Natural Gas Infrastructure and Opportunities in Sub-Saharan Africa, 2018

Sub-Saharan Africa (SSA) Offers Tremendous Potential for Exploration, Production, and Utilisation of Natural Gas Reserves

Sub-Saharan Africa (SSA) offers tremendous potential for exploration, production, and utilisation of natural gas reserves. The region is set to be a hub for natural gas production and export with market potential in Asia-Pacific and Europe. In addition to LNG and pipeline exports, use of gas for power generation and domestic energy demands will drive the investment in natural gas infrastructure across economies.

However, the lack of suitable infrastructure, uncertain regulatory policies, and lack of long-term gas monetisation plans and local expertise prove major roadblocks to realisation of the true potential that local natural gas reserves have to offer for regional socio-economic development. It will be imperative for local governments to modify regulatory and fiscal policies such that they boost investor confidence in addition to meeting local socio-economic development objectives.

The study covers the current status of natural gas infrastructure in SSA, with focus on exploration, production, and consumption activities across major natural gas economies on the continent. This research study also tracks future investment opportunities for market participants in the overall gas value chain along with the key factors and challenges that will determine the extent of investment in the respective economies. Natural gas economies across Sub-Saharan are yet to realise the complete potential of their gas reserves. This provides an opportunity for global companies with sector expertise to provide services and solutions that can enable major gas economies in SSA achieve sustainable social and economic development through use of gas as an alternative source of energy and source of electric power generation. The region lacks expertise in the sector which can be overcome through international collaboration and implementation of industry best practices.

Access to electricity and per capita electricity consumption has been on the lower end of the spectrum when compared to global standards, an aspect which can be addressed through utilisation of local gas reserves across the continent. Project delays and high investments in natural gas export and transportation infrastructure have shifted focus towards local utilisation of gas resources for the short term.

With growing contribution of renewable energy-based distributed generation, governments and public power utilities are now relying on gas-based power generation to meet daily power requirements across consumer categories with an aim to improving electricity access and stimulating industrial and economic development. Growing demand for energy diversification within South Africa is anticipated to drive investments in shale gas exploration as well as gas transmission infrastructure for domestic utilisation across residential, industrial, and power generation. Mozambique and Tanzania are likely to witness strong competition and investment in gas export and LNG infrastructure as each vie for priority commercialisation and marketing of their available reserves.