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Africa could emerge as fourth LNG supply base

5 April 2013 – Gas discoveries in and around Africa indicate that the continent could emerge as the fourth major supply base for liquefied natural gas (LNG), after the Middle East, Australia and the US, according to Drewry Maritime Research. If all the projects that are currently being pursued come on stream on schedule, Africa could leave Qatar behind in terms of nameplate capacity and LNG production by the end of the decade.

Front-End Engineering & Design (FEED) for the first LNG terminal in Mozambique was awarded to a joint venture between Fluor Corporation and JGC Corporation by Anadarko Moçambique in January 2013. Initially, the FEED will deliver 20 million tonnes per annum (mtpa) of LNG, with the potential to expand its capacity to 50 mtpa of LNG in the future.

Asian markets are aggressively pursuing long-term LNG contracts. Firms from Japan, South Korea, India and Thailand hold the majority stakes in the feed gas licences in Mozambique and are likely buy most of the cargoes.

However almost all the existing and emerging suppliers in Africa have faced problems. Commissioning of Angola LNG is now delayed by more than a year; Egypt has been facing FEED-gas supply problems, Olokola LNG hasn’t moved in a while and Nigeria LNG declared force majeure on spot cargoes recently (though it has resumed operations). Algerian plans to attract investments in the energy sector were also jolted by the terrorist attacks on the ln Amenas gas facility.

Hopes for the much-needed supply boost rest on Mozambique. If everything falls into place for Mozambique, it could become the most sought-after source for LNG buyers around the world.