Gas: Africa now a force in global gas industry; South Africa's energy-starved economic landscape is the battleground for two global nuclear giants bidding to install the country's next generation of nuclear capacity. At stake is a R300bn tender to generate at least 50% of South Africa's additional electricity needs by 2025.

While Angola is the fastest growing African oil producer, it will also be the next country on the continent to gain a liquefied natural gas (LNG) sector.

LNG is produced by turning gas into a liquid that can be transported by ship to ports around the world, where it is turned back into a gas for distribution via local pipelines.

Its production is expensive because liquefaction and regasification plants need to be developed at either end of the marketing chain but no long distance pipelines are required and producers have the freedom to supply many different markets rather than just one via a single dedicated pipeline.

Angola may absorb more gas in the future in its own gas fired power plants and South Africa could also be an option for piped gas, but at present LNG represents Luanda's best chance of making commercial use of its gas reserves. In December, the Angola LNG consortium agreed to proceed with the construction of an LNG production plant at Soyo in Zaire Province, around 350km north of Luanda. It will have production capacity of 5.2m tonnes a year in a single production line, known in the industry as a train.

The company is owned by Sonangol Gas Natural (Sonagas) (22.8%), Chevron subsidiary Cabinda Gulf Oil Company (36.4 %), BP (13.6%), Total (13.6 %) and Eni (13.6%).

The actual production train, storage facilities and liquefied petroleum gas (LPG) operations will be constructed by engineering firm Bechtel and ConocoPhillips and first production is due in early 2012.

Gas will be supplied by fields on blocks 14, 15, 17 and 18, helping to cut routine gas flaring in the country. The LNG is expected to be shipped to Gulf LNG's terminal in Mississippi for distribution in North America. Nigeria's lead in the LNG sector, however, seems assured. Nigeria Liquefied Natural Gas (NLNG) has established itself as a gas supplier of global importance through its plant on Bonny Island.

The company, which is owned by Nigeria National Petroleum Corporation (NNPC) (49%), Shell (25.6%), Total (15%) and Eni (10.4%), brought its sixth train on stream in December and hopes to complete testing on it soon to bring total production capacity at Bonny Island up to a massive 22m tonnes a year. NLNG is now considering the development of a seventh train, which would be its largest yet.

Yet while NLNG contemplates output of 30m tonnes a year, other investors are considering projects that would collectively install just as much production capacity.

Brass River LNG and Olokola LNG have been the best publicised schemes to date but other companies are now companies forward. In early November, a consortium of Centrica (37.5%), StatoilHydro ASA (37.5%) and Consolidated Contractors Company (CCC) (25%) signed a memorandum of understanding with the Nigerian government to develop an LNG plant.

Centrica chief executive, Sam Laidlaw, said: "As part of our broader search for new sources of gas to supply our customers, this agreement provides us with an option to assess the viability of developing LNG projects in Nigeria, working alongside experienced partners."

StatoilHydro country manager for Nigeria, Helge Haland, added: "The consortium members bring a range of complementary areas of expertise and resources to this project at a pivotal stage in the development of Nigeria's gas strategy. We look forward to working with key stakeholders and are committed to contributing to the government's ambitions to develop Nigeria into a major gas producer." A feasibility study to identify a likely site for the plant is currently being undertaken.

Pipeline to Europe

Beyond LNG, Nigeria is also keen to promote the export of piped gas. The West African Gas Pipeline (WAGP), which came on stream at the start of this year, provides one outlet but it is the prospect of developing the Trans-Sahara Gas Pipeline (TSGP) that has really whetted the appetite of government officials.

The 4,300km pipeline would be built from the Niger Delta northwards through Nigeria, across Niger and into Algeria, where it would connect with existing Algerian pipeline infrastructure for export into Europe.

Algeria already exports gas to Spain and Italy via two pipelines, with two more projects under development. With Nigerian and Algerian gas marketed together, African gas producers would gain a strong bargaining position in negotiations with European customers.

The rising price of gas should make the construction of the TSGP plus any further required pipelines under the Mediterranean a realistic proposition.

Russian gas giant Gazprom, which is currently the biggest exporter to the European Union (EU) expects the average price of its gas tariffs with European companies to increase from $260 per 1,000 cubic metres last year to $350 per 1,000 cubic metres for 2008, a far higher rate than those on offer anywhere in Africa.

With Libya and Egypt also increasing their exports to the EU, Africa as a whole is quickly establishing itself as a powerful force in the growing global gas industry.