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By NJ Ayuk, Executive Chairman, African Energy Chamber (www.EnergyChamber.org) Reduced deliveries of Russian natural gas is a source of anxiety for the European Union, and rightly so, given that the bloc has been too dependent for too long weather.
for a long time at Gazprom, a Russian majority state-owned company that serves as a de facto political instrument for the Kremlin.
But this anxiety is also a source of potential for African gas producers, as it is driving European consumers to look elsewhere for fuel.
This search has drawn attention to a number of African gas projects that are likely to help Europe in the future, especially as the EU seeks to permanently move away from reliance on Russian gas.
Both Tanzania and Mozambique, for example, are planning large-scale offshore development plans that will support liquefied natural gas (LNG) plants capable of shipping large volumes of the fuel to European markets by the end of the decade.
The Republic of the Congo hopes to accelerate a medium-scale modular project that can start production a few years earlier.
Meanwhile, other greenfield initiatives are being discussed in Mauritania and Namibia, and several large international companies have come together to bring new fields online to facilitate LNG production in Angola.
All of these projecs are exciting and new.
That’s because they can’t.
They are not ready yet.
The African Gas Timeline These projects have great potential, but their potential has yet to be realized.
In countries like Tanzania and Mozambique, we know the gas is there because the International Oil Companies (IOCs) have seen, measured, analyzed and tested it; they just don’t have time yet to drill all the development wells and build all the infrastructure needed to extract it and convert it into LNG for export.
In the Republic of Congo, we know the gas is there, and the big Italian company Eni is already extracting it, just not on a scale that can immediately serve buyers in Europe or local power plants.
These obstacles can be overcome.
Holes can be filled, wells drilled, pipelines connected, gas liquefaction plants built, tankers chartered.
But it will take time, years, not weeks or months, to organize the necessary financing, sign the necessary contracts, gather the necessary materials, etc.
However, this does not mean that Africa cannot play a role in helping the EU wean itself off its dependence on Russian gas in the short term.
Absolutely not!
The importance of existing capacity But much of that assistance, at least in the short term, will come from existing capacity, that is, from places in Africa that are already producing gas for export to Europe.
Above all, it will come from these three countries: Algeria, Egypt and Nigeria, which will account for 80% of African gas production between 2022 and 2025, according to the African Energy Chamber’s State of African Energy Q2 2022 report, prepared in consultation with Rystad Energy.
(Algeria, Egypt and Nigeria will also account for about 60% of the continent’s total LNG production capacity during the same period, even as construction of new facilities progresses, the report says.) These three states are already known to be the largest.
gas producers in Africa.
According to the 2022 edition of BP’s World Energy Statistical Review, they accounted for just over 83% of the 257.5 billion cubic meters (bcm) of gas extracted in Africa in 2021 (for context, that’s roughly the equivalent of all the gas consumed by Iran in a year), Algeria contributes 100.8 bcm (or more than 39% of the total), Egypt 67.8 bcm (more than 26%) and Nigeria 45.9 bcm (almost 18% ).
In addition, they also account for the vast majority of Africa’s gas liquefaction capacity of around 75.3 million tonnes per year (mtpa), with Algeria contributing 29.3 mtpa, Nigeria 22.2 mtpa, and Egypt 12.
.2 mtpa.
Algeria and Egypt have the only operating LNG plants in North Africa, while Nigeria is home to a plant that accounts for nearly 66% of sub-Saharan Africa’s total LNG production capacity of 33.8 mtpa.
Algeria, for its part, not only has LNG; It also has pipes.
It is already using two of them, the Medgaz and TransMed systems, to pump fuel directly to Spain and Italy through the bottom of the Mediterranean Sea. Together these two pipelines are capable of handling up to 40 bcm per year of gas.
The good news is that Algeria, Egypt and Nigeria are already supplying a good deal of the gas that Europe has been using to supplement Russian supplies.
Even better, they also have enough spare capacity to make their plans to ramp up production in the coming years realistic.
Signs of confidence Italy‘s Eni — and the Italian government, which has a majority stake in the company — are equally confident in the potential of these countries to help meet Europe’s gas needs, as evidenced by the decision to turn to Algeria and Egypt in the search for alternatives to Russian gas.
Both Italian government officials and Eni executives have traveled to Egypt and Algeria since Russia‘s invasion of Ukraine in late February to negotiate and sign new supply deals.
Similarly, French oil major TotalEnergies recently extended its commitment to a project in Algeria‘s North Berkine basin, in part with the aim of finding ways to export associated gas from its oil fields to Europe.
They had good reason for making these decisions, and good reason to hope that they would pay off in the short term!
It is worth noting, of course, that Africa can help make up some of the difference, not all of it.
It cannot serve as a substitute source for the entire volume of 155 bcm that Russia delivered to the EU in 2021!
But you can play a key role in this process, and you don’t have to wait to start.
