One issue that took the center stage almost in all the countries and regions around the world prior to, and with the election of Donald Trump as the next US president, after Obama, was the direction of the US policy under the president-elect vis-à-vis the economic and diplomatic policies that would define the relationship of the US with other countries.
With regard to Africa, the argument had raged as to what America’s energy, trade and economic policies were likely to be, with the “Pyrrhic” victory and triumphant entry of the Republican President-elect into the historically-symbolic White House. Some said that Trump’s victory was victory for Africa especially in energy development and economic growth, while others argued that his victory portended grave danger for Africa, economically and diplomatically. But whichever direction his leadership could have gone, and can now go, having won the “African-American” female competitor in a landslide in the just-concluded US presidential election, analysts have always believed that Africa’s energy, trade and economic development and growth, would only be dictated, and significantly too, by the strength, maturity and transparency of its internal politics, as well as reflexes that would attend its external political and diplomatic responsibilities. And all must be seen to be visibly represented, as lack of a visible and transparent representation had posed, for decades, a cog at the wheels of Africa’s energy, sociopolitical and economic development.
Why Africa must carve a niche for itself
Africa is an oil and gas province with the capacity to meet its own domestic energy needs, with much more for export, serving even much longer than many would have imagined.
According to several energy industry news sources, and also from Platform Petroleum Chief – Austin Avuru’s account during a presentation in Lagos, about 23 African countries for instance have a combined volume of gas reserve to the tune of a little under 600 Trillion Cubic Feet (Tcf), and daily production of a little above 24 Bcf, and consuming about 13.5Bcf, approximately half of this daily production.
He further explained that the 23 countries also have total oil reserves to the tune of 118 billion barrels, producing 6.1 million barrels daily, and consuming 4 million barrels daily, while adding the total refining capacity of the 23 countries as 4.83 million barrels daily. And out of the 23 countries, five of them namely: South Africa (800, 000 bbls) daily, Algeria (600, 000 plus bbls), Libya (380, 000 bbls), and Egypt (1.03 million barrels), while ascribing 1.1 million barrels of daily capacity to Nigeria – and adding them up now results in the total daily refining capacity of 4.83 million barrels.
Natural gas, once a byproduct now serves almost a quarter of the global energy needs. Analysts believe that Africa is at the moment in an advantaged position looking at the volume of gas in the continent.
In the next two years or so, statistics show, Africa’s natural gas production is expected to remain relatively flat — increasing only slightly, from 268 billion cubic meters (bcm) in 2024 to 272 bcm in 2025 — analysts of course believe there’s room for optimism about the continent’s potential, African Energy Chamber Report 2024 highlighted.
For Africa to move forward and grow its natural gas output according to the report, a two-pronged approach was required. According to that report, gas producers must not relent, but rather continue to pump from existing fields, while countries with new discoveries must get these undeveloped projects to the final investment decision (FID) stage as quickly as possible.
For example, Nigeria, Angola, and Equatorial Guinea currently account for 85% of the total gas output from the West Africa region, and volume is expected to remain the same until 2025. After that, levels will gradually decline: to 75 percent by 2030, 70 percent by 2035, and 60 percent by 2040 (African Energy Chamber). Although these fields are considered crucial for sustained production, the need for new projects to come online was also critical to prevent a stall in output, the report noted.
Adding that despite the fact that many major new gas finds have been announced in recent years – discoveries in Senegal, Mauritania, Angola, Ghana, South Africa, Namibia, and the Ivory Coast, not much has been done to show for this. Noting that In Namibia alone, Shell’s Graff discovery holds approximately 2 billion barrels of oil equivalent (BOE). These new gas discoveries will, however, remain dormant potential unless African governments and gas producers come together quickly to forge realistic actionable plans to capitalize on these vast new resources. Otherwise, new hopes will simply fade into the past as yet more symbols of lost opportunity.
Production from pre-FID projects, from conservative assessment standpoint, is expected to double year-on-year from 2025 to 2029, with a continued gradual increase until around the late 2030s. Currently, just over 10% of Africa’s gas production comes from these pre-FID volumes and will increase to over half of the total output. Maintaining that these volumes therefore can play a critical role in the continent’s natural gas export aspirations, and in becoming a true player in international markets.
