Natural gas in Africa: the Golden Age
As it has grown, Africa’s gas industry has also evolved geographically. It was historically dominated by the North African producers – in particular, Algeria and Egypt. More recently, the sector’s growth has been concentrated in West Africa, with the huge associated gas resources that accompanied the deepwater oil boom, led by Nigeria and Angola. While the West African gas growth will continue as flaring is reduced and local gas infrastructure is developed, the big future for African gas will feature yet another move – this one to the east and centered on the massive offshore gas discoveries in East Africa, particularly in Mozambique and Tanzania.
For further information, read the full Ernst & Young report, Natural gas in Africa: the frontiers of the Golden Age at www.ey.com/naturalgasinafrica.
As noted by Elias Pungong, Ernst & Young’s Oil & Gas Leader for Africa, “Natural gas development holds tremendous opportunity for Africa. It can be a primary driver of economic growth and broader social development, as well as a major spur for local employment growth and infrastructure development.”
Africa’s Golden Age of Gas will be more than just headline opportunities for the national oil companies (NOCs), the deep-pocketed oil and gas majors, their big international exploration and production (E&P) counterparts, and the well-known African oil and gas specialists. Opportunities will extend in most areas to the smaller, local exploration and production E&P players as well, most often in partnerships with the larger, more-experienced players.
The ramp-up in E&P activity, of course, brings opportunity for the oilfield services (OFS) segment, but again, not necessarily just for the big international OFS players, but also for local and regional companies that can contribute to the supply chains and to the associated upstream support infrastructure build-out. The broader infrastructure build-out may include massive export facilities, as in the case of LNG, but also smaller projects, such as pipelines and gas distribution networks, to support local and regional domestic gas demand.
All of this build-out can bring substantial local and regional opportunities. And certainly, the associated development or expansion of a domestic gas demand sector could bring substantial commercial opportunities in the power generation, industrial and even transportation sectors. Indeed, many of the gas flaring reduction efforts are tied to domestic gas use projects.
African governments and local and regional NGOs will, of course, have critical roles to play – first and foremost, developing a meaningful and practical master gas development plan, one that addresses the upstream tax and licensing models, as well as the necessary infrastructure issues and investments, and local training and job creation issues. Collaboration and partnerships with the IOCs, both big and small, will likewise be critical.
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