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After the pandemic: A new normal for LNG

24 June 2020
Banner oil and gas small

Recent gas finds in Africa have created the potential for major export increases from the continent, beyond the traditional countries. Find out more about the new normal for LNG in Africa.

A rare and ongoing “twin supply-demand shock” due to the unprecedented impact of the coronavirus (COVID-19) pandemic has caused ripple effects across all segments of the Liquefied Natural Gas (LNG) value chain. Where do African projects stand in such an environment? And how will different producers navigate the challenges associated with the new normal post-COVID-19?

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In Africa, the most severe recession in over 25 years is looming. Even before a single case of COVID-19 was reported in the continent, Africa was already facing economic consequences as a result of the wide spread outbreaks in other world economies. Trade balance has plummeted and capital has flown. 

“EPC (Engineering, Procurement and Construction) contracts on LNG projects are met with a bottomless pit of claims. Some contractors struggle to provide what they claimed, after bidding low, and try to recoup costs with claims that can amount to 20- 30% of project value. Other contractors advance genuine claims instigated by changes to the project itself. Relatively few contractors can handle major LNG projects, which remain a niche area.” 

Slava Kiryushin, Global Head of Energy, DWF

Despite this, LNG can have a promising future in Africa if challenges associated with the current coronavirus and economic crisis are managed effectively with the right political support.

Find out more about the new normal for LNG in Africa.

 

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Related Authors

Anne Sylvie Vassenaix Paxto

Anne-Sylvie Vassenaix-Paxton

Partner // Head of Oil & Gas

 

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