Emerging LNG and CNG Markets Drive African Industrialization

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Read more about African gas potential in the upcoming African Energy Series Special Report: Africa LNG 2021 – as key liquified natural gas projects for domestic use and export advance across the continent. Download other AES Special Reports here.

The appeal of natural gas as a viable energy source has grown rapidly over the past decade, with primary drivers including reduced costs compared to traditional fossil fuels; mounting pressure from the global energy transition; and growing demand for alternative power generation solutions across Africa. Accordingly, the emergence of both Liquefied Natural Gas (LNG) and Compressed Natural Gas (CNG) markets has been driven by increased investment, in a bid to address energy security, diversification and electrification challenges.

Emerging LNG markets in East Africa are becoming increasingly competitive on the global LNG stage, demonstrating its potential as a viable energy source for the region. In Mozambique, for example, the Government has recognized the opportunities regarding electrification, regional trade, economic growth and industrialization that LNG presents. Boasting Africa’s third-largest gas reserves, the country has prioritized the development of three LNG plants that have the combined capacity to export an estimated 30 million tons per year of LNG.

Additionally, West Africa is positioning itself as an LNG competitor, with new project developments enabling the expansion of and investment into the regional LNG market. Equatorial Guinea, for example, is focusing on the development of a Gas Mega Hub to spur regional LNG trade and expand the market. Accordingly, the Gas Mega Hub will monetize neighboring gas reserves by establishing itself as a gas-processing center for all stranded gas fields in the Gulf of Guinea. Equatorial Guinea has also created the LNG2Africa initiative, which prioritizes intra-African trade through the provision of natural gas to the wider region.

Meanwhile, emerging CNG markets in East Africa include Tanzania, in which the call for investment in CNG is positioning the country as a major player in the global market. Tanzania is in the process of transforming vehicle fuelling stations into CNG retail stations, encouraging regional use of the resource and reducing existing reliance on traditional fuels. The Tanzania Petroleum Development Corporation is planning to develop two large-scale stations in the commercial capital, intended to supply CNG to retail stations located far from the pipeline infrastructure. The country is enabling provisions of CNG to inaccessible locations, spurring economic growth on both a national and regional base.

CNG is gaining significant attraction in part due to its use in heavy-duty transportation vehicles, offering both affordability and eco-friendliness. With a rise in environmental concern over high carbon emissions, many countries have opted for CNG in power production. Notably, Nigeria is utilizing CNG for transportation purposes across the nation, supplying retailing stations operated by the Nigerian National Petroleum Corporation in a bid to encourage further utilization of the resource and reduce oil consumption. Accordingly, the country is pushing for a transition from traditional fuels to CNG for power generation and transportation.

South Africa’s CNG market is also gradually expanding, with new projects being implemented across the region with the purpose of providing a transportation fuel alternative to oil. Emerging natural gas and helium producer Renergen recently announced the completion of a second CNG filling station in Johannesburg, in which CNG will be utilized for transportation requirements throughout the nation.

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Sihle Qekeleshe is a Web Editor at Energy Capital & Power. She has experience as a Copywriter and Editor in various industries.

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