Historically, Africa’s approach to natural gas has been characterised by flaring or exporting as LNG, which has had minimal impact on local economic growth. But recent shifts in global energy priorities, geopolitical developments and a surge in clean energy investment are changing the continent’s gas landscape. While each of Africa’s 54 countries has unique energy dynamics, several significant trends have emerged since 2020.
As African energy stakeholders head to Accra for the West African Energy Summit from 3 to 5 September, we summarise the key dynamics currently shaping the sector.
Natural gas: A pragmatic step towards clean energy
Natural gas is becoming an important transition fuel for many African countries, especially those that rely heavily on coal or imported petroleum products such as diesel and heavy fuel oil for electricity generation. The continent is increasingly integrating natural gas into broader decarbonization strategies to balance immediate energy needs with long-term environmental goals. This integration is leading to concrete projects among Africa’s major thermal power producers.
South Africa, the continent’s largest coal producer, has submitted a gas master plan that envisages the development of gas-to-power capacity of between 2 and 16.6 GW in the near future. This plan envisages converting existing coal-fired power plants to gas, with more ambitious projects involving new gas-to-power plants. South Africa is also addressing the expected gas shortage by further developing LNG import infrastructure. A Vopak consortium has been contracted to develop the LNG terminal in Richards Bay. Additional LNG import options are being explored in Saldanha Bay and the Port of Ngqura.
Morocco is also developing strategies to increase its gas consumption. The Moroccan government is seeking a partner for the Nador West Med LNG import terminal, construction of which may begin in 2026. In the meantime, independent operators such as SDX Energy, Sound Energy and Chariot are exploring and developing both onshore and offshore gas fields to increase domestic production.
Senegal, a country that relies heavily on imported fuels for its electricity supply, is also relying on natural gas. The expansion of the energy sector includes new plants such as the 120 MW Malicounda power plant and the 300 MW West African Energy power plant. However, these plants will initially rely on imported fuels until solutions are found to exploit the offshore gas fields operated by BP and Kosmos Energy.
Challenges and future prospects for regional gas trading
Despite all the stated goals, regional gas trade in Africa is progressing slowly because the construction of pipelines is too expensive and time-consuming. Currently, only the pipeline between Mozambique and South Africa and the West African Gas Pipeline between Nigeria and Ghana are in operation, although the latter is hardly used.
Future projects such as the Nigeria-Morocco gas pipeline are designed to connect West Africa from Nigeria to Morocco, with planned landings in several other countries. This ambitious initiative has strong political support from the state-owned NNPC and Morocco’s ONHYM and could unlock significant development potential across the region. In East Africa, Tanzania aims to become a regional gas hub, supplying much-needed energy to Kenya, Uganda and Zambia.
Given the long construction times for pipelines, interim solutions such as transporting gas by truck are being considered. There are plans to transport gas from Ghana to Ivory Coast and from Mozambique and South Africa to neighboring countries such as Botswana, Zimbabwe and Zambia.
The rise of small gas projects
With growing aspirations for economic diversification and industrialization, demand for natural gas from a variety of producing companies is steadily increasing. In areas with existing gas infrastructure, such as Ghana or the southwest and southeast of Nigeria, private companies are extending their gas distribution networks into industrial areas. For example, Genser Energy has built a private pipeline that supplies Ghana’s gold mines and reaches as far as Kumasi, where a new gas-fired power plant was recently inaugurated.
But in regions where public funds for large infrastructure projects are scarce and gas demand is scattered, it is smaller gas projects that are taking the lead. These ventures often use “virtual” pipelines – the gas is transported by truck – rather than traditional, expensive pipelines.
As a result, small-scale CNG, LNG and LPG projects are experiencing rapid expansion, particularly visible in countries such as Nigeria, Morocco, Tanzania, Gabon and South Africa. In Nigeria, there is a significant increase in CNG and LNG projects to meet the unmet needs of the industry, while Sound Energy is building the Tendrara micro-LNG plant in Morocco and TAQA Arabia in Egypt is expanding CNG infrastructure in East and West Africa. In Gabon, Perenco has commissioned a new LPG terminal and is developing its first LNG plant, while Renergen recently started LNG deliveries in South Africa.
Planning the way forward
Progress in the African natural gas sector is encouraging, but challenges remain. Key factors such as infrastructure development, policy framework and investment climate will be critical in shaping the future of the industry.
To attract investment, successful projects must be sustainable, inclusive and aligned with climate goals. Robust regulatory frameworks are also needed to ensure a stable environment for private sector participation.
As African countries increasingly view natural gas as an essential part of a sustainable energy supply, the potential benefits are significant. Developing gas infrastructure can meet immediate energy needs and provide long-term economic and environmental benefits. By integrating natural gas into their energy mix, African countries can move away from traditional fossil fuels, support development goals and improve regional cooperation, paving the way for a more interconnected and resilient energy landscape.
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Published: 14-08-2024
