GasForAfrica REPORT 2023 Final

Gas for Africa
ASSESSING THE POTENTIAL FOR ENERGISING AFRICA
Endorsed by
1
Acknowledgements
The Gas for Africa report was prepared by Hawilti Ltd in partnership with the
International Gas Union (IGU).
The report is based on market research, publicly available data, and research
interviews conducted by Hawilti Ltd. with various public- and private-sector
executives across Africa. It engaged the African Union’s African Energy Commission
(AFREC) and the Africa Finance Corporation (AFC), which have provided critical
insights and endorsed the report’s key findings and conclusions.
We received valuable inputs from numerous experts whose contributions and

review helped to develop and shape this report, including:
• Rashid Ali Abdallah, Executive Director, African Energy Commission (AU-AFREC);

• Taiwo Okwor, Vice President Natural Resources, Africa Finance Corporation (AFC);
• Halima Abba, Associate Vice President, Africa Finance Corporation (AFC);
• Charles Nyirahuku, Chief Gas Officer, African Development Bank Group (AfDB);
• Adly Kafafy, Vice President for Africa, TAQA Arabia;
• Dr. Yang Lei, Chair of the IGU Coordination Committee;
• Benoît de la Fouchardiere, Group General Manager, Perenco;
• John Smelcer, Managing Director Business Development, Globeleq;
• Paul Eardley-Taylor, Head of Oil & Gas - Southern Africa, Standard Bank;
• Jean Craven, CEO, Barak Fund Management;
• Karim Shaaban, Managing Director, Rosetta Energy;
• Audrey Joe-Ezigbo, Co-Founder & Deputy Managing Director, Falcon Corporation;
• Sumeet Singh, CEO, Powergas Nigeria;
• Jamal Akinade, Founder & CEO, Bridport Energy;
• Hassana Mbeirick, CEO, Meen & Meen.
2 Gas For Africa Gas For Africa 3

Welcome
We are delighted to welcome you to this important report,
produced jointly by the International Gas Union with Hawilti Ltd.
Africa is home to every fifth human on successfully using natural gas to produce endorsements of this report’s findings value chains in Africa. We hope
the planet; it has the youngest and fastest electricity and serve other key energy by the African Union’s African Energy that readers will find it valuable and
growing population with the lowest energy needs, most Africans still have no way to Commission and the Africa Finance that this report will play an important
access level in the world. It also has close access Africa’s gas. The lack of delivery, Corporation. The analysis presented role in enriching the understanding
to one tenth of the world's proven natural storage, and access infrastructure, in the subsequent sections assesses of the scale of domestic and global
gas reserves. together with small, remote, and often key drivers, potential, barriers, and opportunity for Africa’s gas and
rural demand centres without solutions for developing natural gas future gas markets.
Gas can play a major role in delivering a established energy markets, form a set
secure and sustainable energy future for of complex challenges for gasification.
Africa and can enable a just energy However, as complex as the challenges
transition, which starts with energy are, there are achievable solutions, many
access. Access to modern energy in of which have been demonstrated Li Yalan
Africa is imperative for its development, successful local examples, some of President
its ability to respond to climate change, which are explored in this report. International Gas Union
and for gradually decarbonising its
economies. Gas is one of the keys to It is also imperative that Africa’s gas
unlocking this access, and it is also a key industry is future-ready, which means
source of flexibility and reserve energy minimising or eliminating value chain
needed for integrating large amounts of emissions of natural gas and applying
variable renewables. Using its gas infrastructure designs today which are
resources together with renewable ready for decarbonisation in the future.
energy technologies, Africa can build There are clear opportunities to Amel Grabsi
energy systems compatible with a future-proof new projects and maximise Partner & Head of West Africa
climate- or carbon-neutral future and the sustainability value of existing Hawilti Ltd
underpin the continent’s sustainable natural gas projects, including actions to
economic development. eliminate flaring and methane emissions.
Most of the gas developed in Africa Finally, for gas opportunities to be

to date has been exported. While realised, domestic cooperation and local
several African countries with the most leadership will be critical, and we are
advanced energy networks have been most grateful for the invaluable

Foreword
Role of Natural Gas in Africa’s Just Energy Transition
The African Union attaches great bringing about socio-economic gas. When non-African advocates call build infrastructure to facilitate trade
importance to the implementation of development and mitigating climate for an immediate end to all fossil fuel on Africa’s natural gas market. Through
ambitious energy goals designed to build change through its ability to reduce utilisation and global capital investors regional integration, African countries
resilient energy infrastructure on the greenhouse gas emissions when stop funding gas projects, developing have the opportunity to exploit
continent. The 41st Ordinary Session of substituting coal, oil and biomass. countries in Africa will suffer regional value chains and expand their
the Executive Council adopted the economically and socially. markets, which would otherwise be
African Common Position on Energy Proven natural gas reserves in Africa are small and fragmented. In turn, regional
Access and Just Energy Transition, on the estimated to be at least 18 Tcm, about Africa’s wealth of gas resources value chains are important anchors for
15th of July 2022, a comprehensive 8.8% of the world’s total. They are provides the economic foundations for industrialisation and broader economic
approach that charts Africa’s short-, considerable in Northern (45%) and the sustainable development of many transformation. The expansion of
medium-, and long-term energy Western (32%) Africa especially, and African countries, while the discovery continental and regional gas markets in
development pathways to accelerate commercial quantities of natural gas have and development of new natural gas Africa will offer stakeholders with broad
universal energy access and transition been found in many African countries . 1
fields continue to provide economic actions for consideration within the
without compromising its development The huge reserves of gas can play a leverage through trade and invest- framework of the AfCFTA as a key
imperatives. significant role in energy transition for the ment. It is therefore essential to foster vehicle to facilitate Africa’s energy
fact that natural gas has much less intra-African trade relationships and integration and cross-border trading.
Therefore, the African Common Position carbon footprint than oil and coal. Natural
encourages striking a balance between gas can be used as an energy source to
ensuring access to electricity to catalysing assist certain regions and countries with
much-needed socio-economic growth in power generation, transport, and
Africa and smoothly transitioning towards cooking. Sub-Saharan Africa should be Rashid Ali Abdallah
an energy system based on renewable prioritised, accounting for three-quarters Executive Director
and clean energy sources matching the of the global energy access deficit. African Energy Commission (AU-AFREC)
ambitions of Agenda 2063. This is in Several countries, including Mozam-
recognition that access to energy bique, Tanzania, Mauritania, and
currently stands low in Africa compared Senegal, are actively marketing the use
to other regions, with almost 600 million of natural gas to capitalise on recent
Africans living without electricity services discoveries. Gas is therefore an ideal
while almost 1 billion lack access to clean baseload fuel that complements the
cooking facilities. Natural gas is a resource rapid uptake of renewables. Thus, as
that has a significant role to play in part of a just transition, Africa requires
1
Africa and Just Energy Transition, Considerations for the expansion
of Africa Oil and Gas Domestic Market, AFREC, 2022

Foreword
It gives me great pleasure to welcome to use an additional 90 bcm/y by 2030, gas-fired plant that will will increase the As Africa develops, it is essential that
this timely study on the state of gas in or 50% more than it does today, the generation capacity of the country by a we utilise our resources to their fullest
Africa. For far too long Africa has resulting emissions would only raise third. Senegal’s economy is poised for 8% potential. This report is a valuable tool
suffered from widespread energy Africa's cumulative contribution to economic growth this year and 10.5% in in understanding the opportunities that
poverty in the midst of abundant natural global CO2 emissions to 3.5%, according 2024, according to the World Bank, due in abundant reserves offer for Africa's future.
gas reserves and correcting this to the International Energy Agency (IEA). no small part to gas import substitution It should catalyse discussion and action.
incongruity must become mission Crucially, harnessing Africa’s natural gas and the export of gas. The world is waiting.
critical if the continent is to meet its could provide the baseload power
development aspirations. needed to boost Africa’s capacity to
process its raw materials locally,
The global energy market is in an rather than the continent’s current
unprecedented state of flux. Conflict in practice of shipping them halfway across Samaila Zubairu
Ukraine is driving a desperate search to the world at a great cost to the climate. President & CEO
diversify sources of gas supplies to At the same time, Africa’s biggest Africa Finance Corporation
Europe, opening significant opportuni- contribution to global net zero could
ties for exploration and logistics in derive from arresting the pace of
Africa. At the same time, gas is key to deforestation. How do we achieve this?
helping Africa overcome its crippling By offering the roughly 63% of African
energy deficit, as well as play its part in households that rely on woodfuel for
the global energy transition. At the Africa cooking, a cleaner cooking alternative.
Finance Corporation, we hold the view that
gas is critical not only to Africa's energy It is for these reasons that AFC works to
security, but also holds the key to a develop the infrastructure instrumental
pragmatic and just energy transition. Only to producing gas and connect multiple
gas has the potential to end Africa’s countries through new and expanded
energy deficit quickly and affordably – corridors, assisted with time by the
lifting hundreds of millions out of poverty African Continental Free Trade Area
while generating needed export revenue agreement. A case in point is Senegal.
for re-investment in renewable The West African nation is heavily reliant
solutions. on expensive fuel oil imports for
generation of electricity, with 83% of its
In the transition towards wind, solar and energy generated from HFO. With our
hydro, gas is by far the next cleanest partners and the Government of
alternative. In fact, if the continent were Senegal, we are building a 300-MW

Contents
EXECUTIVE SUMMARY 12
1. AFRICA’S ENERGY CONTEXT 26

1.1 Coming to Terms with the Reality of Energy Poverty 28
1.2 Africa’s Domestic Gas Penetration Remains Minimal 39
2. AFRICA’S NATURAL GAS IMPERATIVE 56

2.1 The Local Opportunity: African Gas for Domestic Energy Security 59
CASE STUDY 1: Two Decades of Domestic Gas Monetisation in Tanzania 62
2.2 Africa’s Export Market Opportunity: Leveraging Export Revenues to Energise 71
Local Economies
CASE STUDY 2: Nigeria LNG’s Contribution to the Development of the 78
Nigerian Economy
2.3 Africa’s Just Energy Transition: The Decarbonisation Opportunity 82
CASE STUDIES 3-5: Actions on Flaring Reductions in Nigeria, Angola, 91
and the Gulf of Guinea
3. BRIDGING THE GAP 100

3.1 Challenge 1: Overcoming Financing Barriers 102
CASE STUDY 6: Central Térmica de Temane (CTT) as a Futureproof Project 108
3.2 Challenge 2: Developing Gasification Infrastructure 112
3.3 Challenge 3: Providing a Positive Business Climate 127
4. SUMMARY CONCLUSIONS 135

Executive Summary
This report assesses key drivers, potential,
barriers, and solutions of developing
natural gas value chains in Africa to fight
energy poverty and enable a just energy
transition. In doing so, it looks at how
gas can play a major role in delivering a
secure and sustainable energy future for
the continent – economically, socially,
and environmentally.
Picture: Savannah Energy

Executive Summary Executive Summary
Africa’s energy poverty is rising and directly impacts the continent’s

Despite holding over 8% of the world’s resources has remained reserved development potential and response to climate change.
proven reserves of natural gas, Africa mostly for the export market. While
remains the most energy-poor continent. African gas has been fueling economies This report first looks at the current not have access to electricity, and almost
Industries rely on expensive, inefficient, and supporting decarbonisation and reality of energy access in Africa, which 1 billion currently lack access to clean
and polluting sources of energy, and jobs abroad, most of the African remains largely insufficient to support cooking.
hundreds of millions of households lack continent has no access to infrastructure the continent’s growing economies and
modern energy access. Instead of to benefit from its resources. Domestic populations. In light of Africa’s rapid Given the lack of energy access and low
population growth and post COVID-19 industrialisation levels, Africa has the
helping to meet growing domestic gas markets remain under-developed or
economic downturn, we find that efforts lowest primary energy consumption
energy needs, the development of non-existent, especially south of
to increase energy access are slowing per capita in the world, estimated at
Africa’s abundant domestic gas the Sahara.
down. Almost 600 million Africans do 14.6 gigajoules (Gj) – or five times less than
UNDERSTANDING ENERGY POVERTY

Figure 1: Understanding energy poverty
OECD North Africa Sub-Saharan Africa

20,000 Canada
15,000
Electricity consumption Korea USA
per capita (kWh)
Australia
South Africa Libya
5,000
Algeria UK
Egypt Turkey
Morocco Mexico
1,000 Zambia
Ghana Gabon
Mozambique Zimbabwe
Sudan Angola
Congo, Rep
Senegal
Togo Cameroon Côte d’Ivoire
DRC Kenya
Tanzania Nigeria
Ethiopia
Niger Benin Income per capita, $*
1,036 4,045 12,535
There is a direct correlation between income and energy consumption. High-income

countries are all high-energy, while low-income countries are all low-energy.
The threshold of 1,000 kWh of electricity consumption/capita marks the Modern
Energy Minimum set by the Energy for Growth Hub.
* Lower middle-income economies are those with a GNI per capita between $1,036
and $4,045; followed by upper middle-income economies with a GNI per capita
between $4,046 and $12,535; and high-income economies with a GNI per capita
above $12,535. Source: IMF, World Bank
Picture: Globeleq

the world average (75.6 Gj), seven times Natural gas has become a critical integration of increasingly affordable f) Build gas systems that are
less than China (109.1 Gj), 16 times less component of Africa’s quest for renewable energies (wind, solar). decarbonisable with the use of
than Belgium (235.8 Gj), and almost 20 modern, affordable, and reliable renewable gas, hydrogen, and carbon
times less than the US (279.9 Gj)2. energy. c) Provide cleaner and more affordable capture technologies, and can therefore
energy to households and industries by provide energy today while anchoring
Africa wants to leverage its proven reserves
Electricity consumption is also very low, displacing wood, biomass, charcoal, and the continent’s future low-carbon power
of natural gas – some 18 tcm, or 8.8% of the
averaging 534.6 kWh/capita on the diesel. systems.
world’s total discovered reserves5 – to meet
continent in 2020, against a global
its vast and growing energy needs. Adopting
average of 3,210 kWh3. Most people in d) Switch coal and diesel-fired power Successful African case studies
gas has become increasingly relevant,
sub-Saharan Africa have an electricity plants to gas to begin decarbonising the demonstrate that while the challenges
considering sustained constraints on
consumption that is below that of an electricity mix. are complex, local solutions for achieving
hydropower capacity due to droughts,
average US fridge4. gasification and emissions reductions can
and the declining use of heavy fuel oil HFO/
e) Develop receiving and processing be developed. These cases include the
Figure 2: Low energy diesel because of their heavy pollutant
infrastructure that can monetise successful monetisation of domestic gas
Electricity consumption, MWh/capita emissions. In its quest for greater gas
LOW ENERGY associated gas, thereby eliminating use in Tanzania, growth of LNG exports in
(2020)
Electricity consumption, MWh/capita (2020) adoption, the continent seeks to reorient
routine flaring while making additional Nigeria, and flaring reduction initiatives in
United States 12.7 gas towards domestic markets and find the
energy available for homes and industries. Angola, Nigeria, and Cameroon.
Australia 9.9 appropriate balance between lucrative
France 7 export revenues and pressing needs for
World 3.21
local development. By adopting gas locally,
Household fridge* 0.46
0.17
Africa can notably achieve the following:
Kenya
Nigeria 0.13
Tanzania 0.12 a) Promote gas-based industrialisation to
DRC 0.11 create jobs, expand supply-chains with the
Ethiopia 0.09
production of fertilizer and petrochemicals,
*US average and diversify economies with the growth of
* US average
Source: IEA, Energy For Growth Hub
energy-intensive industries such as cement,
steel, and desalination among others.
Energy poverty is preventing the industrial
and commercial development of Africa and b) Generate baseload electricity in
making the development of competitive countries with no alternatives like
and modern economies, as well as hydropower or geothermal, and
implementing climate change mitigation ultimately strengthen national and
measures, impossible. regional power systems to enable the
View of the
2
bp Statistical Review of World Energy, 2022
3
International Energy Agency (IEA) Coral Sul FLNG
4
"Africa will remain poor unless it uses more energy", 3 November 2022, The Economist Picture:Eni
5
Annual Statistical Bulletin 2022, Organisation of Petroleum Exporting Countries (OPEC)

Figure 3: Africa's energy balance 2020

in millions of tonnes of oil equivalent
The International Energy Agency's Sankey diagram on Africa's energy

balance reveals that most of Africa's final consumption in energy is biomass
and imports, while two-thirds of its oil and much of its gas are exported.
The scale of fuelENERGY
AFRICA’S in power losses is2020
BALANCE another striking detail revealed by the diagram.
In millions of tonnes of oil equivalent
Statistical differences
Stock changes Statistical differences
Production and imports Total final consumption
(1271.7 Mtoe) (598.4 Mtoe)
Industry
Oil prod 328.3 361.2 344.7 94.8 Refineries
Oil imp
204.0 193.6 157.7
Oil products imp 114.4

97.7 Other transformation
110.6 Transport
Coal prod 147.7 158.6 156.8 96.3
Coal imp
Gas prod 197.8 207.6 202.3

Gas imp
307.2 Other
324.0
Bio/waste prod 390.3 397.7 395.0
Bio/waste imp
Electricity imp
Non-energy use
Heat production
Geoth prod
Other prod
Hydro prod
Nuclear prod
Power station
249.9
Exports Power losses Own use Exports Bunkers

Stock changes
1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: IEA
Source: IEA

Gas is a solution to building resilient and sustainable energy

systems that can help Africa decarbonise in the short and long term. Emissions
Figure factors
5: Emissions fornatural
factors for natural gas
gas vs. vsand
coal coal
oil and oil
Power generation Road transport Marine bunkering
Africa's current energy mix is dominated distributed diesel capacity alone Coal-super Natural Diesel- CNG HFO LNG
critical gas-CCGT ULSD
by highly emitting and polluting traditional estimated to be anywhere between
sources, such as biomass, wood, and 45GW5 and 100 GW6. 1,000 900 200 122 117 1,000 742 662
Carbon dioxide (CO2) 500 400 100 500
charcoal with negative impacts on public 0 0 0
health and the environment. Natural gas provides an immediate kg/MWh gross eq g/km eq g/km
emissions reductions benefit when 0.05

0.05
50 0.04
25
Particulates (PM) 0.01
The shares of coal and natural gas are it replaces coal or oil fuel, both in 0.025
<0.1
25
0.0
0.02
0.0
0 0 0
the most important but vary heavily from greenhouse gases and especially in air PM 2.5 - kg/MWh gross mg/km g/g of fuel
country to country. Most coal-fired pollutants. For this reason, several African 0.1
0.5 0.3 400 250 0.1
electricity is located in South Africa, while countries, including Ghana, South Africa, Nitrogen oxide (NOX) 0.25
<0.1
200 50 0.05
<0.1
0 0 0
the most gas-fired electricity is produced and Senegal, are planning to switch to gas g/g of fuel
kg/MWh gross mg/km
largely in Egypt and Algeria. to lower their emissions and improve air 0.05
0.5 400 0.05
quality. Sulphur dioxide (SOX) 0.25
0.3
200
3.7
On the other side, Sub-Saharan Africa 0 0.0 0 0.0 0 0.0
kg/MWh gross mg/km g/g of fuel
relies heavily on oil to support its Gas adoption also comes with a big
decentralised power generation industry, affordability benefit as gas is often a lot Source:
Source: NETL,
NETL, EEA, OIES,
EEA, OIES, BCG analysis
BCG analysis
which consists of sparse captive power cheaper in power, industry, and transport
plants and diesel generators, with than imported diesel. This has been demonstrated in Nigeria for instance where
between 2020 and 2022 CNG was two to
four times cheaper than diesel.
Africa’s
Figure electricity
4: Africa's electricitymix in Twh(2021)
mix (2021)
Natural gas Developing gas infrastructure and

5% 5%
Coal 8% 11% markets in Africa should also go hand in
Hydroelectric hand with further decarbonisation of the
40% 45%
Oil fuel supply in the medium and long-term.
Renewables 17%
This includes supporting the integration of
Nuclear energy 31%
variable renewable generation, and
Other
28%
planning for carbon capture, renewable
9%
gases, and hydrogen integration.
Africa Africa without Egypt and South Africa
Total: 897.5 TWh Total: 443.5 TWh
The report also looks at the potential of a
Source: bp Statistical Review of World Energy, 2022 broader penetration of gas across industry
Chart: Hawilti, Source: BP
and transport by using CNG, LNG, and
5
Africa Energy Outlook 2022, IEA Picture: Eni
6
"Utility evolution in Africa to reshape global electricity demand", 17 March 2022, Wood Mackenzie LPG.

