Deepening investment option in gas across West Africa

The International Energy Association, (IEA), a Paris-based energy think-tank said that both supply and demand average growth rates for West African gas will exceed world average growth of 1.5 percent/yr by 2021.

The continent’s gas production and supply is expected to grow by 2.2 percent/yr on average during that period, But the medium-term outlook for Nigeria is weak, due to low prices, tough financing conditions and lack of investor interest. African supply is expected to reach 224bn m3 in 2021.

African gas demand growth is forecast to rise by 3.4 percent on average in 2021, albeit from a low base of 124bn m3 in 2015 to 151bn m3 in 2021, driven by cheap supply. This is a similar growth rate to the past six years, says the IEA. However, it remains a fraction of world demand: 3,555bn m3 in 2015 and forecast to reach 3,896bn m3 in 2021.

Nigerian gas production is expected to decline slightly by 2021, the IEA forecasts, so tackling the flaring of 60 percent of associated gas production representing one-third of marketed production becomes even more essential.

The report which notes that Ghana has a 7.5bn m3/yr capacity FSRU under development by West Africa Gas Ltd (a Nigerian joint venture of state NNPC and private Sahara Energy) and ship owner Golar LNG omits to mention two less advanced projects in Ghana that have yet to charter such FSRUs. Nor do plans being drawn up for floating terminals in would-be African LNG markets like Cote d’Ivoire.

Côte d’Ivoire’s national oil and natural gas company, Petroci, projects the industry sector will demand 850 million standard cubic feet per day (MMSCFD) of natural gas by 2023, more than 17 times higher than the current demand. This will dramatically shift the energy consumption mix within the country.

Report indicates that Côte d’Ivoire is estimated to have about 28.3 billion cubic meters of natural gas. The country produced 1.305 billion cubic meters. Though this leaves a substantial portion of natural gas yet to be exploited, new investments in exploration and drilling are necessary to uncover the commercial viability of deposits and prevent the decline of production.

There are indications that Côte d’Ivoire is depending on the discovery of additional natural gas deposits.

Kosmos BP Senegal Ltd estimates gas reserves on the Tortue Field at more than 15 trillion cu ft and further exploration could push that figure higher. Up to 50 trillion cu ft has already been suggested. The most likely commercial outlet for the gas would be a liquefied natural gas (LNG) plant that would allow the gas to be exported around the world.

There are currently only three LNG exporters in Sub-Saharan Africa: Nigeria, Angola and Equatorial Guinea, although Mozambique and Tanzania are likely to join them in the next few years.

Even a small plant would require billions of dollars in investment, representing the biggest single investment ever made in either Senegal or Mauritania

In Nigeria, the IEA says gas prices remain too low to attract investments in processing plants and to finance the needed domestic distribution network. Relative to its population, “Nigerian gas consumption is very low and progress in building new power capacity remains incredibly slow” with efforts “hampered by gas shortages, pipeline vandalism” plus funding and pricing issues.

KELECHI EWUZIE