West Africa looks to investment in gas for economic transformation

West Africa in particular and Africa in general according to a report from Ernst & Young has suffered more from the slump in new offshore project activity. However, there are signs of a pickup in offshore Exploration and Production, led by the emerging deepwater plays and growing interest among investors in floating LNG, both for export and gas imports.

The report indicates that natural gas supply in West Africa has grown in the recent decade and forecasts of supply growth are dramatically stronger with supply possibly doubling to about 15 tcf by 2035.

With Nigeria dominating in the area of natural gas reserve, activity has taken off in West Africa in the last decade, driven particularly by advances in offshore technology.

Industry close watchers observe the brakes on field development offshore in West Africa have been accompanied by a slowdown in asset transfers.

According to report in 2016, financing for Vitol’s participation in the OCTP development project offshore Ghana, Pertamina paid $5 billion to gain entry into Gabon, while late in the year, BP farmed into Kosmos Energy’s gas-rich licenses offshore Mauritania and Senegal.

Analysts opine that the industry seemed more preoccupied with pressing for reform of Nigeria petroleum tax regime, adding that not enough traction was agreed which was very disappointing.

Tayo Ariyo, an energy expert disclosed that insufficient gas-fired power plants in West Africa count as barrier to the region achieving its energy potential. Studies by the International Energy Agency show that Africa had enough gas as at 2013 production levels to last for 600 years.

“West Africa is a land of opportunity and gas can power energy access and economic growth. The discovered gas resources are plentiful, although currently underused in Sub-Saharan Africa.” Industry experts insist.

Analysts are of the opinion that harnessing this gas, combined with LNG initiatives, could prove transformative. They, however, cautioned that governments in the region should first focus on creating the right conditions for investment.

“Drawing up a clear energy master plan and developing fiscal and regulatory instability, security, transparency and a willingness among governments to co-invest in new energy infrastructure.” They said.

For those countries with less abundant gas resources, the focus should be on cost-effective, small-scale LNG import schemes or co-operating with their neighbours in developing regional LNG solutions, with the industry playing its part by being prepared to invest in the associated infrastructure and technology.

A clear example of forging partnership across West Africa countries is Total and Côte d’Ivoire’s state-owned Petroci partnering in a new venture that will involve importing LNG to a floating storage and regasification unit stationed off the coast of Abidjan, with the resultant gas supplied to two onshore power plants helping to satisfy the country’s growing domestic energy demand.

“This is an example of the type of innovative energy partnerships required. It will be the first regional LNG hub in West Africa. The cost to the government will be around $200 million” industry close watcher said.

According to analysts, “More partnerships need to be developed between governments and industry in order to ensure greater access to energy in the sub region. All parties need to look farther ahead to further this process out to 2040-2050.”

It is therefore not too surprising that investors are optimistic about the potential for growth in the gas sector.

KELECHI EWUZIE