Consuming Less Energy, Exporting More Gas

In line with global trends Africa’s consumption of energy slowed, and production of oil and gas declined, in 2016. Continued development of gas for domestic power and LNG exports are drivers for the industry, and for overall African industrialization, for as long as prices stay low.

Africa’s energy consumption grew by just 1.2 percent in 2016 — far below the continental 10-year average of 2.8 percent — despite ambitious goals throughout Sub-Saharan Africa to improve energy access, launch new power projects and develop natural resources.

This low energy consumption could very well stay low, contributing to a global decline of energy demand by 2050, according to BP’s 2017 Energy Outlook. With energy demand declining from both India and China, continued slow development from the African continent could also slow global demand growth to 0.9 percent per annum for 2035-2050, compared to 2.3 percent from 2000-2015. But with Africa expected to be home to a quarter of the global population by 2050, if the region is able to harness its resources and spur rapid industrialization like India and China have done, global energy demand growth could exceed 1.2 percent per annum for the same period.

“Rapid growth and improving prosperity mean growth in energy demand is increasingly coming from developing economies, particularly within Asia, rather than from traditional markets in the OECD,” said Bob Dudley, CEO of BP in the BP Statistical Review of World Energy 2017 report. “The relentless drive to improve energy efficiency is causing global energy consumption overall to decelerate. And, of course, the energy mix is shifting towards cleaner, lower carbon fuels, driven by environmental needs and technological advances.”

Power generation in Africa grew by 2.2 percent in 2016, but was still below the 10-year average of 2.8 percent, according to the 2017 Energy Outlook. About 600 million people in Sub-Saharan Africa don’t have access to electricity, though ambitious initiatives from within and without the continent are trying to tackle the stark electricity problem. In fact South Korea — which has a population of just 50 million, compared to the Sub-Saharan Africa population of 1 billion people — generates more power capacity than all of Sub-Saharan Africa combined. Without better access to power, the outlook for industrialization is bleak.

Development of plentiful gas resources is key to Africa’s power generation plans, with gas-to-power playing an increasingly valuable role in power generation. Ghana’s $7.9 billion Cape Three Points oil and gas project, for example, will provide much needed fuel for gas-fired power plants across the country.

Still, in 2016, oil made up the bulk of Africa’s total energy consumption at 42 percent, compared to natural gas at 28 percent, coal at 22 percent, hydro at 6 percent, renewables at 1 percent and nuclear at 1 percent.

Impacted by both domestic and global factors, such as militancy in Nigeria (Africa’s largest oil and gas producer) and a continued depressed oil price environment, overall oil production declined yet again, declining by 4.9 percent to 7.9 million barrels per day. Africa’s global share of production fell to its lowest point since 1982, hitting 8.6 percent.

 

Though not as dramatically as oil, natural gas production also suffered a decline, dropping by 1.1 percent year on year in 2016. In contrast, natural gas exports increased by 8.3 percent. And in line with a continued focus on natural gas and new gas discoveries coming on stream, Africa is expected to export 7 billion cubic feet per day of LNG by 2035.