Africa Natural Gas Industry

Africa Natural Gas Market Analysis

The Africa Natural Gas Market is expected to register a CAGR of greater than 4.5% during the forecast period.

• The increasing usage of natural gas in power generation and automobiles reduce GHG emissions. Therefore, governments are moving toward cleaner energy sources driving the market.
• The African region is still dependent on wood and other conventional fuels like petrol and diesel for domestic use, power generation etc., increasing economies of a number of countries in the region is expected to provide significant opportunity as natural gas usage is expeetcd to rise with it.
• Nigeria is expected to dominate the market during the forecast period due to its many proven oil reserves available in Africa, the increasing residential construction activities, and growing oil and gas production.

Africa Natural Gas Market Trends

Governments Moving Towards the Cleaner Energy Sources is Driving the Market

• Natural gas power plants are low-cost and quick to build and have very high thermodynamic efficiencies compared to other power plants; burning natural gas churns out fewer pollutants like NOx, SOx, and particulate matter than coal and oil.
• According to the Africa energy outlook report, By 2025, 2035, and 2040, Africa's power generation is expected to increase by 25%, 55%, and 141% from 2020 baseline levels, reaching 1,057 TWh, 1,138 TWh, and 2,047 TWh, respectively. In 2020, natural gas contributed 40% of total power generation, followed by coal (30%). Gas is primarily used in North Africa.
• The South African government plans to use gas-to-power projects to generate electricity. With a power generation capacity of 51,309 MW, South Africa has devised a 20-year integrated resource plan (IRP) outlining a new power generation program until 2030. Electricity will be produced using natural gas and renewable energy sources.
• Despite compressed natural gas being a fossil fuel, it is still the cleanest burning fuel at the moment as far as NOx and soot (PM) emissions are concerned. Compressed natural gas as a transport fuel is a mature technology widely used worldwide. It is possible to run passenger cars and city buses on CNG, and CNG passenger vehicles emit between 5-10% less CO2 than gasoline-powered passenger vehicles.
• By the end of 2020, as part of the government's strategy to gradually wean the nation off the high-sulfur gasoline it usually uses for its vehicles, Nigeria has started deploying compressed natural gas (CNG) as a transport fuel. As part of its National Gas Expansion Programme (NGEP), the government aims to expand the distribution of autogas (CNG) and liquefied petroleum gas (LPG) to gas stations operated by the Nigerian National Petroleum Corporation (NNPC).
• According to BP statistical review of world energy, Africa has generated 355.6 terawatt-hours of electricity from natural gas.
• Because of these factors, the ongoing developments in power plants based on natural gas in various African countries are expected to dominate the market during the forecast period.

Nigeria to Dominate the Market

• As of 2021, according to the Department of Petroleum Resources (DPR), Nigeria has proven gas reserves of 206.53 trillion cubic feet. Located on the Gulf of Guinea in western Africa, Nigeria has a total area of 924,000km2 and a coastline of 853km.
• As of 2021, Nigeria has the largest natural gas reserves on the continent and is the world's 12th biggest oil producer. Nigeria's oil sector accounts for 20% of the country's GDP and 95% of foreign exchange. The Nigerian LNG Company is the country's largest natural gas operator.
• The total electricity installed capacity in Nigeria is approximately 17 GW, where natural gas-generated power plants contribute a major share of 70% with around 12 GW.
• The Abuja Power Plant is a 1,350MW gas-fired power project, planned in Abuja Federal Capital Territory, Nigeria, The project is currently in permitting stage, It will be developed in multiple phases, construction is expected to commence in 2023 and commercial operation in 2024. A joint venture of China Machinery Engineering, GE Power, and Nigerian National Petroleum is developing the project.
• In August 2022, Shell Nigeria Gas Limited (SNG), a subsidiary of Shell Plc, has announced plans to facilitate more investments in gas-to-industries and power projects in Nigeria.
• According to BP Statistical Review of World Energy 2022, the natural gas production in Nigeria was 45.9 billion cubic metres in 2021, a significant ride from 30.9 billion cubic meters in 2010.
• In view of these factors, the ongoing investments and developments in natural gas industry in the country is expected to dominate the market during the forecast period.

Africa Natural Gas Industry Overview

Africa natural gas market is fragmented. Some of the key players in this market are NIPCO PLC, TotalEnergies SE, Shell PLC, Sonatrach, and Nigerian National Petroleum Corporation.

Africa Natural Gas Market Leaders

Africa Natural Gas Market News

• In September 2022, The Nigerian National Petroleum Company Limited (NNPCL) announced its intention to sign a Memorandum of Understanding (MoU) on developing a gas pipeline with Morocco's National Office of Hydrocarbons and Mines and the commission of the Economic Community of West African States (ECOWAS). As a result of the MoU, the 7,000-kilometre Nigeria-Morocco gas pipeline project is expected to ramp up gas supply to Europe. Upon the project completion, 3 billion standard cubic feet of gas is expected to be supplied along the coast of West Africa from Nigeria, Benin, Togo, Ghana, Cote d'Ivoire, Liberia, Sierra Leone, Guinea, Guinea Bissau, Gambia, Senegal, Mauritania to Morocco.
• In May 2022, Sonatrach and Eni signed a Memorandum of Understanding (MoU) in Rome to accelerate the development of gas fields in Algeria. In a more specific way, the Memorandum of Understanding is going to help Sonatrach and Eni assess the gas potential and opportunities for accelerated development at specific Algerian fields already discovered by SONATRACH. According to the agreement, Algeria is expected to export approximately 3 billion cubic meters of gas annually through the Transmed pipeline through the areas covered by the agreement.