{"id":695,"date":"2014-03-12T08:02:03","date_gmt":"2014-03-12T08:02:03","guid":{"rendered":"http:\/\/oilnewskenya.com\/?p=695"},"modified":"2015-09-09T11:16:35","modified_gmt":"2015-09-09T11:16:35","slug":"east-africa-the-newest-lng-frontier","status":"publish","type":"post","link":"https:\/\/www.oilnewskenya.com\/index.php\/east-africa-the-newest-lng-frontier\/","title":{"rendered":"East Africa: the newest LNG frontier"},"content":{"rendered":"

Story by LNG<\/a><\/p>\n

With extraordinary discoveries of natural gas in the Rovuma Basin, East Africa is emerging as a new LNG frontier. The International Energy Agency (IEA) estimates that Africa holds nearly 74 trillion m3\u00a0of technically recoverable natural gas reserves, nearly 10% of the world\u2019s total, and it is believed that the majority of African natural resources are still undiscovered.<\/p>\n

In recent decades oil and gas production has mainly been driven by West Africa. Even more recently, however, development has picked up offshore East Africa, in Mozambique and Tanzania. In 2012, African natural gas production reached 213 billion m3\u00a0(nearly twice the volume of European gas production, and nearly a third of natural gas production in the US in 2012) with an annual growth of nearly 4% since 2000. The IEA estimates that African natural gas production will nearly double by 2035, reaching 400 billion m3. Even though consumption of natural gas is expected to rise, reaching 170 billion m3\u00a0in 2035, there is still substantial room for gas exports to other markets. In 2012, Africa accounted for 16.8% of the global LNG export volumes (with Nigeria being the fourth largest LNG exporter in the world) and its position in the global LNG market will only be strengthened by the recent gas discoveries.<\/p>\n

Developments in Mozambique and Tanzania<\/strong><\/p>\n

When Anadarko made its gas discovery offshore Mozambique (in Area 1 of the Rovuma Basin), East Africa was transformed into a new global gas supply region.<\/p>\n

There were four subsequent discoveries in the area made by Anadarko, along with discoveries in the nearby Area 4 by ENI (in the Mamba prospect), resulting in nearly 2.4 trillion m3\u00a0of new recoverable gas reserves. Next to Mozambique, in the Tanzanian share of the Rovuma Basin, BG Group, Ophir Energy, Statoil and its partner ExxonMobil have also discovered major gas deposits, altogether accounting for a further 425 billion m3\u00a0of recoverable reserves. At the time of increasing global demand for natural gas, these newly discovered resources offshore Tanzania and Mozambique were substantial, and have prompted companies to develop new LNG export terminals.<\/p>\n

In the case of Mozambique, ENI and Anadarko have agreed to unitise their new gas find and jointly develop a LNG export project in order to reduce project development cost. The new LNG facility is due to become operational in 2018 with two 5 million tpa liquefaction trains, plus opportunity for significant expansion in the future. In its published Gas Master Plan, the government of Mozambique states that it expects 10 liquefaction trains to be in operation by 2026, with an overall capacity of 69 billion m3\/y. This could make Mozambique one of the world\u2019s top LNG exporters.<\/p>\n

Meanwhile, offshore Tanzania, Statoil and BG Group are also looking into a joint development of their new gas find and the construction of another LNG facility. However, the Tanzanian government has questioned whether the discovered reserves are big enough to develop a large scale LNG export project on top of meeting domestic demand for natural gas. In order to approve the LNG export terminal construction plan, the government indicated that more gas must eventually be found. In the meantime, a final investment decision on the Tanzanian LNG export terminal is expected to take place in 2016, with the first potential LNG cargo in 2020.<\/p>\n

East Africa\u2019s LNG export potential<\/h2>\n

East Africa is well located to supply multiple markets with LNG. It is particularly well situated with respect to India\u2019s west coast and the emerging markets of Southeast Asia, and it will be able to serve the key markets of Northeast Asia and Northeast Europe.<\/p>\n

The Asia Pacific region is a major player in the global LNG arena, accounting for nearly 70% of total global LNG imports in 2012. In Asian countries, natural gas is increasingly viewed as an essential element in the diversification of energy sources, securing rapidly growing energy demand and limiting air pollution. Since the opportunities for pipeline gas transportation in the region are relatively restrained for geographical reasons, LNG is seen as the most viable option for emerging energy demand. With rapid growth in global demand, the LNG industry will inevitably face a supply challenge. Therefore, there will be a strong demand for new LNG suppliers such as Mozambique and Tanzania. However, while East African LNG projects are still in their infancy, there are other major LNG developments taking place elsewhere around the world in Australia, the US, Canada and Russia in particular.<\/p>\n

High natural gas prices in Asian markets, combined with ever-rising demand for LNG in the region, makes these markets the most attractive for LNG exporters around the globe. This could lead to over-saturation of the Asian markets with new gas supplies, which, in turn, could push prices down. That would be welcome news for Asian gas consumers, but not so good for the new LNG exporters, who are using the current global LNG market conditions in their business models.<\/p>\n

