By Adewale Sanyaolu
Nigeria and other African nations are forecast to increase their gas output from about 260 Billion Cubic Meters (BCM) in 2022 to as much as 335 BCM by the end of the decade.
Europe is now considering how gas-rich African nations can be helped to scale up production and exports in the years to come.
The EU Ambassador to Nigeria, Samuela Isopi, together with France, Italy, Portugal and Spain’s ambassadors had last month met with the management of the Nigerian National Petroleum Company (NNPC)Limited to discuss developments in the sector.
The visit came as Europe tries to reduce its reliance on Russian gas.
The European envoys to Nigeria therefore sought to strengthen their cooperation in the energy sector with Africa’s top economy.
Africa is conservatively forecast to reach peak gas production at 470 billion cubic meters (Bcm) by the late 2030s, equivalent to about 75 per cent of the expected amount of gas produced by Russia in 2022, according to Rystad Energy research.
In early March, the European Union announced it aims to reduce its dependence on Russian gas by two-thirds by the end of this year alone and is currently headed for a supply crunch that will reverberate around the globe.
Even with the number of gas projects being developed or currently delayed, Africa still has significant production potential. The continent is forecast to increase its gas output from about 260 Bcm in 2022 to as much as 335 Bcm by the end of this decade. If oil and gas operators decide to up the ante on their gas projects on the continent, near and mid-term natural gas production from Africa could surpass the above conservative forecasts.
Russia has historically been the dominant natural gas supplier to Europe, with an average of about 62 per cent of overall gas imports to the continent over the past decade. Africa has also been a consistent gas exporter to Europe during that time, with an average of 18 per cent of European gas imports coming from Africa.
Projects in Africa are however, historically seen as having increased risk and can be delayed or go unsanctioned due to high development costs, challenges accessing financing, issues with fiscal regimes and other above-the-ground risks. Recent signals from oil and gas majors such as BP, Eni, Equinor, Shell, ExxonMobil and Equinor indicate a shift, however, in strategy towards further investment in Africa, with several projects that were previously on ice – including liquefied natural gas (LNG) projects – as they consider restarting or accelerating previously shelved projects in response to rising global demand.
“The geopolitical situation in Europe is changing the landscape for risk globally. While LNG flows from the US are substantial, demand is much higher. Asian and European importers will need to consider African priorities as they develop projects, as many African producers are focusing on supplying energy locally as well as to intra-African markets along with catering to global markets. Existing pipeline infrastructure from Northern Africa to Europe and historical LNG supply relationships make Africa a strong alternative for European markets, post the ban on Russian imports,” says Siva Prasad, senior analyst at Rystad Energy.