Nigeria leads regional LNG export with 27.6bcm amid uncertain outlook

Amid sharp decline in LNG utilisation rates in many parts of the world last year, gas exports from West African producers, especially Nigeria, showed some resilience in 2020, trading 27.6 billion cubic feet (bcm) of gas equivalent to the total 39 bcm traded by the region.

The country’s export was down one per cent in 2019, and not far off the 30 Bcm/year (22 million mt/year) capacity of the six-train Nigeria LNG (NLNG) facility. That was despite sharp falls in LNG utilisation rates in other parts of the world last year, particularly in the U.S. over the summer, while spot-exposed Egypt halted LNG exports almost completely in the April-September period.

Noting that much of Africa’s gas supply growth would come from Nigeria, PwC, in its Africa Oil and Gas Review 2020, themed: “Energising a New Tomorrow,” said the positive outlook for natural gas, often termed the renewable bridging fuel due to its lower carbon footprint, will see stronger price and demand recovery as countries move to rebuild their economies.

The report reflected the opportunities in gas export for Nigeria, noting that Africa consumes 63% of its total gas production, predominantly for power generation, even though the continent’s gas exporting countries saw a total decline of more than 6% in 2020 from 39.7 mtpa in 2019 to 37.3 mtpa in 2020.

Despite its resilience last year, however, there is growing concern in Nigeria that militants could be set to resume regular attacks on oil and gas infrastructure.
In November, a gas pipeline in Rivers State was damaged by explosions, which impacted oil and gas production, and briefly suspended exports of Nigeria’s Brass River crude.

Earlier in January, residents of Oduoha Community in Emohua Council of Rivers State were thrown into panic after a gas pipeline operated by the Nigerian LNG Limited (NLNG), and Nigeria Agip Oil Company (NAOC), exploded on Tuesday.

The Guardian learnt that a gas pipeline that runs through the community to a terminal in Bonny Island had exploded in the community, creating a heavy impact on the environment.

Therefore, the outlook is uncertain, with a coalition of former oil rebels in the Niger Delta, now known as the Reformed Niger Delta Avengers (RNDA), issuing a statement on January 6, threatening to resume attacks on installations.

The RNDA said it had pulled out of talks with the Federal Government, after it accused the President Muhammadu Buhari-led administration of not following up on its promises on improving the economy in the Niger Delta.

The original Niger Delta Avengers were responsible for the bulk of the attacks on Nigeria’s oil infrastructure in 2016. Nigeria is relatively exposed to the spot market with around 50% of its LNG exports sold on a spot or short-term basis in 2019, according to industry group GIIGNL.

West Africa’s second biggest LNG exporter Angola, meanwhile, saw its supplies increase 8% in 2020, with a total of 6.39 Bcm of gas equivalent exported. The 5.2 million mt/year (7.2 Bcm/year) Angola LNG plant resumed operations in June 2016, having been closed for more than two years due to technical problems. Of the 64 cargoes shipped last year, some 33 were sent to India, with other markets served including China, Kuwait, South Korea and a number of countries in Europe.

Meanwhile, LNG exports from Equatorial Guinea totalled 3.32 bcm in 2020, down 22%, due in part to falling production from the facility’s main feed gas field, Alba. Equatorial Guinea hopes that first gas from the Alen field offshore the West African country can be delivered soon to help back-fill its one-train, 3.7 million mt/year EG LNG export facility on Bioko Island.

The government said in late December the pipeline linking Alen to the Equatorial Guinea LNG facility had been completed. According to the website of the US’ Noble Energy, first production at Alen is anticipated in the first half of 2021.

Noble was acquired in 2020 by US major Chevron, but Noble’s assets in Equatorial Guinea are not yet integrated into Chevron and are held separately. Chevron said it continued to pursue regulatory approval for the merger from the Central African Economic and Monetary Community (CEMAC), and is hopeful for a positive decision in a “timely manner.”

The EG LNG complex, which shipped its first LNG cargo in 2007, has traditionally relied on gas from the now declining Marathon-operated Alba field, so more gas is needed to maintain export levels. Cameroon became the fourth West African LNG exporter in May 2018.

It exported 1.63 bcm of gas equivalent in 2020, up from 1.56 bcm in the previous year. Production comes from the floating LNG production vessel, the 2.4 million mt/year Hilli Episeyo.

Actual production from the vessel is lower than its capacity at around 1.2 million mt/year, with Gazprom Marketing & Trading having signed a deal to take that volume from the project.