Page 6 - GLNG Week 10 2022

GLNG COMMENTARY GLNG

Implications of war

in Ukraine for Africa

Experts from Rystad Energy and Welligence Energy

Analytics speak to NewsBase about what the

Russia-Ukraine conflict might mean for oil and gas
producers in sub-Saharan Africa

PERFORMANCE RUSSIA’S invasion of Ukraine on February 24 alternate source of natural gas [following] Rus-
hit the geopolitical scene like a bolt of lightning, sia’s invasion of Ukraine, sub-Saharan Africa
WHAT: and the shock spread quickly to the global econ- definitely stands at a point where previously
Given Russia’s position omy as a consequence of the sanctions that West- stalled/delayed projects might come into [the]
as a major oil and gas ern states have imposed on Russia. limelight.
exporter, the current And there are surely more storms to come. We are already seeing BP, which was one of
conflict has the potential The EU and the US have begun expanding their the first operators to announce its exit from
to make projects in sanctions regimes to encompass crude oil and Russia, start studies on its BirAllah gas discov-
sub-Saharan Africa more natural gas, two of Russia’s most valuable (and ery offshore Mauritania, targeting LNG sales to
attractive. politically useful) exports. In turn, Russia has Europe. To be noted, it was previously estimated
imposed a freeze on commodity exports out to that BirAllah would see a delayed timeline of
WHY: the end of the year. development, especially after the [Greater] Tor-
African gas may draw The parameters of this freeze are not yet clear. tue Ahmeyim (GTA) scheme [offshore Senegal]
more short-term interest But since Russia is the world’s largest gas pro- was downsized from the initially planned 10mn
than oil. ducer and one of the world’s top three produc- tonnes per year capacity to 5mn tpy.
ers of oil and wheat, this move has the potential Shell and Equinor’s exits from Russia can
WHAT NEXT: to wreak economic havoc in many parts of the mean increased focus on the currently less spo-
African gas-producing world – partly by driving food and fuel prices ken about Tanzania LNG. ExxonMobil’s exit
states will have to up and partly by complicating its relationships from Russia can mean acceleration of [the] cur-
demonstrate their ability with countries that depend on imports of these rently phased-out development of Mozambique
to provide adequate basic commodities. LNG.
support for LNG projects. Under such circumstances, it is worth asking Europe has been one of the two main import-
what these developments might mean for other ers of Nigerian LNG, with the other being Asia. Shell and
producers of commodities such as oil and gas. Nigeria is bumping up its LNG export capacity
NewsBase has therefore sought the opinion of from 22mn tpy to 30mn tpy, and this can mean Equinor’s exits
two energy experts on the question of whether increased focus on natural gas development in from Russia can
recent development represent a new opportu- the country to feed the Nigeria LNG plant.
nity for oil- and gas-rich states in sub-Saharan As such, the natural gas developments in the mean increased
Africa. region can seem more attractive to the investors
The following is a lightly edited version of the now as this not only helps fill the possible void focus on the
responses received from Derek Boulware, head of supply to Europe but is also in line with the
of sub-Saharan Africa research at Welligence energy transition strategy to focus more on nat- currently less
Energy Analytics, and Siva Prasad, senior ana- ural gas developments compared to crude oil. spoken about
lyst at Rystad Energy. Derek Boulware: Put in simple terms, the
events of the last month make sub-Saharan Tanzania LNG.
Investor sentiment Africa’s upstream more attractive. Of course,
Question: How are recent developments on world the same argument applies to other regions, but Siva Prasad
oil and gas markets (rising prices, talk of sanc- some of the countries in sub-Saharan Africa Senior Analyst
tioning Russian oil and gas exports) likely to had been making good progress in drawing Rystad Energy
affect investor sentiment on upstream projects in in investment. These countries can continue
sub-Saharan Africa? to pull in the dollars as long as they stay on
Siva Prasad: Considering the amount of that path. From an M&A [mergers and acqui-
natural gas potential that sub-Saharan Africa sitions] perspective, the current market may
holds and the need for Europe to find an suppress deal-making. Producing assets will

P6 www. NEWSBASE .com Week 10 11•March•2022