Natural Gas

Hawilti launches “Gas for Africa” report with the International Gas Union (IGU), AU-AFREC, and AFC

The "Gas for Africa" report was launched at EGYPS 2023 in Cairo on 14 February 2023.

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Hawilti released an important new study on Gas for Africa in partnership with the International Gas Union (IGU), assessing the potential for domestic gas resources to energise Africa in line with the global energy transition. The African Energy Commission (AU-AFREC) and the Africa Finance Corporation endorse the report and its findings.

The study starts by analysing current energy poverty trends in Africa, a continent with the lowest electricity per capita consumption in the world and the lowest CO2 per capita emissions. It argues for a pragmatic use of natural gas reserves to support a broad industrial and economic development of Africa in a way that is sustainable and enables a just energy transition.

Mickael Vogel, Director & Head of Research, Hawilti

“Energy poverty in Africa often boils down to the number of people without access to electricity – 600 million, or without access to clean cooking – 970 million. Unfortunately, this assessment misses the point and can lead to responses and solutions that are ill-adapted to Africa’s development needs. As it argues for a better use of gas, the report calls for more ambitious targets around energy access so that we can both bridge Africa’s energy deficit but also support economic growth and industrialisation.”

The ”Gas for Africa” report highlights several ways in which gas can have a positive impact on Africa’s socio-economic development including by switching away from coal and diesel, developing energy-intensive industries and gas-based industrialisation, displacing fuelwood and biomass in households, generating baseload electricity to integrate intermittent energies, and building gas systems that can be decarbonisable in the future with hydrogen, renewable gas, and CCUS.

However, a pragmatic utilisation of Africa’s 18 Tcm of proven gas reserves – or 9% of the world’s reserves – calls for a reorientation towards domestic monetisation. Most of the gas produced in sub-Saharan Africa remains exported, with local consumption still limited because of limited infrastructure availability. Additional barriers include limited access to capital, security risks, and policy uncertaint.y

To overcome these key barriers to development, a total of eight guiding principles are given as recommendations to help stakeholders and policy makers navigate the complexity of the gas industry:

  1. Futureproofing by design: Alignment of future gas development plans with the just energy transition; guarantees of environmental sustainability and compatibility with the goals of the Paris Agreement.
  2. Financial innovation: Look inward and promote domestic financing mechanisms that can tap into vast pools of institutional money, especially for domestic projects.
  3. Good business climate: Safe and stable investment climate will be pivotal to ensuring that the continent is globally competitive
  4. Regionalisation: Sub-regional and regional gas and energy networks can support economies of scale and infrastructure investments.
  5. Cluster and ecosystem investing: Industrialisation plans can focus on creating manufacturing clusters located next to gas fields to benefit from a cheap source of electricity and energy.
  6. Gradual scaling: Small-scale projects have proven as a winning strategy to pre-develop gas markets and unlock suppressed demand.
  7. Building and reforming electricity markets: Reforms are needed to restructure electricity markets and increase liquidity, while improving operational efficiencies.
  8. Price emissions: Externalising the cost of emissions is an effective way to invest in emission reductions projects and incentivise switching from coal and oil to natural gas.

The full report is available for download here.

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Equatorial Guinea awards three exploration blocks to international independents

Equatorial Guinea has awarded offshore exploration blocks to Panoro Energy and Africa Oil Corp. as it seeks to unlock additional reserves and reverse production decline. Earlier this month, the country appointed the former head of its national oil company, Antonio Oburu Ondo, to replace Gabriel Obiang Lima as Minister of Mines and Hydrocarbons. Infrastructure-led exploration Amongst the newly awarded blocks are Block EG-01 and Block EG-31 that are located next to producing and processing infrastructure. The shallow water Block EG-01 has been awarded to Panoro Energy (operator, 56%) with partners Kosmos Energy (24%) and national oil company GEPetrol (20%). The block is located next to the Ceiba and Okume fields, two fields operated by Trident Energy via the 160,000 bpd Sendje Ceiba FPSO. Output currently stands at some 30,000 bpd. Panoro Energy and Kosmos Energy are already partners of Trident Energy on the Ceiba and Okume complex and hold interest in the exploration Block S where a well is planned for 2024. “The partners have been awarded block EG-01 for an initial period of three years during which they will conduct subsurface studies based on existing seismic data to further define and evaluate the prospectivity of the block. Following this, the partners will have the option to enter into a further two-year period, during which they will undertake to drill one exploration well,” Panoro Energy said in a statement.   On the other side, Africa Oil Corp. has been awarded shallow water Block EG-31 as operator with an 80% interest while GEPetrol holds the remaining 20%. The block is located next to the Marathon Oil Corp-operated Alba gas field and the onshore Punta Europa gas hub that houses the EG LNG export terminal. “Potential future discoveries could present low-cost, low-risk gas development opportunities targeting international LNG markets,” Africa Oil Corp. said in a statement. Rio Muni exploration Finally, Africa Oil Corp. has been awarded Block EG-18, which it had already secured during EG Ronda 2019. The award marks an evolution of the company’s acquisition strategy which had so far focused mostly on cash flowing producing assets. “In Block EG-18 the Company has identified a potentially large and highly prospective basin floor fan prospect of Cretaceous age, that is similar to those within the Company's exploration portfolio in Namibia and South Africa,” Africa Oil Corp. added. All PSCs for the blocks are yet to be ratified by the Government and there minimum work programmes do not include drilling commitments. However, their awards to reputable E&P investors send strong signals on the appetite for upstream activity in the Gulf of Guinea.  

Senegal: inauguration of the new 120 MW Malicounda power plant

President Macky Sall has inaugurated the new 120 MW Malicounda power plant on February 11th. The project is the result of a development agreement signed in 2017 between Africa50 and state utility Senelec to select a strategic sponsor to develop the facility under a Build, Own, Operate and Transfer model (BOOT). Independent power producer (IPP) Melec Power Gen, part of the Lebanese Matelec Group, was eventually selected, making Malicounda its third power station in the country following the 67.5 MW Kounoune station commissioned in 2008 and the 115 MW Tobene station commissioned in 2016. Malicounda was developed a cost of €154m and has increased Senegal’s generation capacity by 8%. Its construction started a few years ago after the setting up of a €75m (FCFA 50bn) bridge loan with the Orabank Group and a few regional partners. The senior debt was ultimately provided by the African Development Bank (AfDB), acting as the mandated lead arranger, the Arab Bank for Economic Development in Africa (BADEA), the West African Development Bank (BOAD) and the OPEC Fund for International Development (OFID). The power plant will initially consume diesel and HFO but has been designed to switch to natural gas as soon as gas becomes available from Senegal’s domestic offshore fields