development of this project. The low price environment continues
to affect the commercial viability of LNG projects worldwide and
Africa is not an exception. Price uncertainty will continue to cause
delays to FIDs, as companies attempt to redesign and re-engineer
development concepts. In the case of the Afungi LNG project,
DWexpects it to be in operation by 2021.
There are limited opportunities for the development of import
facilities in Africa. However, there are promising signs for the
development of Morocco’s LNG import terminal near El Jadida.
The facility is expected to start operation in 2020. The country
depends heavily on imports to meet its energy requirements.
Beyond the forecast period, there are 16 planned expansion
projects and 12 proposed new projects, which are expected to
add 143.4 million tpy in capacity for the region. New liquefaction
developments will primarily occur in Equatorial Guinea, Nigeria,
Libya, Mozambique and Tanzania.
East Africa is poised to become the LNG hub for Africa.
However, there are still boundless opportunities inWest Africa.
Nigeria ranks in the top 10 of global gas reserves, yet the majority
of these remain untapped. Undoubtedly, there are a number of
challenges, such as security uncertainties in the Niger Delta,
impeding development. However, some positive steps have
been taken to improve security. Daman Shipyard, for instance,
has delivered four ballistic-protected security patrol vessels to
provide escort services for LNG carriers calling in and out of
Nigeria’s Bonny LNG terminal.
Conclusion
The past 18 months have been difficult for the LNG industry. A
number of capital-intensive projects failed to pass the economic
break-even point. Furthermore, in recent years, pricing has been
challenged: US gas production from thousands of unconventional
wells drilled in shale basins has led to a precipitous drop in LNG
spot prices due to oversupply.
Despite near-term concerns, natural gas will play an
increasingly important role in meeting the world’s energy
demand over the long-term. Significant gas reserves discovered
in the East African gas basin will support the development and
expansion of LNG facilities in Africa. Additionally, with the COP21
Paris agreement aiming to limit global temperature increase to
1.5°C, investment in further LNG projects may become inevitable.
Gas is likely to act as a bridge fuel to viable sources of renewable
energy.
Figure 3.
LNG expenditure 2011 – 2020 – Africa (source: DW,
World LNG Market Forecast).
