African Gas Supply Landscape: The Dominance Of Nigeria, Algeria And Egypt

Published 5 months ago
By Forbes Africa | Oluwatomisin Amokeoja
Oil Refinery And Pipeline In Desert During Sunset
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Nigeria, Algeria, and Egypt are anticipated to be the primary drivers of a gas supply surge, collectively contributing around 80% of the total African gas production. Experts respond to the development, highlighting both opportunities and obstacles on the horizon.

According to the State of African Energy report in August by the African Energy Chamber, Nigeria, Algeria and Egypt are anticipated to be the primary drivers of a gas supply surge, collectively contributing around 80% of the total African gas production.

The report forecasts short-term natural gas supply in Africa poised for growth, projecting an increase from this year’s supply levels of 25.5 Bcf/d to slightly over 27 Bcf/d in 2024, maintaining this level until 2027.

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It indicates, “Algeria is expected to experience growth from 10 Bcf/d in 2023 to 11 Bcf/d by 2027. Egypt’s production is expected to remain steady at 6.25 Bcf/d. Nigeria’s output is expected to fluctuate marginally between 4.5 Bcf/d and 5.5 Bcf/d.”

Reacting to this development, Kelvin Emmanuel, an economist, highlights that one of the key challenges impacting the African gas landscape is the ongoing diplomatic impasse in the Sahel region.

Emmanuel explains to FORBES AFRICA: “The 4,128-km gas pipeline linking the AKK pipeline from Kano through Niger Republic to Algeria was intended to supply the trans-Mediterranean pipeline. The inability of the Economic Community of West African States (ECOWAS) and the African Union (AU) to find a diplomatic solution to the Sahel impasse jeopardizes this vital project, as well as the capacity of Nigeria, Algeria, and Egypt to surpass other producers like Tanzania and Mozambique.”

He further underscores Russia’s influence on gas dynamics, pointing out that the embargo on Russian gas and the inability to secure letters of credit (LC) for gas exports from Nord Stream I and II have led to a demand-supply gap in the African gas market.

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Emmanuel elaborates that while the Nigeria Morocco Gas Pipeline and the Trans-Saharan Gas Pipeline were initially designed to address Europe’s energy needs, complex strategic considerations and the global competition for influence have complicated the situation.

“Understanding the geopolitical forces at play and the interplay of economic interests with the Sahel’s unfolding events is of utmost importance for achieving success,” says Emmanuel.

For Iheakanwah Felix Arinzeh, a financial expert and doctor of business administration, this “advantageous position” offers multiple benefits for the leading countries’ economies and the broader African energy landscape.

Arinzeh shares with FORBES AFRICA that the countries’ dominance “will streamline their ability to meet their domestic gas demand. In Nigeria, energy constitutes a significant production cost, particularly in the manufacturing sector. I anticipate that this cost component will experience a positive impact, potentially translating to more affordable products and services in Nigeria.”

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He believes the increased prominence in the African gas market could lead to enhanced energy security.

“The countries will attain a more secure energy supply by relying less on imported gas. Consequently, their susceptibility to supply disruptions and price volatility will decrease. The increased use of gas will

contribute to reduced greenhouse gas emissions, given that gas burns cleaner than coal or oil. This will improve air quality and mitigate climate change,” says Arinzeh.

Arinzeh also identifies this development as a magnet for foreign investment that could further stimulate growth in their respective gas sectors, benefiting not only their economies but also their foreign exchange earnings.

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However, he acknowledges potential challenges: “There are also potential challenges associated with these countries dominating Africa’s gas supply market. If not properly managed, these countries may become overly reliant on gas exports, rendering their economies vulnerable to fluctuations in the global gas market. To maximize benefits and minimize risks, I strongly recommend that each of these countries diligently manage these challenges.”