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Africa: Frontier of the ‘Golden Age of Gas’?

Oilfield Technology,

In a 2011 report, the International Energy Agency (IEA) asked ‘Are We Entering a Golden Age of Gas’. In their own report, ‘Natural Gas in Africa: frontier of the Golden Age’, EY discusses how such a ‘Golden Age’ might affect Africa.

Expectations and potential by region

North Africa

EY describes North Africa as the ‘Old Guard’ of the continent’s natural gas sector, with Algeria and Egypt the two largest gas producers and consumers. Algeria, Egypt, Libya and Tunisia are the continent’s four largest gas reserve holders.

However, looking forward Libya and Egypt are likely to struggle to restore political stability and to achieve public acceptance of new political order, at least in the short term.

EY suggests that while expansion of Egypt’s natural gas sector is likely to be domestically focused, Algeria’s expansion will be export focused, specifically targeting new reserves and infrastructure in the southwest and northern parts of the country.

West Africa

EY highlights that the underlying theme of West Africa’s future gas development is the monetization of the underutilized resource base through reduced flaring and the capture of associated gas for export and domestic use.

The World Bank’s Global Gas Flaring Reduction initiative has had a major focus on the sub region, with those efforts tied in with the development of the local infrastructure to support domestic gas use. Hence today, two critical components of the gas development theme are downstream gas infrastructure development and increasing local content focus.

East Africa

While small-scale exploration and production had been going on for decades in this sub region, US independent exploration and production (E&P) company, Anadarko, essentially opened the new frontier in 2010 with its massive Windjammer discovery in Area 1 of the Rovuma Basin in offshore northern Mozambique. Four subsequent discoveries in the area by Anadarko, along with major discoveries in nearby Area 4 by ENI in the Mamba prospect, have boosted recoverable reserve estimates for Mozambique as high as 3 trillion m3.

These discoveries have meant that East Africa represents the growth engine for Africa’s natural gas sector. East African LNG is expected to be very competitive into Asian gas markets; consultants at Wood Mackenzie estimate that the break is approximately US$ 7/million BTUs, in contrast to approximately US$ 10/million BTUs for Australian LNG.

Click here to read more about the risks and challenges to the potential ‘Golden Age of Gas’ for Africa.

Adapted from a report by Emma McAleavey.

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