In terms of the green Africa has had some degree of success capture and use their associated gas.
house gas (GHG) Figure 6: Flaring in Africa (2021) in cutting flaring; however, the results They demonstrate that while penalty
emissions impact in the Flaring intensity, cubic have stagnated. Case studies in mechanisms have proven useful, they
metres of gas flared per
short to medium-term, Flaring volumes, MMscm barrel of oil produced Angola, Nigeria, and the Gulf of Guinea fall short of offering solutions for small
adoption of natural gas Algeria 8.155,82 19,7 offer some lessons to be applied by and scattered flare sites where gas is in
in Africa will have a Nigeria 6.626,85 11,7 regulators and operators to successfully low-pressure and low volumes.
limited impact on global Libya 5.998,54 13,2
Egypt 2.082,46 10,2
emissions, given its Africa can better use its export industry to develop local markets,
Angola 1.801,05 4,4
miniscule starting point. Congo, Rep 1,552.17 15,7 while further contributing to fuelling the global energy transition
The IEA estimates that Gabon 1,338.42 20,9 and enhancing energy security.
using an additional 90 Bcm Cameroon 780,79 33,8
per year of African gas by Ghana 599,24 9,1 The overall growth trend of global LNG
Tunisia 272,31 21,1 Figure 7: African LNG export capacity,
2030 for the fertilizer, steel, demand over the past decade has
Equatorial Guinea 254,64 5,5 African
mtpa LNG export capacity, mtpa
(2022-2030)
cement, and water desal- Sudan 242,54 9,9 enabled African countries to monetise gas African LNG export capacity, mtpa
(2022-2030)
ination industries would DRC 225,8 28,1 in lucrative export markets and gave (2022-2030)
Nigeria Algeria Mozambique Egypt Angola
generate cumulative CO2 Chad 178,94 5,6 birth to several LNG export terminals on Nigeria Guinea
Equatorial Algeria Mozambique
Mauritania/Senegal Egypt
TanzaniaAngola
emissions of 10 Gt . This Niger 49,55 17,1 Equatorial Guinea

Libya* Congo, Rep. Mauritania/Senegal
Cameroon Tanzania
Gabon
7
the continent. Still, Africa’s export
South Africa 27,87 Libya* Congo, Rep. Cameroon Gabon
would take Africa’s share of capacity has remained relatively small 140
Côte d’Ivoire 15,11 1,2
global emissions from only compared to its potential. With the 140
3% today to 3.5% by 2050. Source: Global Flaring Reduction Partnership (GFRP), World Bank current market fundamentals signaling
the strong need for investments in new
100
Sustainability improvements will be vital for the gas value LNG supply, the continent has a new
chain in Africa to ensure its global competitiveness. 100
window of opportunity to position itself
as a strategic and reliable global gas
It will be vital for the future of Africa’s to emissions reduction in the short-term,
supply hub. However, this window is not
gas industry to ensure state-of-the-art while making Africa’s resource base more
exclusive to Africa, nor will it stay open 50
management of the gas supply chain, competitive and providing more energy to
forever. 50
necessary to progressively minimise GHG growing African economies.
emissions, including methane. This will have
By 2025, Africa’s LNG export capacity will
a major impact not just on the industry’s The Methane Guiding Principles provide
already have increased from 77.6 mtpa
environmental footprint, but also very a valuable reference for implementing
today to 83 mtpa with new countries 2022 2025 2030
prominently on the attractiveness of the good industry practices for methane
joining the club of African gas exporters, Best-case scenario projections based on approved and pre-FID
African gas sector for investments. management in Africa8. 2022
projects. *Libyan 2025
capacity is unoperational 2030
such as Senegal, Mauritania, or Congo.
Source: IGU, Hawilti research
Much more potential exists based on Best-case scenario projections based on approved and pre-FID
Best-case scenario projections based on
Methane emissions management and Flaring reduction is another critically projects. *Libyan capacity is unoperational
projects currently being proposed, with a approved and pre-FID projects.
flaring reduction projects can contribute important element for Africa's gas future. Source:*IGU, Hawilti
Libyan researchis
capacity
unoperational
total proposed project pipeline totalling
7 Africa Energy Outlook 2022, IEA over 55 mtpa. Source: IGU, Hawilti Research
8
https://methaneguidingprinciples.org

To realise this vast potential and benefit ment of export projects needs to translate
Figure 8: Key principles to supercharge the development of Africa's gas markets
from lucrative sector investments, a into better value for local economies.
pragmatic approach, a sense of urgency, The report considers the opportunity to For full details on our 8 guiding principles, please refer to Section 4.
and a focus on competitiveness to attract use export infrastructure to anchor

the billions of dollars that will be injected domestic gas projects (Mozambique, 1. Futureproof by Design Alignment of future gas development plans
into LNG projects this decade. Mauritania, Senegal, Morocco, Nigeria) with the just energy transition; guarantees of
and the role of LNG export terminals in environmental sustainability and compatibility
with the goals of the Paris Agreement.
Equally important, the further develop- boosting domestic supplies of gas liquids.
To maximise its gas potential and foster sustainable economic 2. Financial Innovation Look inward and promote domestic financing
development, African stakeholders should seek to address mechanisms that can tap into vast pools of
several barriers. institutional money, especially for domestic projects.
First, financing capital-intensive energy remains perceived as risky and

uneconomical, especially considering 3. Good Business Climate Safe and stable investment climate will be pivotal to
projects in Africa faces two major
ensuring that the continent is globally competitive.
challenges: African states’ growing debt small and scattered demand centers in
burden and global asset managers’ Sub-Saharan Africa. To grow gas
divestment from all hydrocarbons. penetration, this report suggests exploring 4. Regionalisation Sub-regional and regional gas and energy networks
Securing capital for gas ventures is as several avenues, notably including can support economies of scale and infrastructure
ever more challenging, as it is ever more developing industrial clusters, reforming investments.
needed, and it calls for (1) futureproofing electricity markets, promoting regionali-
projects to reassure global investors of sation, and encouraging the adoption of 5. Cluster and Ecosystem Industrialisation plans can focus on creating
sustainability and climate value, and small-scale technologies. Investing manufacturing clusters located next to gas fields
(2) unlocking additional sources of to benefit from a cheap source of electricity and
capital, especially domestically. Finally, there is a pressing challenge to energy.
develop an enabling environment and
The second barrier is the lack of decrease risks associated with investing 6. Gradual Scaling Small-scale projects have proven as a winning
infrastructure for the processing, in Africa. Policy certainty and physical strategy to pre-develop gas markets and
storage, and distribution of natural gas. security are imperative in Africa to provide unlock suppressed demand.
Investing in African gas infrastructure a positive environment and grow gas
value chains. 7. Build Electricity Markets Reforms are needed to restructure electricity
markets and increase liquidity, while improving
In light of the long-term global demand operational efficiencies.
uncertainties and the intensifying compe-
Picture: Sahara Group
tition within the broader energy transition, 8. Price Emissions Externalising the cost of emissions is an effective
it is important to address these barriers way to invest in emission reductions projects and
with a sense of urgency, before Africa's incentivise switching from coal and oil to natural
window of opportunity begins to close. gas.

1 / Africa's Energy
Context
An energy-poor continent where
access to energy is the lowest in the
world, expensive, and polluting

1 / Africa's Energy Context 1 / Africa's Energy Context
Despite holding over 8% of the world’s domestic gas resources has remained re-
Figure 11: Energy access in Africa
proven reserves of natural gas, Africa served in large part for the export market. Population without access to electricity (millions)
remains the most energy-poor continent. While African gas has been fueling econo-
Industries rely on expensive, inefficient, mies and supporting decarbonisation and
and polluting sources of energy, and jobs abroad, most of the African continent
hundreds of millions of households lack has no access to infrastructure to benefit TUNISIA
1
MOROCCO
modern energy access. Instead of helping from its resources. Domestic gas markets 1
to meet growing domestic energy needs, remain under-developed or non-existent,

ALGERIA
the development of Africa’s abundant especially south of the Sahara. 1 LIBYA
1 EGYPT
1
1.1 Coming to terms with the reality of energy poverty

CAPE VERDE MAURITANIA
1
Africa has the lowest primary 2.5 MALI
NIGER
African
Figure populations
9: African populationswithout access
without access to
9.7
20.9 SUDAN
energy consumption per capita in to electriciy,
SENEGAL
CHAD
23.1
ERITREA
millionsmillions (2000-2020)
15.1 2.5
5
electricity, (2000-2020)
the world and the lowest share of THE GAMBIA
1 BURKINA FASO
16.4
DJIBOUTI
1
GUINEA
the world’s greenhouse gas 600
GUINEA-BISSAU
1.2 7.4 BENIN
8.3
NIGERIA SOMALIA
65.3 10.3
emissions by population.
CÔTE
590 SIERRA LEONE
6.2
D’IVOIRE TOGO
4.5
ETHIOPIA
59.3
5.8 CENTRAL AFRICAN SOUTH SUDAN
GHANA 10.4
580 LIBERIA
3.6
4.7
CAMEROON
REPUBLIC 4.6
9.8
As a result of continuous population growth 570
EQUATORIAL GUINEA UGANDA
560 34.1 KENYA
and recent setbacks in infrastructure, the 1
GABON
REPUBLIC
OF CONGO RWANDA
5.8
12.1
550 1 2.9
number of Africans without access to SAO TOME & PRINCIPE
1 SEYCHELLES
540 CONGO
81.8 BURUNDI 1
electricity is back on the rise, reaching 10.7

530 ANGOLA
18.1
almost 600 million in 20209. With a current TANZANIA
37
2000 2005 2010 2015 2020 COMOROS
population of some 1.4 billion people, Africa 1
has the lowest primary energy consumption Source: IEA SDG 7 database ANGOLA
MALAWI
17
18.1
ZAMBIA
per capita in the world, estimated at 14.6 12.4
gigajoules10. This is 10 times less than Figure 10: World's primary energy consumption
World’s primary energy comsumption MAURITIUS
ZIMBABWE 1
per region, gigajoules per capita (2021) MADAGASCAR
Europe (122 gigajoules), and four times perregion, Gigajoules per capita (2021) NAMIBIA
1.4
7
20.2
BOTSWANA
lower than other developing countries in North America 227
1 MOZAMBIQUE
19.4
Latin America or Asia. CIS 163

ESWATINI
1
Middle East 143 LESOTHO
Europe 122 1.2
Limited access to reliable and affordable en- Asia Pacific 61.6 SOUTH AFRICA
3
South & Central America
ergy continues to hamper Africa’s develop- 53.7
Africa 14.6
ment and keeps industrialisation rates low.
Most of the continent’s commodities are still Source: bp Statistical Review of World Energy, 2022 Source: IEA SDG 7 database
Disclaimer: The boundaries, colors, denominations, and other information shown on any map in
9
IEA SDG 7 database - https://www.iea.org/data-and-statistics/data-products/sdg7-database
this work do not imply any judgment on the part of Hawilti Ltd nor the International Gas Union
10
concerning the legal status of any territory or the endorsement or acceptance of such boundaries.

exported, as Africa remains at the

bottom of the global value chain with its Figure 12: Low energy Figure 13: CO2 emissions in Africa in tonnes per capita (2021)
Electricity consumption, MWh/capita
share of global manufacturing at less than (2020)ENERGY
LOW
2%, according to the African Development Electricity consumption, MWh/capita (2020)
Bank (AfDB) . While industrialisation is a
11
United States 12.7
key priority for most African governments, Australia 9.9
building diversified and integrated France 7
economies without widespread access to World 3.21

Household fridge* 0.46
reliable and affordable energy is impossible.
Kenya 0.17
Nigeria 0.13
Meanwhile, the disparity in living standards Tanzania 0.12
is increasing, with poverty levels on the rise DRC 0.11
since the COVID-19 pandemic. Africa’s pov- Ethiopia 0.09
Carbon dioxide (CO2) emissions
erty headcount rate (below a poverty line of *US average from fossil fuels and industry.
* US average Land use change is not included.
$1.9 per day) is estimated to have increased Source: IEA, Energy For Growth Hub
by 3 percentage points because of the Source: Our World in Data based on
pandemic12. In total, COVID-19 is expected No data 0t 0.1t 0.2t 0.5tthe Global

1t Carbon
2t Project
5t (2022)
10t 20t
to have sent 37 million more Africans into resilience. Over the past few years, the
No data 0t 0.1t 0.2t 0.5t 1t 2t 5t 10t 20t
extreme poverty while diverting a significant continent has witnessed heat waves,
share of public spending into economic extensive floods, prolonged droughts,
relief packages. and rising sea levels that result too often
revolution15. Current CO2 emissions per However, wide inequality in electricity pro-
in human and economic losses . 13
capita naturally remain low, standing at 1.04 duction and consumption calls for a careful
As a result, most infrastructure develop-
tons per capita in Africa in 2021, or four review of statistics. Egypt and South Africa
ment programmes have been affected and While the impact of climate change on the
times less than the global average of 4.69 alone produce almost as much electricity as
the pace of bringing power to industries, continent is severe, Africa has contributed
tons per capita . 16
the rest of the continent combined. Because
homes, businesses, schools, and hospitals almost nothing to the world’s global emis-
their electricity mix is heavily dominated by
has slowed down. Continued population sions causing the problem. Combined, the
Africa’s limited electricity systems gas and coal respectively, they heavily weigh
growth coupled with inflation is pushing continent accounts for less than 3% of the
continue to rely on inefficient into the continent’s overall mix, which may
more and more Africans into energy pov- world’s energy-related carbon dioxide
grids, with a generation mix hide the actual diversity of electricity
erty, making access to modern energy, (CO2) emissions to date14. Without North
dominated by expensive and sources across the remaining countries.
which is in short supply, unaffordable. Africa and South Africa, the remaining
polluting fuels.
Because of limited infrastructure and low 48 Sub-Saharan African countries' share of
Overall, natural gas dominates Africa’s
access, African countries are also the least global emissions could be as low as 0.55% of
To generate its electricity, the continent electricity mix, led by strong genera-
able to cope with climate change and build global emissions since the industrial
heavily relies on polluting sources of energy. tion centers in North Africa (particularly
11
https://www.afdb.org/en/the-high-5/industrialize-africa
12
Economic Development in Africa Report 2021, United Nations Conference on Trade and Development (UNCTAD) 15
"Moving Beyond 'All or Nothing': Finding the Pragmatic Middle Ground on Gas in Africa", 15 November 2022,
13
State of Climate in Africa 2021, World Meteorological Organization (WMO) Energy for Growth Hub
14
Africa Energy Outlook 2022, IEA 16
Global Carbon Project, 2021

Carbon Project19, coal and oil are responsi- Section 2. 3.). Meanwhile, power trans-
Africa’s
Figure electricity
14: Africa's mix
electricity mix in Twh(2021)
(2021)
ble for 68% of Africa's emissions, while gas mission and distribution infrastructure
Natural gas
accounts for only 22%. Gas generates 50% remains inadequate and forces millions
5% 5%
Coal 8% 11% less GHG emissions than coal when used of individuals and enterprises to rely on
Hydroelectric to generate electricity and a third less to off-grid solutions to access electricity. The
40% 45%
Oil provide heat20. continent’s two biggest economies, Nigeria
Renewables 17%
and South Africa, are struggling the most
Nuclear energy 31%
For the same reason, the share of gas with inadequate power systems. Between
Other
could increase further as countries seek January and September 2022, Nigeria’s
28% 9%
to cut the burning of coal and oil (includ- grid collapsed four times21.
Africa Africa without Egypt and South Africa ing diesel and heavy fuel oil, or HFO) and
Total: 897.5 TWh Total: 443.5 TWh
switch to gas to lower GHG and air pollut- Meanwhile, South Africa experienced
Source: bpHawilti,
Statistical Review ant emissions. Key countries such as South one of its worst load-shedding years on
Chart: Source: BPof World Energy, 2022
Africa and Senegal are already advancing record in 2022, a practice that forces
Egypt and Algeria). Coal-based power Figure 15: Primary energy consumption coal-to-gas switching projects that will rely the country to switch off power in parts
generation is mostly centered in South inPrimary
Africa energy consumption
by fuel, exajoules in Africa
(2021) both on imports of liquefied natural gas of the distribution system to avoid total
by fuel, Exajoules (2021)
Africa, the biggest electricity producer (LNG) and domestic gas monetisation to grid collapse. Between January and
on the continent, ahead of Egypt. Oil Oil 7.86
decarbonise their electricity mixes and September 2022, South Africa experi-
Natural gas 5.92
is mostly consumed for power across improve their local environment (see enced 1949 hours of load shedding22.
Coal 4.21
Sub-Saharan Africa where it supports a Hydro 1.45
thriving decentralised power generation Renewables 0.47

Nuclear energy 0.09
industry that uses diesel (fed into large
Primary energy comprises commercially traded fuels used to generate electricity
generators) and gasoline (for smaller Note: Primary energy here comprises commercially
generators). Recent estimates of Africa’s traded fuels used to generate electricity
decentralised diesel generation Source: bp Statistical Review of World Energy, 2022
capacity vary from 45 GW17 to 100 GW18.

But because it is off grid, this is often not Figure 16: CO2 emissions by fuel in
CO2 emissions by fuel in Africa (2021)
Africa (2021) in million tonnes
reflected in global data repositories. In million tonnes
Oil 556.61
Thanks to its lower emissions profile, Coal 433.85
despite natural gas being the dominant Gas 326.3
source of power generation in existing Cement 77.73
grids, it’s share of Africa’s CO2 emissions is Flaring 56.3
three times less than that of coal and oil.

Picture: Globeleq
According to data gathered by the Global Source: Global Carbon Project
17
Africa Energy Outlook 2022, IEA 20
"The Role of Gas in Today's Energy Transition", July 2019, World Energy Outlook special report, IEA CC BY 4.0
18
"Utility evolution in Africa to reshape global electricity demand", 17 March 2022, Wood Mackenzie 21
"Nigeria suffers widespread blackouts after electricity grid fails", 26 September 2022, Reuters
19
Our World In Data based on the Global Carbon Project (2022) 22
Statistics of utility-scale power generation in South Africa, October 2022, CSIR

Figure 17: Africa's energy balance 2020

in millions of tonnes of oil equivalent
The International Energy Agency's Sankey diagram on Africa's energy

balance reveals that most of Africa's final consumption in energy is biomass
and imports, while two-thirds of its oil and much of its gas are exported.
The scale of fuel in power losses is another striking detail revealed by the diagram.
AFRICA’S ENERGY BALANCE 2020
In millions of tonnes of oil equivalent
Statistical differences
Stock changes Statistical differences
Production and imports Total final consumption
(1271.7 Mtoe) (598.4 Mtoe)
Industry
Oil prod 328.3 361.2 344.7 94.8 Refineries
Oil imp
204.0 193.6 157.7
Oil products imp 114.4

97.7 Other transformation
110.6 Transport
Coal prod 147.7 158.6 156.8 96.3
Coal imp
Gas prod 197.8 207.6 202.3

Gas imp
307.2 Other
324.0
Bio/waste prod 390.3 397.7 395.0
Bio/waste imp
Electricity imp
Non-energy use
Heat production
Geoth prod
Other prod
Hydro prod
Nuclear prod
Power station
249.9
Exports Power losses Own use Exports Bunkers

Stock changes
1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: IEA
Source: IEA

commercial products, Africa is particular UNDERSTANDING ENERGY POVERTY

Beyond electricity, the broader Figure 18: Understanding energy poverty
energy mix is dominated by in that its forests are mainly cut and
emissions-heavy traditional burned to make fuelwood and charcoal.
sources. It is estimated that over half of the OECD North Africa Sub-Saharan Africa
20,000 Canada
continent’s deforestation and degradation
15,000
Within the residential segment, conven- is made to secure primary energy Electricity consumption Korea USA
per capita (kWh)
Australia
tional biomass, charcoal, and firewood source . 25
South Africa Libya
5,000
remain the main fuels for cooking and UK
Algeria
heating needs. The International Energy The use of charcoal and firewood is Egypt Turkey
Morocco Mexico
Agency (IEA) estimates that 970 million something the world should work with 1,000 Zambia
Ghana Gabon
Africans currently lack access to clean Africa to discourage. Without access to Mozambique Zimbabwe
Sudan Angola
means of cooking, and recent spikes in modern energy, Africa is depleting its Congo, Rep
Senegal
the price of cooking gas have forced forests and natural carbon sinks, with the Cameroon Côte d’Ivoire
DRC Togo Kenya
millions back into more polluting but Central African forest alone absorbing 1.5 Tanzania Nigeria
Ethiopia
Niger Benin Income per capita, $*
cheaper alternatives. If nothing is done to billion tonnes of CO2 annually, or 4% of
provide cleaner cooking alternatives, 1.67 the world’s emissions every year26. Provid- 1,036 4,045 12,535
billion Africans will be using wood and ing alternatives to fuelwood and charcoal,
charcoal for cooking by 2050 according to further calls for the adoption of gas even There is a direct correlation between income and energy consumption. High-income
in residential settings and for domestic countries are all high-energy, while low-income countries are all low-energy. The
the United Nations Framework Convention
threshold of 1,000 kWh of electricity consumption/capita marks the Modern Energy
on Climate Change (UNFCCC)23. This has use. Minimum set by the Energy for Growth Hub.
a serious impact on climate, on the con-
* Lower middle-income economies are those with a GNI per capita between $1,036
servation of African forests, and especially To fight poverty and climate and $4,045; followed by upper middle-income economies with a GNI per capita
on health. According to 2022 data from the change, Africa needs energy. between $4,046 and $12,535; and high-income economies with a GNI per capita
above $12,535. Source: IMF, World Bank
World Health Organization (WHO), 3.2 mil-
lion people already die prematurely every Africa’s ability to progress its economic
year from illnesses attributable to house- development, improve the lives of its
To address ongoing demographic growth electricity usage is around 200 kWh27. At
hold air pollution caused by the incomplete people, and address climate change is tied
and tackle rampant unemployment, Africa that level, Africa’s per-capita consumption
combustion of solid fuels and kerosene used directly to its ability to provide reliable,
needs resilient power systems that provide of electricity continues to be largely below
for cooking24. modern, and affordable energy access. Its
reliable and affordable energy to its that of the world’s average of 3,210 kWh
population is expected to at least double by
industries and households. Without energy, per year per capita, and far below that
While forest degradation in Latin America 2050, by which time a quarter of the world’s
Africa will not reach higher income levels of developed economies like the United
and Asia is largely driven by logging for people will be African.
and will not build resilience to address States (over 12,000 kWh)28. Given that
climate-related risks. Excluding South Africa reality, Africa’s energy use must go up to
23
"Too many cooks", 14 June 2021, UNFCC
24
https://www.who.int/news-room/fact-sheets/detail/household-air-pollution-and-health and North Africa, the continent’s per capita allow its development, reduce poverty,
25
Hosonuma, N., Herold, M., De Sy, V., De Fries, R. S., Brockhaus, M., Verchot, L., … & Romijn, E. (2012). An assess-
ment of deforestation and forest degradation drivers in developing countries. Environmental Research Letters,
7(4), 044009. 27
SDG 7 TAG Policy Briefs: Addressing Energy's Interlinkages with other SDGs 2022, United Nations Department
26
"Gabon becomes the first African country to receive payment for reducing CO2 emissions", July 2021, Africa of Economic and Social Affairs.
Renewal Magazine, United Nations 28
IEA

improve lives, build climate change the accuracy of tracking realistic energy 1.2. Africa’s Domestic Gas
resilience, and contribute to the global poverty and raise the ambition on ener-
Penetration Remains Minimal
energy transition. This echoes growing gy access. For Africa to meet this access
calls from African leaders to better capture level, it would need to generate and 8.8% of the world’s proven
Figure 19: Africa's gas production and
the kind of energy consumption that will consume 45% more energy today. If the reserves of natural gas are in Africa’s gas supply and demand
demand (MMscm)
drive the continent’s economic growth. continent reaches 2.5 billion people by (MMscm)
Africa.
“Access to electricity means more than 2050 in line with the UN projections, it 280
Production
By the end of 2021, some 18 trillion cubic
charging a phone through a solar panel,” would need to grow its electricity sup- 260
metres (tcm) of proven gas reserves had
Malawi’s President Lazarus Chakwera ply by 175% between 2020 and 2050 to 240
been discovered across Africa. A large 220
wrote in 2021. achieve this basic access level of 1,000
majority of this gas is in Nigeria (over 200
kWh/capita.
32%), followed by Algeria (25%), 180
The Energy for Growth Hub recently
Egypt (12%), and Libya (8.3%)29. While 160 Demand
proposed a new metric for energy The exponential growth of Africa’s
Nigeria and North Africa hold most of 140
access, the Modern Energy Minimum of energy supply will need to be anchored
120
these reserves, gas has been found in
1,000 kWh/capita (300 kWh at home and into robust infrastructure and power
100
commercial quantities across the
700 kWh within the broader economy). systems that pave the way for a low- 2017 2018 2019 2020 2021
continent.
The hub suggests that this will improve carbon future.
Source: OPEC, Hawilti Research
Considering smaller or yet-to-be-classified

reserves, Hawilti’s research shows that Figure 20: Africa's gas reserves,
more than 20 African markets have Bcm (2021)
African gas reserves, Bcm (2021)
discovered gas, including Morocco, Algeria,
Nigeria 5,848
Tunisia, Libya, Egypt, Mauritania, Senegal, Algeria 4,504
Côte d'Ivoire, Ghana, Nigeria, Equatorial Mozambique 2,840
Egypt 2,209
Guinea, Gabon, the Republic of Congo, the
Mauritania* 1,769
Democratic Republic of Congo (DRC), Tanzania* 1,614
Cameroon, Chad, Angola, Namibia, South Libya 1,505
Senegal* 1,061
Africa, Mozambique, Tanzania, Rwanda, and Angola 301
Ethiopia. Except for Mauritania, Namibia, Congo-B 284
Cameroon 179
and Ethiopia, all these countries already Equatorial Guinea 39
produce gas in various quantities for Gabon 26
Côte d’Ivoire* 25
exports or for small consumption in power,
Ghana* 22.7
transport, industry, and cooking.
*Not officially classified as proven reserves
*Source:
Not officially classified
OPEC, PIAC, Bank ofas provenWorld
Tanzania, reserves.
Bank, Government of
Côte d’Ivoire, Hawilti Research
African gas reserves have also grown Source: OPEC, PIAC, Bank of Tanzania, World Bank,
over the past decade following significant Government of Cote d'Ivoire, Hawilti Research
Picture: Savannah Energy 29

Annual Statistical Bulletin 2022, Organisation of Petroleum Exporting Countries (OPEC)

discoveries in Mozambique Gas production remains driven by lucrative exports.