A highlight by the report on the Liquefied Natural Gas (LNG) and LNG infrastructure suggests that, “Africa LNG export infrastructure is shaping the future in a similar way to the natural gas forecast. Between the bigger producers like Algeria, Nigeria and Egypt, Algeria and Egypt are expected to maintain their existing LNG infrastructure capacity of about 29 million tonnes per annum (MMtpa) and 12.7 MMtpa, respectively. Nigeria’s plans involve increasing its LNG infrastructure capacity from the existing 22 MMtpa to 30 MMtpa via the Nigeria LNG (NLNG) Train 7 development and further marginally to just over 31 MMtpa via UTM Offshore’s FLNG project.”
Production Decline and Reasons to Act Fast
Many of Africa’s existing gas production fields, particularly those in the north and west, are maturing or in decline, meaning they are quickly reaching the end of their productive lives. For example, Nigeria, Angola, and Equatorial Guinea currently account for 85% of the total gas output from the West Africa region, and volume is expected to remain the same until 2025. After that, levels will gradually decline: to 75% by 2030, 70% by 2035, and 60% by 2040. Although these fields are considered crucial for sustained production, the need for new projects to come online is critical to prevent a stall in output.
Fortunately, many major new gas finds have been announced in recent years, including finds in Senegal, Mauritania, Angola, Ghana, South Africa, Namibia, and the Ivory Coast. In Namibia alone, Shell’s Graff discovery holds approximately 2 billion barrels of oil equivalent (BOE). These new gas discoveries will, however, remain dormant potential unless African governments and gas producers come together quickly to forge realistic actionable plans to capitalize on these vast new resources. Otherwise, new hopes will simply fade into the past as yet more symbols of lost opportunity.
These fields along with newly discovered pre-final investment decision (FID) projects have the potential to supercharge output and allow Africa to realize its enormous natural gas potential. As the AEC report notes, any new production growth expected over the next decade will come from both pre-FID potential — such as emerging upstream economies like Mozambique, Tanzania, Mauritania, Senegal, South Africa, and Ethiopia — as well as from mature producers like Nigeria, Libya, and Algeria.
At a very conservative forecast, production from these pre-FID projects is expected to double year-on-year from 2025 to 2029, with a continued gradual increase until around the late 2030s. Currently, just over 10 percent of Africa’s gas production comes from these pre-FID volumes and will increase to over half of the total output. Therefore, these volumes play a critical role in the continent’s natural gas export aspirations, and in becoming a true player in international markets.
There is also great excitement building around the growth of Africa’s liquefied natural gas (LNG) export business. As “The State of African Energy 2024 Report” asserts:
“Africa LNG export infrastructure also is shaping in a similar way to the natural gas forecast. Between the bigger producers like Algeria, Nigeria and Egypt, Algeria and Egypt are expected to maintain their existing LNG infrastructure capacity of about 29 million tonnes per annum (MMtpa) and 12.7 MMtpa, respectively. Nigeria’s plans involve increasing its LNG infrastructure capacity from the existing 22 MMtpa to 30 MMtpa via the Nigeria LNG (NLNG) Train 7 development and further marginally to just over 31 MMtpa via UTM Offshore’s FLNG project.”
How Deep is US Presence in Africa’s Liquefied Natural Gas (LNG) and (FLNG) Expansion Business?
With Africa set to dominate the floating LNG market between now and 2027, U.S. operators and contractors can play a leading role in realizing new capacity, alongside onshore developments.
As Africa looks to develop its gas for domestic and export markets, the U.S. is honing in on LNG as a critical investment avenue, alongside traditional oil exploration. In October 2023, energy research and consultancy group Wood Mackenzie stated that Africa’s $800-billion, 20-year upstream capital expenditure program would result in world-class LNG projects in Mozambique and floating LNG (FLNG) in five countries, presenting substantial gas-driven opportunities for U.S. investors, operators, project developers and service providers.
