Investors Eye Africa's Gas Market

International investors are still showing interest in Africa's natural gas sector even though many planned LNG import projects have not moved into full operation.

Lloyds Energy said it is studying investment opportunities in liquefied natural gas (LNG), floating storage and regasification units (FSRUs), gas-fired power projects, and other downstream gas infrastructure in selected African markets. The company, however, said it has not taken any final investment decision.

Many African countries announced LNG import terminal projects over the past decade to improve electricity supply and support industries. Yet, only a few have reached the operational stage.

Benin signed a deal with TotalEnergies in 2019 to build a floating LNG import and regasification terminal with an annual capacity of 500,000 tonnes. The project was planned to supply the Maria Gléta thermal power plant, reduce the country's use of fuel oil, and support its ambition to become a regional gas hub. There has been no major public update on the project since then.

Côte d'Ivoire also announced plans for an LNG regasification terminal at Vridi in 2017 through the CI-GNL consortium. The project involved Total, SOCAR, Shell, Petroci, Golar LNG and CI Energies. It was expected to start operation in 2018, but little has been made public about its progress.

Equatorial Guinea also unveiled plans in 2019 for a storage and regasification facility under the LNG2Africa programme. The project aimed to support a regional LNG market, but visible progress has been limited.

These cases show that funding, commercial demand, partnerships and project financing still stand in the way of many LNG developments on the continent.

Some countries move closer to completion

While several projects are yet to take off, a few countries have made stronger progress.

Ghana's Tema LNG import terminal is about 95 per cent complete. The project is being developed with Spain's Reganosa and is expected to support the country's rising gas demand as electricity production and industrial activity increase.

South Africa has also moved ahead with an LNG project after Transnet National Ports Authority awarded Ukwanda LNG a 25-year concession to develop an onshore regasification terminal at the Port of Ngqura. The project forms part of the country's energy transition plan and is expected to support 3,000 megawatts of gas-fired electricity generation.

Lloyds Energy said it is also studying investment opportunities in South and Southeast Asia, eastern India, the Philippines, Vietnam and Indonesia, where demand for regasification infrastructure is increasing because of higher electricity use, industrial expansion and energy security needs.

The company said the projects under review cover LNG supply facilities, FSRUs, LNG import terminals, gas-to-power projects, industrial gas supply and other energy infrastructure. It stressed that no final investment decision has been made.

The company's interest shows that investors still see long-term opportunities in Africa's gas market. Even so, future success will depend on how quickly governments can move projects from the planning stage to full operation.