Figure 21: African natural gas exports,
(2010-2014), Tanzania MMscm (2000-2021)
Meanwhile, gas production
(2010-2014), Egypt (2015),
Algeria Nigeria Libya Egypt Others has continued to Figure 22: African marketed gas production,
Senegal (2015-2017), and African
MMscm marketed gas production, MMscm
(2015-2021)
Angola Equatorial Guinea
increase, albeit affected African marketed gas production, MMscm
Mauritania (2015 and (2015-2021)
120K by external shocks such (2015-2021)
Large African gas producers (10,000 MMscm/year or more)
2019). Between 2010 and Large African gas producers (10,000 MMscm/year or more)
as commodity price Large African gas producers (10,000 MMscm/year or more)
2020, 40% of all the gas 100K
Algeria Egypt Nigeria Libya
fluctuations and the Algeria Egypt Nigeria Libya
discovered worldwide 80K
COVID-19 pandemic.
was in Africa. Recent
60K Despite these negative 200K
exploration has continued 200K
impacts, natural gas pro-
yielding tremendous results 40K 150K
duction in Africa grew at 150K
with large discoveries made
20K
a yearly average of 2.5% a 100K
in Côte d'Ivoire in 2021 and 100K
0 between 2011 and 2021, 50K
2022, and in Algeria in 2000 2005 2010 2015 2020
above the world average 50K
2022. Source: Annual Statistical Bulletin 2022, OPEC 0
of 2.2%29. 2015 2016 2017 2018 2019 2020 2021
0
2015 2016 2017 2018 2019 2020 2021
Production reached some

282 bcm in 2021, but re- Equatorial
Source: AnnualGuinea Mauritania/Senegal
Statistical Bulletin 2022, OPEC
mains concentrated within

a few markets only. Algeria Figure 23: African marketed gas production,
produces 37% of gas on the MMscm (2015-2021)
continent, followed by Egypt Medium-sized African gas producers (less than 10,000 MMscm/year)
African marketed gas production, MMscm (2015-2021)
(25%), Nigeria (17%), and Medium-sized African Guinea
gas producers (less than 10,000
Angola Equatorial Cameroon GhanaMMscm/year)
Côte d’Ivoire Tanzania
Libya (8.5%). While other Gabon Congo Rep.
Angola Equatorial Guinea Cameroon Ghana Ivory Coast Tanzania
producers like Angola or Gabon Congo Rep.
25,000
Cameroon have seen their
25,000
20,000
production rise over the
20,000
past decade on the back of 15,000
15,000
LNG exports, their volumes 10,000
10,000
are still small relative to their 5,000
northern neighbours. Gas 5,000
0
production remains driven 2015
0 2016 2017 2018 2019 2020 2021
2015 2016 2017 2018 2019 2020 2021
Figures for Ghana and Tanzania converted from MMcm
by exports in most mar- Figures for Ghana and Tanzania converted from MMcm
Source: Hawilti research from various sources, including OPEC, PIAC (Ghana),
kets, except for Egypt and Source:(Cote
DGH-C1 Hawilti research
d'Ivoire), from
and Bank various sources, including OPEC,
of Tanzania PIAC
Libya. (Ghana), DGH-C1 (Cote d'Ivoire), and Bank of Tanzania
KivuWatt Power Plant in Rwanda. Picture: Power Africa

29

Picture: Century Group
Picture: Powergas
Figure 24: Share of marketed gas used The world’s fastest-growing

for exports in 2021 gas consumption region.
Egypt 7.82
Libya 33
Domestic gas consumption remains on
52.13
the rise having witnessed the world's
Algeria
strongest growth rates between 2011 and
Angola 57.64
2021. In that period, Africa’s consumption
Cameroon 65.18
of natural gas grew at an average of 4.5%,
EQ Guinea 66.61
above that of the Asia Pacific region30.
Nigeria 79.19
Mozambique 81.55
This was mostly driven by East, West, and
Shares expressed in % of marketed gas Central Africa, which all had very low
production volumes. Calculations based
on OPEC data, except for Mozambique starting points explaining some of the
and Cameroon whose shares are rapid acceleration. In absolute terms,
calculated from 2020 volumes consumption volumes remain small with
reported by ITIE.
estimations ranging from 160 bcm
Source: Annual Statistical Bulletin 2022, OPEC;
(OPEC) to 165 bcm (bp) in 2021, compared
Hawilti Research
30

with over 570 bcm for Europe or the Assessing Africa’s gas future in demand in Africa, using
Middle East. Figure 26: Natural gas consumption by region, Bcm
light of persistent energy poverty socio-economic outlooks, to Natural gas consumption by region,
(2021)
and climate change. date has been very sparse. Bcm(2021)
Consumption also remains concentrated in The IEA forecasted its North America 1,034.1
Egypt and Algeria, two markets that have Increasing the consumption of natural gas growth between 2020 Asia Pacific 918.3
developed strong export industries but have in Africa offers a pragmatic solution for and 2050 at 94% in its CIS 610.8
also successfully deepened gas penetration underpinning the continent’s sustainable stated policies scenario32, Middle East 575.4
domestically in the form of gas-fired power development. the fastest in the world. It Europe 571
generation, industry feedstock, direct then revised it down to 16%
Africa 164.4
gasification of communities and regions, South & Central America 163

The IEA estimates in its latest outlook that between 2020 and 2030 in
and compressed natural gas (CNG) to fuel Africa’s undeveloped gas resources could its latest outlook, with gas Source: bp Statistical Review of World Energy, 2022
transport. provide an additional 90 bcm of gas per maintaining a 17% share of
year by 2030 for the fertilizer, steel, cement, total primary energy de- suppressed demand. energy infrastructure
Combined, Egypt and Algeria represent 70% and water desalination industries, with mand over the period . 33 Several regions and prevent most African
of the gas consumed in Africa31. Other mid- cumulative CO2 emissions of 10 gigatonnes industrial clusters on stakeholders from meeting
sized consumption centers can also be (Gt). This level of consumption would take The potential demand the continent remain their human development
found in countries with export facilities or Africa’s share of global emissions from 3% for gas in Africa can be energy starved for lack of needs, which is often not
where some gas is consumed for power and today to 3.5% by 2050. challenging to estimate infrastructure and gas reflected within global data
industry, including Nigeria, Libya, Tunisia, because existing research availability. Poverty and repositories and their
South Africa, and Equatorial Guinea. The analysis of the potential future gas tends to overlook lack of access to modern associated scenarios.
Natural
Figure gas demand
25: Natural ininAfrica,
gas demand Africa,
MMscm
MMscm(2011-2021)
(2011-2021)
Egypt Algeria Nigeria Libya Tunisia South Africa
Equatorial Guinea Angola Gabon Congo, Rep. Others
140K
120K
100K
80K
60K
40K
20K
Picture: Sasol
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 31
Annual Statistical Bulletin 2022, OPEC
32
World Energy Outlook 2021, IEA
Source: Annual Statistical Bulletin 2022, OPEC 33

Regional dynamics - 1 / North Africa

is building upon strong foundations
Morocco, Algeria, Tunisia, Libya, Egypt
TUNISIA
Status MOROCCO
North Africa has the most established has been supporting the industrial
ALGERIA
gas markets on the continent and is base expansion in the region while LIBYA
EGYPT
its top gas-producing region thanks to providing a reliable power supply.
production centers in Egypt and Infrastructure is developed, paving the
Algeria. Proximity to Europe has way for better gas penetration across CAPE VERDE MAURITANIA
MALI
enabled the development of robust economies. However, the region remains NIGER
CHAD SUDAN
ERITREA
SENEGAL
gas export industries, both via LNG prone to geopolitical tensions (such as THE GAMBIA
BURKINA FASO
terminals and pipelines. Domestic those in Algeria and Morocco) and GUINEA-
GUINEA
BISSAU BENIN
SOMALIA
markets are also growing, and gas security threats (Libya). SIERRA
CÔTE TOGO NIGERIA
ETHIOPIA
LEONE D’IVOIRE CENTRAL AFRICAN SOUTH
GHANA REPUBLIC SUDAN
LIBERIA
CAMEROON
Outlook
EQUATORIAL GUINEA
UGANDA
North Africa is expected to remain Energy and Chariot. The former is currently REPUBLIC
OF CONGO KENYA
GABON RWANDA
Africa’s biggest producing region, led by developing a micro-LNG project from its SEYCHELLES
CONGO
Egypt and Algeria. Both countries have onshore Greater Tendrara Concession, SAO TOME & PRINCIPE
BURUNDI
increased cooperation with internation- while the latter is progressing with the shal- TANZANIA
al energy companies in 2022 and are low-water Anchois Gas Project. Both under- ANGOLA
COMOROS
committed to exploring additional gas takings will focus on domestic supplies but
ANGOLA MALAWI
and hydrogen projects. will also tie into the Maghreb-Europe Gas ZAMBIA
Export Pipeline to balance domestic expo- MAURITIUS

ZIMBABWE
On the back of recent onshore and off- sure and improve the bankability of their NAMIBIA
MADAGASCAR
shore discoveries and while seeking to cut development plans. BOTSWANA MOZAMBIQUE
coal consumption, Morocco is expected ESWATINI
to become a much bigger gas player by Both Morocco and Algeria are also involved LESOTHO
2030. Gas will notably help to supply ther- in multi-billion-dollar transnational gas
SOUTH AFRICA
mal power stations, switch from coal, and pipeline projects proposed to distribute gas
provide a decarbonisation opportunity for across West Africa before reaching Europe:
transport and industry. While SDX Energy the offshore Nigeria-Morocco Gas Pipeline
already produces gas there, bigger projects (NMGP) and the onshore Trans-Saharan
are currently being developed by Sound Gas Pipeline (TSGP). concerning the legal status of any territory or the endorsement or acceptance of such boundaries.

Regional dynamics - 2 / West Africa

seeks better gas penetration
Mauritania, Senegal, The Gambia, Guinea-Bissau, Cabo Verde, Guinea, Sierra Leone,
Liberia, Côte d'Ivoire, Ghana, Mali, Burkina Faso, Togo, Benin, Niger, Nigeria TUNISIA
MOROCCO
Status
West Africa's gas reserves are concen- liquidity constraints in Ghana and ALGERIA
LIBYA
trated in Nigeria and offshore Mauri- Nigeria. EGYPT
tania and Senegal. Gas production is

mostly reserved for exports via Nigeria Lack of infrastructure continues to hamper
LNG’s terminal in the Niger Delta. While gas penetration despite the emergence of MALI
NIGER CHAD SUDAN
Nigeria, Côte d'Ivoire, Ghana, Benin, “virtual pipelines” (networks over which SENEGAL
ERITREA
THE GAMBIA
and Togo have all monetised gas gas is trucked) over the past few years. As a BURKINA FASO
GUINEA-
GUINEA
domestically, consumption is limited. response, increasing political will is placed BISSAU BENIN
NIGERIA SOMALIA
CÔTE TOGO
SIERRA ETHIOPIA
on the development of gas-based industri- LEONE D’IVOIRE CENTRAL AFRICAN SOUTH
LIBERIA
The power sector remains the alisation, expansion of CNG networks, and CAMEROON
main gas off-taker but is plagued by construction of small-scale gas projects. EQUATORIAL GUINEA
UGANDA
REPUBLIC
OF CONGO KENYA
GABON RWANDA
Outlook CONGO
SEYCHELLES
SAO TOME & PRINCIPE
BURUNDI
West Africa is expected to emerge as a private sector has proposed new onshore
TANZANIA
much bigger gas-producing region, as terminals and floating LNG projects. The
COMOROS
ANGOLA
both Mauritania and Senegal join Nigeria success of these ventures will now rely
and Ghana in the club of gas exporters on the provision of an enabling business ANGOLA MALAWI
ZAMBIA
(see Section 3.3.). Both countries hope environment and the improvement of
MAURITIUS
that domestic allocation from export the security situation in the Niger Delta. ZIMBABWE MADAGASCAR
NAMIBIA
projects could support gas-fired
BOTSWANA MOZAMBIQUE
generation and replace existing coal Finally, Côte d'Ivoire and Ghana will both
ESWATINI
and diesel consumption. have consolidated their domestic gas
LESOTHO
value chains with clear intent by the
Meanwhile, Nigeria is trying to position operators Eni and Tullow Oil to monetise SOUTH AFRICA
itself as a regional export hub more associated gas and avoid flaring.
actively. NNPC is promoting two export Significant gas-to-power capacity is
pipeline projects, the Trans-Saharan soon expected to be commissioned in Disclaimer: The boundaries, colors, denominations, and other information shown on any map in
Gas Pipeline (TSGP) and the Nigeria- the region, mostly in Senegal and this work do not imply any judgment on the part of Hawilti Ltd nor the International Gas Union
Morocco Gas Pipeline (NMGP), while the Côte d'Ivoire.

Regional dynamics - 3 / In Central

Africa, small-scale is a winning game
Chad, Cameroon, CAR, Equatorial Guinea, Gabon,
Sao Tome e Principe, Republic of Congo, DRC TUNISIA
MOROCCO
Status
ALGERIA
Despite much smaller gas reserves, infrastructure hub at Punta Europa. LIBYA
EGYPT
Central African markets have success- However, Central Africa remains the
fully developed export facilities in most intensive flaring region on the
Equatorial Guinea and Cameroon, with continent and could benefit from new CAPE VERDE MAURITANIA
MALI
additional ones currently in develop- strategies to monetise flared gas. This NIGER
CHAD SUDAN
ERITREA
SENEGAL
ment in the Republic of Congo and has caused several technological and
THE GAMBIA
BURKINA FASO
Gabon (see Section 3. 3.). Domestic technical challenges given the relatively GUINEA-
GUINEA
BISSAU BENIN
consumption has mostly remained small size of the domestic markets and SIERRA
CÔTE TOGO
NIGERIA SOMALIA
D’IVOIRE ETHIOPIA
LEONE CENTRAL AFRICAN SOUTH
limited to power, except for Equatorial the need to aggregate flare volumes LIBERIA
CAMEROON
Guinea, which has developed a robust between several operators (see
EQUATORIAL GUINEA
and diversified downstream gas Section 3. 2.). REPUBLIC
UGANDA
OF CONGO KENYA
GABON RWANDA
SEYCHELLES
Outlook SAO TOME & PRINCIPE
CONGO
BURUNDI
Moving forward, cooperation will be Congo plans to start exporting LNG
TANZANIA
key to unlocking the region’s gas po- by 2023, once Eni commissions its first COMOROS
ANGOLA
tential, especially in the Gulf of Guinea, of the two planned floating LNG units
MALAWI
where Equatorial Guinea is trying to on its Marine XII block. The country ANGOLA
ZAMBIA
position itself as a regional gas hub. also relies on gas for most of its
MAURITIUS
The country is also trying to revive the power production and a few additional ZIMBABWE MADAGASCAR
NAMIBIA
Fortuna FLNG project, while positioning units are in the pipeline there. Gabon
BOTSWANA MOZAMBIQUE
its domestic gas processing facilities also hopes to start exporting LNG by
ESWATINI
at Punta Europa on Bioko Island as a 2026 via a project proposed at Cap
LESOTHO
regional center for the processing of Lopez by independent operator
stranded gas in the Gulf of Guinea. The Perenco. Meanwhile, authorities have SOUTH AFRICA
country already benefits from strong sought to encourage the processing of

regional leadership but its ability to associated gas to reduce flaring and
create a true hub for gas will rely on the produce key products such as cooking Disclaimer: The boundaries, colors, denominations, and other information shown on any map in
improvement of its business climate. gas.

Regional dynamics - 4 / Southern Africa

is on the verge of transformation
Angola, Namibia, South Africa, Botswana, Zambia, Zimbabwe,
Lesotho, Eswatini, Mozambique, Malawi, Madagascar TUNISIA
MOROCCO
Status
ALGERIA
Southern Africa has remained a Mozambique and South Africa, LIBYA
EGYPT
very limited gas frontier, until now. redrawing the cards of the region’s
Angola used to be the primary gas energy security scenario. Regional
market there with the development of cooperation is already thriving and CAPE VERDE MAURITANIA
MALI
an LNG export industry purely reliant could grow further with gas, NIGER
CHAD SUDAN
ERITREA
SENEGAL
on associated gas. But exploration especially if new discoveries are
THE GAMBIA
BURKINA FASO
activity has unlocked new reserves in confirmed in Namibia and Zimbabwe. GUINEA-
GUINEA
BISSAU BENIN
CÔTE NIGERIA SOMALIA
SIERRA TOGO
D’IVOIRE ETHIOPIA
LEONE CENTRAL AFRICAN SOUTH
Outlook LIBERIA
CAMEROON
Southern Africa is on the verge of pro- gas-to-power projects currently in
EQUATORIAL GUINEA
UGANDA
found transformations that will shape its development along with the growth of REPUBLIC
OF CONGO KENYA
GABON RWANDA
energy future. Long dominated by Angola its domestic LPG supply.
SEYCHELLES
CONGO
as a key gas-producing and exporting SAO TOME & PRINCIPE
BURUNDI
country, the region is seeing the entry of For South Africa, gas has become the TANZANIA
several new local and regional gas natural alternative to move away from ANGOLA
COMOROS
players. coal and the country is currently

ANGOLA MALAWI
planning LNG import terminals on its ZAMBIA
Mozambique, which has been a key coast to switch several gigawatts of coal-
MAURITIUS
supplier of gas to South Africa for two based power generation capacity. Recent ZIMBABWE MADAGASCAR
NAMIBIA
decades, has become an LNG exporter discoveries onshore and offshore are BOTSWANA MOZAMBIQUE
in 2022 and hopes to significantly ramp also providing the foundation to grow ESWATINI
up its LNG export capacity by 2030. the gas value chain and serve already
LESOTHO
While export facilities are being well-established manufacturing and
developed in the north, the country’s transport industries. The country be- SOUTH AFRICA
capital in the south could also house an came a small LNG producer in 2022 and
LNG import hub serving the sub-region. will seek to further develop its domestic
But Mozambique is also focusing on its reserves to supply industrial facilities and Disclaimer: The boundaries, colors, denominations, and other information shown on any map in
domestic economy, with several decarbonise its transport sector. concerning the legal status of any territory or the endorsement or acceptance of such boundaries.

Regional dynamics - 5 / East Africa

has strategic decisions to make
Tanzania, Kenya, Burundi, Rwanda, Uganda,
TUNISIA
South Sudan, Sudan, Ethiopia, Eritrea, Djibouti, Somalia MOROCCO
Status ALGERIA
LIBYA
Gas is almost absent from East African industrial base, EGYPT
economies, whose baseload power while Rwanda
has traditionally been met by hydro- started extract-
power. Geothermal energy has also ing methane MALI
NIGER
CHAD
become popular in the region, from Lake Kivu SENEGAL
SUDAN
ERITREA
especially in Kenya but increasingly in in 2016 to THE GAMBIA

BURKINA FASO
GUINEA-
Ethiopia and Djibouti as well. For the produce power. BISSAU
GUINEA BENIN
CÔTE NIGERIA SOMALIA
TOGO
same reason, gas will play a different The latter SIERRA
LEONE D’IVOIRE CENTRAL AFRICAN SOUTH
ETHIOPIA
role from elsewhere on the continent. has since then KivuWatt Picture: Power Africa
LIBERIA
CAMEROON
Tanzania and Rwanda are two notable embarked on
EQUATORIAL GUINEA
UGANDA
exceptions. Tanzania adopted gas as additional gas extraction to produce REPUBLIC
KENYA
OF CONGO RWANDA
GABON
early as 2004 to generate electricity and CNG and cooking gas for its domestic SEYCHELLES
CONGO
SAO TOME & PRINCIPE
support Dar es Salaam’s growing market. BURUNDI
TANZANIA
Outlook ANGOLA
COMOROS
After growing a functioning domestic economy while supporting regional sup-

ANGOLA MALAWI
gas value chain, Tanzania plans to start ply ambitions. ZAMBIA
exporting LNG by developing its vast
MAURITIUS
offshore reserves in the south. The Ethiopia could finally emerge as a gas ZIMBABWE MADAGASCAR
NAMIBIA
country could also become a strategic market this decade provided it can BOTSWANA MOZAMBIQUE
hub for the region and is notably secure a new investor to develop its 113 ESWATINI
considering a gas pipeline to Kenya, bcm of recoverable gas in the Ogaden
LESOTHO
where 10% of electricity generation Basin, with reserves concentrated with-
relies on HFO and diesel and could be in the Calub and Hilala fields. Develop- SOUTH AFRICA
replaced by gas imports. Additional ment plans initially involved a pipeline

domestic projects in Tanzania, such as to Djibouti before exporting gas as LNG,
Ntorya, could unlock more supply to but the contract with a Chinese Disclaimer: The boundaries, colors, denominations, and other information shown on any map in
deepen gas penetration across the operator was terminated in 2022. concerning the legal status of any territory or the endorsement or acceptance of such boundaries.

