Advantages of US liquefied natural gas for Africa

Africa Energy Yearbook Extract: US liquefied natural gas is affordable and abundant, can be delivered easily, and is a good complement to renewables. This makes it a prime choice for the delivery of power to the hundreds of millions who lack access to it in Africa, says Frederik Smits van Oyen of Cheniere.

When the history of a company is short, the focus is more on the future and the journey that lies ahead. While the Africa Energy Forum (AEF) celebrated its 20th anniversary – a marker worthy of celebration – Cheniere is just a couple years into its exports of US liquefied natural gas (LNG). What is exciting, however, is the possibility for both Cheniere and Africa to use US LNG to make waves in a joint effort to bring power to the hundreds of millions of people in Africa who lack access today.

While Cheniere only began exports in February 2016, many of the advantages for African markets of US LNG are already becoming apparent. First, US natural gas is affordable and abundant. Henry Hub prices averaged $2.99 per million British thermal units (MMBtu) in 2017, and the US Energy Information  Administration (EIA) is predicting that average to fall to $2.88 for 2018. Meanwhile, the EIA continues to revise upward US natural gas reserves, reporting a 5% increase in proven reserves in February 2018, with technically recoverable reserves now standing at more than 2,000 trillion cubic feet (Tcf) of natural gas in the US. This prolific resource, unperturbed by geopolitics, allows for LNG delivered at Henry Hub-linked prices, which are expected to be cost-competitive and less volatile than those of oil-indexed formulae over time.

Second, US LNG is flexible. Not only is it destination-flexible, the gas is sourced from the most flexible gas market in the world, with liquidity that rivals the global market for Brent crude. As a result, US LNG is better able to respond to market demand fluctuations and uncertainty than other sources of LNG. This allows companies and countries to better manage their energy needs.

Third, US LNG gives African markets access to natural gas resources located nearby in the Atlantic basin. Cheniere’s estimated low-cost project expansion opportunities, along with LNG volumes already available for delivery from our marketing unit, can give African regions that are looking to expand economically the tools to do so with a reliable and known supply partner in the US.

Finally, US LNG gives African nations a complementary resource in their efforts to bring electricity to their citizens. Natural gas is an ideal energy companion to renewables; delivering reliability and rapid response to balance out the intermittency of renewable energy, all while reducing pollution compared to coal or oil. According to the International Energy Agency, by 2030, of the projected 674m people without access to electricity worldwide, 600m will reside in sub-Saharan Africa. It’s that kind of projection that we can reverse by providing access to US LNG and creating strong partnerships between the US energy sector and African markets. Our combined goal should be that the 30th anniversary issue of the Africa Energy Yearbook will include another entry detailing the existing and growing supply of US LNG to Africa and the associated improvement of access to electricity for its population. 

 

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