New Delhi: The African upstream oil and gas sector is undertaking an $800 billion capex programme, with liquified natural gas (LNG) becoming a key investment theme, said Ian Thom, Upstream Research Director at Wood Mackenzie, during the African Energy Week event in Cape Town.
This 20-year investment cycle, which began in 2010, is anticipated to end with major LNG projects in Mozambique and floating LNG (FLNG) initiatives spanning five African nations. Thom highlighted, “With abundant gas resources, Africa is looking at all opportunities to develop gas for domestic and export markets.” He also noted that FLNG’s niche role in Africa is gaining momentum due to its adaptability, speed to market, and compatibility with smaller volumes.
LNG exports from Africa currently stand at just over 40 million tonnes per annum (mmtpa). Projects in Sub-Saharan Africa (SSA) are at different development stages, including bp’s Tortue FLNG, offshore from Senegal and Mauritania. Thom mentioned, “Tortue Phase 1 is expected onstream next year, so we will see 2.4 mmtpa of supply growth in the short term.”
Citing security concerns in Mozambique, Thom emphasised the importance of enhanced security measures to ensure the construction of onshore LNG facilities. Projects like Rovuma and Mozambique LNG are crucial for possibly doubling Africa’s LNG supply by 2035. However, if these projects do not materialise, there’s a risk that exports might stagnate over the long term.
Thom also commented on the broader future of oil production in Africa. He indicated that traditional oil production hubs in Africa might face challenges in offsetting production drops at mature assets. Countries like Nigeria, Angola, and Egypt might see their oil production levels remain stagnant as the decade concludes.
Drawing attention to the global upstream trend, Thom stated, “With the global upstream trend firmly focused on advantaged resources, it is inevitable oil production will be affected in higher cost and higher emitting assets in Africa.” He added that there could still be potential growth from reserve expansion or undiscovered resources, citing TotalEnergies‘ recent oil discovery in Nigeria as a prime example.