A coming region for LNG shipments could be sub-Saharan Africa as several countries belatedly think about developing terminals and other essential infrastructure after years – and sometimes decades – of neglect, mismanagement and war, suggests an important study.
As the research by the Oxford Institute of Energy entitled Opportunities for gas in sub-Saharan Africa released in early 2019 pointed out, “currently there are no LNG imports within the region although a number of countries are considering [doing so].” Among these are South Africa, Ghana, Ivory Coast and Benin while other countries with coastlines that are not currently consuming gas may follow suit.
Some countries have already made a start. Gas-rich Mozambique and Tanzania are expected to start exporting LNG from 2020, joining Cameroon, Angola and Equatorial Guinea. Angola, for instance, with proven reserves of more than 300Bn m3 is already exporting most of its LNG. Looking further ahead, the study suggests that at least five countries including South Africa could become significant importers of LNG by the mid-2020s.
And looking further out, several war-torn countries may become candidates for LNG imports in the future, notably coastal Eritrea following its peace deal with Ethiopia signed in 2018.
As gas begins makes inroads into power supply in sub-Saharan Africa, the study also sees further opportunities for offshore-based vessels such as FLNGs, notably in Congo, Senegal and Mauritania. In the case of Mozambique, added the study, a floating storage and regasification unit (FSRU) could prove a quicker and more cost-effective solution for transporting gas to the south of the country than a pipeline. And on the Senegal and Mauritania border, a newbuild FLNG is expected to take station by 2024 on the vast Tortue-Ahmeyim development with estimated resources of 420Bn m3.
The development of much of the region’s gas resources has suffered bureaucratic and other delays. Tanzania’s estimated 1.6Tn m3 of natural gas, for example, is not expected to come available much before 2030. And in Ghana, Norway’s Höegh LNG allowed an agreement to provide an FSRU to lapse after the authorities failed to come up with the necessary approvals. Similarly, Ghana’s supply deals with Gazprom and Rosneft stalled, the study pointed out, because the essential infrastructure was not built.
A shortage of capital is another problem. In those countries with poor credit records (no nation in sub-Saharan Africa is rated investment grade), LNG import facilities may require outside finance. “Investment in infrastructure in these countries, whether pipelines, LNG terminals or even upstream, is likely to require the assistance of aid agencies such as the World Bank to provide guarantees,” said the study. However alternative financing mechanisms for LNG imports such as letters of credit could come to the rescue.
Overall though, despite its problems the region could become an important market in the next few years. “While sub-Saharan Africa is faced with many issues and challenges in growing gas demand, there are a number of good opportunities,” the study concluded.
However, nobody is predicting that the region will replace Asia anytime soon as the biggest market for LNG.