The African Energy Chamber (AEC),has advocated the need for African nations to focus on developing a natural gas market in order to serve as the foundation of the continent’s energy industry.

Its chairman,NJ Ayuk,said this in a statement ahead of the chamber’s planned host of a special New Year reception event at the Waldorf Hilton luxury hotel in London on 26th of January,2023.

He added: “Africa will be unable to meet the UN’s sustainable development goals unless we tap into all resources available, which is why we must encourage and facilitate international investment, specifically from Europe, in oil and gas in order to fairly and economically participate in the global energy transition and drive socioeconomic development throughout the continent.”

He said the chamber strives to unite governments and credible businesses to spur growth under international standard business practices and position Africa to capitalize on energy investment through strategic partnerships and trade.

According to him,with the African continent focusing its efforts on lifting 600 million people who currently lack access to reliable and affordable electricity and 900 million who lack access to affordable clean cooking solutions out of energy poverty, the Invest in African Energy Reception will provide an opportunity for investors to explore various initiatives, which include gas-to-power and renewable energy developments, as well as oil and natural gas exploration and production prospects.

He said:”In the wake of the COVID-19 pandemic and the Russian invasion of Ukraine, demand for gas in Europe is expected to rapidly increase in the coming years, thus positioning Africa to take advantage of its immense untapped resources and become a major supplier of oil and natural gas and ensure global energy security while tackling the challenges and opportunities across the continent”.

He stated that the chamber’s Invest in African Energy Reception Event will focus on developing an oil and natural gas market in Africa to serve as the foundation of the continent’s energy industry and transition, facilitating a platform for strong domestic trading and investment while reducing barriers of entry into the sector and thus ushering a wave of opportunities for new players to participate in one of the world’s most burgeoning investment destinations.

During the event, investors and African energy leaders will be given a platform to support energy initiatives that drive economic growth and human development across the continent,he said.

He added:”Set to serve as the first of many of the AEC’s Energy Receptions globally business leaders, investors, and government representatives will unite in London – a city that boasts many Africa-focused investment firms – in good faith to advance mutually beneficial trade and investment partnerships under the common goal of advancing African governance while improving energy access, human rights, food and water security, and education on the continent.

“Additionally, the Reception event comes on the heels of a partnership between pan-African trade finance institution, the African Export-Import Bank (Afreximbank) which officially partnered with the continent’s premier energy event, African Energy Week (AEW) in 2022 in a move expected to reawaken a new era of deal-signing, local content and multi-sector expansion.

“Under a mandate to make energy poverty history in Africa by 2030, the partnership will see both AEW and Afreximbank uniting the power of investment and value creation, driving stronger energy developments in 2022 and beyond. The partnership also aims to further attract investment from the UK to facilitate capacity building, the advocacy and financing of African companies, and the development of infrastructure in the continent’s energy sector.

“The Invest in African Energy Reception Event will serve as the premier platform for international dignitaries, executives, and companies to participate and operate in Africa’s energy sector, where access to affordable and reliable energy will be fundamental towards development, while simultaneously showcasing the pressing need to balance all forms of energy development to ensure a just energy transition and mitigate the global energy crisis”.

Africa’s $245billion gas investments are in danger of turning into stranded assets, as they are designed as a short-term solution to Europe’s energy crisis,Global Energy Monitor’s report,has said.

It outlines that planned investments across Africa, totalling $245 billion, for liquified natural gas (LNG) terminals, gas pipelines and power stations represent “an enormous stranded asset risk,” as much of this gas is intended to cushion and solve Europe’s short-term energy crisis, resulting from Russia’s invasion of Ukraine, rather than being used for domestic consumption.

It added:“Planned investment in gas pipeline and LNG export infrastructure competes with domestic demand for gas and much needed renewable energy investment for Africa to realize universal access to clean, affordable, and reliable energy”

Besides,the Africa Gas Tracker’s data shows investments in planned LNG export terminals dwarf money for gas plants to power Africa with estimated capital expenditure for in-development LNG terminals being $103 billion, 92 per cent of which would be for LNG export terminals.

It said this is expected to increase the region’s 79.3 million tonnes per annum (mtpa) of LNG export capacity by 111 per cent while doing little to improve electrification on the continent.

According to the report,while the planned gas plant build-out in Africa would require $62 billion in investment, only $9.7 billion is attributed to projects under construction, while $52.3 billion is attributed to proposed projects. In addition, out of 64.1 GW of gas power plant capacity in development, only 10.5 GW is under construction, 17.3 GW is in pre-construction and 36.4 GW has been announced.

While Nigeria and South Africa have 22.5 GW and 16.6 GW of in-development gas plants, respectively, and both are gas-producing countries, each faces inadequate installed electricity generation capacity, underlined the report.

The report said much of the continent’s gas pipeline buildout has not yet secured investment, the planned gas pipeline buildup in Africa would require $89 billion in investment. Only $4 billion is attributed to projects under construction, while $85 billion is attributed to proposed projects,it added.

Though Africa has an estimated 23,932 km of gas pipelines in development, most projects remain in the proposal stage, with only 1,872 km currently under construction. In line with this, South Africa and Mozambique lead in proposed gas pipelines, with 4,792 km and 4,352 km, respectively.

Christine Juta, Project Manager for the Africa Gas Tracker, said: “Investments in gas pipelines and LNG export projects compete with Africa’s need to achieve universal access to clean energy and meet domestic demand for gas. Without long-term financing and off-take agreements, African countries risk banking on what could well be a short-lived appetite for gas.”

The Africa Gas Tracker said,65 GW of gas plants, 75 mtpa LNG terminal capacity and 22,600 km of gas pipelines are identified to be in development. The report concludes that Europe’s reduced reliance on Russian gas has led to a renewed interest in African gas.

“However, planned projects still face financing challenges, with many of them yet to begin construction. Without long-term financing and off-take agreements, these assets are likely to become stranded in the very near future once the European energy crisis abates,” as underscored by the findings within the report.