2 / Africa's Natural
Gas Imperative
Assessing the potential
for gas in Africa
Picture: Century Group

2 / Africa's Natural Gas Imperative 2 / Africa's Natural Gas Imperative
On the back of the global energy crisis, cally. In this current opportunity for gas 2.1 The Local Development Opportunity
there has been a surge in optimism development on the continent, it is critical
African Gas for Domestic Energy Security
about investments in African gas as a to build Africa’s energy security. Scaling
potential source of additional supply in up the development and monetisation of By increasing energy access and displacing tively in 2019, according to the latest esti-
an energy-constrained world. This is a African gas reserves could lift hundreds of coal and oil, gas can bring cleaner energy mates available from the Economic Policy
positive development for the local millions out of poverty while significant- to African industries, unlock billions of Institute34. This means that for every 100
industry and stakeholders. Yet, it is ly contributing to the decarbonisation of dollars of investments, generate long-term jobs in the American natural gas distribu-
important that this newfound optimism the energy mix and paving the way for a and sustainable economic growth, and tion industry in 2019, another 638 indirect
also contributes to real changes for low-carbon future. In its Roadmap to create the jobs needed to put millions of jobs emerged elsewhere in the economy.
Africans. Africa’s COP27, for instance, the Africa young Africans to work. From Abidjan, The gas industry jobs multiplier in the US
Finance Corporation (AFC) called for a Côte d’Ivoire to Dar es Salaam, Tanzania, is above those in the power generation,
While African gas has been contributing “natural gas imperative” that could Sub-Saharan Africa has slowly but steadily transmission, and distribution (564.3)
to the global energy security and advance the development of African built a track record of monetising gas do- and all mining industry segments (235 to
decarbonisation agenda through exports, economies while helping many to mestically. Such experiences now need to 537.3).
it has done much less of that domesti- transition to clean energy. serve as bases to scale up gas commercial-
isation, support industrialisation, create With unemployment rates at an all-time
jobs, and build a sustained and sustaina- high in Africa, the benefits of natural gas
ble economic recovery. for job creation cannot be understated.
In Mozambique, for instance, studies by
The multiplier effects of natural Standard Bank found that the develop-
gas investments make gas an ment of natural gas deposits with the
ideal source of energy to Coral South FLNG, Mozambique LNG,
spur Africa’s development and and Rovuma LNG projects could create
industrialisation, while creating as many as 1 million direct, indirect, and
skilled jobs. induced jobs across the economy35.
Limited adoption is preventing entire In addition to supporting job creation, gas

African economies from fully benefiting also has a strong multiplier effect across
from the utilisation of natural gas across local economies because of the span of its
their value chains. In the United States for value chain and its possible usage across
instance, one of the world’s largest con- sectors (electricity, cooking, heating and
sumers of gas, the employment multipliers cooling, transport, and manufacturing of
for oil and gas extraction and natural gas fertilizers, petrochemicals, cement, steel,
distribution stood at 5.37 and 6.38 respec- etc.). Gas-based industrialisation can
34
Updated employment multipliers for the U.S. economy, January 2019, Economic Policy Institute
35
This includes 323,050 jobs from Rovuma LNG (low capex scenario) and 700,000 jobs from Mozambique LNG
Picture: ND Western Ltd (6 trains, no construction delays).

notably support the ex-

pansion of several supply
chains in agriculture and
mining, two of the conti-
nent’s largest industries. In
the African context, using
gas to produce fertilizers
or power-efficient freight
transportation is key to
supporting the continent’s
growing industrial base as
it rolls out the African Con-
tinental Free Trade Area
(AfCFTA).
Gas-based industrialisation
is already strong in North
Africa, but it has also made
strides in Nigeria and South
Africa, where gas is used as
feedstock to produce pet-
rochemicals, fertilizers, and
cement. In these countries,
successful African ventures
were able to grow. Nigeria PetroSA Natural Gas processing and
and South Africa both have refining plant at Mossel Bay in South Africa
reputable fertilizers, petro-

chemicals, and gas-to-liquids biggest in the world, and Nigeria, the Indorama ing to the country’s food urea plant. Beyond large all been running very
facilities for instance. can sustain at least 5,000 Corporation is doubling the security and economic African economies, other successful gas-based
indirect jobs in the South- urea production capacity diversification. It has now markets with smaller gas ventures in transport,
In South Africa, PetroSA’s ern Cape Province36. It has of its petrochemicals and been joined by additional reserves have been equally industry, and power gen-
Mossel Bay Gas-to-Liquids successfully transformed fertilizer complex in Port large-scale urea producers successful in the moneti- eration. The multiplication
Refinery was designed gas into diesel, gasoline, Harcourt from 1.5 to 3 such as Dangote Indus- sation of their natural gas and scaling up of these
with a capacity of 36,000 kerosene, and specialty million tons per annum tries, which commissioned resources to extract do- ventures could now have
bpd, making it one of the products since 1992. In (MTPA), further contribut- the Dangote Fertilizer mestic value. Côte d’Ivoire, tremendous benefits for
plant in 2022, the world’s Cameroon, Tanzania, and local economies and local
36
Production from Mossel Bay was suspended in 2020 due to challenges in securing natural gas feedstock.
PetroSA is currently seeking a partner to reinstate full production from the facility using either domestic or second-largest granulated more recently Ghana have supply chains.
imported gas.

CASE STUDY 1
Two Decades of Domestic
Gas Monetisation in Tanzania
The development of the Songo Songo Laying the ground
gas field and its associated infrastruc-
ture is the backbone of Tanzania's The Songo Songo gas development in-
thermal power generation and has cludes upstream, midstream, and down-
resulted in one of the most successful stream components, from the production
domestic gas monetisation ventures in of gas to its monetisation across Dar es
Africa, with a significant development Salaam. Orca Energy Group's subsidiary
impact for the Tanzanian economy. PanAfrican Energy operates the wells and
the 3.1 million standard-cubic-metres-per-
The adoption of gas has also resulted day (MMscmd) gas processing plant on
in significant carbon emissions reduc- Songo Songo Island, but the development
tion since 2004. In one of its monitoring is owned by Songas, itself majority owned
reports on the project, the World Bank by Globeleq38.
notably demonstrated that between
2004 and December 2010 alone, CO2 The first 1.3 MMscmd of gas from Songo
emissions from power generation and Songo is classified as "protected gas" and
local industrial fuel consumption fell by has served as the anchor for the project.
1.8 million tons and 730,000 tons re- Picture: Globeleq
It is owned by state-owned TPDC and sold
spectively37. under a 20-year gas agreement. This gas
is used by Songas to fuel its 190-MW company has grown a strong base Assessing the development
The Songo Songo gas development Ubungo gas-to-power plant but is also of industrial customers over the impact
remains purely oriented toward the used for distribution to the Tanzania years, including steel, glass, textiles,
domestic market and has grown on the Portland Cement Company and Tanza- beverages, tobacco, cooking oils, flour, The steady supply of gas to Tanzania’s
back of a cooperation between private nia's village electrification programme. cement, and paper, as well as supplying economic capital Dar es Salaam, first
investors and Tanzania’s state-owned gas to the hotel industry. It also ven- from protected gas and then from
energy companies. It was commissioned Beyond 1.3 MMscmd, the gas is tured into the CNG business in 2009 with additional gas, has provided cleaner
in 2004, making it one of Africa’s longest classified as "additional gas" and an investment of $2.5 million for the and cheaper feedstock than diesel or
and most successful domestic gas can be freely commercialised by supply of natural gas to industries and HFO to several local power stations
ventures. PanAfrican Energy. As a result, the hotels, as a fuel for trucks and buses, and industries. Songo Songo is now
and more recently even ride-hailing firm responsible for approximately 45% of
37
Implementation Completion and Results Report, 30 September 2011, World Bank
38
Gas volumes have been converted from cubic feet for consistency. Uber. the Tanzanian electricity supply,

according to ORCA Energy Group’s

inaugural Sustainability Report Figure 27: Approximately 130 MMCFD of gas contracted
released in 202239. Minimum

Daily
Because droughts have affected the Quantity,
Contracts MMcfd Destination
country’s hydroelectric dams, gas-fired
Ubungo 2
generation has also provided a reliable TPDC/NNGI
129 MW
30
baseload when dam reservoirs are low. GSA Kinyerezi 1
150 MW
Natural gas has also displaced diesel

Industries TPDC/NNGI Kinyerezi 2
and HFO at several power plants in Dar Additional gas 11 240 MW 180 MW gas
es Salaam and limited the imports and TPCPLC AG 8

Gas plant 140 Ringmain
(Industries and CNG)
consumption of oil. Globeleq’s latest Tegeta

Tanesco 45 MW
Sustainability Report40 estimates that 26
PGSA Ubungo 1
its Ubongo power plant has generated 102 MW
Songas Complex AG 8 Songas

savings of over TZS 14 trillion (around 190 MW
$6 billion) since 2004 for the Tanzani- Songas

Protected gas Village Electrification
an economy by reducing the need for Gas plant 110
TPCPLC
imported fuel. In 2021, its electricity also Gas agreement
reached some 5 million Tanzanians, or (Songas, TPCPLC, 45 Ubungo 3A
Village Electrification) 100 MW
over 8% of the country’s population. Ubungo 3B

20MW
Equally important, the development of Source: Orca Energy Group
domestic gas for power has resulted

in a significant drop in electricity costs of thermal power generation in of its Songas operations estimated that sitioned from HFO to gas to run its
in the country. By 2010, the weighted Tanzania. another 113,809 indirect jobs were cement kilns. Following its transition,
average of energy cost for the pow- enabled by businesses using the TPCC increased its clinker production
er plants supplied by Songo Songo Both Orca Energy and Songas have also electricity generated41. from 600,000 tons to 1,050,000 tons
had fallen from around $0.13/kWh to created jobs. They currently have a while significantly reducing its costs.
around $0.64/kWh, according to the workforce of 190 employees consisting Finally, the Songo Songo operations are The analysis provided by Orca Energy
same World Bank monitoring report. mostly of Tanzanians, including 116 largely responsible for helping to grow revealed that TPCC has cut costs by a
Until today, protected gas enables employees at Orca Energy and 74 at Dar es Salaam’s industrial base by pro- factor of almost six by transitioning to
Songas to be the lowest-cost supplier Songas. Globeleq’s study into the impact viding more affordable and locally avail- gas. It also estimates that it has de-
able feedstock for manufacturing and creased its carbon emission intensity
39
Orca Energy Sustainability Report 2021. power. The Tanzania Portland Cement by almost 80,000 tons of CO2 per year
40
Globeleq Tanzania Sustainability Report 2021.
41
Estimations based on Joint Impact Model (used by British International Investment, majority-owner Company (TPCC) for example has tran- by consuming gas instead of HFO.
of Globeleq).

The switch to gas in the industrial and commercial transport

sectors provides an opportunity to reduce emissions.
Cutting reliance on expensively imported often available locally, while diesel

HFO and diesel, decreasing GHG remains imported across most of
emissions, and improving air quality are Sub-Saharan Africa.
important components of the business
case to continue the adoption of gas by More recently, the historic rise in the prices
African industries. of oil and petroleum products has put fur-
ther pressure on industries that continue to
Based on interviews conducted for this rely on diesel and HFO instead of accessing
project with gas distributors, the demand locally available gas. Wood Mackenzie con-
for gas from African industries has in- servatively estimates that over 100 GW of
creased in recent years. This is particularly distributed diesel capacity is operational on
the case from sectors such as fast- the continent, representing some $20 billion
moving consumer goods (FMCG) and a year spent by African consumers on fuel
mining, where economic actors have for their backup generators42.
sought to cut diesel consumption.
Switching to gas offers both a cleaner al- For the same reason, demand from indus-
ternative, but also a cheaper one as gas is try is expected to keep increasing and is
Figure 28: Price comparison petrol, diesel, PNG and CNG in Nigeria, in niara
Price comparison petrol, diesel, PNG, and CNG in Nigeria, N
CNG (N/scm) PNG (N/scm) Diesel (Naira/Liter) Petrol prices (Naira/Liter)
800
700
600
500
400
300
200
100
0
Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul
2020 2021 2022
Source: Powergas Africa
Picture: Presidency of Benin 42

"Utility evolution in Africa to reshape global electricity demand", 17 March 2022, Wood Mackenzie

no longer driven just by emission reduc- gas were driven by multinationals seeking can be flexible enough to integrate large help meet rising energy demand, build
tion targets but also by the affordability of to decarbonise their environmental amounts of variable renewable generation, grid flexibility to integrate renewable
gas compared with diesel and petrol on footprints, the need to secure affordable including possible distributed sources, will energies, and secure backup power in
the continent. fuels has unlocked further growth in support more gas-fired generation capacity countries where hydropower dams
recent years. by 2030. That is a conservative estimate, experience droughts (see Section 2.3)45.
In Nigeria for instance, gas distributors have given the scale of new electricity generation
seen much more traction by industries seek- Since the start of 2022, escalating diesel that will be required to energise and develop
ing to buy CNG and LNG for their factories, prices have also generated a huge appetite Africa's growing economies. Gas-powered
according to Powergas Africa CEO Sumeet for CNG and LNG among truck fleet owners, plants provide the backup generation
Singh. Most of them have concluded that according to Femi Babajide, CEO of road capacity that is needed to balance the grid
diesel prices would not come down soon, haulage company Ecologique. He adds during periods of intermittency in renewable
nor was the power grid going to increase that because most vehicles in Africa are generation.
substantially in the short to medium-term. second-hand and rely on Euro-2 or Euro-3
In that context, the ideal solution is to type fuels, replacing them with gas can The IEA estimates that an additional 30 GW
procure gas to meet their power needs. generate carbon savings of 60% or more. of gas-fired capacity will be brought online
by 2030. In its Sustainable Africa Scenario
While gas was initially only procured by The role of gas in the (SAS), gas is expected to maintain the same
factories as a backup to an unreliable future African energy mix: share of modern energy as today (about
power grid, it has now become popular building Africa’s transitional 16%) by 2030. In that scenario, additional
in the transport sector as well (cars, infrastructure. gas-fired generation is mostly developed to
buses, trucks). When it comes to the
logistics industry, North Africa has so If all of Sub-Saharan Africa tripled its Figure 29: Gas-to-power production (grid-connected) in selected African countries in
GWh (2020)
far been the only region to have made electricity consumption overnight us-
significant strides in gas-fuelled transport, ing only natural gas, the additional CO2 150K
especially in Egypt and Algeria. would be equivalent to just 1% of global

emissions43. However, the potential of
100K
Across the rest of the continent, most gas to provide reliable and lower-carbon
cars and commercial vehicles remain electricity to Africa remains unexploited.
fueled with imported petrol. However, According to a 2018 study by Power Africa, 50K
Sub-Saharan Africa is steadily embracing Sub-Saharan Africa has used only 5% of
the trend as well with gas increasingly its gas-to-power potential estimated at
used by the long-haul trucking industry 400 GW44.
(particularly in Nigeria and South Africa)
Côte d’Ivoire
Libya
EQ Guinea
Ghana
Algeria
Nigeria
Tanzania
Benin
Egypt
Gabon
Cameroon
Angola
Mozambique
Togo
Congon-B
or in public transport (Côte d'Ivoire and This is expected to change, as the quest for
Tanzania). While conversions of engines to developing resilient electricity grids, which
Source: IEA, Hawilti Research
43
"12 reasons why gas should be part of Africa's clean energy future," 23 July 2020, World Economic Forum
44
Power Africa Gas Roadmap to 2030, June 2018
45
Africa Energy Outlook 2022, IEA

2.2 Africa’s Export Market Opportunity

Leveraging Export Revenues to Energise Local Economies
The growth of global gas demand over the export market and gave birth to several
past two decades has supported the LNG export terminals on the continent.
development of LNG trading across the But Africa’s export capacity has remained
world. Asia and Europe have emerged as relatively small compared to its potential.
robust demand centers importing vast With new market fundamentals calling for
quantities of LNG to fuel their economies, investments in LNG supply, the continent
switch away from coal, and integrate more is now getting a new window of oppor-
renewables. In 2022, the impact of the tunity to position itself as a strategic and
Russia-Ukraine conflict and the drastic reliable global gas supply hub.
reduction of Russian gas flow to Europe
sent it on an urgent quest to secure That window is not exclusive to Africa,
alternative sources of gas supply, most of it however, nor will it stay open forever. A
via LNG. pragmatic approach, sense of urgency, and
focus on competitiveness will be required
The overall growth trend of global LNG for Africa to attract the billions of dollars that
demand has enabled African countries will be injected into LNG projects this decade
to monetise their gas for the lucrative (see Section 3. 3.).
Global liquefaction capacity growth by region, 1990 - 2027
Figure
1000 30: Global liquefaction capacity growth by region, 1990 - 2027
900
800
700
600
MTPA
500
400
300
200
100
Greater Tortue
Ahmeyim (GTA) 0
hub offshore 1990 2000 2010 2020 2026
Mauritania/Senegal. Africa Asia Pacific Europe Former Soviet Union Latin America Middle East North America
Picture: bp
Source: World LNG Report 2022, IGU/Rystad Energy

The limited rise of Africa’s

gas export industry
By 2021, Nigeria, Algeria, Egypt, Angola,

Equatorial Guinea, and Cameroon were
all LNG exporters with a combined global
market share of 11.4%45. In the same year,
Africa exported a total of 60.2 mt of LNG,
most of which went to Europe (27.8 mt)
followed by Asia (23.9 mt) and the broader
Asia Pacific region (5.9 mt).
The Coral Sul FLNG offshore

Additional exports are also ensured Mozambique exported its
through pipelines, especially from Algeria first cargo in 2022.
Picture: Eni
via the Transmed Pipeline (Algeria-Italy
via Tunisia), the Medgaz Pipeline (Alge-
ria-Spain), and the Maghreb-Europe could easily support 10 trains at Bonny Mauritania and Senegal, adding another
Figure 31: African natural gas
Pipeline (Algeria-Spain via Morocco46), but African natural gas exporters (2021), Island alone. Similarly, lack of investment in 2.45 MTPA of floating LNG export capacity.
exporters (2021), MMscm
MMscm In the Republic of Congo, Eni is also
also from Mozambique to South Africa Equatorial Guinea has prevented the expan-
(ROMPCo) and Nigeria to Ghana (WAGP).
Algeria 54,759 sion of EG LNG, even though a FEED study moving forward with the installation of the
Nigeria 38,464
Overall, African exports of gas have in- for a second train there had been done in Tango FLNG unit with a capacity of
Libya 8,000
creased by over 75% since 2000, driven Egypt 5,500 the mid-2000s. The country has also been 0.6 MTPA expected to be commissioned
Angola 5,084
by the expansion of Nigeria's LNG unsuccessful so far in developing the 2.2 before the end of 2023. These three
Equatorial Guinea 4,694
(particularly in the years 2003, 2005, 2006, Mozambique (RompCo) 3,864 MTPA Fortuna FLNG project as the previous floating LNG projects are the ones
2007), and by the commissioning of new

Cameroon 1,415
operator could not raise financing for the expected to grow Africa’s LNG export
LNG terminals in Equatorial Guinea (2007), Source: OPEC, Hawilti Research project in the mid-2010s. capacity by 2025.
Angola (2014-2016), and Cameroon

(2018). Following a period of relative stagnation, The second half of the decade could see
out on supplying the current high-price
the volume of gas exports from Africa more significant capacity addition coming
environment created by an exceptionally
However, several additional capacity ex- will grow again in the short and medium from both established and new markets.
tight market.
pansion projects have remained stalled term on the back of new projects in West By 2030, Nigeria LNG should have com-
and have prevented Sub-Saharan Africa and Southeastern Africa. In 2022, Eni pleted its NLNGSevenPlus (or Train 7)
Nigeria LNG for instance has remained a six-
from playing a larger role in the global commissioned its 3.4-MTPA Coral Sul project, targeting an additional 7.6 MTPA.
train facility with its last train commissioned
LNG export market, subsequently missing FLNG unit in offshore Mozambique. Similarly, TotalEnergies could have com-
back in 2007, while Nigerian gas reserves
missioned its 12.88 MTPA Mozambique
45
World LNG Report 2022, IGU In 2023, bp will commission the GTA LNG LNG terminal, where construction could
46
Algeria stopped supplying gas to Morocco at the end of 2021. Morocco is currently getting its gas supplies from restart in 2023.
Spain, using the same pipeline in reverse flow. hub at the maritime border between

Figure 32: Africa's LNG Infrastructure
Existing LNG Export Type Capacity Owner/ Commissioning 2

1
Infrastructure Operator TUNISIA
MOROCCO
1 Arzew/Bethioua LNG (GLI-2-3Z) Onshore 20.8 mtpa Sonatrach 1977-2014
5 4
3
2 Skikda LNG (GLIK) Onshore 4.5 mtpa Sonatrach 2013
3 Marsa El Brega LNG Onshore 3.2 mtpa LNOC 1970 ALGERIA
LIBYA
4 Damietta Onshore 5 mtpa Segas LNG 2005
5 Idku LNG Onshore 7.2 mtpa Egyptian LNG 2005 EGYPT
FLNG
6 Bonny LNG Onshore 22.5 mtpa Nigeria LNG 1999-2007

under expansion
7 Soyo LNG Onshore 5.2 mtpa Angola LNG 2013
FLNG
MAURITANIA
MALI
8 EG LNG Onshore 3.7 mtpa EG LNG 2007 FLNG
15 20 NIGER
CHAD SUDAN
11 SENEGAL ERITREA
9 Hilli Episeyo FLNG 2.4 mtpa Golar LNG 2018 19
10 Coral South FLNG 3.4 mtpa Eni 2022 26 THE GAMBIA
BURKINA FASO
FLNG GUINEA- NIGERIA
GUINEA BENIN
Under-Construction LNG Owner/ BISSAU 31
Type Capacity Commissioning CÔTE SOMALIA
SIERRA TOGO
Export Infrastructure Operator LEONE
D’IVOIRE
CENTRAL AFRICAN SOUTH
ETHIOPIA
FSRU
LIBERIA 25
11 GTA FLNG 2.5 mtpa bp 2023 6
24 8 CAMEROON
12 Marine XII (Tango) FLNG 0.6 mtpa Eni 2023 23 9
UGANDA
13 Marine XII FLNG 2.4 mtpa Eni 2025 EQUATORIAL REPUBLIC
FSU/FRU
GUINEA OF CONGO KENYA
14 Mozambique LNG Onshore 12.88 mtpa TotalEnergies 2026 18 GABON RWANDA
13 CONGO
Planned LNG Export Type Capacity Owner/ Commissioning 12 BURUNDI
Infrastructure Operator
7
FLNG FLNG
TANZANIA
15 GTA Ph.2 FLNG 2.5 mtpa bp 2025/2026 16
FLNG
ANGOLA
16 Tanzania LNG Onshore 15 mtpa Equinor, Shell 2030 22 10 14
17 Rovuma LNG Onshore 15.2 mtpa ExxonMobil, Eni TBA MALAWI 21 17
ANGOLA
18 Cap Lopez Onshore 0.6 mtpa Perenco 2026 ZAMBIA 28
19 Yakaar-Teranga Possible FLNG 4.5 mtpa bp 2026 FLNG
20 BirAllah-Orca Possible FLNG TBA bp FID 2025

ZIMBABWE FSRU
21 Mozambique LNG Onshore 30 mtpa TotalEnergies 2026 NAMIBIA

22 Coral 2 FLNG TBA Eni TBA BOTSWANA MOZAMBIQUE
23 Fortuna FLNG TBA TBA TBA MADAGASCAR
LEGEND ESWATINI
24 Padah Onshore 3.4 mtpa Padah LNG 2025 27 FSRU
ONSHORE LNG PLANT LESOTHO

Planned LNG Import & Type Capacity Owner/ Commissioning 30
Regasification Operator FLNG
OFFSHORE FLNG
Infrastructure SOUTH AFRICA
FSRU
FSRU VESSEL
25 Tema LNG FSU/FRU 1.7 mtpa Helios Inv. Partners 2022 29
FSU/FRU
FSU/FRU
26 KARMOL LNGT Powership FSRU 84 MMscf/d KARMOL 2022

Africa FSRU
27 Matola LNG FSRU TBA TotalEnergies, Gigajoule 2025

28 KARMOL (ex. LNG Vesta) FSRU TBA KARMOL TBA
Source: World LNG Report 2022, IGU; Hawilti Research
29 Coega LNG Onshore TBA TBD TBA
30 Richards Bay LNG Onshore TBA Transnet SOC TBA Disclaimer: The boundaries, colors, denominations, and other information shown on any map in
31 Kamsar LNG Onshore TBA West Africa LNG Group, TBA this work do not imply any judgment on the part of Hawilti Ltd nor the International Gas Union
Inc. (WALNG) concerning the legal status of any territory or the endorsement or acceptance of such boundaries.

