African natural gas consumption and production is set to become one the fastest-growing sectors globally by 2040, holding a promising future despite the ongoing challenges imposed by the COVID-19 crisis, according to the Africa Liquified Natural Gas (LNG) report issued on Monday.
The report also said that Africa is projected to increase its share of global marketed gas production from current figures of six percent to 11 percent by 2050.
It added that despite projects' delays caused by COVID-19, and a temporary oversupply in the market that has limited capital expenditure, several African LNG projects have been able to progress, positioning Africa as a major LNG competitor globally.
On the other hand, the 2021 gas outlook for the continent is expected to remain loose until prices tighten despite the gradual increase in demand as the global economy recovers, according to the report.
On the consumption side, the report projected growth across the continent at an average of 3.3 percent per year to reach approximately 195 billion cubic meters (bcm) in 2025 and up to 380 bcm in 2050, comprising six percent of global total consumption.
“Driven primarily by industrial and power generation needs, development is expected to dramatically increase. As demand begins to steadily rise, several African countries are prioritising exploration and attracting new operators to their acreage, in which investor-friendly policies and transparent processes serve to create an enabling environment,” the report showed.
Africa is also expected to become the fastest-growing region in gas production, averaging 5.6 percent growth per year, in which the continent is expected to produce approximately 295 bcm in 2025 and over 660 bcm in 2050, accounting for 20 percent of global gas production increase during the same period.
According to the report, Africa is expected to account for 11 percent of global gas production, up from 6 percent in 2018, while the Middle East is projected to contribute with 18 percent of global production by 2050, up from 17 percent in 2018.
It also said that “between 2019 and 2025, a total of 70 natural gas projects are projected to come online in sub-Saharan Africa, adding that final investment decisions will be made on competitive feed gas supplies and low upstream, plant construction, and transportation costs, to avoid project delays or cancellations in a cost-sensitive environment.”
Meanwhile, emerging markets in East, West, and South Africa are gradually becoming major contributors to the production of LNG and compressed natural gas for use in power generation and transportation, according to the report.