By Ntombi Mhlongo
With massive reserves remaining untapped across the continent’s marginal fields, an opportunity has risen for African countries to enhance partnerships with local and international independents to harness these resources for local electricity generation.
This was an assertion made by the International Gas Union (IGU) in its latest report which highlights the key principles that Africa needs to adopt to supercharge the development of gas markets.
The union said countries such as Nigeria, Angola, Congo-Brazzaville, South Sudan, and Gabon have the potential to accelerate electrification on the back of small-scale gas-to-power projects and marginal field development.
The IGU recommended that African countries should prioritize environmental sustainability and energy decarbonization in project planning and deployment to ensure that gas projects will remain relevant for decades to come as carbon emissions reduction becomes more of a priority for global governments.
With the energy transition taking centre stage, the union said there is a need for Africa to ensure gas projects align with the just energy transition agenda; guarantee environmental sustainability; and are compatible with the goals of the Paris Agreement.
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“Africa is, however, progressing in this regard, with countries focusing on emissions reductions through various measures such as policy enactments aimed at reducing and curbing gas flaring. Africa is also prioritizing sustainability by developing gas in the form of liquefied natural gas (LNG), with a lion’s share of the continent’s new discoveries including Greater Tortue Ahmeyim (GTA), BirAllah, Coral Sul, Brulpadda and Luiperd, Mozambique LNG, Venus, and Graff being monetized as LNG,” highlighted the union in the report.
In terms of financial innovation, the union said Africa is competing with international markets to attract the investments required to fast-track gas exploration, production as well as mid- and downstream activities.
By looking inward, and promoting and leveraging domestic financial mechanisms, the continent has an opportunity to maximize the growth of the industry, according to IGU.
It was highlighted that private sector funders and institutions such as the Afreximbank, Africa Finance Corporation, African Energy Investment Corporation, and the proposed African Energy Transition Bank have been and will continue to be critical in enabling Africa to fund domestic gas projects.
Also highlighted was that fiscal terms, political atmosphere, energy policies and contractual terms need to be attractive to global investors and energy companies.
The IGU report states that African governments need to maximize the creation of enabling environments for global gas companies and investors to be globally competitive and attract the capital, technologies, and skills needed to enhance industry growth.
In this regard, countries such as Angola, Mauritania, Senegal, Algeria, Tanzania, and Namibia have been successful with an increasing number of energy companies, investors, and foreign direct investments flowing to boost energy exploration and infrastructure development.
A focus on regionalization in the report highlighted that the development of sub-regional and regional gas and energy networks can support economies of scale and infrastructure investments.
“Africa is progressing well in this area with large-scale projects such as the Nigeria-Morocco Gas Pipeline, Trans-Saharan Gas Pipeline, East African Crude Oil Pipeline, and the Central African Pipeline System either underway or in the planning stage. Equatorial Guinea through its Gas Mega Hub and Senegal and Mauritania through the development of the massive GTA gas development have indicated the importance of regional cooperation in driving industry growth,” it was mentioned.
A key recommendation by the IGU contained in the report is that to amplify the development of gas markets, Africa needs to include tangible industrialization plans such as the development of manufacturing clusters close to gas fields. This will help ensure the provision of cheap energy to power industries.
“With African countries seeking to meet growing energy demand and ensure energy affordability, thereby reducing reliance on high-cost energy imports, the continent’s gas sector is set to record an impressive growth both in the short and long-term,” it was emphasised.