Report: At 470bcm Potential Gas Output, Nigeria, Others to Compete with Russia in Coming Years

Emmanuel Addeh

Despite current low production levels, Nigeria, along with a handful of other African countries will from the next decade almost rival Russia’s current gas output at a peak production of about 470 Billion Cubic Meters (BCM).

The 470bcm will be roughly 75 per cent of Russia’s projected 2022 output, a report by the African Energy Chamber (AEC) said, stressing that numerous African countries are well positioned to plug the looming gas supply void in Europe.

On the back of its war with Ukraine, governments and companies in Europe have been looking to scale back their dependence on Russian gas supplies.

Various European Union (EU) delegations have visited Nigeria in recent months, with a view to encouraging it to ramp up supply, although the country from all indications is hardly able to do that in the short term.

“Africa is conservatively forecast to reach peak gas production at 470 bcm by the late 2030s, equivalent to about 75 per cent of the expected amount of gas produced by Russia in 2022.

“2022 natural gas output from Africa is expected to reach about 260 bcm. While near-term forecast suggests drop in output to about 240 bcm by 2025. The trend is expected to reverse post 2025, with 2030 natural gas flows expected to reach over 335 bcm,” the AEC stated in its State of African Energy Q2 report.

In one of the visits, the EU Ambassador to Nigeria, Samuela Isopi, had disclosed that at least 40 per cent of Nigeria’s Liquefied Natural Gas was exported to Europe, calling for greater cooperation between Nigeria and the EU.

“Nigeria is the fourth gas supplier to Europe. At least 40 per cent of the Nigerian LNG is currently exported to Europe. We are not only major clients for Nigeria, we are also major partners in the oil and gas sector because some of the companies that are working with you are from Europe.  So we share the same interest and objectives,” she told the Group Managing Director, Nigerian National Petroleum Company Limited (NNPC), Mele Kyari, during one of the meetings.

A month earlier, during a similar meeting, the Minister of State for Petroleum Resources, Chief Timipre Sylva, had told the delegation that Nigeria was ready to step in as an alternative gas supplier to Europe.

However, he urged the EU to step up investments in gas and hydrocarbons in Nigeria so that the country would be able to help meet the EU energy needs.

But the AEC report stated that main producers in the near term include Algeria, Nigeria and Egypt accounting for about 80 per cent of the entire continent’s natural gas production through the years 2022-2025.

Nigeria and Algeria together, it added, are expected to contribute to over 65 per cent of the LNG exports from Africa to international markets.

“Even with the number of gas projects being developed or currently delayed, Africa still has significant production potential. If oil and gas operators decide to up the ante on their gas projects on the continent, near and mid-term natural gas production from Africa could surpass the above conservative forecasts,” AEC added.

 According to the report, recent signals from oil and gas majors such as BP, Eni, Equinor, Shell, ExxonMobil indicate a shift in strategy towards further investment in Africa, as they consider restarting or accelerating previously shelved projects in response to rising global demand.

It cited BP, UK giant which recently booked pre-tax charges of $24 billion and $1.5 billion in its first-quarter 2022 financial results due to its decision to pull out of Russia and is now looking at African projects to seize the opportunity to target European markets with gas supplies.

“Nigeria is currently in the process of ramping up capacity at the Nigeria LNG project from 22 million to 30 million Tonnes Per Annum (TPA) through its Train 7 scheme and debottlenecking, and Eni is a stakeholder in many upstream fields that provide feed gas to the LNG plant as well as in the processing plant,” the report said.

It added that Equinor, ExxonMobil and Shell, like BP, have significant LNG portfolios in Africa that are yet to be developed, and they can look to these massive gas resources to counter the potential gas supply deficit in the future.

“Algeria and Egypt are expected to lead the 2022 natural gas production charts with output levels of over 86bcm and about 75bcm respectively. Nigeria’s overall 2022 monetised natural gas production, excluding the volumes pumped to the Eleme Petrochemicals Company Limited (EPCL), is estimated at about 50 Bcm. The overall LNG exports from Africa during the year are estimated at about 52 million tpa with about 19 Bcm coming from Nigeria and Algeria estimated to export 15.5 million Tpa of LNG.

“The overall 2022 to 2035 split between gas utilised domestically and exported via pipelines vs gas exported to international markets as LNG is 50-50. Nigeria leads the LNG producers over the years 2022-2025 with aver 120 Bcm from an overall output of 205 bcm being exported as LNG,” it noted.

With talks of cross country long distance pipelines having picked up in the recent months, aiming at taking West African gas all the way to Europe, it explained that on the average 18 per cent of European gas imports over the last decade have come from Africa.