Natural gas in Africa: frontier of the Golden Age

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Africa is currently a small but growing part of the global gas picture, and its prospects are even brighter still.

With relatively open access and generally attractive leasing terms, Africa’s oil and natural gas resources have long attracted a broad spectrum of investors — from the large integrated, international majors, to the large and small independent exploration and production (E&P) companies, as well as national oil companies (NOCs) from outside the region.

Natural gas development holds tremendous opportunity for Africa, and it can be a strong “prime mover” for broader economic and social development.

Take a closer looks at the region today.

Development of Africa’s unconventional gas resources — largely in North Africa and South Africa — could substantially add to the potential new supply.

Natural gas development holds tremendous opportunity for Africa, and it can be a strong “prime mover” for broader economic and social development. But those opportunities come with risks and challenges — some that are beyond the control of local/regional industry and government, others that although daunting, can be managed, but will need resolute and dedicated attention.

Golden Age of Gas

The International Energy Agency (IEA) asked in a June 2011 report, “Are We Entering a Golden Age of Gas?”

That report described a new positive outlook for the global future of natural gas — with that positive outlook a function of four factors:

  1. Ambitious assumptions around natural gas use in China
  2. Greater use of natural gas in transportation
  3. Slower growth in global nuclear power
  4. A more optimistic outlook for natural gas supply, chiefly driven by the increasing availability of unconventional natural gas at competitive prices, and by the expansion of global supply capabilities for LNG

How might the Golden Age of Gas affect Africa?

Africa’s Golden Age of Gas will be more than just headline opportunities for the NOCs, the deep-pocketed oil and gas majors, their big international E&P counterparts and the well-known African oil and gas specialists. Opportunities will extend in most areas to the smaller, local E&P players as well, most often in partnerships with the larger, more-experienced players.

African governments and local/regional NGOs will of course have critical roles to play. Their first and foremost role will be developing a meaningful and practical master gas development plan, one that addresses the upstream tax and licensing models. Secondly will be the necessary infrastructure issues and investments, and local training and job creation issues. Collaboration and partnerships with the IOCs, big and small, will also be critical.

In the followings sections of this report, we will look at current industry fundamentals and activity in Africa, and then at the expectations of and potential for natural gas in Africa.