Oil and gas companies are planning to build liquefied natural gas (LNG) capacity of more than 84 million tons per annum (mtpa) in Africa, transforming the continent into a natural gas powerhouse, according to a latest report.
However, African states are not the only ones jostling for the attention of energy-hungry Asian markets. Australia, Canada, the United States and Russia have greater financial muscle, expertise and resources to develop and ship LNG to China, India, South Korea and Japan.
Many LNG projects, especially in Australia, are already underway and have attracted customers and financiers. Australia is even predicted to overtake Qatar as the world's largest LNG supplier by 2017, according to the Australian government's estimates.
"Australia also has more than 60 million tons of additional LNG export capacity under construction through 13 projects worth a total of about AUD 176 billion. Based on these proposed and committed projects, our capacity could quadruple by 2017," said Martin Ferguson, the country's natural resources and energy minister.
This is not to say that African states should be completely ruled out of the running.
"On the whole, Africa could be considered a dark horse in gas production with the potential to increase [output] dramatically over the long-term," notes a Canadian Energy Research Institute (CERI) report published on February 4.
The institute estimates that LNG projects with a combined capacity of more than 600 mtpa are being proposed over the next 10 years. However, there is no guarantee that all of these will be built and it is still unclear who will emerge as a winner in the global LNG race.
The US currently appears to have the largest number of proposed LNG projects with a combined capacity of 168 mtpa. While it also enjoys a fresh energy boom, thanks to upbeat shale gas production, the US has yet to assure its lead role as producer in the natural gas market.
This observation has been attributed to the ambiguous political stand of the US to become a net exporter, given that it is also a major consumer of billions of cubic feet of natural gas.
At the moment, the world's largest economy is benefiting from cheap natural gas prices. A growing number of lobby groups in Washington that are against the exportation of natural gas could eventually lead to higher domestic prices.
Further up north, many analysts believe Canada is missing the LNG boat as all the major projects are at least five years away and many developments may never take off if the operators don't fetch the right long-term prices.
Even in Australia, the largest project being developed by Chevron and partners has seen costs balloon from USD 37 billion to USD 52 billion.
Africa is no stranger to LNG projects with the first exploration happening as early as 1964 in Algeria. There are currently nine projects in operation across the continent with a combined capacity of 71.7 mtpa.
The International Energy Agency expects African natural gas production to more than double to almost 400 billion cubic meters (bcm) by 2035 and post an average annual increase of 2.7% while regional natural gas consumption reach nearly 170 bcm.
The continent is already the third largest regional exporter of LNG in the world, comprising 17% of global LNG trade in 2011.
"As a result of proposed liquefaction projects in existing and new LNG exporting nations, Africa could see a substantial increase in LNG production towards the end of the decade," notes CERI.
"By 2014, construction on three new LNG projects in Africa will be completed, and the region's total liquefaction capacity will increase by 14%, to almost 76 mpta."
However, Ernst & Young (E&Y) expects the veteran producers Algeria and Egypt to struggle to ramp up their natural gas output due to political instability.
Algeria's two new projects - GL1K and Arzew GL3Z - are widely expected to come online this year, although the latest terrorist attack at a gas plant in the country could delay this.
Meanwhile, Nigeria is expected to make a decision on the Brass and Progress projects. Angola is set to start construction of its 5.3 mpta LNG facility and Cameroon and Equatorial Guinea are also expected to inch closer to their dream of LNG exports within a few years.
And while Western Africa holds potential, it is East Africa that is emerging as the "new frontier" of natural gas, according to E&Y.
"While [East Africa] may not be the next Qatar or Australia, it certainly has the potential to be an LNG heavyweight on par with Nigeria. East African LNG is expected to be very competitive [in the] Asian gas markets; consultants at Wood Mackenzie estimate that the break -- even for East African gas -- is around USD 7 per million BTUs, in contrast to around USD 10 per million BTUs for Australian LNG."
The US Geological Survey estimates that Kenya, Tanzania, and Mozambique may contain as much as 250 trillion cubic feet of natural gas, especially offshore.
This is especially attractive to major LNG players such as Royal Dutch Shell and Chevron, who already have Asia-Pacific buyers lining up.
"If successful, exploration projects in Kenya, Madagascar, Ethiopia, and Somalia could lead to additional LNG exports from those countries," CERI said.
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