Market fundamentals call for more investments in LNG supply There is a plethora of pre-FID Figure 34: African LNG export
options in Africa that can boost African LNG
capacity, export
mtpa capacity, mtpa
(2022-2030)
(2022-2030)
Meanwhile, market fundamentals for have exacerbated the scale of the the continent’s export revenues Nigeria Algeria Mozambique Egypt Angola
LNG investment in Africa have witnessed a supply gap. and bridge the global supply gap. Equatorial Guinea Mauritania/Senegal Tanzania
U-turn since 2021 and have become very Libya* Congo, Rep. Cameroon Gabon
favorable. Between 2015 and 2017, the The Russia-Ukraine war added even These industry fundamentals are auspicious
140
decrease in global gas prices led to a more uncertainty, taking volatility in for African gas markets. The continent’s list of
slowdown in new LNG project investments the gas markets to historically unprece- pre-final investment decision (FID) LNG pro-
contributing to the supply constraints in dented levels, delaying key Russian jects has grown over the past few years, and
100
the market. The few projects that did get LNG export projects and generating the current appetite for gas could provide a
sanctioned after 2017 are now suffering massive European demand for alternative boost to several of them as they seek to reach
delays. This is the case with African sources of gas. But while short-term financial close. Floating LNG projects are cur-
projects such as bp’s GTA LNG Phase 1, demand will be driven by Europe’s rently seen in a very positive light for their abili-
50
delayed to 2023. transition away from Russian supplies, ty to start delivering cargo in under 2 years.
global markets in Asia will continue
Meanwhile, the insurgency in Mozambique needing increasing volumes of gas in As Sub-Saharan Africa seeks to ramp up its
has also delayed TotalEnergies’ 12.88 the long term. Shell’s 2022 LNG Outlook LNG export capacity, it must ensure that
MTPA Mozambique LNG project, expects global LNG demand to cross the new projects work in tandem with the de-
2022 2025 2030
expected to be commissioned only in 700-MTPA per year threshold by 2040, a velopment of its domestic markets to cre-
Best-case
Best-case scenarioscenario
projectionsprojections based
based on approved and on
pre-FID
2026 at the earliest. These delays 90% increase on 2021 demand. ate a stronger business and societal case. projects. *Libyan capacity
approved is unoperational
and pre-FID projects.
In that regard, the development history of * Libyan
Source: capacity
IGU, Hawilti researchis unoperational
Nigeria's LNG offers a great example. Source: IGU, Hawiliti Research
Global
Figure gas prices,
33: Global $/Mmbtu
gas prices, $/Mmbtu(2010-2022)
(2010-2022)
70 Figure 35: Selected pre-FID LNG projects in Africa
60
PROJECT OPERATOR CAPACITY COUNTRY STATUS
50 GTA Phase 2 FLNG bp 2.5 mtpa Senegal/Mauritania FID expected in 2023/2024

Yakaar-Teranga bp 4.5 mtpa Senegal FID expected in 2023
40 BirAllah-Orca bp TBA Mauritania FID expected in 2025
Natural
gas, Tanzania LNG Equinor/Shell 15 mtpa Tanzania FID expected in 2025
Europe UTM FLNG UTM Offshore 1.2 mtpa Nigeria FEED
30
Cap Lopez Perenco 0.6 mtpa Gabon Project under study
Area 4 FLNG Eni TBA Mozambique Second FLNG under
LNG,
20 study
Japan
Fortuna FLNG TBA TBA Equatorial Guinea Under negotiations.
10 Initial concept targeted
Natural 2.2 mtpa
gas, Padah LNG Padah LNG 3.4 mtpa Nigeria Under preparation
0 US Rovuma LNG ExxonMobil 15.2 mtpa Mozambique New concept under study
2010 2012 2014 2016 2018 2020 2022
Nigeria LNG T8 Nigeria TBA Nigeria Concept under study
Source: World Bank

Source: Hawiliti Research, media reports
CASE STUDY 2
Nigeria LNG’s Contribution to the
Development of the Nigerian Economy
Data from Nigeria LNG (NLNG), the

continent’s biggest LNG exporter, shows
the extent to which gas projects can
lift economies when they successfully
combine export revenues with domestic
supply and capacity building.
Sub-Saharan Africa's Flagship

LNG Facility
NLNG’s terminal on Bonny Island was

Sub-Saharan Africa's first LNG export
facility, with its initial train commissioned
in 1999. The company is made up of four
shareholders, including NNPC (49%),
Shell Gas (25.6%), Total Gaz Electricite
Holdings France (15%), and Eni Interna-
tional (10.4%). Over the past two decades,
NLNG has become a six-train, world-class
LNG facility and has delivered over 5,000
LNG cargoes around the world, where
Nigerian gas is used to provide reliable
power supply and decarbonise European
and Asian grids.
NLNG has now embarked on the NLNG-

SevenPlus (or Train 7) project, targeting a
seventh train with a capacity of 4.2 MTPA Stamp of approval: Nigerian society recognises the key role
and an additional 3.4 MTPA of capacity from the natural gas industry plays in the country's economy.
the debottlenecking of existing trains.

The company is by far the biggest across the country. Beyond just
venture for the monetisation of LNG, NLNG also produces high-quality
Nigerian gas, commercialising on natural gas liquids (NGLs) including
average 38% of the gas produced every liquefied petroleum gas (LPG) and
year in the country. Between 1999 and butane as by-products. Between
2021, it had already generated over 2007 and 2021, NLNG supplied over
$124 billion in revenues, paid over 2.4m tons of LPG to the Nigerian
$7 billion in corporate income tax, market via its Domestic LPG
and generated over $19.5 billion in Scheme, which supports the domestic
dividends to the Federal Government availability of cooking gas for Nigerian
of Nigeria . Over the same period, it
47
households. In early 2022, the
generated considerable foreign direct company’s board decided to allocate
investment (FDI) with current assets all its LPG supply to the Nigerian
worth well over $19 billion. market, representing some 450,000
tons a year.
Export and Domestic Supplies
Local Content Development
NLNG is not purely an export
business and has been increasing its As it embarked on expansion phas-
domestic supplies of gas in recent es in the 2000s, NLNG put a focus on
years. Globally, the company domestic capacity building and local
manages several long-term LNG content development. The company’s
sales purchase agreements (SPAs), Nigerianisation scheme resulted in
but it has also committed to supplying 100% of its management team being
LNG to the domestic market. In June Nigerian and 95% of its workforce being
Picture: Nigeria LNG
2021, it signed 10-year SPAs with local. In addition, NLNG has provided
three local companies (Bridport over 12,000 direct jobs at the peak of
Energy, Asiko Energy, and Gas Plus each expansion project over the years, scheme to help its vendors access 10% of Nigeria’s total export revenue,
Synergy) to supply an initial 1.1 MTPA and the same number of jobs will once finance and boost local content. For employs thousands of Nigerians, and
of LNG on a delivered ex-ship (DES) again be supported by its ongoing Train Train 7, 55% of both engineering activ- estimates its contribution to GDP at
basis to the domestic market. The 7 expansion. ities and procurement will be carried 4% between 2008 and 2014. Equally
move facilitates the local out in Nigeria by Nigerian vendors. The important, it is now the country’s
availability of LNG to support gas With the support of Nigerian banks, it set growth of NLNG is a demonstration of biggest supplier of domestic cooking gas
distribution for Nigerian industries up a $1.2-billion local vendors' finance the impact gas can have on a developing and will start delivering LNG as
economy. The company now represents well from 2023.
47
Facts and Figures 2022, Nigeria LNG

2.3. Africa’s Just Energy Transition

The Decarbonisation Opportunity
for a new approach to projects’ develop-
For natural gas to continue playing its
ment, operations, and maintenance. It is a
critical role in helping meet future energy
prerequisite for the gas industry’s license
demand in Africa while tackling climate
to operate and to ensure a supply and
change and improving air quality,
delivery of gas to fuel a sustainable energy
encouraging the switch away from coal
future, aligned with the Paris Agreement.
and diesel while managing methane
emissions must become a priority for
Gas is a pathway to the
producers and consumers.
decarbonisation and
strengthening of the African grid.
The urgency for effective management Pollution from a coal-fired facility
and elimination of methane emissions
The current African energy supply mix
globally, as well as for ending routine
relies significantly on highly emitting and According to the Global
flaring is growing. While the reduction Figure
Carbon 36:dioxide
Carbon (CO
dioxide (CO2) emissions
) emissions
polluting fuels, including coal, oil, and Carbon Project, 2
of flaring offers attractive opportunities coefficients for homes and businesses
traditional biomass (see Section 1). Africa has been emitting coefficients for homes and businesses
to cut carbon emissions and make more
over 400 million tons of Coal (all types) 96.1
gas available for the local economies, the Residual heating fuel (businesses) 75.09
Switching coal-fired and diesel-fired CO2 every year from burn-
elimination of methane emissions calls Diesel and home heating fuel 74.14
power plants, which make up some 60% ing coal for the past two Kerosene 73.19
of the continent’s electricity mix, to gas decades . Current coal-

49 Jet fuel 72.23
Motor gasoline 70.66
will help to begin start decarbonising a related emissions are
Aviation gas 69.15
significant share of Africa’s power heavily driven by South Propane 62.88
generation industry. According to the IEA, Africa (85%), with the rest Natural gas 52.91
switching to gas-fired generation today made up of much smaller

Source: U.S. EIA
would produce 45-55% less GHG polluters such as Morocco,
emissions than coal. Replacing kerosene Zimbabwe, Egypt, domestic gas develop- Transition Partnership with
and diesel with gas in industries and Botswana, and Zambia ments or gas import France, Germany, the
homes can also reduce emissions by a among others. projects to secure supply, United Kingdom, the
third, according to IEA estimates. In with the aim of retiring or United States, and the
addition, gas has a clean burning profile Some of these key coal switching several of their European Union to mobi-
and low or zero emissions of the main consumers, including coal power plants. In No- lise an initial $8.5 billion
air pollutants: PM2.5, sulfur oxides South Africa and Morocco, vember 2021, South Africa towards decarbonisation.
(mainly SO2), and nitrogen oxides (NOX)48. are moving ahead with negotiated a Just Energy The investment plan is
48
"The Role of Gas in Today's Energy Transitions", 2019, IEA 49
Our World in Data based on the Global Carbon Project (2022)

targeted at scaling up renewable energy Senegal where KARPOWERSHIP is in the The switching opportunity in these engines would significantly
generation, but also includes several policy process of switching its 236-MW Ayşegül for African industries reduce operating costs and the
reforms to increase gas usage within the Sultan powership in the Port of Dakar from environmental impact.
country’s power mix, retire coal stations, diesel to gas. Beyond decarbonising the grid, developing
and domestic gas markets in Africa will also In West and Central Africa, gas provides
stabilise the grid as wind and solar The Turkish contractor’s joint venture with undoubtedly allow industries to switch an ideal source of energy to switch
generation grows. As a result, South Africa Mitsui O.S.K. Lines, KARMOL, is working on to lower carbon sources of energy and captive diesel power plants in the mining
is likely to remain the continent’s biggest delivering several floating storage regas- be more competitive regionally. This is and manufacturing industries. Nigeria
gas importer as it seeks to secure ification units (FSRUs) to Africa to decar- particularly relevant to tackling emissions has pre-developed a few gas demand
additional supplies via the construction bonise KARPOWERSHIP’s floating stations from the continent’s burgeoning diesel clusters served by trucked gas for over a
of LNG import terminals on its coast. thereby consuming LNG instead of diesel generators. In 2019, a study by the Inter- decade, via what it calls “virtual pipelines”.
and HFO. Its next one is being converted national Finance Corporation (IFC) esti- Several private operators can run on CNG
Elsewhere, the focus is also on cutting diesel by Keppel Shipyard and is due for delivery mated that these generators account for and LNG via these networks that supply
and HFO consumption within power plants in 2023 in Mozambique. the majority of power sector emissions of gas to captive power plants and a few
by using gas instead. Ghana’s LNG import nitrogen oxides (NOx) and fine particulate truck fleet owners. Industry experiences
terminal at Tema was notably set up to For many of these countries, replacing matter (PM2.5) . Switching diesel with gas
50 have demonstrated that trucking CNG is
satisfy the excess demand requirements liquid fuels or coal within existing power
in Eastern Ghana where power plants are plants is also a perfect way to address Emissions
Figure factors
37: Emissions factors for natural
for natural gas gas vs and
vs. coal coal
oiland oil
in shortage of gas and must often burn traditional barriers that come with
Power generation Road transport Marine bunkering
light cycle oil (LCO). The project is owned by developing domestic gas value chains (see
Coal-super Natural Diesel- CNG HFO LNG
Access LNG (Helios Investment Partners) Section 3. 2.). Most of them are small gas critical gas-CCGT ULSD
and consists of a floating storage unit (FSU) demand centers that would otherwise 1,000 900 200 122 1,000 742
117 662
Carbon dioxide (CO2) 400
and floating regasification unit (FRU). Once struggle to provide the kind of economies 500 100 500
0 0 0
demand from the power sector is met, its of scale that justify investing in gas infra- kg/MWh gross eq g/km eq g/km
expansion phase aims at replacing LCO, structure. As such, the existence of oper- 0.05
0.05 50 25 0.04
residual fuel oil (RFO), coal, and diesel for ating infrastructure assets that can absorb Particulates (PM) 0.025
<0.1
25 0.02 0.01
0 0 0.0 0 0.0
industrials as well. gas makes it an ideal scenario to anchor PM 2.5 - kg/MWh gross mg/km g/g of fuel
future lower-carbon energy infrastructure. 0.1
0.5 0.3 400 250 0.1
In Senegal, where some 83% of generat- Nitrogen oxide (NOX) 0.25 200 50 0.05
<0.1 <0.1
0 0 0
ed electricity comes from diesel and HFO, The quest for stable grids with lower car-
several independent power producers (IPPs) bon footprints is driving the appetite for 0.05
0.5 400 0.05
are also planning to switch to gas once the gas amongst most of these countries that Sulphur dioxide (SOX) 0.25
0.3
200
3.7
commodity becomes available domestical- have traditionally relied on coal or diesel 0 0.0 0 0.0 0 0.0
ly. The CES, which owns the country's only to generate electricity. For the same
Source: NETL, EEA, OIES, BCG analysis
coal power plant at Sendou, has also started reason, gas imports are likely to rise in Source: NETL, EEA, OIES, BCG analysis
working on plans to switch the station to Africa over the coming decade and future 50
The Dirty Footprint of the Broken Grid – The Impacts of Fossil Fuel Back-up Generators in Developing Countries,
gas and expand it to 360 MW. It is also in gas imports by African countries will September 2019

2 / Africa's Natural Gas Imperative
very beneficial to meeting power demand for gas from the mining sector.
Figure 38: African signatories to the global methane pledge (GMP) and endorsers of
demand of up to 8-10 MW, after which Miners in Ghana are seeking to secure gas zero routine flaring (ZRF) by 2030
LNG becomes more economical because both for power and for transport, with
it is denser. Goldfields Ghana aiming to convert up to
60 Caterpillar Mine Haul trucks from diesel
The Nigerian experience shows how fuel to LNG or diesel dynamic gas blending
TUNISIA
CNG players were able to capture and (DGB) systems by 2031. MOROCCO
develop demand from the industry before

LNG was able to get into the market. As Soaring oil prices since 2021 have ALGERIA
LIBYA
demonstrated in our previous case study, exacerbated this switching trend because EGYPT
Increased demand for gas even pushed of the disastrous economic impact they
Nigeria LNG to sign agreements in 2021 with have had on manufacturing industries and
domestic companies to supply 1.1 MTPA of their operational expenditures. Switching MAURITANIA
MALI
NIGER
LNG on a DES basis to the domestic market. to gas is not only a carbon issue but has CHAD SUDAN
ERITREA
THE GAMBIA SENEGAL
also become a matter of survival for many
BURKINA FASO
Gas consumption has become essential African industries. With up to 100 GW of GUINEA-
GUINEA
BISSAU BENIN
NIGERIA
to the survival of Nigerian industries and back-up diesel power generators operating CÔTE TOGO
SOMALIA
SIERRA LEONE D’IVOIRE SOUTH ETHIOPIA
manufacturers, according to Ken Etete, across the continent, the potential to switch GHANA CENTRAL AFRICAN
REPUBLIC
SUDAN
LIBERIA
CAMEROON
Group CEO at the Century Group. Its to cleaner, locally available, and more
subsidiary GasPlus Synergy has recent- affordable fuels is significant. EQUATORIAL GUINEA UGANDA
REPUBLIC
OF CONGO KENYA
ly achieved infrastructure readiness to GABON RWANDA
receive LNG in Nigeria and distribute it Managing and eliminating CONGO

BURUNDI
across the country. According to him, the methane emissions is a ANGOLA
TANZANIA
capacity to negotiate friendly, stable, long- prerequisite for Africa’s
term gas sales contracts and access locally gas sector to remain
available gas as cleaner and more efficient competitive and sustainable. ANGOLA MALAWI
ZAMBIA
fuel is gaining traction in the region.
In 2021, the USA and the European
LEGEND ZIMBABWE
Just next door in Ghana, gas is becoming Union led the launch of the Global NAMIBIA MADAGASCAR
Signatories to both the Global Methane
popular amongst mining companies who Methane Pledge at COP 26 in Glasgow. Pledge and ZRF Endorsers BOTSWANA MOZAMBIQUE
Endorser of the ZRF only
want to run cleaner operations. In 2022, The Pledge has now gathered 150 signa- ESWATINI
Signatory to the GMP only

American energy solutions provider tories who have all agreed to take action LESOTHO
Genser Energy closed a $425-million to reduce global methane emissions by at

SOUTH AFRICA
funding package to support the least 30% below 2020 levels by 203051. The
expansion of its midstream gas business initiative has been joined by some of the
Source: World Bank, Global Methane Pledge
in the country and meet the growing continent’s biggest oil and gas producers,
51
https://www.globalmethanepledge.org
including Nigeria, Egypt, Congo, and methane emissions across infrastructure associated gas to eliminate flaring indeed recognised the need to reduce
Gabon. assets to develop necessary response (see below); the improvement of flaring, or the process of burning associated
measures and repair programmes when combustion engines’ efficiency when gas that indirectly comes with oil production
Achieving the Global Methane Pledge and where needed. Unfortunately, beyond gas is used as a fuel; and the inspection activities. To do so, they have joined the
target requires widespread implementation flaring detection, very little data is and repair of emitting pneumatic devices, World Bank’s Zero Routine Flaring by 2030
efforts in key sectors including energy, currently available on methane emissions or their replacement with electrical Initiative (ZRF)55, which commits govern-
agriculture, and waste. Oil and gas represent in Africa, especially when it comes to pumps and controllers or mechanical con- ments and companies to stop routine flaring
up to a fifth of methane emissions from fugitive and venting emissions data. This trollers. on greenfield oil projects and end routine
human activity) , and the share between
52
area should be prioritised, as data flaring on existing oilfields by no later than
the two is roughly equal. Hence, actions in collection and standardisation is a lengthy The topic of methane emissions 2030.
the natural gas value chain present a process that requires assessments over reductions and the rapidly developing
significant opportunity to reduce a sufficiently representative set of assets new technologies and practices to Besides adherence to global flare
human-made methane emissions. For the for at least a year to understand where, continuously improve the efficiency and reduction initiatives, most African
same reason, the reduction of flaring, when, and what methane emissions may effectiveness of mitigation is vast and producing countries are committed to
venting, and fugitive emissions provides be occurring . 54
critically important. It is outside of the minimising or eliminating methane
valuable near-term opportunities to limit scope of this report to delve much deeper emissions within their oil and gas sectors
climate change and one where Africa can The second one is the execution of periodic into their examination; however, it is and have all adopted different approaches
make a noticeable difference. leak detection and repair surveys (LDAR) highly recommended for African gas to tackle flaring, with varying degrees of
and the rollout of robust asset integrity and leaders to consider and implement the success.
Methane emissions in the natural gas maintenance programmes on existing Methane Guiding Principles. Methane
supply chain can arise from venting, and future gas infrastructure. This is Guiding Principles can be accessed at The World Bank’s Global Gas Flaring
fugitive emissions, or incomplete especially the case for key assets such as https://methaneguidingprinciples.org. Reduction Partnership (GGFR) estimates
combustion (otherwise known as storage tanks, compressors, and glycol that Africa’s oil producers still burn on
“methane slip”). Their successful dehydrators that are traditionally prone Flaring reduction projects average 30 bcm of associated gas every
management and reduction require the to venting, but also for key upstream and can significantly contribute year56. While Africa represents less than
implementation of several industry downstream assets such as wellheads, to emissions reduction while 10% of global oil production, it accounts
practices that have so far been only pipelines, and LNG transmission and making more energy available for 20% of global flaring volumes. Such
sparsely adopted on the continent. Chief distribution infrastructure. to growing African economies. volumes represent CO2 emissions of
amongst them are the 10 best practices over 80 million tons every year and a
identified by the Methane Guiding Additional principles worth noting include So far, the best-known measures to value loss of $3.46 billion in gas sales
Principles to which the International Gas the implementation of effective engineer- mitigate and manage flaring in Africa last year according to World Bank
Union is an associate signatory53. ing design and construction strategies to involve the capture and monetisation of data57.
tackle methane loss possibilities right from associated gas, thereby improving energy
The primary focus is on the identification, the project’s conceptual phase; the security in most affected countries. Most The continent’s biggest oil producers
detection, valuation, and quantification of recovery, processing, or storage of African oil and gas producing markets have naturally flare the most, with Algeria,
52
Global Methane Tracker, 2022 (IEA) 55
https://www.worldbank.org/en/programs/zero-routine-flaring-by-2030/endorsers
53
https://methaneguidingprinciples.org/resources-and-guides/best-practice-guides 56
Global Gas Flaring Tracker, World Bank
54
IEA 57
Idem

Nigeria, and Libya rep-

resenting 70% of flaring Figure 39: Flaring in Africa (2021)
CASE STUDIES 3, 4 & 5
emissions in Africa in Flaring intensity, cubic
metres of gas flared per
Actions on Flaring Reductions
2021. However, smaller Flaring volumes, MMscm barrel of oil produced
producers flare more gas 3) ANGOLA adopted material
Algeria 8.155,82 19,7
relative to their produc- Nigeria 6.626,85 11,7 sanctions against flaring as early Flaring
Figure volumes
40: Flaring in Angola,
volumes in Angola,
MMcm (2012-2021)
MMcm (2012-2021)
tion. Data from the World Libya 5.998,54 13,2 as 2009. In doing so, it incentivised
Bank shows that flaring Egypt 2.082,46 10,2
operators to process associated 4,000
Angola 1.801,05 4,4
intensities in Africa are the gas while creating an integrated
Congo, Rep 1,552.17 15,7 3,500
highest in Cameroon, the Gabon 1,338.42 20,9 value chain for its monetisation. 3,000
DRC, Tunisia, and Gabon. Cameroon 780,79 33,8 Fiscal measures encouraged 2,500
In that regard, the Gulf of Ghana 599,24 9,1 investments in midstream gas in- 2,000
Guinea should be subject Tunisia 272,31 21,1
frastructure, including the Angola 1,500
Equatorial Guinea 254,64 5,5
to increased stakeholders’ LNG export terminal at Soyo, while 1,000
Sudan 242,54 9,9
attention as significant DRC 225,8 28,1 various regulations enabled opera- 500
improvements could be Chad 178,94 5,6 tors to re-inject gas, commercialise 0
made from an intensity Niger 49,55 17,1 2012 2014 2016 2018 2020
the surplus, or transfer it as feed-
perspective there South Africa 27,87
stock to Angola LNG. Source: Global Flaring Reduction Partnership
Côte d’Ivoire 15,11 1,2
(especially in the DRC, (GFRP), World Bank
Source: Global Flaring Reduction Partnership (GFRP), World Bank
Gabon, and Cameroon). These initiatives were accompa-
The region is particularly nied by strict enforcement of reg- The drop is particularly significant
representative of the chal- distribution infrastructure However, success has been ulations equally applicable to all after 2016, the year when Angola
lenges faced by African a capital-intensive and limited so far, and in industry participants, public and LNG’s terminal became fully
operators of producing oil technologically challenging cases where flaring has private. By 2021, Angola’s flared operational and was able to offtake
and gas resources more venture. been reduced, its intensity gas volumes had come down to 1.8 most of the associated gas from
sustainably. has increased. For Africa to bcm compared with 3 bcm in 2012. offshore fields.
According to the latest IEA capitalise on its resources
Emissions there are scat- estimates, reducing flaring and ensure its long-term
tered across hundreds of and venting in Africa could viability, financeability, and
small fields where gas is make some 10 bcm of gas sustainability, it will need
produced in low volumes available in the short term to institute serious
and at low pressure (see for export, without the change. Angola provides
case study below). This in development of any new one example of taking the
turn makes the develop- supply and transport right steps toward that
ment of processing and infrastructure58. change.
58
Africa Energy Outlook 2022, IEA

