Kelly Mealia is Energy Capital & Power's Co-Founder and Chairperson
Africa represents one of the wealthiest continents in terms of proven and estimated natural gas reserves and, producing fewer emissions than oil and coal, the resource has been dubbed the “fuel of the future.”
Methods of monetization such as liquefied natural gas (LNG) hold the promise of an energy secure and industrialized Africa, with new, gas-based revenue streams unlocking opportunities for broader socioeconomic growth.
Africa’s Resource Wealth Cannot be Ignored
Africa’s natural gas resources are measured at 600 trillion cubic feet (tcf), with more than half of its 54 countries rich in proven reserves. Discoveries made in Namibia (five since 2022); South Africa (two in 2019-2020); Ivory Coast (two in 2021-2022) and many more are projected to increase these figures substantially, backed by a strong pipeline of projects currently underway.
Given these resources, Africa’s natural gas resources cannot be ignored. From providing clean, affordable and reliable power to the over 600 million people that currently lack access, to introducing feedstock for heavy fuel-based industries, to creating employment, stimulating infrastructure development and breathing new life into Africa’s economies, gas is a catalyst for sustainable development. At the same time, opportunities transcend the continent’s borders, with African gas exports providing much-needed relief for global markets.
The continent is on track to become a major global gas supplier. According to the African Energy Chamber’s Q2 2023 report, State of African Energy, short-term gas supply from Africa is expected to increase from 2023, with output hitting 27 billion cubic feet per day in 2024. Long-term, much of the continent’s output will be driven by developing projects in Mauritania and Senegal (Greater Tortue Ahmeyim); Tanzania (Tanzania LNG); Mozambique (Rovuma LNG and Mozambique LNG); and Republic of the Congo (Golar FLNG an Marine XII FLNG).
However, significant additional investment is needed. Wood Mackenzie states that over the next ten years, Africa will only account for 6% of global upstream investment, highlighting the critical role for foreign partners to play.
Europe Turns to Africa Amid Security Concerns
Last year, I wrote that the Russia-Ukraine conflict highlighted Europe’s reliance on Russian gas, showing the unsustainability of Europe’s existing energy matrix and how Africa could emerge as an ideal supplier in the long term. This has not changed, but rather, Africa’s role as a global supplier has only amplified. Rising global demand, coupled with new discoveries and project completions in Africa, have further enhanced the continent’s attractiveness as a gas investment market. And in 2023, we have seen foreign companies and governments shift even more of their focus to the continent.
Last month, German Chancellor Olaf Scholz stated that Germany was in advanced discussions with Nigeria to invest in LNG. Nigeria already represents a major gas producer, with the country responsible for 80% of Africa’s total output alongside Algeria and Egypt. The country is also responsible for 65% of total LNG output alongside Algeria, with exports from these players expected to hit 48 million tons per annum (mtpa) in 2026-2027. With over 200 tcf of proven reserves and up to 600 tcf of estimated reserves, opportunities for investors are abundant and Germany seems eager to secure a new energy source.
Italy is also making a play for African gas, with the country having engaged several of its African counterparts to advance collaboration and investment. Last month also saw Italian Prime Minister Giorgia Meloni meet with Mozambique’s President Filipe Nyusi under efforts to strengthen bilateral relations in energy, with Meloni stating, “Together we can build a different future of cooperation between our continents about energy…”. Italy is also ramping up investment in Algeria, a country with which it has enjoyed a long-history of cooperation and trade, and Angola, an emerging strategic partner for Italy.
American majors including ExxonMobil and Chevron are also making great strides in developing African LNG, underpinned by a national drive to secure market share and strengthen U.S. presence on the continent. ExxonMobil is leading the soon-to-be launched Rovuma LNG project in Mozambique with a capacity of 15.2 mtpa, while Chevron is driving the 5.2-mtpa Angola LNG plant as well as Equatorial Guinea’s Gas Mega Hub, comprising the 3.7-mtpa Punta Europa LNG terminal. As new discoveries are made, foreign partners are expected to play an even greater role in monetizing African gas.
Capital, Collaboration and COP28
It all comes down to one simple fact: the world cannot function without energy, and natural gas is the best method of achieving energy security in line with climate commitments. During last year’s Conference of the Parties (COP27), African leaders collectively called for heightened investment in natural gas to strengthen the continent’s capacity to deal with and mitigate climate catastrophes. A year on, little has been done from a practical standpoint to increase financing in this area. While attention has turned to Africa, nations have failed to follow through with funding, and during COP28 this year, we call for dialogue to go beyond empty pledges to actionable and deliverable gas-focused investments.
