North African LNG exports decline in Jan despite bullish gas outlook

North African LNG exports in January declined slightly from December despite forecasts of strong gas development in the near term.

Exports out of Egypt and Algeria totaled 1.18 million mt in January as of Jan. 30, down from 1.34 million mt in December, according to data from S&P Global Commodity Insights.

Algeria exported 980,000 mt, down 120,000 mt from December, while Egypt exported 200,000 mt, down 40,000 mt.

Of these volumes, 92% headed to Europe while the rest is yet to be nominated.

Notably, 550,000 mt headed to Turkey, 260,000 mt to France and 160,000 mt is scheduled to land in Italy.

Despite Egyptian LNG exports to Europe previously climbing to multi-month highs, supported by continued flows of gas from Israel to Egypt, sources suggest that the ongoing attacks in the Red Sea have hindered the Egyptian export market, with cargoes being diverted away from the Suez Canal.

Production outlook

Algeria and Egypt saw diverging export trends in 2023, with Algeria seeing an uptick in exports while Egypt saw a decline. Analysts at S&P Global see a bullish gas production outlook for Africa.

There is available infrastructure in place for drilling activity, particularly for gas, S&P Global analysts said. As seen generally across Africa, unless gas infrastructure with available capacity is near to a drilled well or a relatively fast monetization route is otherwise available, exploration specifically for gas has not taken place, and where gas has been discovered, it tends to be accidental. But where major infrastructure is close -- for example, in Egypt, Algeria, Nigeria and Angola -- active gas exploration is taking place, and this is expected to continue.

"Unlike the forecast for liquid production, the longer-term outlook for gas production in Africa is positive; all "big five" countries [Angola, Nigeria, Algeria, Libya and Egypt] are expected to maintain or increase gas production at least through 2030," analysts at S&P Global said in their Africa energy and economy 2023 review. "North African countries as well as Nigeria and Angola have increased their focus on gas development and have been investing in infrastructure and legislating new policies designed to encourage and accelerate gas projects ... As a consequence, by the end of the decade, African gas production is likely to nearly double."

Egypt and Algeria's gas production outlook is set to continue its upward trend set in 2022 through to 2030, according to data from S&P Global analysts. Egypt will continue to attract attention, and the Orion well that Eni is drilling may contain some 10 Tcf of gas, the analysts said.

Sources suggest exports out of Egypt and Algeria should climb in January to reach levels surpassing December. Market intelligence also pointed to signs of strong exports in February already emerging, with even some selling interest to the West and East Med popping up in March.

Platts, part of S&P Global, assessed the LNG Mediterranean marker at $8.367/MMBtu on Jan. 29, up 3.1 cents/MMBtu on the day. The East Mediterranean marker was assessed at $8.467/MMBtu, up 3.1 cents/MMBtu. That put the Mediterranean at a 5 cents/MMBtu premium to Northwest Europe and the East Mediterranean at a 15 cents/MMBtu premium to Northwest Europe.