Europe looks to Africa for more gas as E&P reconsiders plans | Rigzone

According to Rystad Energy research, Africa is expected to peak gas production at 470 billion cubic meters by the end of the 2030s, equivalent to about 75% of the expected amount of gas produced by Russia. in 2022.

In early March, the European Union announced plans to cut its dependence on Russian gas by two-thirds by the end of this year alone and is currently heading for a supply shortage that will reverberate around the world.

Even with the number of gas projects under development or currently delayed, Africa still has significant production potential. The continent is expected to increase its gas production from around 260 bcm in 2022 to 335 bcm by the end of this decade. If oil and gas operators decide to up the ante on their gas projects on the continent, Africa’s near to medium term natural gas production could exceed the above conservative forecasts.

Russia has historically been Europe’s main natural gas supplier, averaging around 62% of global gas imports to the continent over the past decade. Africa has also been a consistent exporter of gas to Europe during this period, with an average of 18% of European gas imports coming from Africa.

However, projects in Africa are historically considered higher risk and may be delayed or not permitted due to high development costs, difficulties in accessing finance, issues with tax regimes and other surface risks. . Recent signals from oil and gas majors such as BP, Eni, Equinor, Shell, ExxonMobil and Equinor, however, indicate a shift in strategy towards new investments in Africa, with several projects that were previously on ice – including LNG projects – as they consider restarting or accelerating previously suspended projects in response to growing global demand.

“The geopolitical situation in Europe is changing the global risk landscape. While LNG flows from the United States are significant, demand is much higher. Asian and European importers will need to consider African priorities when developing projects, as many African producers focus on supplying power locally as well as to intra-African markets while supplying global markets. The existing pipeline infrastructure between North Africa and Europe and historic LNG supply relationships make Africa a strong alternative for European markets, following the ban on Russian imports,” says Siva Prasad , principal analyst at Rystad Energy.

African nations that have historically been gas suppliers to Europe are well placed to increase their exports. Africa’s advantage is that it already has existing pipelines connected to the wider European gas network. Current pipeline exports from Africa to Europe pass through Algeria to Spain and from Libya to Italy.

Discussions on long-distance gas pipelines linking gas fields in southern Nigeria to Algeria via the onshore Trans-Saharan Gas Pipeline (TSGP) and the offshore Nigeria Morocco Gas Pipeline (NMGP) have resumed in recent months.

While the TSGP aims to use existing gas pipelines from Algeria to access European markets, the NMGP aims to extend the existing West African Gas Pipeline (WAGP) to Europe via West African coastal countries and the Morocco. Further afield, African LNG exports come mainly from Nigeria and Algeria, with smaller volumes from Egypt, Angola and a fraction from Equatorial Guinea. Additionally, large-scale discoveries off Mozambique, Tanzania, Senegal, Mauritania and South Africa have the potential to generate additional natural gas exports once developed.

Europe is now considering how to help gas-rich African countries increase their production and exports in the years to come. The decision by the European Union earlier this year that all investments in natural gas are equivalent to investments in “green” energy indicates that African gas is considered sustainable.

The supply crisis driven by security interests may push Europe to fund projects that will also contribute to energy accessibility at home. For example, Europe could be a major backer of the proposed $13 billion TSGP project.

BP exit in Russia – A boost for uncontracted gas in Senegal-Mauritania

BP chief executive Bernard Looney said the decision to leave Russia was not only the right thing to do, but was also in the company’s long-term interests. The British giant recently recorded pre-tax charges of $24 billion and $1.5 billion in its first quarter 2022 financial results due to its decision to withdraw from Russia. The company is now looking to African projects to seize the opportunity to target European markets with gas supplies.

BP has several large gas projects in Senegal and Mauritania – the Greater Tortue Ahmeyim (GTA), Yakaar-Terenga and BirAllah LNG projects.

Mary I. Bruner