• Monday, May 20, 2024
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South Africa positions for big gas investment inflows

South Africa positions for big gas investment inflows

Nigeria may have the largest proven natural gas reserves in Africa but South Africa seems to be the epicentre of gas investment inflows on the continent this year.
Total’s second significant gas condensate discovery announced last week in South Africa is a bright spot in a year of deep uncertainty and struggles in the African energy sector.
With partners Qatar Petroleum, CNR International and Africa Energy Corp, Total was able to start its multi-well exploration programme on Block 11B/12B only two months behind schedule, delivering what remains until now the year’s only discovery across sub-Saharan Africa.

The Luiperd-1X well was drilled to a total depth of 3,400 meters and encountered 73 meters of net gas condensate pay within the Paddavissie Fairway, which already includes 2019 Brulpadda discovery. This second find confirms the tremendous gas potential in South Africa and is expected to be followed by the drilling of a third, a potential fourth, exploration wells on the same block.
Nevertheless, with over 200 Trillion Cubic Feet (TCF) of proven natural gas reserves, Nigeria sits on Africa’s largest gas reserves but the country’s capacity to develop, gather and process natural gas remains comparatively low. The Nigeria Liquefied Natural Gas (NLNG) company has 22 million tonnes per annum capacity. Train 7 would increase it to 30 million tonnes when it comes on stream.

Read Also: Nigeria steps up effort to modernise oil and develop gas

Australia with 108TCF of gas reserves has 88 million tonnes capacity per annum. Malaysia has 97TCF of proven gas reserves with 29 – 30 million tonnes capacity per annum. Mozambique has about 50 – 120TCF of proven gas reserves and plans a 50 million tonnes capacity per annum. So, 30 million tonnes per annum capacity for Nigeria is a non-starter.
Furthermore, South Africa’s discovery further positions Africa as a global and competitive gas frontier that continues to offer very attractive exploration and gas commercialisation opportunities.

The upcoming Africa Energy Outlook 2021 of the African Energy Chamber identifies several such high-impact wells for 2021 and 2022 that could yield similar discoveries in South Africa and Namibia. The outlook notably identifies the southwestern coast of Africa as being home to perhaps the most anticipated wildcats globally. The prospects, if successful, could open new basins for development and trigger big new investments towards the latter half of the 2020s.

Under its 2021 projections to be released in November, the Chamber notably sees gas production and consumption increasing on the continent. More specifically, new frontiers such as South Africa are expected to increasingly consume natural gas for industrial purposes and power generation. Such developments could be a pillar for economic recovery post-Covid-19, but would require the promotion of an enabling environment providing investors with sound and attractive policy and contractual frameworks.

“The African Energy Chamber has always seen Africa as a true frontier for exploration and promoted a much bigger use of gas across our economies to create jobs and support industrialisation. The gradual opening of a new domestic gas hub in South Africa is a very welcoming development that needs to be supported with efficient and transparent policies, and quick approvals of all necessary permits and licenses for gas to be commercialised and create value for South Africans,” said Nj Ayuk, executive chairman, African Energy Chamber.