Meeting the demands: The LNG industry in Africa

Furthermore, the present difficultly of procuring natural gas from traditional suppliers in Qatar and the Western strategy of reducing dependence on Russian gas supplies has meant that European nations require these alternative sources quickly. With all eyes turned towards the ‘Cradle of Humankind’, Africa’s position has shifted to greater prominence; poised to potentially become a major powerhouse of LNG production and exports. Geographically close to Europe and rich in gas reserves, African nations have the potential to become major natural gas exporters. According to the Gas Exporting Countries Forum (GECF), African countries exported a total of around 86 billion m³ of gas in 2022, with approximately 54 billion m³ exported as LNG.¹ But the question remains if Africa, with a plethora of developing LNG projects across a variety of nations, is ready or even willing to take on the global demand for LNG.

Presently, LNG developers spearheaded by European oil and gas companies are looking to target almost 14 million tpy of new African liquefaction capacity by 2028.² This capacity will stem from all across Africa, building on established assets in West and North Africa, as well as projects currently under construction or awaiting approval.

North Africa

Encompassing the southern coast of the Mediterranean Sea, North Africa is in a geographically advantageous position due to its proximity to European markets. Moreover, three of the five largest LNG exporters in the region are located in North Africa with Algeria, Libya, and Egypt leading exports of LNG – exports from Algeria in 2023 were at their highest since 2010, with the country exporting approximately 11% of the natural gas consumed in Europe in 2023.³

With reduced export volumes from Qatar, it is more and more important to secure alternative supplies with trade from North Africa potentially providing a more readily available supply. There is already an established relationship as in 2023, supplies to the East Mediterranean accounted for 35% of the total 17.12 million t of North African LNG exports.³

Even now, nations are exploiting the opportunities presented by foreign demand; however, they are also having to balance these developments with their own domestic concerns. For instance, Egypt saw a decline in exports of 3.41 million t as higher domestic demand owed to warm weather, declining domestic gas production, and a temporary loss of Israeli pipeline imports meant that less gas and LNG could be allocated to exports.⁴

Nonetheless, existing North African LNG exporters have an opportunity to capitalise on the opportunities provided by ready access to the underbelly of Europe if they can focus their LNG exports on that market.

References

1. TAKAHASHI, M., ‘Anticipated Role of African Nations as Emerging Gas Suppliers: Addressing Dependency on Russian LNG and Exploring Diversified Sourcing Opportunities’, Sasakawa Peace Foundation, (31 May 2024), www.spf.org/iina/en/articles/takahashi_02.html.
2. ‘Global LNG Outlook 2024 – 2028’, IEEFA, (2024), p. 18.
3. BLAKEWAY, A., and HO, C., ‘Africa’s ‘big five’ LNG exporters optimistic for growth despite recent slump’, S&P Global, (6 March 2024), www.spglobal.com/commodityinsights/en/ market-insights/latest-news/lng/030624-africas-big-fivelng-exporters-optimistic-for-growth-despite-recent-slump
4. ‘2024 World LNG Report’, International Gas Union, (2024), p. 25

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