Forecast African natural gas production and disposition (total production = demand + net exports)
Source: Ernst & Young calculations from the International Energy Agency (IEA), “Golden Rules for a Golden Age of Gas,” June 2012
African rotary rig counts (annual totals — percent by type)
(*2012 through June)
Source: Ernst & Young analysis of Baker Hughes Inc. data.
African rotary rig counts (annual averages — 2012 through June)
*2012 through June
Source: Ernst & Young analysis of Baker Hughes Inc. data.
Net exports of natural gas from Africa are expected to more than double, reaching more than 230 bcm by 2035.
While short-term risks from the global economy are still quite high, longer-term economic prospects for Africa are seen as very bright.
In its last World Energy Outlook, the IEA assumes that Africa’s GDP will grow at between 3.4% to 4.5% per year until 2035 5.
| In its most recent report, the IEA forecasts that African natural gas production will expand to almost 400 bcm by 2035, with regional natural gas consumption growing to almost 170 bcm. Gas production in Africa is expected to almost double by 2035, increasing at an average rate of about 2.7% per year. Gas consumption is expected to grow at about 2% per year. Net exports of natural gas from Africa are expected to more than double, reaching more than 230 bcm by 2035 6. | Forecast African natural gas production and disposition (total production = demand + net exports) 
|
Sub-regional expectations and prospects
The expectations and prospects for natural gas are quite different in each of the three sub-regions in Africa.
North Africa
Two of the three leaders of Africa’s “Old Guard” — Libya and Egypt — will struggle, at least in the short-term, to restore political stability and to achieve public acceptance of the new political order.
While any expansion of Egypt’s natural gas sector is likely to be domestically focused, in contrast, Algeria’s expansion will be export-focused, specifically targeting new reserves and infrastructure, specifically in the southwest and northern parts of the country, including offshore.
West Africa
The underlying theme of West Africa’s future gas development is the monetization of the underutilized resource base through dramatically reduced flaring and the capture of associated gas for export, and more importantly, for domestic use.
Throughout the sub-region, two critical components of the gas development theme are downstream gas infrastructure development (e.g., “integrated” gas development that could include power generation and/or industrial development) and increasing local content focus — again, using gas development as a broader prime mover.
East Africa
East Africa is the newest frontier — with the recent massive discoveries, it represents the growth engine for Africa’s natural gas sector. While it may not be the next Qatar or Australia, it certainly has the potential to be an LNG heavyweight on par with Nigeria.
East African LNG is expected to be very competitive into Asian gas markets; consultants at Wood Mackenzie estimate that the break — even for East African gas — is around US$7 per million BTUs, in contrast to around US$10 per million BTUs for Australian LNG .
African LNG capacity
| Country | Project | Start* | Capacity
(MT/yr) | Operator |
| Existing/operating |
| Algeria | Arzew (3 trains) | 1964 | 1.1 | Sonatrach |
| Skikda (4 trains) | 1972 | 7.6 | Sonatrach |
| Bethioua (12 trains) | 1978 | 16.5 | Sonatrach |
| Egypt | Damietta (1 train) | 2005 | 5.0 | ENI |
| ELNG (2 trains) | 2005 | 7.2 | BG Group |
| Libya | Marsa El Brega (2 trains)
| 1971 | 3.2 | Sirte Oil |
| Nigeria | NLNG (6 trains) | 1999 | 22.2 | NNPC |
| Equatorial Guinea | Punta Eur (1 train) | 2007 | 3.7 | Marathon |
| Angola | Angola LNG (1 train) | 2012 | 5.2 | Chevron |
| Planned/possible |
| Algeria | Arzew GL3Z | 2013 | 4.7 | Sonatrach |
| Algeria | Skikda LNG | 2013 | 4.5 | Sonatrach |
| Libya | Marsa El Brega T3 | 2016 | 2.6 | Sirte Oil |
| Nigeria | Progress FLNG | 2017 | 1.5 | NNPC |
| Cameroon | Kribi LNG | 2018 | 3.5 | GDF Suez |
| Egypt | Damietta T2 | 2018 | 4.8 | ENI |
| Equatorial Guinea | Punta Eur T2 | 2018 | 4.4 | Marathon |
| Mozambique | Mozambique T1 | 2018 | 5.0 | Anadarko |
| Nigeria | Brass LNG T1 | 2018 | 5.0 | NNPC |
| Tanzania | Tanzania LNG T1 | 2018 | 6.6 | BG Group |
| Mozambique | Mozambique T2 | 2019 | 5.0 | Anadarko |
| Nigeria | Brass LNG T2 | 2019 | 5.0 | NNPC |
| Nigeria | NLNG T7 | 2019 | 5.0 | NNPC |
| Nigeria | NLNG T8 | 2020 | 8.5 | NNPC |
| Nigeria | OK LNG | 2020 | 12.6 | NNPC |
| Mozambique | Mamba | 2020 | 10.0 | ENI |
*For existing projects, start date is for first train; for planned/possible projects, start dates arenominal and subject to delay/cancellation.
Source: Ernst & Young compilations from various analyst/investment reports.
5 “World Energy Outlook,” International Energy Agency (IEA), November 2011.
6 “Golden Rules for a Golden Age of Gas,” International Energy Agency (IEA), June 2012.
7“Ophir Energy,” J.P. Morgan Cazenove — Equity Research, 1 May 2012.
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