Africa Could be Significant LNG Importer by 2025

power station

Published Oct 4, 2016 9:12 PM by The Maritime Executive

Africa could become a significant global market for imported LNG by 2025, with Egypt the main driver, as more countries eye gas-to-power projects, a senior official at Total said on Tuesday.

With hundreds of millions of people living without electricity in the world's poorest continent, African countries are increasingly turning to gas to take advantage of lower global LNG prices amid a supply glut.

"It could be collectively a 20 to 30 million tons per year market by 2025," Tom Earl, vice president of gas and power development at the French oil major, said on the sidelines of a gas conference in Cape Town.

He said Egypt could be importing between 15 million-20 million tons annually within a decade, although actual volumes would depend on the development of its huge Zohr gas field, which had an estimated 30 trillion cubic feet of gas.

West Africa was seen importing five million tons a year, Southern Africa four million and Morocco two million tons by 2025, Earl said.

Egypt aims to import between 110 and 120 cargos of liquefied natural gas in 2017, the state-owned Egyptian Natural Gas Holding company (EGAS) said in June.

"Africa really is going to take a central role, the projects may be typically of smaller scale, but nevertheless they will collectively be very important," said Earl.

He said Total was focusing on gas-to-power projects around the world and wanted to develop downstream markets to increase the uptake of gas, which is seen as a cleaner alternative to harmful coal-fired plants.

"Total is willing to invest further downstream and that's important for us because it is developing future demand, future markets," he said.

He said Total was considering all aspects of South Africa's plans to build two gas-to-power projects with a combined 3,126 megawatt capacity to diversify electricity production away from more environmentally damaging coal plants.

The projects, estimated to cost around 50 billion rand ($3.7 billion), will initially require about 1.6 million tons of imported gas.

Meanwhile, the Ivory Coast signed a partnership pact on Tuesday to create a consortium headed by Total to build an LNG import terminal that could begin receiving gas shipments by mid-2018.

Ivory Coast has emerged from years of political turmoil to become one of Africa's fastest growing economies and demand for electricity is increasing by 10 percent annually, according to the energy ministry.

The project aims to conceive, build and operate a floating storage regasification unit (FSRU) with initial capacity of 100 million cubic feet that would gradually be brought up to 500 million cubic feet, according to an energy ministry statement.

The ministry estimated the cost at $200 million. Other members of the consortium include Royal Dutch Shell, Houston-based Endeavor Energy, Ivory Coast state oil company Petroci, CI-Energies, Azerbaijan's SOCAR and Golar LNG.

Total is managing its portfolio and allocating investment to position itself for profitable medium term growth with the following priorities:

•    Lowering the breakeven of oil portfolio, both Upstream and Downstream
•    Expanding along the full gas value chain
•    Capitalizing on customer-focused culture to grow its marketing and services positions 
•    Positioning in low carbon energy business.