While American companies are already at the helm of the continent’s booming LNG industry, there is room to grow their participation, particularly in FLNG, which offers increased flexibility, reduced time to market and suitability for smaller gas volumes. According to energy intelligence provider Westwood Global Energy, the global FLNG market is set to see $35 billion in new investment by 2027 – totaling 18.3 million tons per annum (mtpa) of additional capacity – with Africa dominating short-term investments. This increase in capacity will generate an associated engineering, procurement and construction (EPC) contract value of $13 billion. After 2027, an additional 36.5 mtpa of capacity is expected to come onstream, with an EPC value of $22 billion.
In Equatorial Guinea, U.S. operators and contractors are leading the country’s flagship Gas Mega Hub (GMH), which seeks to monetize all stranded gas fields in the Gulf of Guinea to facilitate an intra-African LNG trade.
Mozambique of course is another strategic market for US gas investments, having moved beyond $1 billion in LNG exports last November analysts say. This is beside America’s ExxonMobil which is said to be leading development of the $23-billion Rovuma LNG project and anticipates a final investment decision in 2025, “utilizing a retooled, phased construction approach.” With a planned capacity of 18 million tons per year, the facility will deliver reliable, affordable energy to local customers, as well as export to global markets. The company is also reported to be undergoing a study that will determine the commercial and technical feasibility of an LNG regasification terminal to bring low-cost, reliable fuel in South Africa – all these and many more are clear indicators of Africa’s strategic importance, as long as sourcing for energy is concerned.
Energy Transition to Net Zero Emissions and its Constraints
There’s no arguing the fact that notwithstanding the ongoing global disruptions in the energy markets, as well as the war in Ukraine, which have, and ultimately so, added impetus, and providing some kind of a stronger global consensus around the campaign to push for renewable energy, the challenges toward achieving net zero are enormous and gradually becoming clearer, according to analysts.
In addition to the uncertain pace of technological development and deployment, four issues particularly may be said to stand out. It includes, the return of energy security as a prime requirement for countries, lack of consensus on how fast the transition should and can take place, in part because of its potential economic disruptions, sharpening divide between advanced and developing countries on priorities in the transition, and of course, the obstacles to expanding mining and building supply chains for the minerals needed for the net-zero objective, among others.
What then are the realizable parameters available to addressing various energy shocks and economic hardships which are at different levels within individual countries and continents at the moment? Where’s the possibility of reconciliation or consensus among world leaders on issues of skyrocketing energy prices and geopolitical conflicts? Is it impossible to assume that energy security and energy transition could be two strange bedfellows who cannot coexist – I mean to talk about the North-South cleavage? Again where are the minerals – each of which have one significant role or another to play in the determination of the direction of the transition? Is it also unlikely to think that none of these factors won’t be an easy nut to crack – as they are intrinsic in nature, and inevitably interact with one another? Is it impossible that those interactions have the potency and tendency to further compound their impacts? This is the crux, and so, recognizing them is truly imperative in promoting a deeper understanding of the issues and requirements in seeking to achieve the energy transition.
For a long time, these factors have contributed, and are still contributing to influencing governments’ decisions while reassessing their strategies, reassessment which according to analysts, now recognizes that the energy transition needs to be grounded in energy security—that is to say, adequate and reasonably priced supplies—aimed at evoking certain degree of sympathy from the public, for the purpose of checkmating economic dislocations and all its consequential political effects.
But analysts are inquisitive, wandering how easy and fast can subsuming energy transition into energy security can go, looking at the pressure at the moment to “accelerate a significant part of the 2050 carbon emission targets toward 2030.” But like an analyst said, “If energy security is the first challenge of the transition, timing is the second.”
In the book “The New Map”, the author, while describing the uncertainties surrounding the ongoing global energy transition journey vis-à-vis the previous transitions said: “I looked at the previous energy transitions, and it is clear that this one is like no other. All previous transitions were driven largely by economic and technological advantages—not by policy, which is the primary driver this time. Each of the preceding transitions unfolded over a century or more, and none were the type of transition currently envisioned.
“The objective of this transition is not just to bring on new energy sources, but to entirely change the energy foundations of what today is a $100 trillion global economy—and do so in little more than a quarter century. It is a very big ambition, and nothing on this scale has ever been attempted up to now.”
Ejekwu Chidiebere