Africa: The making of a major exporter

In 1964, Africa became the first continent to export LNG when Algeria delivered its inaugural cargo from the Arzew gas terminal to the UK. Since then, Africa has remained a vital part of the global natural gas network, with the continent estimated to hold around 10% of worldwide proven reserves. In 2022, Africa exported approximately 42 million t of LNG – or around 5.7% of global LNG exports.

Historically, Algeria and Nigeria have been the largest African exporters of LNG, with several exporting terminals operating for decades. This may all change in the near-future, as the African natural gas landscape develops. In the past decade, there has been a series of significant natural gas discoveries made across the continent – between 2010 – 2020, approximately 40% of all natural gas discovered worldwide was in Africa, with most of those discoveries located in Sub-Saharan Africa. With a number of African LNG export projects planned or under development, even more African states stand to become LNG exporters.

There are also substantial changes on the demand side, with an increase in Europe-an appetite for African LNG particularly to replace Russian gas imports. In 2022, in response to Russia’s invasion of Ukraine, the European Council adopted the Versailles Declaration, which included a target to “phase out […] dependency on Russian gas, oil, and coal imports as soon as possible” including by diversifying supplies and routes. In May 2022, the European Commission published the REPowerEU Plan that proposes to end EU reliance on Russian fossil fuels before 2030. Africa is playing, and is likely to continue to play, a key role in supplying replacement volumes of LNG into European markets. In 2021, African LNG accounted for approximately 10% of Europe’s gas imports. In 2022, as many importers scrambled to source alternatives to Russian gas in the wake of the invasion of Ukraine, African LNG exports rose by over 7%. Nigeria, with Africa’s largest natural gas reserves, was Europe’s fifth-largest LNG supplier in 2022.

A snapshot of major new developments

African states with large natural gas reserves generally seek to harness them for both domestic consumption and monetisation via developing LNG export projects, subject to limited exceptions in which African natural gas is exported by existing pipeline infrastructure (e.g. via the Medgaz and Transmed pipelines that ship natural gas from Algeria to Europe via Spain and Italy, respectively), where this is geographically more convenient. African states export around 40% of the natural gas volumes produced, and LNG export provides both a practical way of accessing the global export market and a valuable source of foreign exchange.

The number of LNG export projects planned or under development in Africa has been increasing in recent years, fuelled by both new discoveries and an increase in support from investors and financiers. Several key LNG export projects have delivered their first shipments or are planned to come online next year, with several additional states in advanced discussions on developing their first LNG export projects or new expansion projects later on in the decade.

In 2022, the first cargo of LNG produced from the Coral gas field was shipped from Mozambique’s Coral South floating LNG (FLNG) facility. On the northern coast of Mozambique, the US$20 billion Mozambique LNG project has been under force majeure since spring 2021 following attacks by insurgents.

Senegal and Mauritania have co-operated on the exploitation of adjacent offshore natural gas fields through plans to develop the Greater Tortue Ahmeyim (GTA) FLNG export facility. The commissioning of the first phase with production capacity of around 2.3 million tpy has been delayed but is expected to come online in 2024.

As its neighbour Angola marked 10 years of LNG export, construction commenced on the US$5 billion Congo LNG project in April 2023. The Republic of the Congo’s first LNG project will include two FLNG plants and is expected to reach capacity of 3 million tpy from 2025.

In May 2023, Tanzania’s government announced that it had concluded negotiations with investors for a US$42 billion onshore LNG project, with execution of binding documentation to follow. Final investment decision is expected by 2025, indicating that the project could come on-stream from 2030 onwards.

Egypt continues to be a major exporter of LNG and could benefit from the significant discoveries in the Eastern Mediterranean over the past decade, as Israel, Cyprus, and Greece explore ways to ship East Mediterranean natural gas to European markets.

Africa-specific challenges and opportunities

Africa contains many distinct and varied regions, geographies, political systems, and cultures, so the challenges of developing large scale LNG projects across the continent are complex and often particular to that state or region. Alongside the general risks that all LNG projects face, particularly with regard to technical and demand-side risks, LNG projects in Africa often face additional challenges due to the interplay of these factors on planning, developing, and financing LNG projects.

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