North Africa Gas Supply Outlook, Said Nachet, FEEM « Gaz Talks »
Milan, 20-21 November 2014
North Africa :
Natural Gas Supply Outlook
Said Nachet
Director, Paris Petroleum Seminar, IFP Training
Professor Associate, Sciences Po-Paris, IFP School-Rueil Malmaison
North Africa : Significant natural gas resources …
Proven natural gas reserves (1/1/2013)
Proven conventional gas reserves

56.5% of Total Africa proven gas reserves ;
Algeria
2nd largest proven reserves in Africa (4.5 Tcm).
 Many discoveries announced recently ;

Libya
4th largest proven reserves in Africa (1.5 Tcm).
 Territory is still unexplored, and libyan gas
reserves largely inexploited ;

Egypt
3rd largest reserves in Africa (1.8 Tcm).
 Gas reserves are mostly located in the
Mediterranean area, with signifcant proved
amount in the Gulf of Suez ;

Source: CEDIGAZ
Vast technically recoverable shale gas
resources

Algeria : 3rd largest resources (707 Tcm)
behind China & Argentina;
(2) EIA/DOE.
… but production is declining all over …
Natural gas production
100
Algeria
90

80
70
Bcm
60
Gas production felt from 86 Bcm
in 2008 to 78.6 Bcm in 2013
(government target for 2013 was
85 Bcm) ;
50
Egypt
40

30
Dry natural gas production has
declined by an annual average
of 3% from 2009 to 2013 ;
20
10
Libya
0

Algeria
Egypt
Source: BP Statistical Review, 2014.
Libya
Production didn’t get back to pre2011 revolution levels.
… due to unattractive investment environment …
Algeria
 The Algerian government approved amendments to its hydrocarbon law in January
2013, as part of a concerted effort to revive foreign investor interest in the sector …;
 .. but only 4 of the 31 blocks on offer early 2014 were awarded (and none of the
several blocks with unconventional gas potential) ;
Egypt
 Egyptian government redirected natural gas supplies to the domestic market putting
LNG plant of Damietta out of operation ;
 Egypt owes some $8 billion to foreign companies, with projects being delayed and
drilling activity reduced ;
 Capped gas price has presented a major obstacle for foreign operators making
projects economically unviable ;
Libya
 New hydrocarbon law was under preparation in 2011, but are there authorities that
can finalise and approve any new draft ?
… insecurity and political uncertainy
Internal insecurity :
 The terrorist attack on a natural gas facility in Algeria (In Amenas) in January 2013
has raised security risks for companies operating in the country ;
 Sabotage attacks repeatedly disrupted Egypt’s gas exports through the Arab Gas
Pipeline to Isreal and Jordan ;
 Some of the companies already operating in Libya have evacuated their personnel
due to security concerns ;
Political uncertainty :
 Presidential succession and the resulting consequences of a cabinet reshuffle on
Algeria’s political stability ;
 President Al Sissi success in stabilizing Egypt politically and stimulating its
economy and creating jobs for nationals;
 Significant political risks loom over the Libyia's longer-term outlook (domestic
tensions between the East and the West, Islamic militant movements in North
Africa, safe haven for terrorist groups) ;
Natural gas demand in North Africa
Libya

Prior to the 2011 conflict, typically 35% to 40% of dry natural gas supply was
consumed domestically;
Algeria

Electricity consumption has increased by an annual average of roughly 10% from
2009 to 2012. The vast majority of generation capacity comes from gas-fired and
combined-cycle plants (share of renewable energy in Algeria's generation mix is
growing but still limited).
Egypt

The largest natural gas consumer in Africa, accounting for more than 40% of total
dry natural gas consumption of the continent in 2013. Natural gas represents more
than 50% of total primary energy consumption ;

Domestic prices are below international levels. Egypt spent $26 billion on
fossil- fuel subsidies in 2012, ranking as the eighth-highest spender of fossil
fuel subsidies in the world.
• The 3 countries are among top 20 countries in terms of gas flaring.
North Africa : existing and planned gas pipelines to Europe
Pipeline name
Start year
Route
Length
(miles)
Capacity
(Bcf/y)
Pipeline Enrico Mattei
(GEM)
1983
Algeria to Italy via Tunisia
1,025
1,340
Pedro Duran Farell
pipeline (GPDF)
1996
Algeria to Spain via Morocco
325
390
MEDGAZ Pipeline
2011
Algeria to Spain via the
Mediterranean Sea
125
280
Algeria’s total export
pipeline design
capacity
Greenstream
2,010
2004
Libya to Italy via Sicily
370
388
PLANNED PIPELINES
GALSI Pipeline
--
Algeria to Italy
534
282
Trans-Saharan Gas
Pipeline (TSGP)
--
Nigeria to Algeria via Niger (link
to MEDGAZ)
2,602
706-1,059
North African Gas Export Potential

Although North African countries gas resources are significant, the development of
the latter is hampered either by unattractive investment environment or by the
surrounding insecurity and the political instability ;

Natural gas demand in North African countries is growing fast, had pushed Egypt to
become a net gas importer and Algeria's natural gas exports to gradually decline
over the past decade ;

Algeria, Libya and Egypt are among top 20 countries in terms of gas flaring, waisting
valuable quantities of gas ;

The consequence of the above may lead to a possible decline of North African gas
exports to Europe by 2020 ;

New projects are urgently needed to meet growing domestic demand and to fulfill
long-term export contractual obligations (for Algeria in particular);

Shale oil and gas development was formally approved by Algeria's Council of
Ministers in May 2014, but it may take 7 to 13 years to confirm Algeria's potential
shale resources…

… and there are other hurdles, including technical ones, that need to be addressed
for the development of shale gas resources to take place.