Natural gas could catapult Africa’s energy sector and economic growth prospects, says Webb Meko, Business Development Director, Sub-Saharan Africa, Black & Veatch
The last decade has seen Africa’s most significant energy discoveries in decades fueling optimism in the rise of region-wide energy independence. In particular, natural gas resources in East and sub-Saharan Africa are creating significant opportunities to develop projects that integrate power domestically and boost local economies.
However, while financial investment decisions have slowed in many parts of the world, plans to advance domestic or cross-border gas-to-power (G2P) projects are being buoyed by market shifts supporting the economic feasibility of natural gas projects, particularly in underdeveloped regions. This trend has seen many African countries that were traditionally net exporters of natural gas looking to use their supply in country to generate electricity.
Foreign direct investment from China and Japan is assisting many African liquefied natural gas (LNG) developments get off the ground, which could have a significant impact on global LNG trade and see Africa becoming a major supplier. However, further investment in pipeline infrastructure is critical for Africa to realise its growth potential in the natural gas market.
Establishing Stable Markets
According to Black & Veatch’s 2017 Strategic Directions: Natural Gas Industry Report developing regions across the globe are hard at work to establish stable, long-term gas markets. For example, the South African Government has long discussed its interest in developing a gas sector to help drive industrialisation and economic growth. This led to the Department of Energy announcing a gas independent power producer procurement programme aimed at adding 3 GW of natural gas power capacity in 2012.
However, unfinished policies have stalled the programme and while the gas determination may change when the latest Integrated Resource Plan (IRP) is released, there is little doubt that gas will remain part of South Africa’s future energy mix.
To support its G2P initiative, South Africa has earmarked three locations – Richards Bay, Saldanha Bay and Coega – for floating storage and regasification units (FSRUs) to receive and regasify LNG. FSRU technology is ideally suited for these locations as floating applications can significantly reduce execution and start-up time, mitigate siting constraints and allow shipment of gas to multiple locations.
Whatever the determination of gas may be it is important that business decisions are carefully weighed to determine the potential opportunities and risks. During infrastructure development phases, sound planning and implementation supported by proven project controls and management systems must be employed to ensure that gas becomes a more prominenet and economically viable energy source for South Africa.