LNG Industry Primed for Growth in East Africa

September 24, 2014 Audubon Companies

A recent study released by PricewaterhouseCoopers (PwC) stated that in 2013, six of the top ten oil and gas discoveries in the world were in Africa.

Regions off the eastern coast of the continent, in particular, have generated a great deal of interest in recent months. Early estimates indicate that deposits under the waters near Mozambique and Tanzania could contain over 500 trillion cubic feet (TCF) of natural gas, and with the global demand for LNG expected to double over the next two decades, both countries are racing to become the first to export.

One of the biggest problems currently facing oil-producing regions in East Africa is a severe lack of infrastructure. Over the next 10 years, an estimated $20 to $40 billion will need to be invested to even begin the early stages of development in these fields.

While over 500 companies are currently operating in the region, many experts believe that it will take a company with significant capitalization to take on a large-scale project that could bring oil to the market.

Slow negotiations with local governments and a lack of skilled labor have further complicated matters for producers operating in the area; however, even with these obstacles looming, oil and gas operations throughout the region have continued to ramp up.

In 2011, plans were set to build an LNG facility in Mozambique that will eventually have a 20 million metric ton capacity – making it the second largest LNG plant in the world. Though unfinished, billions of dollars have already been invested into the facility and the positive impact it’s had on the local economy has been noticeable.

Spurred largely by population growth and urbanization, total oil consumption in Africa is expected to rise by 50 percent over the next two decades, according to the PwC study.

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