Nadia Saleem, Editor of Pipeline Magazine writes about the latest energy trends in Africa and the demand outlook for a continent which is growing exponentially
Africa’s energy future is not predetermined but it will be defined by the crucial steps governments take to address the energy needs of the population, already suffering from low levels of access to energy could exacerbate as growth rates are expected to burgeon in the coming years.
According to a new report from the International Energy Agency, today, 600 million people in Africa do not have access to electricity and 900 million lack access to clean cooking facilities.
The number of people living in Africa’s cities is expected to expand by 600 million over the next two decades, much higher than the increase experienced by China’s cities during the country’s 20-year economic and energy boom. Africa’s overall population is set to exceed 2 billion before 2040, accounting for half of the global increase over that period, IEA’s Africa Energy Outlook 2019 said.
Understandably, electrification is at the centre of plans by national oil companies in places like Nigeria and Senegal, but IEA also says that current policy and investment plans in African countries are not enough to meet the energy needs of the continent’s young and rapidly growing population.
Africa’s energy demand is projected to rise 60 per cent to around 1,320 million tonnes of oil equivalent in 2040, based on current policies and plans.
Current plans would leave 530 million people on the continent still without access to electricity in 2030, falling well short of universal access, a major development goal, IEA’s report said, adding that it could, with the right policies, reach that target.
Gas and clean energy
Speaking during ADIPEC in November, executives from Nigeria and Senegal brought to light the dire need of electrification for the countries, with gas seen to be playing an important role in addressing this.
“We are working to increase production of biomass and ethylene but the truth is that our primary aspiration is to use the fossil fuels we have to power our economy,” said Roland O. Ewubare, Chief Operating Officer, Upstream Nigerian National Petroleum Corporation (NNPC), addressing the pressure of reducing carbon footprint.
Nigeria aims to increase its national production to 3 million barrels of oil equivalent per day, with proven gas reserves at 200 TCF, with another 600 TCF of unproven gas reserves, Ewebare said, while highlighting the importance of getting access to energy to a population of 200 million people.
Ewubare said that it finds the balance between energy transition and clean energy to be difficult, while reducing carbon footprint should be more of a priority for the countries responsible for most of the emissions.
Meanwhile, Austin Avuru, CEO of Nigeria’s Seplat Petroleum Company, said the country was planning for a 20 per cent emissions reduction by 2030, although the country only generated 0.3 per cent of global greenhouse gases. He stated that a key national aim was to replace diesel electricity generators with those powered by gas and complete a programme of zero gas flaring. Instead the excess gas would be “put to use”.
“Reforestation to enable carbon capture and smart agriculture all add up. The policies have been put up by the government and pushed by the private sector,” Avuru said.
Senegal’s Mamadou Faye, managing director of Petrosen meanwhile said the country is working on a pipeline project connecting the north of Senegal to the south of the country. With a focus on cleaner energy, Faye said that with the discovery of 30 TCF of gas, the country is planning on displacing the use of oil. “Today, for Senegal, we have a gas plan to fulfil the need for the country,” he said, adding that by 2020, 20 per cent of the country's energy mix will come from renewables.
Renewables role in Africa’s future
IEA’s report said that Africa can draw on rich natural resources and advances in technology to meet by 2040, the energy demands of an economy four times larger than today’s with only 50 per cent more energy.
“Africa has a unique opportunity to pursue a much less carbon-intensive development path than many other parts of the world,” said Dr Fatih Birol, the IEA’s Executive Director. “To achieve this, it has to take advantage of the huge potential that solar, wind, hydropower, natural gas and energy efficiency offer. For example, Africa has the richest solar resources on the planet but has so far installed only 5 gigawatts of solar photovoltaics (PV), which is less than 1 per cent of global capacity.”
If policy makers put a strong emphasis on clean energy technologies, solar PV could become the continent’s largest electricity source in terms of installed capacity by 2040.
Natural gas, meanwhile, is likely to correspond well with Africa’s industrial growth drive and need for flexible electricity supply. Today, the share of gas in sub-Saharan Africa’s energy mix is the lowest of any region in the world. But that could be about to change, especially considering the supplies Africa has at its disposal: it is home to more than 40 per cent of global gas discoveries so far this decade, notably in Egypt, Mozambique and Tanzania.
Africa’s natural resources aren’t limited to sunshine and other energy sources. It also possesses major reserves of minerals such as cobalt and platinum that are needed in fast-growing clean energy industries.
“Africa holds the key for global energy transitions, as it is the continent with the most important ingredients for producing critical technologies,” Dr Birol said. “For example, the Democratic Republic of the Congo accounts for two-thirds of global production of cobalt, a vital element in batteries, and South Africa produces 70 per cent of the world’s platinum, which is used in hydrogen fuel cells. As energy transitions accelerate, so will demand for those minerals.”
Giving a glimpse into the upcoming projects in Africa, eight licensing rounds are open or have closed during the fourth quarter and going forward 13 countries may offer acreage in 2020.
Heading into 2020, Africa is likely to continue opening many of the upcoming opportunities. Angola will launch its 2020 Bidding Round following its 2019 round, which closed earlier this quarter. The 2019 round offered offshore frontier acreage and received bids from ENI Angola, Total Angola, and Sonangol. Several other countries, including Algeria and South Africa are also planning to launch licensing rounds once new legislation is introduced.
“The year has held mixed fortunes for those hosting licensing rounds in Africa,” said Toya Latham Upstream Oil & Gas Analyst at GlobalData said. “Some rounds, for example Ghana’s First Licensing Round, have seen limited success, whilst others have suffered delays or suspension. Gabon’s 12th Licensing Round and Somalia’s First Offshore Licensing Round have been extended into 2020 (this is in part due to delays in enacting pivotal legislation), whilst Madagascar’s long-overdue licensing round has been suspended,” he added.