Africa's Share of LNG Trade Steady in 2015, Declining in 2016-19

Africa's share of world’s LNG imports was broadly the same year-on-year in 2015 but will decline as large new Australian and US projects enter the market during 2016-19, even allowing for the return to production of Angola LNG this year.

Nigeria, Algeria and Equatorial Guinea – Africa's only LNG exporters in 2015 – provided 14.4% (or 35.2mn metric tons) of the worldwide total LNG traded volume of 245.2mn mt last year, according to data released last week by the International Group of LNG Importers (GIIGNL).

In 2014 five African exporters provided 15% (35.9mn mt) of the world’s 239.2mn mt trade. They included Angola, which started production in mid-2013,and Egypt each of which provided barely a third of a million metric tons.

Angola LNG is expected to resume exports during this quarter after its two-year shutdown for major repairs. In Egypt, there were no shipments during 2015 from its Damietta and Idku LNG export plants because of a lack of feed gas, as Egyptian domestic gas use grew.

Egypt indeed imported LNG for the first time in 2015, becoming the only African country to do so. Its 2.6mn mt of imports represented 1% of world trade. GIIGNL's annual report last week listed BP, Spain’s Gas Natural, Noble Group, Rosneft, Trafigura and Vitol among those with short-term contractual arrangements to supply Egypt’s state Egas in 2015-16. It was Egas that contracted two floating import terminals (FSRU) at Egypt's Red Sea port of Ain Sukhna: one from Hoegh LNG that started up in April 2015 and the other from BW Gas that started in October, both under 5-year charters.

Nigeria maintained its ranking from 2014 into 2015 as the world’s fourth biggest source of LNG imports – behind Qatar, Australia and Malaysia – and even increased sales by 2% to 19.5mn mt. During the same period Algeria moved from 7^th to 6^th ranking, despite supplying less. However the expansion of Australia (2015: 29.45mn mt) as an LNG exporter – to such an extent that by the turn of the decade it could overtake Qatar (2015: 78.4mn mt) – means that Nigeria LNG's relative importance will diminish as it faces a wave of exports from the US Gulf coast.

In today's glutted low price market, 12.7mn mt (65%) of Nigeria's exports were sold spot or on short-term (less than four-year) contracts, said GIIGNL, with only Qatar selling a larger volume in this way in 2015.

Neither Nigeria nor Algeria however will be adding new liquefaction capacity this decade. Indeed as GIIGNL noted, the only final investment decision (FID) anywhere outside the US in 2015 for an export plant was for a small but innovative floating LNG venture offshore Cameroon in West Africa, as low oil and gas prices caused investment appetite for mega-trains to dry up. This year FIDs are expected around mid-2016 on a similar FLNG venture offshore Equatorial Guinea and probably on the Eni-led Coral FLNG unit offshore Mozambique – but these aren’t expected to produce until 2019.

The first of up to 10 large LNG units onshore Mozambique, each of 5mn mt/yr capacity and using feed gas from Eni and Anadarko-operated licences deep offshore, won’t start up until the next decade, most likely after an improvement in Asian LNG demand or world oil prices, or both – with some in Tanzania likely to be developed slightly later. None of these have taken FID.

Meanwhile prospects for the large West African LNG export schemes much talked of a decade ago – Nigeria LNG trains 7 and 8, Brass LNG, Olakola LNG -- have faded away. But that’s in part because demand for gas-fired electricity and fiscal reforms are slowly attracting investment into new power plants and onshore gas production by independents – which should perhaps be seen as a positive, if it increases access to electricity among the poor of West Africa and stimulates economic growth.

Table 1: Imports of African LNG in 2015, mn mt

Table 2: Origin of Egyptian LNG imports in 2015, mn mt

Source for both tables: GIIGNL Annual Report 2016

Mark Smedley