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The continent has significant natural gas reserves, accounting for nearly 9% of the world total Insufficient investment in the gas sector in Africa is primarily to blame for weak production growth last year, but there are several potential projects in the pipeline for the continent’s top three gas producing countries in 2025. The continent has significant natural gas reserves, accounting for nearly 9% of the world total. The latest edition of the quarterly Gas Market Report by the International Energy Agency (IEA) provides a review of market developments in 2024 and an outlook for 2025. The report, released today (21 January) says depressed upstream activity limited Africa’s natural gas demand growth to below 1% in 2024. The continent’s gas demand is forecast to increase by 2% in 2025. Overview of top three gas producers in Africa Egypt In recent years, Egypt’s natural gas production has been hit by a steady decline in output from its largest field, Zohr. “In the first 10 months of 2024, Egypt’s domestic gas production fell by 15% (or 7 bcm [billion cubic meters]) y-o-y. “As a result, Egypt has shifted from being a net exporter to a net importer of LNG in 2024, aided by the restart of the Ain Sukhna FSRU and the use of the Aqaba re-gasification facility in Jordan.” The report notes that Egypt has also been increasing its piped gas imports from Israel, which grew by 20% (or 5 bcm) y-o-y in the first 10 months of 2024 and accounted for 15% of Egypt’s primary gas supply. “To prioritise domestic energy needs, especially during the peak summer months, Egypt has significantly reduced [liquefied natural gas ] LNG exports, leading to a decline of close to 80% y-o-y in 2024, with exports curtailed since May [2024].” Ramping up LNG imports to meet energy needs To address the shortfall in gas for power generation, Egypt launched five emergency tenders since June last year as a temporary fix, the latest of which was awarded for Q4 delivery, for a total of 20 LNG cargoes. In 2024, Egypt imported the highest LNG volumes in seven years. However, Q4 deliveries fell well below the planned 20 LNG cargoes, with only 12 cargoes – including those via Jordan – or 1.8 bcm, discharged since October. The state owned EGAS postponed some LNG deliveries from late 2024 to early 2025, affecting four shipments so far. Additionally, a planned tender for Q1 2025 cargoes is now likely to be delayed and seek fewer than the 20 cargoes originally envisaged. Although the LNG import slump in Q4 appears to be largely due to lower demand since mid-November, volumes have also been constrained by technical problems at the 5.5 bcm/yr Hoegh Galleon FSRU, moored at Ain Sukhna since late June. In late November 2024, Egypt’s energy ministry announced a reassessment of LNG import needs due to vessel diversions and the need to cut costs. The ministry emphasised the importance of minimising import costs while maintaining flexibility in the delivery schedule. Despite reports of operational issues at the Ain Sukhna FSRU, the ministry stated that the facility is operating smoothly. Last week, Egyptian media widely reported that the country and Italian energy company Eni are discussing establishing a new LNG import terminal in Damietta on the Mediterranean coast. Nigeria Reflecting the priority that Nigeria places on LNG exports over domestic consumption, which accounts for less than half of its total gas production, the country remains Africa’s leading LNG exporter. “However, its LNG exports have faced a number of challenges in recent years, mainly due to upstream and security issues that have affected feedgas production.” The IEA report says that in 2024, Nigeria achieved its first year-on-year increase in full-year LNG exports since 2019. “This positive trend was largely driven by strong spot sales, which helped boost overall export volumes. “Specifically, LNG exports from Nigeria rose by 7% in 2024, which translates into an increase of 1.2 bcm y-o-y. This growth is significant as it marks a recovery from the previous declines and highlights the country’s efforts to overcome the obstacles that have hampered its LNG production and export capabilities.” Driven by the “Decade of Gas” initiative launched in 2021, Nigeria is poised to witness substantial investment from major international companies, with TotalEnergies planning a $750 million investment in a new gas project to boost LNG exports from the NLNG legacy plant and Shell committing up to $1 billion over the next decade to develop Nigerian gas infrastructure. Algeria In 2024 several key developments significantly benefitted Algeria’s gas and LNG markets, supporting increased production and international interest, the report says. “Algeria’s sales gas production has increased by 25% over the past four years, driven by reduced re-injection volumes and new greenfield developments.” The report lists as notable projects the Hassi Ba Hamou and Hassi Mouina fields, part of the southwest gas project, which have been brought onstream and are expected to add 4.5 bcm/yr of sales gas. “Despite the decline in domestic gas demand in 2024, falling production puts pressure on exports, which fell by 6.6% to a four-year low of 48 bcm, with LNG down 10% y-o-y.” The European connection Algeria remains a crucial supplier of natural gas to Europe, particularly Spain and Italy, while the government aims to diversify the country’s energy mix to avoid over-reliance on natural gas, with a target of 22GW of installed renewable capacity by 2030. From an exploration perspective, Algeria signed six new contracts under improved financial and tax conditions set by the government, attracting investment of more than $7 billion. The country has also signed 14 memoranda of understanding (MoUs) with foreign oil and gas companies, indicating a significant shift in investor interest. The country is leveraging its strategic location to expand LNG and pipeline exports, supported by new gas supply deals and exploration drilling by global majors, says the report. Push to increase investment in Algeria’s gas sector In November 2024 Algeria launched its first gas field licensing round in a decade, backed by a reformed hydrocarbon law, to attract global energy investors. The report says this move aims to revitalise Algeria’s upstream sector and provide a long-term alternative to meet European gas demand, especially in light of the reduced Russian gas supplies following its full-scale invasion of Ukraine. The bid round includes six onshore blocks, with a strong focus on expanding Algeria’s gas resources. Algeria has an estimated 480 bcm (17 trillion cubic feet [Tcf]) of undeveloped conventional resources. “The development of these resources, combined with infrastructure-led exploration, could extend Algeria’s sales gas growth into the 2030s. Unconventional gas, particularly shale and tight gas, holds enormous potential, likely in the hundreds of Tcf. “However, commercial viability remains a challenge due to high costs and slow operational approvals. ExxonMobil and Chevron have signed MoUs to evaluate and develop these opportunities.” The report says that following the supply shock of 2022/23, natural gas markets moved towards a gradual rebalancing and returned to structural growth last year. “Global gas demand reached a new all-time high in 2024 and is expected to expand further in 2025, primarily supported by some fast-growing markets in Asia.” |
