The Organization of Petroleum Exporting Countries (OPEC) has projected that natural gas is set to become the second-largest fuel in the global energy mix by 2030.
OPEC made this projection in its World Oil Outlook report which was released on Monday, October 31 and seen by Nairametrics.
According to the report, gas demand is projected to increase by 19.6 mboe/d to 56.3 mboe/d in 2045, supported by demand in all sectors. Natural gas is also expected to replace coal and traditional biomass use in coming years and remain a long-term fuel of choice.
Reason for the projected increase in gas use: The long-term potential for natural gas is based on sufficient gas resources and its relatively low CO2 emissions. This is why many countries intend to increase their share of gas in their energy mix. The percentage of natural gas in the global energy mix would increase from 23% in 2021 to almost 24.5% in 2045.
Nigeria and other OPEC members will lead growth: The outlook report further noted that OPEC member countries like Nigeria will lead gas demand growth. This will lead to the share of non-OECD countries in total gas demand rising to 66% in 2045, up from 55% in 2021.
Natural gas will also play an important role in the expansion of access to modern energy in Africa, thus reducing the traditional use of biomass for cooking and heating.
Increased gas use will help curb climate change: OPEC believes that natural gas, as the cleanest hydrocarbon, is a perfect regional solution for Africa in the fight against climate change, as well as poverty, and one of the best solutions for sustainability.
- Natural gas is assumed to be Africa’s greatest opportunity as a long-term energy supply solution to help alleviate energy poverty and enhance the quality of life, specifically in sub-Saharan Africa.
- As a fuel for sustainable development, natural gas can provide accessibility, affordability, and reliability to African nations.
The future for LNG exports in Africa is promising: According to the OPEC outlook, it is expected that Africa will be the source of more than 9% of the natural gas supply worldwide in 2050, compared to 6% in 2020.
- It is forecasted that Africa’s gas production will increase by an average growth rate of 2.8% per annum, from about 230 bcm in 2020 to around 520 bcm in 2050. This enormous expansion will enhance the role of Africa in global natural gas supplies and increase the region’s meaningful share in global gas production.
- Currently, Africa accounts about 71.1 million tons per annum (mtpa) of liquefied natural gas (LNG) liquefaction capacity located in Nigeria, Algeria, Angola, Cameroon, Egypt, and Equatorial Guinea.
Ongoing gas projects in Africa: There are gas projects under construction amounting to 18.8 mtpa in Mauritania, Mozambique, and Senegal, 9 mtpa with a final investment decision (FID) in Congo and Nigeria, and 26.4 mtpa that are in different stages of Front-End Engineering Design (FEED) around the continent. Furthermore, proposed projects amount to 64 mtpa and there are 41.2 mtpa of potential and stalled projects.
- The International Energy Agency (IEA) had earlier projected that African natural gas consumption grows at an average of 3.3% per year to reach almost 195 bcm in 2025. This is primarily driven by industrial and power generation needs in Algeria, Egypt, and, Nigeria. The development of domestic production in West African countries drives the sub-region, which sees an average 6% growth rate per annum (excluding Nigeria), but the overall size of the market remains limited at about 14 bcm per year in 2025.
The Nigerian context: In 2020, Nigeria’s Ministry of Petroleum Resources inaugurated the National Gas Expansion Programme, which is aimed at making Nigeria a gas-based industrial country, by establishing gas as an automotive fuel, a resource for industries, captive power, and clean cooking.
Based on OPEC’s projections, Nigeria could benefit immensely from natural gas if the NGEP is judiciously implemented. According to Kayode Oluwadare, a natural gas analyst who spoke to Nairametrics, Nigeria’s natural gas resources can be harnessed with the right investments and policy implementations.
At the moment, Nigeria does not have 100% capacity to develop its gas assets. So, OPEC’s projections could be a nudge for investors to invest in the country so that domestic production can be upgraded.
