Eastern Africa Will Head Future of African Natural Gas Market

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Ernst & Young released a new report at Africa Oil & Gas Week in late October that declared Africas oil and natural gas resources attractive to...

Ernst & Young released a new report at Africa Oil & Gas Week in late October that declared Africa’s oil and natural gas resources attractive to many investors for a variety of reasons.

“Natural gas in Africa – The frontiers of the Golden Age,” the 2012 report, says local players in the oil and gas spectrum will experience growth as well as larger longstanding companies. Eastern Africa’s natural gas sector is one huge driver in the growth of the continent, says Ernst & Young Oil & Gas Leader Elias Pungong. He says the natural gas will lead social development, local employment and infrastructure development.

The discovery of offshore gas in Eastern Africa, notably Mozambique and Tanzania, is a promising leader for the future, although currently, West African gas growth has been developing at a faster pace. Nigeria and Angola lead the continent in gas production, accompanying a deepwater oil boom recently. The Ernst & Young report says Algeria, Nigeria and Egypt have the highest reserves although production has not yet met levels in other countries.

The report says opportunities will abound for oilfield services for both international players and local companies that can play parts within the supply chain. Broader infrastructure across the continent will build export facilities, both for liquefied natural gas and pipeline and gas distribution networks, supporting local gas demands.

“African governments and regional NGOs will of course have critical roles to play – first and foremost, developing a meaningful and practical master gas development plan, one that addresses the upstream tax and licensing models, as well as the necessary infrastructure issues and investments, and local training and job creation issues,” Pungong says. “Collaboration and partnerships with the IOCs, both big and small, will likewise be critical.”

The new discoveries in Eastern Africa bode well for the natural gas sector in Africa as a whole, which will stand to build infrastructure within the continent and strengthen the economy.

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