African gas producers have been urged to leverage opportunities following the announcement of wide-spread sanctions against Russia for its invasion of Ukraine to attract investments for infrastructure development and upgrades to enable them to enhance export capabilities.
Already, yesterday’s invasion of Ukraine spiked commodities prices, including gold and oil, which rose above $100/barrel in early hours trading for the first time since 2014, while crashing global stock markets in Europe and Asia.
The African Energy Chamber (AEC), in a quick analysis of the situation, said yesterday that with recent sanctions by western nations threatening the critical supply of Russian gas to European markets, an opportunity has emerged for African gas producers to step up by enhancing hydrocarbon production and exports to meet international supply gaps.
The Chamber noted that “Significant progress has already been made to establish Africa as a viable gas export market, and now, with geopolitical tensions rising, Africa should focus on establishing itself as the preferred supplier to international markets.”
It added that “The withdrawal and disruption of supply channels from Russia, as the second largest gas producer globally and the biggest supplier of natural gas to Europe, will not only send Europe into a deeper energy crisis, but will cause price hikes globally. However, this represents a golden opportunity for Africa.”
The ongoing European energy trilemma and challenges provide a golden opportunity for African gas producers to develop a robust, bankable gas strategy to cater for motherland Africa and our European friends’ energy demand.
Member states of the Gas Exporting Countries Forum (GECF) met in Doha, Qatar, on Monday, to discuss the impact of the mounting tensions between Russia and Ukraine and its impact on the global gas market.
A Declaration after the meeting emphasized that despite their commitment to increasing gas production to meet growing energy demand globally; members do not have the capacity to help Europe replace 40% of its energy consumption in the event Russia cuts supply.
These commitments will not only be critical for Europe’s energy crisis but for Africa’s sectoral expansion.
However, in an interview with the AEC earlier this month, Equatorial Guinea’s Minister of Mines and Hydrocarbons, Gabriel Mbaga Obiang Lima, said: “Infrastructure is going to be critical. Investors in Europe may be selling solutions to be able to put as many terminals as possible, which will allow us to export gas to them. That is what we need in order to be competitive in gas.”
He noted that African producers can take advantage of the outcome to attract investments required to build infrastructure that would enable them to expand exploration, production and exportation to meet the anticipated increase in demand in Europe.
Similarly, President, AEC Nigeria and West Africa, Abdur-Rasheed Tunde Omidiya, said: “The ongoing European energy trilemma and challenges provide a golden opportunity for African gas producers to develop a robust, bankable gas strategy to cater for motherland Africa and our European friends’ energy demand.
“I believe Africa can leverage current trends to attract much needed investment to develop the infrastructure needed to accelerate production for regional consumption and exportation. The time to act on the Trans Africa Gas plan is now.”
Already, African countries have started ramping up production. The AEC in its Q1 2022 Outlook predicts Nigeria will increase gas production from 2016 of about 1,550 billion cubic feet to about 1,780 billion cubic feet in 2022.
These production increases will enable Nigeria to increase domestic capacity, ensuring energy security both domestically and continentally, while creating the opportunity to scale-up exports to European markets.