It is also important to consider that China has a considerable ambition to develop its own shale reserves and that they are estimated to be even larger than the shale reserves in the US. In order to withstand growing competition and have a share in the Asian market, East Africa needs to move fast and be creative in terms of its LNG price.<\/p>\n

Opportunities and challenges<\/h2>\n

Development of the new-found gas reserves in East Africa will not only benefit the global gas industry, it will also bring various socio-economic opportunities to the region.<\/p>\n

Although civil war is now over, Mozambique\u2019s economy is still founded on agriculture and poverty remains widespread. Tanzania has a fast growing population and widespread poverty, with economic growth coming mainly from gold production, export and tourism. The country is still suffering from high inflation, driven by rising fuel and food prices, as well as long-lasting energy shortages. Growth in the natural gas sector can provide both countries with revenues for persistent needs in education, health and infrastructure, as well as help expand energy access.<\/p>\n

The Mozambique Natural Gas Master Plan indicates that Mozambique could potentially earn up to US$ 5.2 billion\/year by 2026 from LNG exports, creating over 70 000 jobs in its gas sector.<\/p>\n

Although these opportunities have the potential to transform the economy of both countries, they come with risks and challenges that must be addressed. Insufficient infrastructure, combined with unforeseeable economic and market conditions, will undoubtedly impact the viability of the proposed LNG projects. However, there is a broad spectrum of institutional, regulatory, governmental and \u2018human-capacity\u2019 issues that must be addressed to ensure that the development of natural gas resources will actually benefit the local population. The governments of Mozambique and Tanzania have high levels of corruption, bureaucracy and low business transparency.<\/p>\n

In the Gas Master Plan, both governments specify that they intend to responsibly manage the growth of their respective energy sectors and economies in general. Therefore, it is important that they carefully plan the envisioned LNG projects.<\/p>\n","protected":false},"excerpt":{"rendered":"

