Is Africa ready to embrace the opportunity around gas?
The African continent holds a significant portion of the world’s gas reserves. Although relatively difficult to exploit, the availability of gas presents an opportunity for governments across the continent to diversify the fuels they use to generate power, improving the sustainability and reliability of their power sources. According to Allan Fairbairn, Area General Manager for Western and Central Africa at Aggreko, while the opportunity is clear, there are still some challenges to overcome.
“There is a lack of midstream infrastructure, which is a priority for Africa,” he says. “This constraint restricts gas usage to cities with ports or large industrial facilities or power plants near oil or gas fields. Sub-Saharan and in particular Western Africa also lack gas processing and refining facilities of scale to create sufficient demand to attract investment.”
Is now the time to take advantage of gas in West Africa?
“We have been working extensively with several public and private sector entities across West and Central Africa to design projects and develop applications to monetise gas resources, using equipment that we have,” says Fairbairn. “Gas is very much a market-led solution. The gas industry is also extraordinarily complex to navigate and governments need to recognise this. Then, of course, there is the time between identifying resources and them becoming available to the market. Expectations must be managed to ensure we do not lose sight of the benefit of using gas and it takes commitment from both the public and private sectors. Governments are taking heed, however, and we have seen several countries in West Africa take the lead in developing Gas Master Plans with governments investing in the exploitation of gas reserves.”
He adds that the situation around climate change and the need for improved sustainability creates an opportunity for the gas market to grow. “There is a compelling argument for the need to produce and use more gas. It is a cleaner-burning fuel than diesel or crude oil. If the resources are available, why not use them to support governments and the industry in their sustainability goals? As more plants use gas in support of this sustainability drive, the market for gas will grow and prices will decrease .”
Supply versus demand – what is holding investment back?
There is an ever-increasing risk that gas will be ignored unless there is increased demand and investment. This requires clarity of roles and responsibilities between the public and private sectors. “Private companies need to be on standby and work with governments to ensure that when gas is available onshore it becomes available for consumption and turned into useful resources. There are several companies out there with hubs in West Africa that are ready to take advantage of the gas resources when they become available. That is how we can positively move forward together,” says Fairbairn.
“There is, of course, the question around the monetisation of available resources. We have actively listened to our existing customers and key industry leaders,” he says. “That is why we have evolved our business to offer a broad range of products ranging from traditional thermal fuels to efficient gas products and battery and solar hybrid energy sources that we can integrate to help governments and the private sector monetise gas resources. More importantly, however, it is about supporting governments and the private sector to help them design power systems that are going to be efficient and stand the test of time,” says Fairbairn.
He cites Nigeria as a practical example, where Aggreko has over 50 project locations where they work with public and private sector entities covering a variety of different business applications and sectors. “It is about supporting those clients with a competitive cost-per-kilowatt solution that in some cases even competes with the local utility.”
Fairbairn says when it comes to gas consumption, they have focused very strongly on flare gas. “In 2018 there were 8.2 billion cubic meters of gas flared across Africa, which is the equivalent of 11 to 12 gigawatts of power. Our solutions help monetise some of that flare gas to ensure electricity is consumed where it is most critical and can add significant value to those areas or countries, where the gas is often free.”
He concludes that governments have a responsibility to provide their citizens with reliable and cost-effective energy. “While gas is currently seen as expensive in some territories, that is beginning to change as the infrastructure is being built and more volumes are being used. This means that reliability will improve, and it will become more competitive in price as well. As this shift continues, we will see more countries adopt gas to provide reliable and ultimately sustainable power sources to their people and industries.”