4) NIGERIA has adopted a similar

approach, although material anti- Flaring
Figure volumes
41: Flaring in Nigeria,
volumes in Nigeria,
MMcm
MMcm (2012-2021)
(2012-2021)
flaring sanctions were adopted only
recently. The country’s efforts to cut 9,000
flaring date back to the development 8,000
of the Nigeria LNG Bonny LNG export 7,000
terminal in the 1990s. Most feedstock 6,000

5,000
for LNG production comes from
4,000
associated gas that was previously
3,000
flared, to such an extent that the
2,000
commissioning and expansion of
1,000
Nigeria LNG led to the monetisation 0
of about 218 bcm of associated gas 2012 2014 2016 2018 2020
and decreased flaring in the country

Source: Global Flaring Reduction Partnership
from 65% in 2001 to less than 20% (GFRP), World Bank
today. It is expected that this trend
will continue toward elimination. scfd for companies producing less
than 10,000 bopd. Efforts to cut
Flaring reduction became national flaring were further strengthened
policy in 2015 when Nigeria with the adoption of the Petroleum
included specific commitments to Industry Act (PIA) in 2021, which
reduce flaring into its nationally lightened fiscal provisions around Picture: Seplat Energy
determined contributions (NDCs) the monetary sanctions.
zat the foundational COP21 Paris
ulations on flaring were a step in the Nigerian Gas Flare Commercialisation
meeting, which produced the Flaring has continued to steadily
right direction, but more needs to be Programme (NGFCP), a competitive
Paris Agreement. decrease in Nigeria, reaching approx-
done if the country wants to meet its process initially announced in 2016,
imately 6.6 bcm in 2021 against 9.6
NDC commitment of ending flaring by under which flare sites are auctioned
Regulations on flare gas came into bcm in 2012 (see Figure 41). However,
2030. to investors seeking gas. Hopes are
force in 201859 as a result. Under a significant part of the reduction
that the relaunch and restructuring
these regulations, flare penalties were in the flaring volumes is also tied
Moving forward, Nigeria plans to of this bid process will attract tech-
set at $2 per 1,000 standard cubic feet to a drop in the country’s overall oil
focus on addressing flaring across nically and commercially competent
per day (scfd) of gas for companies output while, concerningly, flaring
hundreds of small and disparate third-party investors to these flare
producing 10,000 barrels of oil per day intensity has increased by 10% over
fields. In that respect, the regulator sites. The process is now ongoing and
(bopd) or more and $0.50 per 1,000 the past decade. Nigeria’s 2018 reg-
has relaunched in September 2022 an proposals are to be submitted at the
auction of these flare sites under the end of February 2023.
59
Flare Gas (Prevention of Waste and Pollution) Regulations, 2018

Flaring volumes in selected Gulf

of Guinea countries (2012-2021)
5) The GULF OF GUINEA in Central in MMscm
to the 216-MW Kribi Power Station,
Figure 42: Flaring volumes in Nigeria,
Africa is home to the continent’s small before the additional investment
MMcm (2012-2021)
Congo, Rep. Gabon Cameroon DRC
and medium-sized oil producers with was made to develop remaining gas
production ranging from 100,000 to 5,000 reserves to supply 26,000 tons of
300,000 bopd on average. It illustrates 4,000 domestic LPG per year and export
a shared challenge in Africa’s efforts to 3,000 1.2m tons of LNG annually via the
reduce emissions and flaring, because 2,000 FLNG Hilli Episeyo from 2018
the bulk of its flared volumes often 1,000
onwards.
comes from small and disparate fields 0
spread across very large onshore and 2012 2014 2016 2018 2020 This new business model has proven
offshore areas, making flare elimina- so successful that Perenco is now
Source: Global Flaring Reduction Partnership
tion projects economically challenging. (GFRP), World Bank replicating it to monetise flared gas
in Gabon and the DRC. In northern
An equally important challenge is that sions from marginal and mature Gabon, the company has already
most flared gas is in small volumes and fields. developed a 400-km offshore gas
at low pressure, so operators need to network back in 2006 and a compres- Picture: Perenco
make significant investments into the Independent operator Perenco, the sion station at Batanga to supply
development of high-pressure gas net- largest oil and gas producer in Central previously flared gas to the power country, a region with very little access
works to aggregate and distribute their Africa, is leading such efforts in stations of Libreville and Port Gentil. to electricity. A memorandum of under-
associated gas, providing they find cooperation with regulators and standing (MoU) will be signed with the
off-takers for it. This partly explains industry stakeholders. Perenco’s It has since then installed additional Government of Gabon in 2023 for the
why oil-producing countries like Cam- approach has been to first anchor the compressors to further reduce flar- project, which involves the power
eroon, Gabon, the Republic of Congo, development of its small gas reserves ing and supply up to 1.13 MMscmd of station in the first phase before ramp-
and the DRC have some of the highest with the domestic power sector, and gas to both power plants. The existing up gas utilisation to set up a 0.6
flaring intensity indexes in the world. then diversify the products made from ence of such a network has enabled MTPA LNG terminal at Cap Lopez and
gas (LPG, CNG, LNG) in a second phase the company to make an additional developing the domestic gas-to-indus-
Thankfully, governments there have to ensure additional revenue streams investment and it is currently build- try segment to supply Gabon’s growing
committed to eliminating routine and make its projects economically ing a $50 million LPG production unit mining industry and possibly the future
flaring and are increasingly promot- feasible. Interestingly, this business at Batanga to produce some 15,000 Mayumba deep-water port.
ing the use of gas domestically to model puts the export market as the tons of LPG a year for the domestic
create a value chain that can absorb third component and final stage of market. In the DRC, the same scheme is being
associated gas. Meanwhile, operators development. planned, starting with a power station
have developed innovative business But moving forward, its plans in in Muanda on the coast before increas-
models and projects that can address Cameroon was the first country to Gabon also include the developing gas utilisation via CNG and for the
the technological and economical benefit from such a strategy. Peren- ment of a scalable power station at future Banana Deep-water Port
challenges of tackling methane emis- co’s fields there initially supplied gas Mayumba in the south of the developed by DP World.

In conclusion, while Africa has had some

degree of success in cutting flaring, results
have stagnated. The cases of Nigeria and
Angola have demonstrated the important
role of policy to drive emissions reductions,
including the set-up of penalties and the
development of infrastructure projects able
to off-take associated gas.
However, while policy frameworks have

significantly improved in recent years,
there remains a significant opportunity for
improvement.
Where they exist, the current policies are

largely inconsistent across the continent.
Most still do not cover fugitive methane
emissions or do not cover both flaring and
venting within the same framework. This
would notably help capture the whole value
chain and include emissions from midstream
Gas flaring in Nigeria
and downstream infrastructure as well.
Figure 43: Global flaring and venting regulations: A comparative view of African Policies
Authorities are Development Associated gas Measuring and Monetary fines, Non-monetary Engineering Fiscal Market-based Mid- and
Targets/ Emergency Routine flaring
empowered plans must include projects require reporting penalties and sanctions are performance incentives incentives downstream
limits are flaring/venting or venting is
by legislation provisions for use an economic standards are sanctions imposed for requirements provided for provided for regulations
set allowed without prohibited
and regulation of associated gas evaluation prescribed imposed for violations are set reductions reductions encourage
prior approval
violations reductions
Algeria Y Y Y Y Y Y N - - N Y N Y
Angola N Y N Y Y Y Y Y N N Y N N
Egypt N Y N N N N N N N N N N Y
Gabon Y Y N Y Y N N Y - N N N N
Libya N Y N N Y Y - N - N N N N
Nigeria Y Y - Y Y Y Y Y Y - Y Y Y
Source: World Bank (May 2022)

Natural gas and its infrastructure today form a progressive highway efficient to develop in countries where a gas mostly oriented towards ammonia-based
to a low-carbon future. network is already in place. Of the proven fertilizer and relies on natural gas feedstock
low-carbon gas technologies (renewable or coal. But developed African economies
Africa needs gas to support the develop- anchoring intermittent energy and adding gas, hydrogen, and and carbon capture, with efficient power infrastructure or large
ment of resilient grid infrastructure. These large-scale renewables will become much utilisation, and storage or CCUS), renewable electricity off-takers are now looking to the
are needed to integrate significant shares of more feasible without further compromis- gas holds the highest potential to reduce future and serving as pathfinders in the
variable renewable and distributed energy, ing reliability. For the same reason, the IEA emissions in existing natural gas networks production of green hydrogen. Egypt and
without compromising energy security or sees gas maintaining its role as the leading because it comes with no constraints on South Africa are natural leaders in that
economic development. source of grid flexibility in Africa61. Globally, blending or combustion. When renewable aspect, but projects are also planned in
it actually forecasts a significant increase gas feedstock is produced using sustainable Morocco, Mauritania, and Namibia.
African power grids, where they exist, in flexibility needs as the shares of solar PV agricultural practices, it can achieve emissions However, green hydrogen production requires
remain largely weak and unstable, which is and wind grow in the electricity mix. In its reductions of at least 80% for instance64. significant electricity generation and water
a bad combination for any significant Announced Pledges Scenario (APS), the IEA capacity, which makes its scalability unlikely
renewable capacity integration. To allow for predicts that power system flexibility62 needs Gas infrastructure also provides a backbone across the continent in the short-term. Blue
this, the grid needs sufficient flexibility, and will double by 2030 and then double again for the gradual blending and integration of hydrogen, on the other hand, has more poten-
that means African power networks need by 205063. hydrogen within the energy mix. In Mozam- tial because it relies on natural gas. Hydrogen
to be expanded and reinforced with a relia- bique, the 420-MW Temane gas-fired power solutions are being put on the table as part of
ble supply of dispatchable power-generation Equally important, gas infrastructure plant currently in construction will notably large upcoming LNG facilities in countries like
resources that are available in sufficient developed today will provide a long-term be equipped with SGT-800 turbines that can Nigeria and Tanzania.
quantities and on demand60. While hydro- backbone for integrating decarbonised, blend up to 70% hydrogen in the future.
power and geothermal energy are ideal low-carbon, and zero-carbon gases that Elsewhere in Africa, innovation could mostly
options to generate frequency control and African countries will need to achieve Gas pipelines can also be converted to carry come from major energy companies
dispatchable power in East Africa, gas is an low-carbon or carbon-neutral economies in up to 100% hydrogen, though this requires seeking to decarbonise their assets and
essential tool for most of the rest of the con- the future. significant investment equivalent to around develop low-carbon projects. In the short-
tinent to build robust and flexible electricity ¼ of the cost of building new hydrogen pipe- term, additional low-electrification and CCUS
grids. In that regard, developing gas-to-pow- Globally, biofuels are increasingly embracing lines65. Medgaz, for instance, is carrying out solutions can be expected from the power
er must be part of the process of building and biomethane and renewable gas produced studies in 2023 to examine the compatibility generation and LNG industries.
expanding reliable power systems that can from biological materials like organic waste of its 10-bcm-per-year pipeline infrastruc-
integrate intermittent energies and pave the instead of fossil fuel deposits. Biomethane is ture with a view to linking Algeria to Europe Using CCUS, blending low-carbon and
way for a low-carbon energy mix. the same substance as natural gas and can for the transportation of hydrogen and zero-carbon gases like hydrogen, or scaling
integrate seamlessly into existing gas infra- natural gas. up renewable energy generation capacity
Once resilient African grids are in place, structure, making it very attractive and cost are all steps towards the goal of a
When it comes to hydrogen production, carbon-neutral supply. But building a low-
60
Because renewable generation sources like wind and solar fluctuate based on the weather, dispatchable backup projects have been minimal in Africa so far carbon future relies on strong foundations
resources are required to maintain the electricity network stability.
61
Africa Energy Outlook 2022, IEA and remain carbon intensive. Production is that most African nations are yet to cement.
62
Measured as the amount the rest of the system needs to adjust on an hourly basis to accommodate demand
patterns and the variability of wind and solar output. The IEA mentions four main sources of flexibility in power
systems: generation plants, grids, demand-side response and energy storage.
64
"A greener gas grid: what are the options?", 2017, Imperial College London
63
65
Global Renewable and Low-Carbon Gas Report 2021, IGU

3 / Bridging the gap
Assessing barriers and solutions to
the development of African gas
markets and how to overcome them
View of the Maria-Gléta power plant in Benin

Picture: Presidency of Benin
GasFor
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Africa Gas
GasFor Africa101
ForAfrica
3 / Bridging the gap 3 / Bridging the gap
Natural gas is a critical component of and deliver modern energy to households pressure to stop funding all hydrocarbons is particularly affecting development
Africa’s fight against energy poverty and has and industries. However, making the most has negatively impacted gas projects despite and concessional finance68, which used to
been chosen by many African governments of African natural gas resources requires their demonstrated emissions reduction and support several gas projects for their
as the energy required to provide baseload Africa’s policymakers and industry stake- improvements to air quality, in addition to poverty-reducing and economic develop-
electricity, anchor future low-carbon power holders to address several local and global positive socio-economic development ment value. Development and concession-
infrastructure, integrate more renewables, barriers to development. impact. al finance have indeed traditionally
played an important role in mitigating
This growing withdrawal of investments has the risks associated with gas projects in
3.1. Challenge 1: Overcoming Financing Barriers had a concrete impact on Africa. Some of Africa.
The financing of capital-intensive translate into insufficient public spending on the continent’s biggest financiers, including
the African Development Bank (AfDB), are The removal of this source of de-risking
energy projects in Africa faces two gas infrastructure projects, compounded by
finding it increasingly difficult to support gas capital will significantly reduce Africa’s
major barriers. the drying up of global development capital
from anything gas related. project developments that require loan syn- options for financing its projects. For exam-
dication and foreign partners. Because local ple, without DFIs’ guarantees or patient
The first one is the growing debt burden of
Shareholder pressure to divest out of banks are limited by their capital base, they risk capital, most of Africa’s recent gas-to-
many African governments, which in turn
hydrocarbons drove significant cuts to the cannot finance major gas projects on their power plants would have never been built
raises debt service expenditures and debt-
capital available for financing gas projects in own. For TotalEnergies’ Mozambique LNG in the first place. In that regard, the
to-GDP ratios and increases default risk,
emerging markets by several global financial project for instance, $14.9 billion had to be withdrawal of development finance from
leaving little room for budget allocation to
powerhouses and development finance raised in project finance from multiple finan- downstream gas and gas-to-power projects
infrastructure projects.
institutions (DFIs). As of 2021, 587 investors cial institutions, led by Export Credit Agen- is a serious cause for concern for Africa’s
representing over $46 trillion in assets under cies (ECAs) along with commercial banks. electrification and moving the needle on
The second is the movement of many
management had signed the Global Investor The withdrawal from funding gas projects energy access.
global asset managers away from all
hydro-carbon related investments to Statement to Governments on the
support their net-zero pathway aspirations. Climate Crisis66. Ahead of COP26, the
In that process, gas is often treated on par Glasgow Financial Alliance for Net Zero
with coal and oil, despite their significant (GFANZ)67 had also gathered over 450 finan-
differences in emissions impacts and decar- cial firms across 45 countries responsible for
bonisation potentials. over $130 trillion in assets, all committed to
accelerating global decarbonisation. Both
This blunt policy mechanism can be argua- initiatives sent a strong message about the
ble for its emissions implications in poorer accelerating phaseout of fossil fuels and
areas like Africa, where the available alter- increased scrutiny for any hydrocarbon-
native to gas is not renewable electricity, but related investment. Because most financial
rather coal, diesel, and most of all, polluting institutions do not make distinctions
Picture: Sasol
biomass. Concretely, both challenges between coal, oil, and natural gas, the
66
Institutional Investors Group on Climate Change (IIGCC) 68
Below market rate finance provided by major financial institutions, such as development banks and multilateral
67
https://www.gfanzero.com/ funds, to developing countries to accelerate development objectives (World Bank definition).
GasFor
102Gas ForAfrica
Africa Gas
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Africa103
Figure 44: DFI natural gas finance policy status Solution 1: Futureproofing gas projects can help ensure
DFI Natural gas finance policy status
global capital remains available for gas projects in Africa.
DFI Indicated or Restrictions on Ban on all No mention
(Country/Region) implied support most fossil fuels, fossil fuels of gas restriction reductions70. In the African context,
for gas with exceptions (including gas)
Considering ongoing shifts in global policy-
of gas making and capital markets, future-proofing countries must demonstrate the role of
ADB (Asia) x needs to become a priority for African gas gas projects today in meeting their net
AfBD (Africa) x projects69. This will enable African develop- zero targets, which for many African
CDB (CHN) x ers to anticipate the future and develop countries are beyond 2050.
DFC (USA) x adequate measures to mitigate the impact
EDFIs (Europe) x of their projects by building resilient and Futureproofing will especially be required
BIO (BEL) x bankable business models. As part of the from big ventures seeking to access large
BMI-SBI (BEL) x process, assessing each project’s compatibil- pools of capital. For the upstream (explora-
CDC (UK) x ity within the Paris Agreement’s stipulations tion and production) segment of the indus-
COFIDES (ESP) x is a necessity, especially when seeking to try, that could mean focusing on minimising
DEG (DEU) x attract foreign capital. operational emissions and the development
Finnfund (FIN) x of gas feedstocks with low carbon content,
FMO (NLD) x While gas can serve as the ideal fuel to or the monetisation of associated gas that
IFU (DEN) x displace coal and immediately reduce emis- would otherwise be flared.
Norfund (NOR) x sions, it is also the only fossil fuel that is
OeEB (AUT) x itself ‘decarbonisable’ at scale. Natural gas The focus of upstream operators on net-ze-
Proparco (FRA) x infrastructure also provides a resilient, long- ro projects is already gaining traction in
SIFEM (CHE) x term network for delivering low-carbon and Africa, with Eni making the development
SIMEST & CDP (ITA) x zero-carbon gases (see Section 2.3.). of its recently discovered Baleine offshore
SOFID (PRT) x field in Côte d'Ivoire the first net-zero de-
Swedfund (SWE) x New gas infrastructure can and should be velopment in Africa for scope 1 and scope
EIB (Europe) x designed in a way to enable the further 2 emissions71. Eni's strategy includes the
ERBD (Europe) x scaling up of these low-carbon and zero-car- implementation of highly efficiency plant
FinDev (CAN) x bon gases and ultimately help meet the solutions, process energy recovery, and the
IDB (Latin Am.) x objectives of the Paris Agreement. In doing reduction and control of fugitive emissions.
IsBD (Islamic so, future gas development plans would be For other already producing assets, brown-
x
states)
aligned with the vision of a just energy tran- field strategies are required to decarbonise
JICA (JPN) x
sition and find the right balance between operations around initiatives such as flue
KDB (KOR) x
economic development and emissions gas metering, improved air compression
World Bank x
IFC (WB) x 69
Futureproofing in this context means finding solutions to guarantee environmental sustainability and
compatibility with the goals of the Paris Agreement. Today, it requires upholding the best available standards
Note: while several DFIs still make exceptions for gas, most of these exceptions will end in 2030 for minimising and eliminating emissions, maximising efficiency, and being ready for further decarbonisation.
and/or come with stringent ESG-related scrutiny and alignment with the Paris Agreement.
70
See for instance AfDB Africa Economic Outlook 2022
Source: Energy for Growth Hub (2021)
71
https://www.eni.com/en-IT/eni-worldwide/africa/costa-d-avorio.html
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Africa Gas ForFor
Gas Africa105
Africa
to achieve zero-methane emissions by mitigation aspects of the project. “We are

design is real. fortunate that the gas we have discovered in
Tanzania has a remarkably low carbon diox-
Fortunately, there are indications that these ide content. And the country’s reliable sun-
trends are already being considered and shine means we can use solar power to cool
adopted in Africa. Tanzania LNG could be the gas, ready for transportation as LNG.
a pathfinder in that regard, with former That all helps a lot. But if we are to make the
Equinor Vice President Al Cook meeting with project genuinely low carbon, we will need
Tanzanian President Samia Hassan in to convert the gas into hydrogen before it is
August 2022 to discuss the climate used,” Mr Cook said after his meeting.
The gas sector development in Africa is in many ways aligned

with the goals of the Paris Agreement and has a role to play in
supporting net-zero transitions.
• Natural gas generates dispatchable and • Gas-to-power plants require much less
efficient power that supports a reliable and land than other sources of energy, such
necessary backup generation to stabilise as solar and wind, and can easily
Picture: Dorman Long Engineering
power grids, especially in areas without hy- be located close to demand centers,
dropower, nuclear, or geothermal facilities. thereby decreasing the need for
technology, the development of co- world’s largest LNG liquefaction project, It provides mid-merit and peaking power investments in transmission infrastruc-
generation solutions, or the use of Qatar’s North Field East LNG development, supply and the balancing and ancillary ture.
renewable power for operations. will integrate both CCUS and solar . In the
72
services required to build a resilient electric-
future, the ability of LNG infrastructure to ity value chain capable of integrating large • While gas is a fossil fuel, its infrastruc-
In midstream (transmission) and down- accommodate hydrogen blends is likely to volumes of intermittent renewables. ture can be reconfigured to accommo-
stream (distribution), special attention also be factored in. In that regard, the first date the production and distribution
needs to be given to the decarbonisation pilot projects for hydrogen blends into • Natural gas has lower CO2 emissions of new energies in the future, including
of the LNG supply chain and the liquefaction are already in development . 73
than any other fossil fuel and is the renewable gas and hydrogen.
development of futureproof LNG ideal, immediately available, rapidly
infrastructure. Applying CCUS will become The other critical component of making deployable, and large-scale substitution • Gas offers the most efficient,
the norm, and it is the reason why Nigeria these gas investments futureproof is the fuel for coal, diesel, or HFO. flexible, and low-emission solution
LNG is already studying such an option extent of their ability to eliminate methane for hard-to-electrify areas of the
for its Train 8. Similarly, the use of solar emissions. Having the benefit of greenfield • Domestic natural gas in Africa often economy, like heavy manufacturing,
energy to power liquefaction (or regasifica- construction, combined with a new wealth offers the most affordable power and is that require extremely high
tion) infrastructure will also increase. The of science and technology, the opportunity part of the Least Cost Power Develop- temperatures and high energy
ment Plans (LCPDP). density.
72
Shell LNG Outlook, 2022
73
Idem
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CASE STUDY 6
Central Térmica de Temane (CTT)
as a Futureproof Project
In Mozambique, the Central Térmica 70% hydrogen in the future.

