Rising number of LNG projects in various African countries a threat to Nigeria’s global market share

NIGERIA – A growing number of African countries are pushing ahead with Liquefied Natural Gas projects to develop and monetise their huge gas resources, posing a threat to Nigeria’s share of the global market.

Four LNG plants are currently operational on the continent, with at least eight projects ongoing or proposed.

Nigeria LNG has a capacity of 22 million tonnes per annum (mtpa); Angola LNG, 5.2 mtpa; Cameroon Hilli Episeyo FLNG, 2.4 mtpa; and Equatorial Guinea LNG, 3.7 mtpa 2018.

Last week, the Nigeria LNG Limited took the long-awaited final investment decision on the company’s Train 7 project, after over 10 years of delay.

The Train 7 project aims to increase the company’s production capacity from 22 mtpa to about 30 mpta and will form part of the investment of over US$10bn including the upstream scope of the LNG value chain.

According to the Africa Energy Chamber (AEC), sub-Saharan Africa accounted for 9.1 per cent of the global LNG exports as of 2018, with Nigeria exporting 20.5 mt; Angola, 4.1 mt; Equatorial Guinea, 3.5 mt; and Cameroon, 0.6 mt.

The AEC, in its Africa Energy Outlook released in November, said over the last decade, huge discoveries in Mozambique, Tanzania, Senegal and Mauritania had delivered a combined total of around 200 trillion cubic feet of recoverable gas.

That is enough to provide two thirds of current global supply for around 20 years.

On top of this, Nigeria alone has 200 trillion cubic feet of proven reserves.

AEC notes that currently, sub-Saharan Africa has the capacity to produce 34 million tonnes of LNG per annum.

In December 2017, the Coral FLNG Project in Mozambique was launched as Africa’s largest ever project financing at US$5bn.

Anadarko Petroleum Corporation (whose stake in the project was acquired by Total in September 2019) then sanctioned the US$15bn Afungi mega project in mid-2019.

The US$30bn Rovuma LNG project, jointly led by Eni and ExxonMobil, is expected to reach FID in early 2020, according to the report.

“These projects will see Mozambique’s LNG export capacity reach 30 mtpa by 2025, with total expected to invest an upward of US$50bn in the project,” the AEC said.

The report said Floating LNG operations had proved popular in Africa.

 In frontier markets, operators are using FLNG to exploit smaller plays that do not justify investment in an onshore plant.

Cameroon is a prime example and this trend is set to continue in 2020.

In Ethiopia, a Chinese-sponsored 3 mtpa near-shore FLNG project is expected to commence in 2020.”

According to the report, the 2 mtpa Fortuna FLNG project in Equatorial Guinea – which was ready for FID before Ophir Energy failed to secure financing – could be sanctioned in 2020.

It said similar floating solutions were being mooted for projects in Gabon, the Republic of Congo and Nigeria, to develop smaller stranded gas fields instead.

The AEC said, “Tanzania has tremendous resource potential with some 50 tcf of gas discovered the country’s offshore by majors including Exxon, Shell and Equinor but political mismanagement has slowed the development of these projects.

Mauritania has the potential to develop its own 10 mtpa FLNG project at the Birallah Hub while in Senegal, the Yakaar and Teranga discoveries could be developed through a 10 mtpa onshore plant.

All these developments are expected in the long term to add more competition on the global stage where Nigeria exports large quantities to countries like Japan, South Korea, Spain and Mexico.