Sub-Saharan Africa as an Alternative and Reliable Natural Gas Resources Hub

Author: Babu Ram

Sub-Saharan Africa (SSA)’s natural gas resources are estimated at 359 trillion cubic feet. The countries that hold major natural gas resources are Nigeria, Angola, Equatorial, Guinea, Mozambique, and Tanzania. The unproven (contingent) resources correspond to 190 trillion cubic feet, a lot of which are located in Mozambique and Tanzania and remain to be commercialized. Equatorial Guinea, Nigeria, and Angola are LNG exporters.

Eight other countries having about 1 trillion cubic feet of natural gas reserves are Cameroon, Ghana, the Republic of Congo, South Africa, Namibia, Côte d’Ivoire, Mauritania, and Gabon. Creative thinking to address economy-of-scale issues will pay high dividends. 

Besides being an LNG exporter, Nigeria also supplies gas to Ghana, Togo, and Benin through the West Africa gas pipeline project (WAGP). The unreliable gas supply issue needs to be addressed, which entails investments in new pipelines within Nigeria. However, if reliability is improved, WAGP extension to Cote D’Ivoire will enable the country to ramp up electricity production and exports to neighbors i.e., Burkina Faso, Mali, Ghana, etc.

Nigeria intends to increasingly use natural gas in gas-to-power projects. Nigeria’s energy sector roadmap envisages adding 20,000 MW gas-to-power projects by 2022. Achieving these targets is contingent upon doubling current natural gas production and building the natural gas pipelines and expanding and reinforcing the electricity transmission system wheeling capacity to 20,000 MW in the realm of the country and the West Africa Power Pool (WAPP) in the same time frame.

The government’s energy sector reforms’ success is notable with private investment in Azura (450MW) with smart debt financing by having local currency devaluation risk mitigated. Azura is viewed as a model for unleashing further private investment in the sector. Following Azura.  Oma Power Generation (1080MW) is expected to commission in 2022.

Angola is also an LNG exporter; is developing a combined cycle gas-to-power project (400MW), expected to enter into commercial operation in 2024. Natural gas could be supplemental to its hydropower resources under development. Presently a non-operating member, Angola’s integration with the Southern Africa Power Pool (SAPP) will be facilitated if shared water resources (Baynes Dam-600 MW) are jointly developed with Namibia for power production.

The investment decision in Namibia exploiting Kudu gas resources for power production (885MW), is expected to be finally taken in 2022. The project will contribute to increasing the intra-regional electricity trade in the Southern Africa Power Pool.

Mozambique’s potential to export LNG is about 10 trains, or even more to happen in twenty years. The national economy is expected to receive over US$100 billion.  Plus, with uncommitted gas, 20 GW gas—to—power projects, could be built, which, however, face competition with Cahora Bassa North Bank and Mpanda Nkuwa and coal projects in Tete.  If built pipelines connecting Mozambique with neighboring countries will increase intra-regional natural gas trade in Southern Africa. Mozambique presently exports natural gas to only South Africa.

South Africa’s Ministerial determinations require “that 3126MW of baseload and/or mid-merit energy generation capacity is needed from gas-fired power generation to contribute towards energy security. The gas required for such power generation will be from both domestic gas and imported gas resources”.

This scenario enhances the economics of a second pipeline between Mozambique and South Africa for natural gas supply to the  South African market.   Moreover, South Africa’s shale gas resources, estimated at 390 trillion cubic feet, could be counted for use in the long term.

Tanzania is using natural gas in gas-to-power projects with the operationalization of the 546 km Mtwara-Dar Es Salaam natural gas pipeline and Kenyerezi I 150MW-open cycle gas turbines, all funded by the government. So, Kudos to the government. The piped natural gas would be used further to produce an extra 400-500 MW in plants owned by TANESCO and IPPs in Dar Es Salaam, replacing jet fuel and HFO. Future plans to produce about 3000 MW of gas-to-power projects are confirmed.

The natural gas resources are enough to double the current electricity generation capacity in Sub-Saharan Africa. Natural gas–to–power production will supplement hydropower and smoothen fluctuations in the outputs of renewables like wind and solar, supported by the strengthened electricity grids. The pivotal role the natural gas and renewable energy mix play in the carbon-constrained world is an important virtue.

Natural gas resources located close to low-demand centers in far-flung areas offer entrepreneurial challenges and opportunities to venture capitalists. Private investments are needed to build to transport gas to run power projects, in particular pipelines and compressing stations. Plus, natural gas production needs to be stepped up to achieve gas-to-power production targets within the time frame in SSA in particular in Nigeria and Tanzania.

The scale economy issues deprive small reserve-holding countries of the benefits of natural gas exports. If not gas, such countries can export power to neighbors. The solution lies in integrated funding of gas field development, gas transportation, and gas-to-power production facilities with public-private partnerships. In this context, Banda gas field development (Mauritania) is a great example of replication in several situations in Sub-Saharan Africa. The reforms in natural gas upstream and midstream sectors are on equal footing with electricity sector reforms to attract investment in the natural gas value chain and gas-to-power projects.  These reforms will divert investment from elsewhere to Sub-Saharan Africa as at the present time European economies are scrambling for alternative and reliable natural gas resources to lessen their dependence on Russian gas.


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