The International Gas Union (IGU) has noted that Qatar, Russia and Nigeria are the three next dominant liquefied natural gas (LNG) exporters to Europe after the United States of America.
The IGU stated this in its 2023 Global Gas Report released earlier today, October 19.
According to the report, Europe will sustain partnerships with these countries as its appetite for LNG grows. It noted that in Europe, there was a remarkable upswing in liquefied natural gas (LNG) imports, surging from 74 million tons in 2021 to 124 million tons in 2022, marking a substantial increase of nearly 68%.
This surge in demand was met by a group of prominent LNG exporters, with the United States leading the way by expanding its exports to Europe by over 30 million tons from 2021 to 2022. This impressive surge represents a remarkable 159% year-on-year increase in LNG exports.
A part of the report stated:
- “Following the United States, key LNG exporters to Europe include Qatar, Russia, and Nigeria. These countries play a pivotal role in satisfying Europe’s growing appetite for LNG.
- “This heightened import activity underscores the significance of LNG as a crucial energy source for Europe and the strong partnerships between these exporting nations and European markets.”
The African Gas Context
The IGU report highlighted the fact that gas production in Africa experienced a decrease of 2.9 billion cubic meters (Bcm) (approximately 1.1%) from 2021 to 2022, primarily due to declining output from aging fields in Egypt. Nonetheless, Algeria and Libya showed robust net production increases in 2022, totalling about 2.9 Bcm, which partially offset the declines in mature field production.
The report stated further that the continent boasts significant growth potential in the energy sector, given that it holds 8% of the world’s gas reserves and has ambitious development plans. Africa has a growing need for gas to fuel domestic industrialization and expand access to modern energy for its rapidly increasing population.
The IGU report advocates that with 600 million Africans lacking access to electricity, the continent presents a promising opportunity for the development of domestic gas markets. However, realizing this potential necessitates concerted efforts from regional stakeholders to address existing barriers.
These include:
- Securing capital
- Expanding critical infrastructure
- Streamlining policies
- Enhancing the business climate and project delivery timelines.
The International Energy Agency (IEA) notes that Africa’s energy sector still grapples with the aftermath of a significant decline in oil and gas spending levels in 2014. In Sub-Saharan Africa, limited energy access remains a key factor impeding energy security.
Nearly 800 million people globally lacked access to electricity in 2021, with 600 million of them residing in Africa, according to World Bank estimates. This issue is exacerbated by the post-COVID-19 cost-of-living crisis, which escalated electricity costs globally.
Addressing energy access in impoverished regions is essential for stimulating economic development and industrialization. To meet the substantial additional energy demand, a reliable and affordable energy source is crucial.
Natural gas, with a progressively decarbonized energy mix in the coming years, can serve as a versatile solution. Gas can provide heat, power, and feedstock for critical industries, including fertilizer production for food security and raw materials for infrastructure construction.
While some rural areas in Africa explore alternatives like photovoltaic (PV) microgrids, these solutions may not sustain energy-intensive industrial operations, such as running cement or fertilizer factories.
What you should know
Understanding various LNG transaction types; spot, portfolio contracts, and long-term contracts is essential for navigating the evolving energy landscape and ensuring a stable energy supply for the continent’s development.
- Spot: Purchase or sales of LNG are made at prices in real-time • Most spot market transactions are settled in a few days.
- Portfolio contracts: By players who hold LNG supplies from different regions, and have shipping, storage, and regasification assets. Contracts can be either short-term or long–term. Prices can be on a spot or term contract basis.
- Long-term contracts: Price is often linked to natural gas and oil benchmark prices • Contract period is typically more than 15 years.
