With Cameroon joining the league of sub-Saharan African countries producing Liquefied Natural Gas(LNG), there is the fear of stiffer competition between it and Nigeria, as well as other African countries, experts observe.
Industry analysts monitoring the development have confirmed that Cameroon, Equatorial Guinea and Congo Republic are already developing avenues for four offshore plants, expected to cost about $6 billion.
The conclusion is following Cameroon’s plans to begin exporting LNG before the end of 2017, using a newly designed offshore plant that analysts say could slash production costs unlike what obtains in other African countries already in the industry.
Already, a specialised vessel, owned by a Russian firm, Golar LNG, is billed to dock offshore Cameroon’s Atlantic coast in the first week of August 2017 for lifting of the product.
The new offshore vessel is expected to do the same job as the onshore facilities, albeit in smaller volumes, for a fraction of the cost in infrastructure.
However, Nigeria, Angola, West and Central Africa’s Gulf of Guinea are currently battling over Europe and Asia markets, which reports say will be become more competitive with Cameroon coming on board.
In sub-Saharan Africa, Nigeria, Equatorial Guinea and Angola already export over 20 million tonnes each year (mtpa) of LNG, mainly to Europe and Asia.
But the cost of pipelines and onshore liquefaction facilities means that relatively few gas finds have been developed.
Cameroon’s project, a joint venture between Golar, Perenco and Cameroon’s state-run SNH, will produce 1.2 mtpa.
Together, the four planned offshore projects are unlikely to produce much more than 7 mtpa of LNG.
However, a new technology has the potential to boost West and Central Africa’s efforts to exploit its vast gas resources by allowing smaller plants to ship gas from less accessible fields.
It will liquefy natural gas produced in nearby offshore fields for shipment directly overseas.
Russia’s Gazprom has the rights to ship the gas to customers in Asia, Europe and South America.
“Deploying offshore liquefaction facilities bypasses some of the difficulties associated with building infrastructure onshore. Sometimes, offshore is simply easier,” said Jean-Baptiste Bouzard, sub-saharan Africa analyst at Wood Mackenzie.
Onshore facilities, which require large refrigeration units and storage tanks that take up acres of land, can be quite expensive.
The dominance of cheap diesel and fuel oil in the region’s domestic power markets has in recent times, hindered the exploitation of reserves.
But small scale has its advantages. In a market already glutted by a 7.5 percent growth in supply last year, having the cheapest gas will help win customers.
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