Nigeria’s LNG misstep is rest of Africa’s gain as market share to shrink to 10% by 2029

With several Liquefied Natural Gas (LNG) projects in the country stuck over the past few years amid vast untapped gas reserves, Nigeria is losing its competitive advantage in Africa’s LNG market as other Africa countries are with relative low reserves looks set to overtake Nigeria.
According to data from a Norway based independent energy research and business intelligence institution Rystad Energy; in Africa’s market share, Nigeria’s LNG production will shrink to about 10 percent by 2029 from having a huge junk of about 50 percent in 2019, while another African country Mozambique will by 2029 dominate the market share with at least 55 percent from zero in 2019.
Although, data from the Norwegian based research institute showed Africa’s production capacity is almost expected to double over the next decade, however the data also revealed North Africa and the Middle East which include Djibouti, Egypt, Libya and Algeria are also expected to miss out in the market share from 50 percent in 2010 to less than 10 percent in 2019.
Ayodele Oni, energy partner at Bloomfield Law practice said the major problem facing the NLNG sector is its problematic fiscal regime and its unspecific laws which will always distract deep- pocket investors from coming into the country.

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Oni said competition is growing across Africa and other countries are stepping up activities in their gas sector unlike Nigeria which has enjoyed the benefit from the oil and gas sector for a long time and seems to be relaxed.
“Nigeria has more gas than oil so we should leverage on our gas resources and continue to put structures in place to encourage deep pockets investors to invest in Nigeria,” Oni told BusinessDay.
Leading consulting firm PricewaterhouseCoopers (PwC) in its Africa oil and gas report said poor infrastructure and an uncertain regulatory framework were the top two challenges identified by new emerging players and markets especially in Uganda, Ghana, Tanzania, Nigeria and Kenya.
“The Nigerian Government has been in the process of implementing the Petroleum Industry Bill (PIB) since 2006 and it has been estimated that uncertainty around it has cost the country $50 billion in capital projects,” PwC noted in its report.
PwC noted that governments around Africa are reviewing or developing their energy policies as many countries are investigating changes in the government take, taxation regulations and state participation.
According to Rystad Energy, Africa countries like Senegal, Mauritania and Egypt have been the hotspots in the past three to four years where there has been a considerable amount of exploration which has resulted in some high profile discoveries like the giant Zohr gas field, Nooros discovery onshore, Atoll discovery offshore in Egypt; and Ahmeyim, Teranga, Yakaar discoveries offshore in Mauritania and Senegal.
Rystad Energy said the exploration plans for the rest of 2018 and 2019 seem encouraging with many as 15 such high impact wells are planned in the coming 15 to 16 months.
“The locations for these wells vary from onshore Egypt, Morocco and Tanzania to deep-water Gambia, Namibia, South Africa, Ghana, Mauritania and even Angola.”
Rystad Energy noted that the participation of super-majors like Total and ExxonMobil, and Norwegian E&P Equinor and British Independent Tullow as well as Kosmos and FAR Limited who have already seen success in the Mauritania Senegalese waters, shows encouraging signs for near term future exploration activity in Africa in the remaining of 2018 alone as 10 of such high impact wells, including Total’s Tarif prospect onshore Egypt; Tullow’s Cormorant prospect offshore Namibia; FAR’s Samo prospect offshore Gambia and so on, are expected to be drilled.
While other countries are growing in leaps and bounds Nigeria which was once ranked the fourth largest LNG exporter in 2016, according to the World LNG Report has delayed in taking Final Investment Decisions (FID) on various LNG projects in the country.
Three LNG projects in Nigeria, namely, Olokola LNG, Brass LNG and the NLNG’s Train 7, have suffered setback as a result of the delay in taking final investment decision by the stakeholders.
The OK LNG project was stalled because all the International Oil Companies (BG, Shell and Chevron) withdrew from the project, with only the Nigerian National Petroleum Corporation (NNPC) left.
The Brass LNG project, which was designed to produce 10 million metric tonnes per annum, was to be built by the NNPC, Total, ConocoPhillips and ENI Group. But ConocoPhillips withdrew from the project in 2013.
According to PwC, Mozambique is expected to become the second-largest exporter of LNG by 2025, as the country steps up production from 10 million tons per annum (Mtpa) in 2017 to an envisaged 50Mtpa which will serve as access to the lucrative Asian LNG market and could act as a catalyst for meaningful economic development.
Mozambique already exports natural gas to South Africa through a terrestrial pipeline but future growth opportunities will be driven by off-shore LNG export projects. Royalties and taxes on such gas exports will shore up Mozambique’s fiscal and external balances amid an ongoing debt crisis. In addition to budget inflows, downstream gas sector development (which first and foremost will mean the construction of gas-fired power plants) will spur the economy through cheaper and reliable electricity and direct and indirect skilled job creation.
Furthermore, United States Trade and Development Agencies (USTAD) said Mozambique’s efforts to develop its natural gas resources have increased in recent years. With the expansion of off-shore natural gas exploration and production as United States companies could be involved throughout the value chain.
“We will likely see opportunities for U.S. companies related to the construction of export terminals, liquefaction facilities, gas storage and transmission, and in engineering, procurement, and construction (EPC) services and supply of combined cycle gas turbines for domestic power generation,” USTAD said.

DIPO OLADEHINDE