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Africa heats up

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LNG Industry,

Gordon Cope, contributing editor, discusses the number of opportunities to monetise natural gas reserves that are opening up in many African countries.

The LNG sector in Africa has a long and illustrious record, dating back over half a century. Gas discoveries (and associated gas) have led to developments in over half a dozen countries, with a handful of hopefuls waiting in line. But whether LNG prospects on the continent continue to flourish – or flounder – depends on a number of different factors.


Starting in 1964, Algeria’s state-owned oil company Sonatrach built the Arzew, Skikda and Bethioua LNG trains in order to service markets in Europe. In 2013, a new train was commissioned in Skikda, and a new train in Arzew in 2014.

Algeria’s oil and gas sector, and thus its LNG industry, face several challenges, however. Thanks to a lack of investment by Sonatrach and general lethargy toward international participation, oil production and exports have been flagging, and now stand at 1 million bpd and 500 000 bpd. While gas production still stands at 91 billion m3/yr, domestic demand has been growing at a tremendous clip, and is expected to reach 50 billion m3 by 2020. This is placing a strain on existing assets; there is concern that the Hassi R’Mel, Algeria’s largest gas field, with some 2.4 trillion m3 in reserves, is being over-produced, watering out wells.

Some advances are being made. Three new fields, Touat, Timimoun and Reggane, are set to add 9.3 billion m3 to reserves. In late 2018, Sonatrach announced exclusive agreements with Total and Eni to explore Algeria’s deepwater region. The country also holds immense unconventional reserves; the US Energy Information Administration (EIA) estimates that the country has over 700 trillion ft3 of technically recoverable reserves.1 Sonatrach has drilled several exploratory wells in the Sahara desert, but residents in the arid region are opposed to the use of water-intensive fracking.


While Nigeria is primarily known for its oil production, it also has almost 200 trillion ft³ of conventional gas reserves. In order to monetise its assets, the west African country began LNG production in 1999; state-controlled Nigeria LNG (NLNG) now has six trains, with 22 million tpy of capacity, with plans for a seventh.

Unfortunately, several proposed projects have not fared well. When envisioned in 2003, the 10 million tpy Brass LNG project was a joint venture (JV) between Nigerian National Petroleum Corp. (NNPC), Chevron, Eni and ConocoPhillips. Since then, Chevron and ConocoPhillips have dropped out, with Total entering the JV. In 2018, the Nigerian Senate launched an investigation into Brass LNG, seeking to clarify its bank records. The Olokola (OK) LNG facility was originally planned in 2005 as a JV between NNPC, Shell, Chevron and BG Group. Scheduled startup for the 12.6 million tpy facility was planned for 2012. Shell, Chevron and BG subsequently pulled out of the deal, leaving NNPC as sole shareholder.

One of the main roadblocks to development of the projects is that Nigeria’s gas reserves are almost entirely associated with oil fields. They require extensive processing and infrastructure before they can be used to produce LNG, which adds to the already costly projects.

In addition, the Nigerian government has expressed a desire to revise fiscal agreements in the sector. The added costs, as well as government inertia and a risky business environment, have only added barriers to making LNG final investment decisions (FIDs) in the country.

This is an abridged version of an article that was originally published in the May 2019 issue of LNG Industry. The full version can be read here.

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