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ECONOMY > Energy

East Africa rising as LNG producer

  • September 1, 2019
  • , Nikkei , p. 7
  • English Press

By Ryosuke Hanafusa

 

East Africa is broadening its footprint as a leading exporter of liquefied natural gas (LNG). In Mozambique, which is ahead of other countries in the region in LNG development, two projects are currently underway. Mozambique Minister of Economy and Finance Adriano Afonso Maleiane, who is currently in Japan, announced that the country will make an investment decision on its third project some time “between January and March of 2020.” Meanwhile, another project is underway in Tanzania. East Africa is expected to grow as an LNG producer and to rank behind the Middle East and Australia. Its growth will likely impact Japan’s energy procurement.

 

Mozambique will have an annual output capacity of about 31.5 million tons and will surpass Malaysia (annual output of about 24 million tons), which is at present the world’s third largest LNG exporter, when the three projects are completed. The amount is equivalent to about 40% of LNG consumed in Japan, the world’s largest LNG importer. The country will exceed Nigeria and become Africa’s largest LNG exporter.

 

One of the two projects that are currently under construction involve Japanese firms. It is led by Occidental Petroleum, a U.S. firm, and Mitsui & Co. LNG produced through this project will be procured by Tokyo Gas, JERA and Tohoku Electric Power Co.

 

East Africa is closer to Asia than the Gulf of Mexico. The geopolitical risk involving LNG produced in East Africa is smaller than that of Middle Eastern LNG because it can be shipped without transiting the Strait of Hormuz. The China National Petroleum Corporation (CNPC), Korea Gas Corporation (KOGAS), and Oil and Natural Gas Corporation Limited (ONGC) are also participating in the Mozambique projects.

 

Japanese businesses are paying closer attention to East Africa as an LNG source and sell the energy to other regions in accordance with changes in demand.  

 

Tokyo Gas will source LNG from Mozambique together with Centrica. The British firm will receive the excess LNG when Japan’s domestic demand for gas drops in summer. JERA has signed a joint procurement deal with Taiwan’s CPC Corporation and agreed with it to sell LNG to Europe when Japan’s domestic demand for LNG falls due to the restarting of nuclear reactors. (Abridged)

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