African gas: it’s boom or bust
• CEF boss sees a high-growth scenario of industrialisation, and a poor one of focus on overseas marketsonly
Central Energy Fund (CEF) CEO Ishmael Poolo said the gas market in Africat presented an opportunity for nations to develop their economies, increase access to power and dramatically reduce emissions over the next five years.
He was addressing the Africa Gas Forum in Cape Town on Monday. The event takes place as heavy users of liquefied natural gas (LNG) dread the risk of the country running out of industrial gas supplies by 2026.
His speech, titled “An unapologetic future for gas in Africa”, outlined a boom scenario in which Africa took advantage of its gas resources to industrialise, and a bust scenario where the gas market continues to operate at the expense of the continent’s development.
He said with its abundance, lower emissions and relative affordability, gas presented a “boom scenario” for Africa with a feasible solution to energy scarcity, the climate crisis and poverty alleviation in the coming decades.
“The International Energy Agency estimates that doubling Africa’s gas consumption from 90-billion cubic metres per year by 2030 for the fertiliser, steel, cement, and water desalination industries would generate cumulative carbon dioxide emissions of 10 gigatonnes. This would increase Africa’s share of global emissions from 3% today by a mere 0.5% in 2050,” he said.
The US, the largest LNG exporter in the world, was choosing to keep its gas rather than export it while Africa’s LNG export capacity is estimated to increase to about 145-million tonnes per annum by 2030 from 78-million tonnes per annum in 2023.
However, he said, while the “boom” scenario paints the picture of a “golden age fuelled by gas-powered industries and exports” and rapid economic growth, the “bust” scenario features medium-term gas dependency increasing vulnerability to global market volatility.
Another risk was the potential failure to monetise gas resources in pursuit of solar PV and battery energy storage systems, leaving Africa as a net importer of energy technology, with limited localisation and beneficiation.
Poolo said Africa must ensure it does not only export the energy, but also uses it for local manufacturing, stressing: “We must not, we cannot, sleepwalk into this kind of future again.
“Gas is too valuable a commodity to be considered solely for LNG export, gas to liquids or gas to power. To properly monetise gas, we need to develop our gas grid to the extent that consumers are able to select gas as a safer, cleaner, more reliable and cost competitive alternative to other energy sources.”
Poolo said discoveries of gas around the continent, including Brulpadda and Luiperd in SA, the Rovuma basin, Mozambique, Tanzania, the Orange basin in Namibia and onshore developments such as Renergen present an opportunity to the region to accelerate its development.
“We may wax lyrical over the abundance of recent high quality gas discoveries across Southern Africa. But the key questions for us are: will gas be a defining economic stimulus for the region? Will these discoveries be monetised and provide lucrative returns to the host governments and exploration and production partners?”
He said gas consumption in the Southern African Development Community region may take off due to the discoveries over the next decade but a risk lingered that integrated oil companies design their projects in the region for maximum export with a “sprinkling” of support for the domestic market.