Story by LNG With extraordinary discoveries of natural gas in the Rovuma Basin, East Africa is emerging as a new LNG frontier. The International Energy Agency (IEA) estimates that Africa … Read More<\/a><\/p>\n","protected":false},"author":2,"featured_media":696,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[6],"tags":[63,147,236,671,862,1160,1636,1696,1699,1926,2191,2404,2466],"class_list":["post-695","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news-by-others","tag-africa","tag-anadarko","tag-bg-group","tag-east-africa","tag-exxonmobillng","tag-international-energy-agency","tag-mozambique","tag-natural-gas","tag-natural-gas-master-plan","tag-ophir-energy","tag-rovuma-basin","tag-statoil","tag-tanzania","entry"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2014\/03\/lng.jpg?fit=268%2C188&ssl=1","jetpack_shortlink":"https:\/\/wp.me\/p5JWkQ-bd","jetpack-related-posts":[{"id":1199,"url":"https:\/\/www.oilnewskenya.com\/index.php\/smaller-firms-will-lead-east-africas-oil-and-gas-development\/","url_meta":{"origin":695,"position":0},"title":"Smaller firms will lead East Africa’s oil and gas development","author":"Samuel Kamau Mbote","date":"June 11, 2014","format":false,"excerpt":"Source: Reuters Smaller oil explorers willing to take financial and operational risks will lead the development of East Africa's oil and gas industry as majors ditch riskier projects as margins fall, executives from several oil and gas firms said on Tuesday. The region has emerged as a significant prospect for\u2026","rel":"","context":"In "News by others"","block_context":{"text":"News by others","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/news-by-others\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2014\/05\/sakson1.jpg?fit=387%2C519&ssl=1&resize=350%2C200","width":350,"height":200},"classes":[]},{"id":1343,"url":"https:\/\/www.oilnewskenya.com\/index.php\/lng-from-east-africa-how-the-odds-are-stacked\/","url_meta":{"origin":695,"position":1},"title":"LNG from East Africa – how the odds are stacked","author":"Samuel Kamau Mbote","date":"July 1, 2014","format":false,"excerpt":"Story by\u00a0lexology.com How much gas? Vast amounts. Mozambique alone is estimated to have gas reserves of up to 150 trillion cubic feet\u00a0 (TCF) and Tanzania potentially as much as 50 TCF (Petroleum-Economist). But in a global economy\u00a0 where commodity prices, consumer demand and 'timing to market' are crucial, there is\u2026","rel":"","context":"In "News by others"","block_context":{"text":"News by others","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/news-by-others\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2014\/03\/anadarko.jpg?fit=400%2C300&ssl=1&resize=350%2C200","width":350,"height":200},"classes":[]},{"id":12366,"url":"https:\/\/www.oilnewskenya.com\/index.php\/mozambique-first-gas-introduced-to-coral-sul-flng-from-coral-south-field\/","url_meta":{"origin":695,"position":2},"title":"MOZAMBIQUE: First Gas Introduced to Coral-Sul FLNG from Coral South Field","author":"","date":"June 23, 2022","format":false,"excerpt":"Italian energy major Eni has announced first gas to the Coral-Sul Floating Liquefied Natural Gas (FLNG) facility from the Coral South Field located in Area 4 of the Rovuma Basin offshore Mozambique. The development sparks a new era of hydrocarbon growth in the southern African country, with Mozambique now on\u2026","rel":"","context":"In "Countries"","block_context":{"text":"Countries","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/countries\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2022\/01\/Coral-FLNG.png?fit=720%2C405&ssl=1&resize=350%2C200","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2022\/01\/Coral-FLNG.png?fit=720%2C405&ssl=1&resize=350%2C200 1x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2022\/01\/Coral-FLNG.png?fit=720%2C405&ssl=1&resize=525%2C300 1.5x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2022\/01\/Coral-FLNG.png?fit=720%2C405&ssl=1&resize=700%2C400 2x"},"classes":[]},{"id":10017,"url":"https:\/\/www.oilnewskenya.com\/index.php\/africa-lng-report-out-now-mozambique-at-forefront-of-global-gas-development\/","url_meta":{"origin":695,"position":3},"title":"Africa LNG Report Out Now: Mozambique at Forefront of Global Gas Development","author":"","date":"March 2, 2021","format":false,"excerpt":"Africa Oil & Power (AOP)\u00a0has launched its\u00a0Africa Energy Series: Africa LNG Special Report 2021,\u00a0dedicated exclusively to Liquefied Natural Gas (LNG) developments and investment across the continent; driven by new discoveries and progressive gas-focused policies, Africa\u2019s LNG consumption and production is set to become one of the fastest growing sub-sectors globally\u2026","rel":"","context":"In "Countries"","block_context":{"text":"Countries","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/countries\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2021\/03\/78c065d58bb81a5a0e0bc52629050b06.jpg?fit=800%2C450&ssl=1&resize=350%2C200","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2021\/03\/78c065d58bb81a5a0e0bc52629050b06.jpg?fit=800%2C450&ssl=1&resize=350%2C200 1x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2021\/03\/78c065d58bb81a5a0e0bc52629050b06.jpg?fit=800%2C450&ssl=1&resize=525%2C300 1.5x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2021\/03\/78c065d58bb81a5a0e0bc52629050b06.jpg?fit=800%2C450&ssl=1&resize=700%2C400 2x"},"classes":[]},{"id":12808,"url":"https:\/\/www.oilnewskenya.com\/index.php\/mozambique-first-lng-cargo-departs-from-coral-sul-flng-offshore-the-rovuma-basin\/","url_meta":{"origin":695,"position":4},"title":"MOZAMBIQUE: First LNG Cargo Departs from Coral Sul FLNG, Offshore the Rovuma basin","author":"","date":"November 14, 2022","format":false,"excerpt":"Eni, as Delegated Operator of the Coral South project on behalf of its Area 4 Partners (ExxonMobil, CNPC, GALP, KOGAS and ENH), informs that the first shipment of liquefied natural gas (LNG) produced from the Coral gas field, in the ultra-deep waters of the Rovuma Basin, has just departed from\u2026","rel":"","context":"In "Countries"","block_context":{"text":"Countries","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/countries\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2022\/01\/Coral-FLNG.png?fit=720%2C405&ssl=1&resize=350%2C200","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2022\/01\/Coral-FLNG.png?fit=720%2C405&ssl=1&resize=350%2C200 1x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2022\/01\/Coral-FLNG.png?fit=720%2C405&ssl=1&resize=525%2C300 1.5x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2022\/01\/Coral-FLNG.png?fit=720%2C405&ssl=1&resize=700%2C400 2x"},"classes":[]},{"id":8811,"url":"https:\/\/www.oilnewskenya.com\/index.php\/amarinth-tsavo-partner-to-provide-centrifugal-pumps-to-the-eastern-africa-market\/","url_meta":{"origin":695,"position":5},"title":"Amarinth, Tsavo Partner to Provide Centrifugal Pumps to the Eastern Africa Market","author":"","date":"August 11, 2020","format":false,"excerpt":"Amarinth, a company specialising in the design, application and manufacture of centrifugal pumps and associated equipment to the Oil & Gas, petrochemical, LNG, chemical, industrial, power and desalination markets, has underlined its recent expansion in Africa with the announcement of a strategic partnership with Tsavo Oilfield Services to provide centrifugal\u2026","rel":"","context":"In "Countries"","block_context":{"text":"Countries","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/countries\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/08\/Amarinth.jpg?fit=500%2C667&ssl=1&resize=350%2C200","width":350,"height":200},"classes":[]}],"jetpack_sharing_enabled":true,"jetpack_likes_enabled":true,"_links":{"self":[{"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/posts\/695","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/comments?post=695"}],"version-history":[{"count":1,"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/posts\/695\/revisions"}],"predecessor-version":[{"id":3773,"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/posts\/695\/revisions\/3773"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/media\/696"}],"wp:attachment":[{"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/media?parent=695"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/categories?post=695"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/tags?post=695"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}