The East African oil and gas market is expected to register a CAGR of more than 3.13 % during the forecast period, 2020–2025. Factors, such as the increasing consumption and the rising production of oil and natural gas in the region, are expected to boost the growth for the East African oil and gas market during the forecast period. However, political instability, due to civil war, in countries of East Africa, like South Sudan and Somalia, has impeded growth in the oil and gas sector.
- The midstream industry in East Africa is expected to witness a significant increase in the forecast period. Offshore gas fields in the exclusive economic zone (EEZ) of countries like Mozambique and Tanzania, are expected to increase the production of gas. An increase in gas production is expected to lead the nations in the region, thereby, witnessing substantial growth in the pipeline and LNG terminals market.
- The East African companies are expected to invest in the exploration and production of East Africa's oil and gas fields. It is likely that the investment may increase the production and create an opportunity for oil and gas market of the region.
- Mozambique is expected to grow the fastest in the region, due to rapid increase in the exploration and production of the offshore gas fields in the region. New LNG terminals are also expected during the forecast period.
Key Market Trends
Midstream Sector to Witness the Fastest Growth
- In East Africa, oil consumption increased by 2.9% to 30.7 million metric ton of oil equivalent (Mtoe) in 2018 from 29.8 Mtoe in 2017. The increasing demand for oil and the rising purchasing power of the citizens in the region has been boosting the growth of the market studied.
- In 2019, the midstream sector became a pivotal sector for the East African countries, with the discovery of gas fields in the region and the governmental push towards the reduction of imports.
- In 2019, Kenya Crude Oil Pipeline, also known as the Lokichar-Lamu Oil Pipeline, is a proposed oil pipeline in Kenya and is expected to have a length of 820 kilometers. In 2019, the surveying of the route has been commenced, and the pipeline is expected to be completed by 2023.
- Hence, the midstream sector is expected to witness significant growth due to the increase in oil consumption in the region and an increased investment in the sector.
Mozambique to Witness the Fastest Growth in the Region
- In East Africa, there has been an increase in natural gas consumption by 7.5%. Increasing to 1.9 million tons of oil equivalent (Mtoe) in 2018 from 1.7 Mtoe in 2017. The consumption is expected to increase in the forecast period as the countries become more prosperous.
- LNG Terminals are expected to amplify the growth of the East Africa oil and gas market, especially in Mozambique, which is expected to augment its gas production. In 2018, Mozambique LNG project Rovuma LNG Area 4 consortium, aims to build the world’s biggest liquefaction trains outside Qatar, as it is expected to reduce the cost of liquefaction. The project is under the proposal stage and is expected to be completed by 2024.
- In 2019, Anadarko Eni Mozambique LNG Terminal is a proposed LNG terminal in Cabo Delgado Province, Mozambique. The total capacity of the terminal is approximately 20 mtpa (4 trains with five mtpa per train), and the projected is expected to be completed by 2024.
- Mozambique's oil and gas industry is expected to grow significantly in the forecast period due to an increase in gas production and increasing investment in the country, especially in the midstream sector.
The East African oil and gas market is consolidated. The major companies include Sudan National Petroleum Corporation, China National Petroleum Corporation, Royal Dutch Shell PLC, Equinor ASA, and Tullow Oil PLC.
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