de Temane (CTT or Temane gas-to-
power plant), is a project led by 3) It is structured with a flexible technical
the Temane Energy Consortium and commercial configuration that allows
(TEC), majority-owned by Globeleq. for a variable supply of baseload and dis-
Additional shareholders include patchable power, hence delivering com-
state-utility company EDM and plementary power so that Mozambique
South African chemicals group can easily integrate renewables into the
Sasol. grid.
The $650-million project reached its 4) Its power purchase agreement (PPA)
financial close in December 2021 and ends before 2050.
is currently under construction. Not
only did it manage to attract funding By demonstrating its alignment with the
from several Western DFIs, but it also Paris Agreement, the CTT secured a large
got unanimous approval from the debt financing package provided by the
board of the World Bank without any International Finance Corporation (IFC),
abstentions. The reason is simple: the FMO, and the Emerging Africa Infrastruc-
CTT is a gas project strongly aligned ture Fund ($253.5 million combined), the
with the Paris Agreement. US International Development Finance
Corporation ($191.5 million), and the
1) The power plant aims at supplying OPEC Fund for International Develop-
Mozambique's President Filipe Nyusi lays the foundation stone for the Temane power plant in
low-cost and reliable electricity to ment ($50 million). March 2022.
Mozambique by relying on domestic
natural gas and is part of Mozam- In December 2021, the Multilateral Sasol Africa Pty Ltd, and Moz Power and Energy (MIREME). Finally, the
bique’s least-cost generation and Investment Guarantee Agency (MIGA) Invest, S.A. Meanwhile, the termination project also benefits from a World
transmission expansion plan. also signed contracts issuing guarantees payment obligations from the offtaker Bank Partial Risk Guarantee (PRG)
totaling $251.3 million in political risk (EDM) will be backstopped by the that backstops EDM’s payment
2) It will be equipped with Siemens insurance to private sector equity Government of Mozambique, represent- obligations to the IPP and to the
SGT-800 turbines that can blend up to investors, including Globeleq Africa Ltd, ed by the Ministry of Mineral Resources gas supplier.
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Gas Africa
Africa109
Solution 2: the development of alternative and domestic FCFA 220 billion ($363 million) for the pro-
sources of funding can help expand domestic value-chains. ject, in a debt package that also gathered
Coris Bank International and Afreximbank.
In response to the drying up of foreign fastest-growing gas utility companies. The
funding for gas projects, African stakehold- transaction demonstrated the efficiency of a Moving forward, additional actions can be
ers have increasingly sought to tap their new mechanism to access domestic capital expected from such African institutions to
domestic markets to unlock long-term and has opened the way for several more provide the capital required for the conti-
capital at home. However, accessing do- bond issuances by infrastructure developers nent to maximise the potential of its natural
mestic institutional money or channeling since then. resources. In May 2022, for instance, the
private capital into African gas projects will African Petroleum Producers Organization
require innovation and the development Across the continent, African DFIs are also (APPO) and Afreximbank agreed to work
of new finance mechanisms. Succeeding in increasingly stepping up to support together on the establishment of an
unlocking that capital would make a signif- domestic gas ventures, with key institutions African Energy Transition Bank. The bank
icant difference: the African Development such as the African Export-Import Bank aims at facilitating investment in energy
Bank (AfDB) estimated in 2020 that assets (Afreximbank), the Africa Finance projects, including gas, to finance the
under the management of African domes- Corporation (AFC), or the Development development of robust energy
tic institutional investors were worth $1.8 Bank of Southern Africa (DBSA) taking the infrastructure and ultimately support a
trillion . 74
lead on advocating for gas funding. The just African energy transition.
AFC is supporting several gas-fired pow-
Some markets have started tapping into er plants on the continent by focusing on Solution 3: The contribution of
such pools of capital, including Nigeria and projects with a strong development impact. carbon financing
The launch of the African Carbon Markets
more recently Kenya. In 2017 the Nigerian In Ghana, it was the lead developer, lead Initiative (ACM) at COP 27 in November 2022.
Sovereign Investment Authority (NSIA) and sponsor and mandated lead arranger (MLA) Since the signing of the Kyoto Protocol in Picture: Kenya Ministry of Environment, Climate
GuarantCo established the Infrastructure for the 350-MW Cenpower Kpone IPP that Change & Forestry
1997, African countries have implemented
Credit Guarantee Company Ltd (InfraCredit), started commercial operations in June 2019. several Clean Development Mechanisms However, despite their ability to earn sellable
a Nigerian private entity focused on provid- The transaction was largely an African deal (CMD)75 generating carbon credits that are certified emission reduction (CER) credits and
ing local currency guarantees to enhance with 67% of the equity held by African en- now sold and traded globally. CDM offers generate returns by reducing emissions, their
the credit quality of debt instruments issued tities and 83% of the senior debt issued by real potential as a source of capital to devel- extent has been limited. In Nigeria, govern-
domestically. banks and African financial institutions. op gas projects, which has been overlooked ment sources estimate that $385 to $500
by large gas producers on the continent. million are lost in emission credit value by not
Since then, InfraCredit has been successful In 2021, the AFC was also the MLA and monetising flared gas and certifying the corre-
in unlocking long-term and domestic insti- provided project development capital to Several CDM projects implemented in Africa sponding reduction in carbon emissions76.
tutional capital for infrastructure projects. another important project in Senegal, a so far have directly targeted the processing
In 2018, it guaranteed the issuance of a $30 300-MW gas-to-power facility developed by of associated gas to reduce routine flaring. With the historic rise of carbon prices since
million, 16% Senior Guaranteed Fixed Rate West African Energy, a 100%-Senegalese
75
The Clean Development Mechanism (CDM), defined in Article 12 of the Protocol, allows a country with an emis-
Bond for the Viathan Group, one of Nigeria’s venture. The company was able to mobilise sion-reduction or emission-limitation commitment under the Kyoto Protocol (Annex B Party) to implement an emis-
sion-reduction project in developing countries. Such projects can earn sellable certified emission reduction (CER)
credits, each equivalent to one ton of CO2, which can be counted towards meeting Kyoto targets. https://unfccc.int
74
Unleashing the Potential of institutional investors in Africa, November 2019, AfDB Working Paper Series No. 325 76
National Gas Expansion Programme (NGEP)
110Gas
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Africa Gas
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Africa
For
202177, market fundamentals now provide jects, with the aim of producing 300 million result, developing Africa’s gas reserves for field (as in Mauritania and Namibia). This
strong incentives to invest in emission carbon credits a year by 2030, and 1.5 billion the sole purpose of monetising them locally explains why gas has remained a niche fuel in
reduction projects to issue CER credits. a year by 205078. In the process, ACMI wants is likely to remain a tough pitch to investors, Sub-Saharan Africa, contributing only 5% of
COP26 also agreed to the rule for Article 6 of to unlock $6 billion in revenue and support at least until demand can be better assured. the total energy mix versus a global average of
the Paris Agreement, under which countries 30 million jobs by 2030. While flare reduc- This means that for Africa’s successful gas- 20-25%, according to the IEA79.
can continue paying for greenhouse gas tion projects are not identified under ACMI’s ification, the business case would need to
emissions reductions or removals projects in scope, direct air capture (DAC) and carbon be creatively constructed, leveraging new A lack of economies of scale in upstream and
other markets to meet their domestic emis- capture and storage ventures are. This could export opportunities created by the current midstream gas projects has created serious
sion reduction commitments. provide the right incentives to unlock financ- global market appetite for new gas supply. barriers to investment in gas-fired power
ing for the decarbonisation of natural gas plants, which traditionally serve as the founda-
New market dynamics have incentivised and potentially support methane emissions Most gas consumption on the continent tion of future gas infrastructure expansion.
African stakeholders to make the best of car- management projects (see Section 2. 3.). remains in the north (see Section 1), where
bon financing, and the Africa Carbon Mar- the power sector has anchored a lot of In 2014, a study by the World Bank found
kets Initiative (ACMI) was launched at COP27 Putting a price on emissions is a highly domestic gas monetisation projects that that developing a 30 bcm gas field the size of
to dramatically expand Africa’s participation effective policy mechanism to incentivise have eventually broadened gas penetration Kudu in Namibia requires a price of $6-10 per
in the voluntary carbon market. The venture switching to cleaner fuels, and a robust across industries and households. There, MMBTU to be economically viable, whereas
focuses on increasing the production of carbon pricing scheme could strengthen electricity production, industrial growth, and larger fields in the big resource centers can be
African carbon credits by focusing on clean the business case for Africa’s gasification in gas exports have unlocked enough gas de- produced for $2-3 per MMBTU80. Examples
energy and sustainable development pro- many applications. mand to support domestic gas access infra- include both the offshore Banda gas field in
structure investments. But that model of an- Mauritania and the Kudu gas field in Namibia,
3.2. Challenge 2: Developing Gasification Infrastructure choring gas infrastructure expansion on the which have remained undeveloped since their
back of a gas-fired power generation plant discovery decades ago because of unattractive
Investing in African gas upstream production to downstream distri- returns linked to their domestic gas-to-power
has been tricky to replicate in Sub-Saharan
infrastructure is still seen as bution. That makes any domestic gas project concept. For the same reason, only a third of
Africa. While a few successful examples do
a risky and uneconomical game. a complex puzzle where every piece must be the gas produced in Africa is used for
exist, like in Tanzania (Songo Songo) or Nige-
in sync for it to be bankable and successful. electricity generation, compared to nearly
ria (Uquo), they remain rare exceptions.
The chicken and the egg dilemma of missing Domestic gas projects also come with a high- 40% globally and 45% in Asia81.
demand to build infrustructure versus er level of risk than export-oriented ones, in-
The reason is simple: outside of North Africa,
missing infrastructure to allow the demand cluding currency, convertibility, construction, Lack of economies of scale continues to be
the rest of the continent is a patchwork of
to grow has characterised Africa's gassifica- institutional, political, and demand uncer- the major obstacle to gas-to-power develop-
small domestic gas markets within under-in-
tion discussions from their start. tainty. In a context where global gas prices ment in Sub-Saharan Africa, which in turn has
dustrialised economies where effective de-
are high, incentives are also stronger to ex- negative implications for the rest of the mid-
mand is scattered across small centers. For
The success of domestic gas ventures port gas and earn steady foreign exchange stream and downstream gas value chain. Even
several of them, the option of producing gas
requires the synchronisation of several from overseas buyers instead of selling in in countries with a large resource base and
locally relies on the development of a single
components across the value chain, from local currency to the domestic market. As a
79
Africa Energy Outlook, 2019
77
Emission permits in Europe witnessed a historic rise to close at almost €100 per ton in mid-2022. Since the 80
“Harnessing African Natural Gas : A New Opportunity for Africa's Energy Agenda?", 2014. Santley, David;
creation of carbon markets, emission permits had never gone above €40 per ton. Schlotterer, Robert; Eberhard, Anton. World Bank, Washington, DC. © World Bank
78
Africa Carbon Markets Initiative (ACMI): Roadmap Report Harnessing carbon markets for Africa, November 2022 81
"Natural Gas in the African Energy Landscape: A special Policy Report on Energy", July 2021, AFREC Policy Brief 2
Gas
112Gas For
For Africa
Africa Gas
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ForAfrica
Africa113
attractive economies of scale, serious addition- addressed the risk associated with selling Picture: Seplat Energy
al risks exist around the creditworthiness of power to state utilities with the issuance of
gas or power off-takers. guarantees. But, as we have seen, the same
institutions are increasingly shying away
The creditworthiness of African from supporting gas projects.
off-takers has remained another
major risk, especially in the power Unfortunately, nowhere are these forms of
sector. guarantees more necessary than in the pow-
er sector, which remains by far the largest
The absence of cost-reflective electricity off-taker of domestic gas in Africa. The bank-
tariffs82 , the persistence of several subsidy ability of the African gas-to-power industry
schemes and the challenges of revenue has largely relied on such securities issued
collection are all weighing heavily on the by the World Bank, giving assurance that
balance sheet of African state utilities and bills would be paid to gas producers and
overall sector liquidity. Because of these power generation companies. These same
factors, developing African electricity structures that have made projects banka-
markets are largely dysfunctional, lacking ble are not only becoming harder to secure
appropriate mechanisms to balance supply from DFIs, but they are also increasingly
and demand. being challenged by African governments
as they are deemed too expensive for state
The struggling utilities are also the ultimate utilities and bulk power purchasers whose
buyer and off-taker of power, and their balance sheets are weak. Ghana and Kenya
unstable financials weaken the entire power have already been involved in transitions
sector value chain. As a result, most gas-to- from take-or-pay to take-and-pay clauses
power projects that would usually anchor within their power purchase agreements
the development of gas infrastructure are (PPAs) for a few years. Nigeria has also seen
not bankable. DFIs have traditionally several parties voicing criticism about similar
agreements.
The combined challenges of supplying small

demand centers and gradually losing critical
guarantee mechanisms to address key off-
take risks make investments in African gas
infrastructure a very challenging venture at
a time when more incentives are required to
unlock capital.
82
Electricity prices that reflect the true cost of supply and are not subsidised.
114Gas
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For Africa GasGas
For For Africa115
Africa
Solution 1: Innovations and reforms in the power sector. Figure 45: Status of cost-reflective tariff reforms in selected African countries, 2021
To address the off-take risks associated required by investors to inject hundreds of

with selling power to African utilities, the millions of dollars into projects. TUNISIA
MOROCCO
guarantee mechanisms that the continent
is already familiar with are a good option On the other side, international develop-
ALGERIA
to carry forward, with some possible new ment bodies could play a bigger role in LIBYA
EGYPT
caveats. Such critical guarantees notably supporting the lending process by offering
include partial risk guarantees (PRGs) and lower investment guarantees, especially in
take-or-pay clauses in project agreements. cases where gas projects are aligned with
MAURITANIA
PRGs are typically issued by the World net-zero ambitions (see Section 3.1.). MALI
NIGER
CHAD SUDAN
Bank’s International Development THE GAMBIA SENEGAL
ERITREA
Association (IDA) to private lenders or Meanwhile, the focus needs to remain on BURKINA FASO
GUINEA-
investors against the risk of a government strengthening the balance sheet of BISSAU GUINEA
BENIN
NIGERIA SOMALIA
or state-owned entity failing to perform its state utilities and implementing reforms SIERRA LEONE
CÔTE
D’IVOIRE
TOGO
SOUTH ETHIOPIA
GHANA CENTRAL AFRICAN SUDAN
contractual obligations with respect to a that boost liquidity within the power LIBERIA REPUBLIC
CAMEROON
private project. sector value chain. Pricing reforms are
especially important to implement EQUATORIAL GUINEA
REPUBLIC
UGANDA
OF CONGO KENYA
RWANDA
On the other hand, take-or-pay clauses cost-reflective electricity tariffs and bring LEGEND GABON
CONGO
are another form of guarantee under subsidies down. Additional measures that Yes
BURUNDI
Under discussion
which a purchaser commits to both buy would benefit the sector include a sustained ANGOLA
TANZANIA
No
a minimum agreed volume of gas or focus on metering to reduce energy losses No data
electricity from a producer and to pay a and improve revenue collection.

contract price on that minimum agreed ANGOLA MALAWI
ZAMBIA
volume. Finally, policy can encourage private power generation is gaining traction
investors to take risks with ambitious on the continent and is already giving
ZIMBABWE
From a policy perspective, the growing embedded generation regulations. If the birth to new business models. In Aba, NAMIBIA MADAGASCAR
unwillingness of some African states to state is unwilling or unable to commit to northeast of Port Harcourt, Geometric BOTSWANA MOZAMBIQUE
enter into such commercial guarantee costly guarantee mechanisms, or if its state Power is developing Nigeria’s first ESWATINI
mechanisms or the shift to take-and-pay utility cannot abide by take-or-pay terms, integrated and independent power LESOTHO
clauses is likely to make domestic gas decentralisation can prove beneficial. utility, including a 141-MW gas-fired
projects unattractive to prospective Embedded generation, under which power power plant,
Previously a in
published 27km gas pipeline,
Africa Energy and
Outlook 2022 by the IEA
SOUTH AFRICA
lenders and investors. While it is only producers are linked to a distribution its own
Source: distribution
AfDB utility selling
Electricity Regulatory Index forpower
Africa (2021)
natural that governments would seek to network as opposed to the national grid, is within aThe
Disclaimer: ring-fenced distribution
boundaries, colors, network.
denominations, and other information shown on any map in
this
In doing so, it secures its own direct powerLtd nor the International Gas Union
work do not imply any judgment on the part of Hawilti
sign better deals that do not put pressure one such solution. concerning the legal status of any territory or the endorsement or acceptance of such boundaries.
on their state budget, this should not sales arrangements without relying on the Previously published in Africa Energy Outlook 2022 by the IEA
Nigerian state utility. Source: AfDB Electricity Regulatory Index for Africa (2021)
come at the cost of must-have guarantees Evolving regulation around distributed
116Gas
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Africa Gas
GasFor
For Africa117
Africa
Solution 2: The power sector must not be the only reserve part of their production for the
option for anchoring lower-carbon energy projects. domestic market.
Developing and scaling up Africa’s domestic domestic market, as is the case with Gas export pipelines have followed a similar
gas value chain will necessarily rely on Mozambique LNG (2.8 MMscm/d) or pattern. In Mozambique, the development
credible off-takers serving as anchor buyers GTA Phase 1 (1 MMscm/d) . 83
of the Temane and Pande gas fields has
for the development of gas clusters. Even supported the successful operations of
though the power sector has traditionally The availability of domestic gas from ROMPCo’s Mozambique-Secunda pipeline
always played this role in the past, other export facilities can then encourage gas- since 2004. Royalty gas from the project also
options exist. based industrialisation (Senegal) or served as a basis for the development of
additional gas-to-power capacity Mozambique’s first gas-to-power plants in
The export industry has been a strong (Mozambique, Mauritania, and Senegal). the 2010s. There are already indications
anchor for the growth of domestic gas In August 2022, for instance, Senegal’s that gas export pipelines can continue to
markets and this role could be further Petrosen Trading & Services signed an anchor domestic gas ventures, including in
encouraged. Both Nigeria LNG and Angola MoU with Turkey’s Çalık Enerji and Morocco, where future domestic gas pro-
LNG, for instance, have grown their domes- Japan’s Mitsubishi for the pre-feasibility jects like Anchois and Tendrara are seeking
tic supply of gas liquids such as cooking study of a gas-based ammonia and urea to secure connections with the Maghreb- Picture: Eni
gas to their respective markets over recent manufacturing unit. Domestic gas Europe Gas Pipeline (GME) to build investors’
years, with ambitions to do more mov- allocations from LNG export projects are confidence around their business case. exist in Sub-Saharan Africa, but they have re-
ing forward. Upcoming LNG terminals in also an effective way to ensure that even if mained limited to Nigeria (Indorama Eleme
Sub-Saharan Africa now make it compulsory developers decide to prioritise lucrative In addition to domestic gasification require- Petrochemicals, Dangote Fertilizer, Escravos
to allocate a certain amount of gas to the exports over local sales, they must still ments on export projects by decree, govern- GTL) or South Africa (Mossel Bay GTL refin-
ments can reinvest the revenue received from ery).
Figure 46: Domestic gas allocations from LNG export terminals
DOMESTIC GAS ALLOCATIONS FROM LNG EXPORT TERMINALS export projects to expand domestic access.
This would be particularly prudent now, as As the continent seeks to industrialise and
Capacity DomGas Allocation Receiving
Project (mtpa) (MMscfd) Country increased export revenues generated in an process more of its raw materials at home,
elevated global price environment begin opportunities exist to use energy-intensive
Greater Tortue trickling into African gas-exporting countries. industries as a basis for the development of
Ahmeyim (GTA) 2.45 35 Senegal
The price premium is most likely temporary gas access infrastructure. Anchoring larger
Greater Tortue until the markets rebalance, and this lucrative gas-to-power projects on power demand
2.45 35 Mauritania
Ahmeyim (GTA) period will not last forever. from the mining sector for example could
be an option, especially given the growth of
Mozambique LNG 12.88 100 Mozambique
Gas-consuming industries are another ma- the mining sector in West and Central Africa.
Coral Sul FLNG 3.40 0 Mozambique jor off-taker that can spur the development This is the case for the Kamsar LNG terminal
of domestic gas infrastructure, especially in Guinea, which proposes to import LNG to
Source: Hawilti Research process industries such as fertilizers and power the country’s mines and future
83
Allocations are officially stated in MMscfd, ie 100 MMscfd for Mozambique LNG and 35 MMscfd for GTA Phase 1. petrochemicals. A few successful examples alumina refineries.
118Gas
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Africa Gas
GasFor Africa119
Africa
For
Figure 47: Current Southern Africa scenario
Windhoek
Key
Walvis Bay
FSRU
Key centres Northern

Fuels switch peaker
Cluster
Potential new GTP

Gas-to-liquids Gabarone
7 3
Gas pipeline Pretoria
Johannesburg Maputo/Matola
Potential gas pipeline Secunda
FSRU
Sasolburg
Gas field
Luderitz/
Helium field Elizabeth Bay 6
FSRU Potential FSRU
7 FSRU
LNG truck
1 Richards Bay
LNG ISO container World’s primary energy consumption
Source: bp Statistical Review of World Energy, 2022
per region, gigajoules per capita (2021)
4
Durban
1 Namibia offshore Orange Basin exploration FSRU
2 South Africa 11B/12B discoveries

3 Matola LNG imports
4 KZN LNG imports optionality point for virtual gas pipelines across the rest
5 Coega LNG imports optionality FSRU Southern of the region. An integral part of the project
6 Reconfiguration post inland gas expansion Saldanha 7 Cluster East London is the development of a cryogenic and train
7 New GTP opportunities | Eskorm 4-6GW 7 filling facility to support the expansion of
Cape Town Mossel Bay FSRU
5 Southern African gas markets by ensuring
Gqeberha
the "virtual" supply of LNG via trucks as far
as 1,000km from the loading point.
2
Source: Standard Bank
As a result, South Africa, Botswana, and

Solution 3: Stronger regional cooperation can help accelerate to deepen gas penetration and build on the Zimbabwe could be supplied with
the development of gas infrastructure and consumption. success of the Republic of Mozambique Pipe- competitively priced LNG imported at
line Company (ROMPCo). Additional gas from Matola. Providing gas discoveries are
Africa has embraced regionalisation and networks can help support better econo- Mozambique can notably supply the broader confirmed in Namibia and Zimbabwe,
cross-border cooperation and is seeking mies of scale and justify investments into Southern African Development Community additional supply could also be secured from
ways to further its integration. Along with infrastructure that work for the whole conti- (SADC). Gigajoule and TotalEnergies are plan- other new frontiers that are well connected to
the roll-out of the African Continental Free nent. ning an LNG import terminal in the port of serve the rest of the region, including Zambia
Trade Area (AfCFTA), the development of Maputo that would support a gas-to-power and Botswana where appetite is strong to
sub-regional and regional gas and energy In Southern Africa, there are opportunities plant in Mozambique but also be the starting secure gas and switch away from coal.
120Gas
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GasFor Africa121
Africa
For
CURRENT WEST
Figure 48: The Central African Pipeline System (CAPS) AFRICA
Figure SCENARIO
49: Current West Africa scenario
PORTUGAL SPAIN ITALY
TO N'DJAMENA Skikda GREECE
Cordoba Almeria
ed
NIGERIA CENTRAL AFRICAN Medgaz TransM
REPUBLIC SOUTH Existing pipeline
Arzew El Haouaria
SUDAN Planned pipeline (TSGP)
CAMEROON BANGUI Gas hub
GM TUNISIA
MEDITERRANEAN SEA
E
LNG facility
YAOUNDE Existing route (WAGP) MOROCCO Hassi R’Mel
DOUALA
Planned route (NMGP)
ALGERIA
CAPS LIBYA
EQUATORIAL GUINEA
REPUBLIC
LIBREVILLE GABON OF CONGO
MAURITANIA
MALI
NIGER
CONGO RWANDA CHAD

