U.S. Investment in African Natural Gas ‘Crucial’ to Alleviating Energy Poverty

Despite living on a continent with an abundance of untapped natural gas resources, energy poverty is a daily reality for more than 600 million Africans. By monetizing the 620 Tcf of proven gas, the continent has the potential to transform the quality of people’s lives, industrialize economies, build gas-to-power plants, create jobs and provide energy for clean cooking. U.S. investment in this endeavor plays a crucial role in turning this vision into reality—transforming lives and economies across the continent.

In addition to having the potential to resolve energy poverty, natural gas is indispensable in many industries. It plays a key role in the production of fertilizers used to grow the food that sustains the entire global population. Since the Russia-Ukraine conflict started in early 2022, both food and fertilizer prices shot up significantly as Russia started shutting down its gas supplies, thereby limiting fertilizer production and creating a low-supply, high-demand market globally. Not only can Africa benefit by developing its natural gas resources, but it also appears to have an obligation to do so to secure domestic and global food supplies.

Natural gas can also be used as a feedstock for liquid transport fuels, paraffin, base oils and naphtha, which can generate additional revenues to help build infrastructure, set up new businesses and reduce unemployment levels. Gas can be used in combined heat and power systems, which simultaneously produce electricity and utilize the wasted heat in other industrial processes and increase overall efficiency. It also can be used to produce hydrogen, which is needed in various industries including refineries and ammonia production.

Developing Africa's natural gas resources presents a multitude of new fiscal opportunities. By tapping into this valuable resource, the continent's residents will be empowered to secure prosperous livelihoods, leading to a positive ripple effect on the economies. The sustained long-term growth resulting from this development will foster economic stimulation and diversification across the region.

U.S. E&Ps have the potential to be pioneers

Despite proven resources and growing regional demand, many of Africa's existing gas production fields—particularly in the north and west—are maturing or declining rapidly and nearing the end of their productive lives. Nigeria, Angola and Equatorial Guinea today account for 85% of the West Africa region's total gas output, which is expected to remain steady until 2025. However, beyond that point, levels will gradually decrease to 75% by 2030, 70% by 2035 and 60% by 2040. To sustain production, bringing new projects online is crucial.

Thankfully, numerous major gas discoveries have been reported in Senegal, Mauritania, Angola, Ghana, South Africa, Namibia and the Ivory Coast. Shell's Graff discovery in Namibia holds approximately 2 Bboe. Yet, the potential of these discoveries remains untapped without prompt collaboration between African governments and U.S. E&P companies to formulate realistic and actionable plans to harness these vast resources effectively.

And here lies a unique opportunity for American E&P players. Favorable fiscal environments, strong political partners and an urgency to get large-scale projects off the ground will reap high returns on investment for foreign players in Africa’s gas market. While resource-rich countries such as Mozambique, Namibia, Senegal, Mauritania, Angola and Equatorial Guinea are driving multi-billion-dollar infrastructure projects to support the development of onshore and offshore gas resources, most of these countries’ acreage remains largely unexplored or undeveloped, opening lucrative opportunities for players across the entire energy value chain. Among other nations, Nigeria has more than 200 Tcf of proven gas resources—likely to measure upwards of 600 Tcf with new exploration campaigns; Algeria holds more than 159 Tcf; Senegal 120 Tcf; and Mozambique 100 Tcf.

U.S. companies, with their skills, technology and expertise, can not only support the development of gas in Africa but of the wider continental economy, and companies are already making progress. Exxon Mobil is spearheading the construction of the 18 million tonnes per annum (mtpa) Rovuma LNG project in Mozambique. The company will invest $15 billion into the development of hydrocarbon resources in Angola and is developing the $30 billion Tanzania LNG project.

U.S.-based Chevron Corp. holds interests in Nigeria’s deepwater acreage and the West African Gas Pipeline Co.; operates concessions in Angola; has interests in the Angola LNG project; spearheads Equatorial Guinea’s Gas Mega Hub initiative; and is driving E&P efforts in Cameroon, Egypt, Ghana, Benin and many others. Opportunities remain abundant, both for multinationals and independents alike.

Natural Gas will be a key investment topic at the African Energy Week in Cape Town, South Africa from Oct. 16 through Oct. 20. The event will connect African governments and policymakers with potential investors, enabling new deals to be signed that will kickstart a wave of gas developments. For American E&P companies, the event serves as a critical chance to tap into new opportunities in the world’s fastest growing gas market.

NJ Ayuk is founder and CEO of Pan-African corporate law conglomerate, Centurion Law Group and the Founder and Executive Chairman of the African Energy Chamber. He is the author of several books including Billions at Play: The Future of African Energy.