notes, as Africa will observe a huge rise in its population and the rapid industrialization of its economies, which will surge in the coming decades.
Oil production will plateau in the next two decades, as gas becomes a bigger priority for the key oil and gas producers.
Oil output will reach 8.2 million b/d by 2040 compared with 8.4 million b/d in 2018 while gas production will surge to 317Bcm in 2040 from 240Bcm last year. Mozambique, Tanzania and Egypt will be the main drivers of gas production, according to the report.
But developing gas infrastructure will be a major challenge because of “typically small market sizes and concerns about affordability,” the report adds.
With an oversupply looming on the gas market, “much will depend on the price at which gas becomes available along with the development of distribution networks, the financing available for infrastructure and the strength of policy efforts to displace polluting fuels,” the IEA states.
It stated that Africa’s importance in the global oil and gas markets will increase to the “growing appetite for modern and efficient energy sources.”
Oil demand in the continent will grow by 3.1 million b/d between now and 2040 due to the doubling of the car fleet along with increased demand for LPG as cooking fuel.
The report said African oil demand in 2040 would average 7 million b/d from 3.9 million b/d last year. This is higher than the projected growth in China and second only to that of India, IEA adds.
On the gas side, Africa will become the third-largest source of global gas demand growth over the same period, outlining its importance, not as products but also has a consumer.
Gas demand would increase to 317Bcm in 2040 from 158Bcm in 2018.
The report, however, sounded a note of caution to Africa’s oil and gas producers that due to the changing development models in Africa, countries that are highly dependent on hydrocarbon revenues are coming under increasing pressure.
“Changing global energy dynamics mean that resource-holders cannot assume that their oil resources will translate into reliable future revenues,” it says.
African governments need to put policies in a place to accelerate production growth to serve domestic demand and develop strategies to maximize the value of their resources, the report says.
Stressing that importance of East Africa’s gas industry, IEA warned the governments of Mozambique and Tanzania to take adequate measures to ensure gas revenues lead to “tangible economic benefits.”
