MONETIZATION OF GAS TO POWER IN AFRICA

LAGOS, Nigeria, Capital Markets in Africa: Gas to power offers African countries the quickest route to significant mid-merit and base load Grid and Distributed electricity, keeping generation close to demand centres to support economic growth and development.

In order to understand gas-to-power and its place in the African energy mix we need to assess global trends in energy, with natural gas now widely regarded as the transition fuel to a future characterized by low-carbon energy production.

Natural gas can be used to produce heat and electricity; as a feedstock in manufacturing; and can also support renewable electricity production.

Additional factors supporting the uptake of gas in Africa is the significant amount of proven gas reserves on the continent, calculated at more than 600 trillion cubic feet in 2015, which is geographically well spread across the continent in many countries, notably Nigeria, Ghana, Tanzania, Mozambique and Egypt. In addition, South Africa could have significant offshore gas resources estimated at 60 trillion cubic feet and onshore shale gas potential resources conservatively estimated at 40 trillion cubic feet.

In order for African countries to be placed onto a sustainable economic growth path, a stable electricity supply is required to enable the development of the manufacturing and service sectors. The recent history of economic development, most notably in Asia, has shown that development cannot happen without a stable electricity supply.

“Natural gas has the potential to develop the significant base load and mid-merit power needed to propel African electricity generation,” says Mr Ebrahim Takolia, Co-founder and Chief Strategy Office of Monetizing Gas Africa, Inc.

“Gas-to-power can facilitate greater uptake of renewable energy by enabling electricity grid stability.” In recognition of the economic benefits that can be realized from gas-to-power in Africa, many countries have developed or are developing gas master plans focused on enabling gas utilization and gas-to-power.

“The move to include gas in the energy mix of many African countries is part of a global trend to include gas as a significant source of primary energy. Globally, natural gas is expected to provide on average 25% of the primary energy of many countries, and Africa has a long way to go before it reaches this level of energy provision,” says Mr Takolia.

“Natural gas produces up to 50-60% less carbon (CO2) than coal, and 24% less than diesel. Electricity from renewable energy and natural gas plants are expected to increase due to the lower carbon emissions, against a backdrop of declining production from carbon intensive coal and diesel power plants as countries move to lower carbon energy generation sources.

“Natural gas is also seen as an intermediate power back-up source until smart grids and electricity storage are able to replicate the utility-scale, base load and peaking power characteristics of natural gas power plants.

“Monetizing Gas Africa is one of very few companies established purely to solve the energy challenges facing Africa by focusing on the transport and delivery of natural gas from multiple sources to uses across Africa. The company has embarked on an ambitious strategy to buy, build and operate key gas transportation, delivery, processing and power assets in several top-tier countries,” says Mr Takolia. While electric power generation is probably the most compelling need and use for gas, there are many other important uses that gas serves well.

Such uses include Compressed Natural Gas (CNG) which is a ready fuel for transportation, cooking and heating fuel, Gas-to-Liquids (GTL), whereby gas is converted to fuels like diesel, chemical manufacturing feedstocks, methanol, and fertilizer for agriculture.

Gas compressed down to liquid state (LNG) is fast becoming plentiful on the world market, making it cheap to buy and import. “This makes the timing of many government initiatives to build up the gas market in Africa well-chosen and augurs well for its success, though it will take several years to reach scale,” says Mr Takolia.

Contributor Profile
Ebrahim Takolia, Chief Strategy Officer, Monetizing Gas Africa Inc. Ebrahim brings an impressive mix of relevant skills and background. Past CEO of the South African Oil & Gas Alliance, the industry body for oil and gas in Sub-Saharan Africa.

This article was featured in the INTO AFRICA August edition, which focused on Infrastructure Finance in Africa.