West Africa in search for solution to gas infrastructural constraints
Across the West African region, gas production has become a major focus for oil companies in response to strong investment in gas-to-power projects.
Nigeria as the largest gas producer in the region is expected to have an output of over 2.5tr cubic feet per year while Côte d’Ivoire and Equatorial Guinea as gas producers and also expected to make an impact.
There are however challenges of infrastructure for gas producers like Cameroon and Ghana that prevent them ramping up gas output significantly. They will require additional investment in gas processing and transporting infrastructure if they are to increase output significantly.
Industry watchers are concerned that funding gas projects remains a major challenge in West Africa, owing to the poor commercial terms for domestic gas suppliers. Despite huge demand for power and the presence of huge gas reserves offshore, governments have been hesitant to change electricity tariff regimes.
They observed that the pricing structure and the nature of contracts remain a significant obstacle to the development of natural gas in the region, saying that there is a need for a standardisation and harmonisation of the agreements.
Those who understand the industry are concerned that the inadequacy of the existing gas processing, transmission and distribution infrastructure to support the current demand, may slow that process of growth suggesting governments in West Africa region must as a matter of urgency streamline the adoption of a national gas infrastructure blueprint that seeks to address the need for rapid deployment of gas infrastructure across the region.
Africa’s LNG producers accounted for 9 percent of global LNG exports in 2016 and this is likely to rise as Cameroon’s floating LNG plant, which was due to start operations in H2 2017, is now expected to start up in 2018/19.
Nigeria is also looking to expand its NLNG plant with a seventh train, which would increase its capacity to 30mn tonnes/year.
Statistics show that Sub-Saharan Africa is estimated to hold over 500 tcf of natural gas reserves. Recent discoveries offshore Senegal and Mauritania could boost the region’s gas reserves further, once appraisals of the finds have been conducted.
Reports indicate that since late 2015 there have been moves to raise electricity tariffs in Ghana and Nigeria. These efforts were driven by the devaluation of these countries’ currencies, which drove up the cost of feedstock fuels and gas and gave greater urgency to the need to make tariffs more cost-reflective.
Analysts said that the development of gas infrastructure will help accelerate West Africa’s elusive and much desired industrial development and economic growth.
They are of the views that in the light of the socio -economic issues plaguing the region, and the need for West Africa to effectively challenge her competitors for investors in infrastructure and gas based industries; the gas policy focus should shift towards accelerated investment in the upstream and gas infrastructure.
To them, “the gas sector is most amenable to private sector capital if the right conditions are put in place”.
KELECHI EWUZIE