Africa’s oil and natural gas resources hold “tremendous opportunity” for the continent and would continue to attract a broad spectrum of investors, advisory group Ernst & Young (E&Y) stated on Tuesday.
Oil & Gas Africa leader Elias Pungong said natural gas development could be a primary driver of economic growth and broader social development, as well as a major spur for local employment and infrastructure development on the continent.
“While the risk rankings overall in Africa are quite high, for many countries the risk trend is improving. Most importantly though, the opportunities for Africa in this sector are enormous and the challenges and risks can be addressed and mitigated,” he added.
Pungong said the African governments would have to come up with gas development plans addressing the upstream tax and licensing models, and would have to deal the necessary infrastructure issues and investments, as well as local training and job creation issues.
African proved gas reserves are highly concentrated, with four countries – Nigeria, Algeria, Egypt and Libya – accounting for more than 92% of the continent’s total.
But E&Y said in its ‘Natural gas in Africa – The frontiers of the Golden Age’ report that the big future for African gas was in East Africa.
Ten years ago, East Africa was a non-story as far as oil and gas were concerned but it was now seen as the “new promised land” or the “next epicenter” for global natural gas, with massive offshore gas discoveries, in particular in Mozambique and Tanzania.
E&Y said Africa’s gas reserves would be more than just headline opportunities for the national oil companies, the deep-pocketed oil and gas majors, their big international exploration and production (E&P) counterparts, as well as well-known African oil and gas specialists.
The ramp-up in E&P activity brings opportunity for the oilfield services (OFS) segment, but again, not just for the big international OFS players, but also for local and regional companies that could contribute to the supply chains and to the associated upstream support infrastructure.
The broader infrastructure build-out could also include export facilities, as in the case of liquefied natural gas, and smaller projects such as pipelines and gas distribution networks to support local/regional domestic gas demand.
E&Y stated that the associated development or expansion of a domestic gas demand sector could also bring substantial commercial opportunities in the power generation, industrial and transportation sectors.