SENEGAL
CAPiCo CAPoCo CARefCo THE GAMBIA

GUINEA- BURKINA FASO
Central African Central African Central African BISSAU GUINEA
BENIN
Pipelines Company Power Company Refinery Company NIGERIA
SIERRA CÔTE TOGO
LEONE D’IVOIRE GHANA Lagos
CENTRAL AFRICAN
LIBERIA Accra Warri REPUBLIC
CAMEROON
LUANDA
Port Harcourt
Source: Potential future pipeline routes in Central Africa
In Central Africa, oil and gas producers mand centers and anchoring the network The mega project would have tie-in points footprint to provide gas across the region.
are seeking to boost their integration around key credible off-takers will be key in Nigeria, Benin, Togo, Ghana, Côte Ghana is especially well positioned in that
with the building of a regional pipeline to success. d'Ivoire, Liberia, Sierra Leone, Guinea- regard given the appetite of local private
network for which an MoU was signed Bissau, Guinea-Conakry, The Gambia, players to make gas a regional commodity.
in September 2022. This Central African In West Africa, regionalisation around gas Senegal, Mauritania, and Morocco before In 2022, a subsidiary of Afreximbank
Pipeline System could include Angola, has so far not shown much progress but has reaching Europe. Each country located backed an LNG distribution infrastructure
Cameroon, Chad, the Republic of Congo, tremendous potential for growth, on its route could access gas to meet its platform called Ecow-Gas, which aims to
the DRC, Equatorial Guinea, and Gabon, especially for land-locked countries in the respective local demand or further supply provide gas as a cheaper and cleaner fuel
and would serve as the backbone for the sub-region. the sub-region where Burkina Faso, Mali, to under-served industrial customers in
development of storage, LNG, power, and and Niger continue to consume diesel for West Africa. Ecow-Gas could use Tema LNG,
refining infrastructure. Most countries in The West Africa Gas Pipeline (WAGP) power generation. Ghana’s gas import facility, as its key supply
the region share the same currency and continues to operate below capacity but center to provide LNG handling, truck
legal regime, which would further facilitate could play a larger role in the develop- Before the NMGP materialises, loading, and storage services to Togo,
the exchange of commodities between ment of the Nigeria-Morocco Gas Pipeline several gas companies in West Africa are Burkina Faso, Benin, Sierra Leone, and
them. However, addressing scattered de- (NMGP) that has entered the FEED stage. already seeking to regionalise their Liberia.
122Gas
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Africa Gas
GasFor Africa123
ForAfrica
Figure 50: Current Southern and Eastern African scenario
1 Gas supplies to East Africa could come from Atlantic coast Mombasa
either via Lobito (1a) or via Walvis Bay (1b) - but both would
require an FSRU.
2 New gas pipeline next to TAZAMA (or directly from Lindi),

or regional pipeline using Mozambique gas (2a)
Dar es Salaam
3 Mozambique SSLNG value chain rail (Nacala Blantyre Lilongwe
Chipata) then truck. Tete also an option, then truck
4 If Invictus Energy finds gas in Zimbabwe, its central location in 6

Southern Africa makes it an ideal gas supplier to several demand
centers in Zimbabwe and Zambia
2 2a Lindi
Mtwara
5 Mozambique SSLNG value chain rail (Beira Harare Zave ) then truck FLNG
Palma/Afungi
6 Coral FLNG operational; MLNG, RLNG, TLNG under FSRU
construction/development
Chipata
Benguela
1a Ndola
Lilongwe Nacala
3 FSRU
Blantyre
Key
4 Tete
Key centres
Zave
Gas pipeline
5
Potential gas pipeline Harare
Rail Network
Export LNG 1b Beira

FSRU Potential FSRU/FSU
FLNG FLNG
FSRU
Windhoek
Source: Standard Bank
In East Africa, only Tanzania is well posi- regional partners such as Kenya or
tioned to build a regional gas hub because Uganda. The first of these projects is
of the size of discovered gas reserves and likely to be a 600km gas pipeline linking
the existence of a gas pipeline network Dar es Salaam in Tanzania to Mombasa in
from Mtwara in the south to Dar es Kenya, where power plants and industries
Salaam in the north. This could provide are trying to reduce imports of expensive
the pillar to expand gas distribution and polluting diesel and HFO, and switch to
regionally and extend the network to key gas instead.
Picture: Globeleq
124Gas
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Africa Gas
GasFor Africa125
Africa
For
Solution 4: Promoting small-scale developments can provide the Africa, the country’s first domestic (SIP)” that reduces its approval times
foundations to expand transmission and distribution infrastructure. LNG and helium project, benefits from for all its licences and regulatory
a status of “Strategic Integrated Project approvals.
The lack of large, credit-worthy off-takers in ural gas (PNG) projects within local in-
Sub-Saharan Africa has naturally pushed the dustrial areas. The market has been de- Solution 5: Domestic gas projects must make
development of the small-scale gas industry. veloped by the private sector by forming the most of every molecule and diversify output.
While small-scale projects won't drastically joint ventures with state governments or
As the Perenco strategy demonstrated in Most recent midstream gas projects on the
transform Africa’s gas sector in the short through franchise agreements with the
the Gulf of Guinea (see Section 2.3), diver- continent include both dry gas and liquid
term, they can be built with much fewer state-owned Nigerian Gas Marketing Co.
sifying gas products can go a long way in gas components to maximise extraction.
risks, provide a sandbox to demonstrate (NGMC)85. The model has generated
multiplying revenue streams and making This is supporting the growth of domestic
new business models, and eventually scale several small PNG networks in main
gas infrastructure investments profitable. To and small-scale CNG, LPG, and LNG
up as demand grows. This has made them cities in the south of the country, with
make domestic gas ventures more attrac- industries across the continent. In Ghana,
very credible options to pre-develop domes- networks averaging 100km each with
tive, African developers and sponsors are Genser Energy raised $435 million in 2022
tic gas markets on the continent. peak utilisation rates of as little as
increasingly working on diversifying revenue to expand its gas pipeline network to
0.1 MMscm/d and as high as 2 MMscm/d.
streams from their projects or finding al- captive power off-takers, but also launch
The case of Nigeria notably illustrates how Several of these ventures were developed
ternative arrangements to counterbalance an integrated NGLs business, including a
small, flexible, modular solutions can go a by Axxela. The company has grown gas
above-the-ground risks. Successful strate- 5.6-MMscmd gas conditioning plant. In
long way in pre-developing markets before distribution ventures around small
gies typically include injecting dry or lean Mozambique, the second phase of
proper infrastructure can be built. One of the demand centers in Lagos and Port Har-
gas into a pipeline for power generation and developing the Temane and Pande gas
country’s main challenges is bringing energy court and is now able to scale up opera-
processing wet gas into additional commod- fields was approved in 2021 and now
to its manufacturing hubs in the north when tions. In 2022, the Sojitz Corporation of
ities that can be sold locally. includes 30,000 tpa of domestic LPG as well.
all its gas is produced hundreds of kilome- Japan acquired a 25% interest in Axxela,
ters further south. In the absence of pipeline demonstrating the success and scalability
infrastructure, private investors started invest- of its business model. 3.3. Challenge 3: Providing a Positive Business Climate
ing in small CNG stations over a decade ago,
allowing gas to be trucked across the coun- The growth of small-scale ventures and Last but not least, stakeholders and finan- or the Fraser Institute’s Economic Freedom
try to factories and industries. The growth adoption of relevant technologies could ciers must address several risks associated of the World report. These are often rep-
of these “virtual pipelines” has successfully be further encouraged by recognising with doing business on the continent. resentations of weak governance
pre-developed markets and unlocked enough their strategic contribution to gas infra- frameworks, outdated investment laws,
gas demand to justify the development of the structure development. Governments Africa’s investment climate and business or overall instability in the political and
614km Ajaokuta-Kaduna-Kano (AKK) pipeline could seek to grant them fiscal incentives environment continue to deter business climate.
that is now under construction84. or special status enabling them to go investment, although wide disparities exist
through the permitting process more ef- from country to country. Countries with Security issues have been a major barrier
Nigeria has also been successful in ficiently. For instance, the second phase large natural resources continue to score to investment in African infrastructure pro-
attracting private capital into piped nat- of the Virginia Gas Project in South poorly within most recognised global bench- jects and have stalled existing ventures. This
marks on issues of investments and is directly preventing gas from making it to
84
A similar practice has been successfully applied in China, where trucked LNG has delivered gas to mainland governance, such as Transparency Interna- market, as two of the biggest gas countries
consumers while delivery infrastructure was developed (see IGU LNG report 2019).
85
Recently renamed NNPC Gas Marketing Ltd (NGML). tional’s Corruption Perception Index (CPI) on the continent continue to be plagued
126Gas
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Africa
For
Lack of policy certainty coupled with world where the speed of execution of
above-the-ground risks is severely re- new projects has become a determinant
stricting the ability of Africa’s gas sector to factor for final investment decisions, Africa
become globally competitive. As obtaining needs to do much more to realise its great
finance to develop gas projects is becom- potential.
ing increasingly challenging, Africa’s repu-
tation for both cost overruns and delays in Investments into gas supply between
project execution puts it at a disadvantage. 2022 and 2030 will likely be focused on
Africa has great potential to become an cost-competitive, flexible projects with
alternative gas supplier to Europe in the a minimal carbon footprint that can be
short-term while meeting long-term gas brought to the market quickly. Securing the
demand growth in Asia and the rest of the capital needed to get these ventures off the
world, thanks to its proximity to Europe ground calls for, among other things, the
and access to the Indian Ocean. However, provision of a secure environment, policy
these helpful factors will not be enough certainty, and environmental responsibility,
to justify investing billions of dollars into but also a stable and attractive regulatory
new LNG projects on the continent. In a framework.
Picture: Sahara Group Solution 1: Stakeholders can work together to create better
enabling environments and decrease risks associated
with security threats that affect their devel- Beyond physical risks, some credit risk with investing in Africa.
opment prospects. In Nigeria, crude theft assessments by global credit rating agencies
As Africa seeks to grow its share of the conflict, and unrest. Developers and
and vandalism in the Niger Delta are directly could sometimes overstate the level of
global gas export market, it is in competi- sponsors of large infrastructure projects
affecting the production of gas feedstock macroeconomic risk, significantly raising
tion with several well-established producing can support community development
required to run power stations and the Africa's cost of borrowing from global debt
areas, and it will not be an investment des- programmes and local job creation to
LNG terminal on Bonny Island. In Mozam- capital markets86. To this end, African leaders
tination by default. Its success in attracting reduce poverty in the short-term while
bique, the insurgency in Cabo Delgado have become increasingly vocal about differ-
investments will depend on the develop- supporting long-term economic develop-
Province has led to the suspension of entiating actual and perceived risks, with
ment of a secure and enabling environment, ment. There is often a direct correlation
construction work at TotalEnergies’ Senegalese President Macky Sall calling in
the execution of a long-term vision for its between societal indicators like poverty,
Mozambique LNG project. These are no 2022 for the creation of a pan-African credit
low-carbon energy future, and the achieve- youth unemployment, and violence. A par-
doubt very complex challenges, but it is ratings agency that could address the very
ment of energy access and socio-economic ticular focus could be given to increasing
imperative that they are resolved because arbitrary nature of global credit ratings and
development aspirations at home. the participation of local businesses within
high physical security risk factors will resulting insurance premiums. Addressing the
projects’ supply chains. Governments would
quickly eliminate prospects for the continent high cost of perception premiums with better
Providing a safe and stable business be well placed to work with key stakehold-
to take advantage of its resources and balance in financing rules could help the
environment is necessary to ensure that ers, investors, and communities to build
develop its economies. continent further diversify its funding sources.
multi-billion-dollar investments benefit cohesiveness and inclusivity. Following this
86
"The ruinous price for Africa of pernicious 'perception premiums'", 7 October 2021, Hippolyte Fofack, Brookings societies and communities to avoid violence, commitment, stakeholders can work to
128Gas
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Africa
build an enabling environment that reduc- significant exports of Israeli gas to Europe Solution 2: Policymakers should adopt a clearer gas policy
es operating risks and makes investments using Egypt’s liquefaction terminals. framework that addresses the particularities of gas investments.
more attractive. This involves addressing Finally, streamlining the permitting
Local regulations must also align with the
regional insecurity, especially in the Gulf of processes and guaranteeing contract
ambitions that each country has with
Guinea and in northern Mozambique, but enforcement by governments and/or
regard to its energy transition journey and
also improving the ease of doing business. multilateral bodies would go a long way in
the role of gas within it. This is especially
Regional cooperation on gas development making the overall business climate more
the case for oil-producing countries where
could serve as a cornerstone for broader attractive in several key jurisdictions. Large
regulatory frameworks tend to cover crude
diplomacy in regional disputes, as the infrastructure projects require stable legal
oil and natural gas with the same piece of
experience of the East-Mediterranean gas environments.
legislation without directly addressing the
developments has demonstrated, where
particularities of the gas sector. Several
Israel and the Arab nations are coming The rising presence of one-stop-shop
supporting and enabling policy orientations
together to enjoy the benefits of regional investment centers and the adoption of
have proven to be useful in facilitating gas
gas markets. In June 2022 for instance, a more transparent contracting and tendering
developments and should be prioritised
new MoU was signed between Israel, Egypt, procedures are additional moves in the right
across the continent.
and the European Union to pave the way for direction.
These include:
• Updating gas master plans to provide

investors clarity on each country’s vision
towards a low-carbon energy future and
integrating new regional supply dynamics.
New gas master plans should consider
regionalisation as an opportunity while
promoting infrastructure developments
anchored on long-lived gas assets such as
Picture: Sahara Group
non-associated gas fields.
Petroleum Industry Act (PIA), for instance,
• Adopting and updating Gas Codes to offer introduced a new fiscal framework to
a specific legal framework that regulates incentivise upstream developments and
midstream and downstream gas ventures. provided several incentives for investments
in midstream gas infrastructure.
• Optimising fiscal regimes to improve the
cost competitiveness of African resources. • Increasing compliance with flaring
Specific attention should be given to flexible reduction and elimination regulations
approaches to midstream taxation to make and incentivising the processing and
Egyptian LNG
projects economical. Nigeria’s recent monetisation of associated gas.
Gas
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Solution 3: Find the right balance between local

content development and cost-effectiveness.
Last but not least, more efforts must be making sure that developing African gas
allocated to capacity development among serves the growth of local industries.
administrations and the workforce so
that fundamental risks around skills • Operators’ skills development programmes
availability are also addressed. By striking should start addressing gas more
the right balance between building domestic specifically, especially when it comes to
capacity and reducing cost, African gas- upskilling their workforces on HSE practices
producing countries can significantly and issues around methane management.
improve their cost environment and
become more competitive. • Developing in-house capacity within
domestic financial institutions, especially
In that regard, particular attention can be institutional investors, to understand and
given to: assess the credit risk of gas infrastructure
transactions. This will increase risk appetite
• Developing regional educational centers among domestic investors to invest in gas
that favour the sharing of experience among and encourage them to share credit risk on
African gas markets and with emerging gas related infrastructure transactions.
frontiers on best industry practices.
By taking bolder steps to create enabling
• Regionalising local content approaches to environments, African leaders can
make the best use of competencies, capac- contribute to improving access to new
ities, and skills available on the continent to capital pools, attracting and retaining the
develop, operate, and maintain gas assets. right skills and capabilities, and unlocking
Better regional cooperation in the private true domestic value from their gas
sector would support cost reductions while resources.
Picture: Dorman Long Engineering Picture: Seplat Energy
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4 / Summary conclusions
Key Principles to Supercharge the
Development of Africa’s Gas Markets
As we have demonstrated, natural gas has two major roles to play in
the sustainable development of Africa. The first is to address energy
poverty, energising industrialisation and development, and the second is
to pave the way for a just African energy transition towards a low-carbon
future. In conclusion, this report proposes eight key principles that would
help to develop and maximise the benefits of gas resources for Africans.
Because of their deep interconnectedness, an ideal approach would focus
on addressing each of these principles within a common strategy.
1. FUTUREPROOFING BY DESIGN
Futureproofing gas projects should be global financial institutions calls for a
considered as a built-in risk management rigorous approach to structuring projects,
tool for project sponsors. By finding from decarbonising gas production to
solutions to guarantee environmental operating sustainable gas infrastructure
sustainability and compatibility with the that can anchor low-carbon or zero-carbon
goals of the Paris Agreement, developers gases. To tap into foreign sources of
and promoters can both build long-term capital, African developers must offer
business models and enhance value stronger sustainability and climate change
propositions to meet the stringent require- risk assessment frameworks and propose
ments of global investors. The increasing projects that are aligned with the Paris
scrutiny around funding gas projects by Agreement.
2. FINANCIAL INNOVATION
The drying up of global capital for gas and incentivising institutional investors to
projects should encourage the develop- increase their exposure to private mar-
ment of alternative and innovative kets. Similarly, initiatives such as the
financing mechanisms, especially domes- African Energy Transition Bank could be
tically. To finance its energy needs, Africa supported by public and private stake-
must look inward and promote domestic holders, so that capital is available to
financing mechanisms that can tap into its build today the kind of energy infrastruc-
vast pools of institutional money. Actions ture Africa needs to reach its net-zero
can be focused on building domestic ambitions, while lifting millions out of
capacity around credit risk assessment poverty.
134Gas For Africa Gas ForFor
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4 / Summary conclusions 4 / Summary conclusions
3. ENABLING GOOD BUSINESS CLIMATE 6. GRADUAL SCALING
investment destination will require it to The lack of receiving, processing, and flexibility and can address a wide range
A safe and stable investment climate will
address above-the-ground risks. On the distribution infrastructure is hampering of needs, capabilities, and demand
be pivotal to growth and to ensuring that
governance side, regulatory frameworks the commercialisation and adoption of sizes. Africa’s burgeoning small-scale
the continent is globally competitive.
should seek to address the challenges of gas across Africa. Small-scale projects rely gas industry can mitigate several
Sound sector governance and friendly
the gas value chain (currency, convertibili- on modular and flexible supply options risks associated with gas infrastructure
investment jurisdictions can be promot-
ty, construction, institutional, political, and and have proven as a winning strategy investments while providing a sandbox
ed for Africa to sustainably develop its
demand risks) and optimise fiscal regimes to pre-develop gas markets, unlock sup- to demonstrate new, scalable business
gas resources when the opportunity is
accordingly to make projects more banka- pressed demand, and eventually justify models. Small-scale projects in CNG
ripe. Sustainably developing Africa’s vast
ble. larger infrastructure investments. and LNG can notably be used for power
resources of gas and making it a leading
Small-scale natural gas generation generation but also serve other end
technologies can be further promoted uses such as transportation, heating,
4. REGIONALISATION
as they come with more operational and cooking.
Along with the roll-out of the African that work for the whole continent. In
Continental Free Trade Area (AfCFTA), doing so, regionalisation can help address
energy imbalances on the continent 7. REFORM ELECTRICITY MARKETS
the development of sub-regional and
while creating bigger demand centers to To increase electricity production and ad-
regional gas and energy networks can
dress energy poverty, reforms are needed While each market’s size and dynamics are
help support better economies of scale anchor lower-carbon energy infrastructure
to restructure electricity markets and in- different, key reforms include the remov-
and justify investments in infrastructure projects.
crease sector liquidity, while improving op- al of subsidies to ensure cost-reflective
erational efficiencies. Only well-functioning electricity tariffs, the unbundling of state
5. CLUSTER AND ECOSYSTEM INVESTING utilities to make the value chain more
electricity markets can pave the way for
Industrialisation plans can favour the rely on a power plant serving an enclave of the kind of investments Africa needs to efficient, and encouraging privatisation
creation of manufacturing clusters that industries while offering an opportunity to bridge its energy deficit and develop resil- models such as embedded generation to
bring supply-chains closer to energy sourc- process additional gas into LPG or LNG to ient power systems. attract private capital.
es and raw materials. Industrial clusters convert, store and thereafter transport gas
developed close to gas fields can easily for domestic and commercial usage.
8. PRICE ON EMISSIONS
The recent launch of the African Carbon gas sector. It would importantly incentivise
Markets Initiative at COP27 is an encour- switching from coal and oil to lower-
aging sign of the potential future of African emitting natural gas and would greatly
emissions trading systems. Further aware- benefit emissions-reduction projects such
ness around the functioning and benefits as direct air removal (DAR), carbon
of carbon markets could unlock additional capture, utilisation, and storage (CCUS),
capital for emission-reduction projects and and the monetisation of associated gas
support the decarbonisation of the African to eliminate routine flaring.
Picture: Sasol
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Gas for Africa

ASSESSING THE POTENTIAL FOR ENERGISING AFRICA

We received valuable inputs from numerous experts whose contributions and

• Rashid Ali Abdallah, Executive Director, African Energy Commission (AU-AFREC);

2 Gas For Africa Gas For Africa 3

Most of the gas developed in Africa Finally, for gas opportunities to be

4 Gas For Africa Gas For Africa 5

6 Gas For Africa Gas For Africa 7

8 Gas For Africa Gas For Africa 9

1. AFRICA’S ENERGY CONTEXT 26

2. AFRICA’S NATURAL GAS IMPERATIVE 56

3. BRIDGING THE GAP 100

4. SUMMARY CONCLUSIONS 135

10 Gas For Africa Gas For Africa 11

Picture: Savannah Energy

12 Gas For Africa Gas For Africa 13

Africa’s energy poverty is rising and directly impacts the continent’s

UNDERSTANDING ENERGY POVERTY

OECD North Africa Sub-Saharan Africa

1,036 4,045 12,535

There is a direct correlation between income and energy consumption. High-income

14 Gas For Africa Gas For Africa 15

16 Gas For Africa Gas For Africa 17

Figure 3: Africa's energy balance 2020

The International Energy Agency's Sankey diagram on Africa's energy

Oil products imp 114.4

Gas prod 197.8 207.6 202.3

Exports Power losses Own use Exports Bunkers

18 Gas For Africa Gas For Africa 19

Gas is a solution to building resilient and sustainable energy

emissions reductions benefit when 0.05

Natural gas Developing gas infrastructure and

20 Gas For Africa Gas For Africa 21

emissions of 10 Gt . This Niger 49,55 17,1 Equatorial Guinea

22 Gas For Africa Gas For Africa 23

and a focus on competitiveness to attract use export infrastructure to anchor

First, financing capital-intensive energy remains perceived as risky and

24 Gas For Africa Gas For Africa 25

26 Gas For Africa Gas For Africa 27

to meet growing domestic energy needs, remain under-developed or non-existent,

1.1 Coming to terms with the reality of energy poverty

electricity is back on the rise, reaching 10.7

Latin America or Asia. CIS 163

28 Gas For Africa Gas For Africa 29

exported, as Africa remains at the

economies without widespread access to World 3.21

pandemic12. In total, COVID-19 is expected No data 0t 0.1t 0.2t 0.5tthe Global

30 Gas For Africa Gas For Africa 31

thriving decentralised power generation Renewables 0.47

capacity vary from 45 GW17 to 100 GW18.

grids, it’s share of Africa’s CO2 emissions is Flaring 56.3

three times less than that of coal and oil.

32 Gas For Africa Gas For Africa 33

Figure 17: Africa's energy balance 2020

The International Energy Agency's Sankey diagram on Africa's energy

Oil products imp 114.4

Gas prod 197.8 207.6 202.3

Exports Power losses Own use Exports Bunkers

34 Gas For Africa Gas For Africa 35

commercial products, Africa is particular UNDERSTANDING ENERGY POVERTY

36 Gas For Africa Gas For Africa 37

Considering smaller or yet-to-be-classified

Picture: Savannah Energy 29

38 Gas For Africa Gas For Africa 39

KivuWatt Power Plant in Rwanda. Picture: Power Africa