About the ProjectKAPSARC is analyzing the shifting dynamics of the global gas markets, which have turned upside down during the past five years. North America has emerged as a large potential future LNG exporter while gas demand growth has been slowing down as natural gas gets squeezed between coal and renewables. While the coming years will witness the fastest LNG export capacity expansion ever seen, many questions are raised on the next generation of LNG supply, the impact of low oil and gas prices on supply and demand patterns and how pricing and contractual structure may be affected by both the arrival of U.S. LNG on global gas markets and the desire of Asian buyers for cheaper gas.Key PointsThough Africa is traditionally considered as an exporter of pipeline gas and liquefied natural gas (LNG), in future it could come to be seen as an LNG market. Until recently, financing issues, market conditions, price sensitivity and the small size of the individual gas markets were all strong deterrents to sellers looking at Africa as an LNG destination, even though the region’s per capita energy consumption is very low and there are hundreds of millions without electricity and modern cooking facilities. But now the situation has fundamentally changed because, faced with the slowdown in Asian LNG demand and a global LNG oversupply, sellers are looking for new markets. At the same time, LNG has become more affordable, more flexible and is increasingly sold on a spot basis. So now, gas can be part of the solution to developing Africa’s electricity generation, along with renewables. Most African countries would need small initial volumes to feed the integrated LNG-to-power projects that sponsors are considering. This could lead to a further development of gas demand in other sectors as gas supply becomes available and infrastructure is developed. The majority of countries are opting for floating storage and re-gasification units (FSRUs), enabling faster implementation. The new markets could benefit from the proximity of existing African LNG suppliers, and future projects in Cameroon and Eastern Africa as suppliers optimize shipping distances. The key issues of financing and the role of the state see investors looking for governments to provide regulatory and political clarity to prospective sellers, financial institutions to facilitate access to capital and LNG suppliers that will accept the risk of delivering to these new markets. The choice of pricing mechanism and contract commitment will be key for their viability. The intended gas and power markets for these new LNG projects will only be developed if domestic gas and electricity buyers can secure their offtake liabilities and ability to pay for the energy to the satisfaction of lenders.