Catalysts: Renewables and Technology

The theme of Africa Oil & Power, Catalysts for Change, encompasses the major changes that African governments and firms are undergoing in 2017, and the significant developments in the oil, gas, power and finance industries in response to the oil and gas price down-cycle. We asked the leading voices in the African oil, gas and power business to give us their views on the drivers for change in the energy industry.

 

Dr. S.Z. Gata 
Managing Partner
EMC Continental Ltd. 

What I notice and what I think will be emerging across Africa is the realization of the impact of renewable energy in the future energy spectrum.

Renewables are beginning to prove their worth and the power sector in Africa is catching up. Along with renewables, there is increasing evidence that natural gas will play a key role in Africa’s future. More than coal, I see natural gas as the complement to the low intensity and variable availability of renewable energy.

These sources are in thermodynamic harmony, and may be even in economic harmony. For example, some forms of renewable energy like hydro and biomass are seasonably available; others like PV solar are not available after sundown. Natural gas can supplement the periodic deficit in renewable power through dynamic conjunctive dispatch.

Natural gas has its own challenges, though, especially in terms of the infrastructure needed to get the gas to its markets. Because of its low intensity as compared to oil and coal, high quantities of gas to get the same amount of energy as from oil. This puts a considerable challenge on logistics and high capacity infrastructure to reach the gas markets.

The challenge for Africa will not be in finding the resources, or in developing the markets. The problem will be high-cost long-lead physical infrastructure needed to distribute these resources to various markets, such as pipelines, regasification plants, etc. But, if well-developed regulatory systems with investment incentives and securities are in place, the private sector is able to play a significant role in investment and the necessary infrastructure can be developed.

The opportunity for Africa, in my opinion, is to focus on renewable energy, which we command in considerable abundance, complemented by use the natural gas which is being rapidly discovered across the continent, in quantities well above aggregate local demand.

 

Ian Cogswell 
Managing Director – Global Infrastructure & Projects
Natixis 

 The main trend to note is the increasing number of African countries developing their own oil and gas projects – whether that is Mozambique which is trying to develop LNG, or West African countries which are developing the downstream sector in petrochemicals, etc.  Currently, there are more and more countries trying to develop their own hydrocarbon-based projects, which hasn’t happened before. This is due to improvements in technology, which has given these countries the ability to develop a range of projects throughout the value chain, including upstream, midstream, downstream and power generation. Previously, projects in Africa were mostly limited to upstream exploration and production.

Whilst I don’t think there is any one specific catalyst for change in Africa, I do believe technological advancement has allowed a diverse range of projects to go ahead — the Floating LNG project in Mozambique is a prime example. Twenty years ago, Floating LNG technology hadn’t been commercially developed, so the opportunity to undertake such a project didn’t exist. Similarly, in West Africa, we are seeing smaller downstream projects take off, which previously would have been too expensive.

 

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