Key Issues and Opportunities in the Southern Africa Gas Industry
The first workshop session looked at the Key Issues and Opportunities in the Southern Africa Gas Industry. Speakers were Mike de Pontes, Chief Operating Officer, iGas and Daryl Hunt, Consultant – iGas, and Paul Eardley-Taylor, Head of Oil & Gas Southern Africa, Standard Bank.
While at a global level the gas share in the primary energy mix is 24 percent, it is only three percent in South Africa. The South African energy economy has historically been dominated by inexpensive coal. However, looking to the future, this could change. Indigenous upstream potential, new technologies and competitive pricing are all setting natural gas up to make a far more meaningful contribution to a sustainable energy future and economic growth.
Daryl Hunt explained the legislated planning process which determines South Africa’s power generation mix. With the recent world class discoveries in Southern Africa, the prospects for indigenous gas resources and LNG’s growing access to global markets, the future for natural gas in South Africa looks bright.
Paul Eardley-Taylor described the situation of gas in Africa today as “a game of two halves,” with some countries, like Angola and Nigeria, struggling with the low oil price, while others importing hydrocarbons and benefiting from the same price environment.
Mike de Pontes, Chief Operating Officer, iGas and Daryl Hunt, Consultant, iGas: “Overview of Key Issues and Opportunities in the Southern Africa Gas Industry”
Paul Eardley-Taylor, Head of Oil & Gas Southern Africa, Standard Bank:“The Impact of LNG on Sub-Saharan Africa”
Global Agenda and Regional Opportunities
“Global Agenda and Regional Opportunities” was the theme of the second session. The African Natural Resources Center (ANRC), represented by Thomas Viot, Senior Extractives Officer, explained the regional policy perspective and ANRC`s role in promoting domestication of natural gas in the energy mix. ANRC coordinates with the African Development Bank (AfDB)and governments on national and regional policy frameworks, conducting policy analysis to build internal knowledge and documenting case studies to benchmark. They also act as the focal point between the AfDB and other gas advocacy partners. Viot presented the example of ANRC support to Tanzania in the process of its development of the gas sector.
Muzi Shange, Chief Operating Officer of the Department of Energy in South Africa, shared his thoughts on the great potential for the gas industry there. The country will need an additional 43,000 MW of new electricity generation capacity by 2030. Not only are gas plants less expensive and quicker to build than coal plants, gas fired power becomes even more attractive, when the cost of tackling climate change and air pollution are taken into account.
Mariana Ortiz, portfolio director, Global Gas Division Gas Natural Fenosa gave an overview of the LNG global market focusing on its current development and its future prospects. She stressed the important contribution of the LNG market to the security of supply to the global energy system. Finally she detailed how the experiences of Gas Natural Fenosa in small scale LNG applications can be employed in the development of the gas business in Africa and its role as LNG supplier.
Thomas Viot, Senior Extractives Officer, African Natural Resources Center (ANRC), African Development Bank: “Regional Perspective on Gas Sector Policy and Institutional Framework and role of the African Development Bank”
Muzi Shange, Chief Operating Officer, Department of Energy, South Africa: “Introduction”
Mariana Ortiz, Portfolio Director, Global Gas Division, Gas Natural Fenosa:“Global Overview and Discussion of Future LNG”
African Industry Issues and Opportunity
The third session looked to “African Industry Issues and Opportunity.” Khaled AbuBakr spoke of Africa as a new player in the energy market and provided case studies of gas development in the Mediterranean. His message was clear that African countries must get access to energy because energy is vital for any development and the need is urgent in Africa. He added that it is not the cooking of Africa’s poor that threatens the global climate.
James Rockall, Chief Executive Officer and Managing Director, World LPG Association, talked of the potential of LPG in developing markets and how it can be a pre-stage to further natural gas development. LPG’s flexibility allows gas to be transported to areas where gas infrastructure has not yet been developed.
Khaled AbuBakr, IGU Regional Coordinator – Middle East and Africa, Chair of Egyptian Gas Association: “Africa: a New Player in the Energy Market – East Africa, East Mediterranean”
James Rockall, CEO and Managing Director, World LPG Association:“The role of LPG in supporting African development”
Khaled AbuBakr, IGU Regional Coordinator – Middle East and Africa, Chair of Egyptian Gas Association: “Egypt’s Gas Market Development”
Case studies in Gas Industry Development
The fourth session looked beyond Africa to other countries and the development of the gas industry. Christopher Gunner, president & country chairman of Shell Japan, presented a case study on the world’s largest floating storage regasification unit (FSRU) under construction by Shell in South Korea. The plant will operate 200 km from the Australian coast for 20-25 years. The FSRU allows remote gas to the market without pipelines to shore creating a smaller environmental footprint than conventional LNG plants.
Gunner also talked about small-scale LNG which is increasingly providing tailor-made solutions in many places, transportation and gas to liquids.
Li Yalan, chairperson of the board of directors, Beijing Gas Group and IGU Regional Coordinator, spoke of “The Further Scenario of China’s Natural Gas Market Taking Reference of Beijing’s Development.” During the past 30 years, the development of Beijing’s natural gas market has been driven by air pollution control, rapid growth of the city and its rigid energy demand pattern with periods of strong heating and cooling demand. The facts show that in 1996, natural gas consumption was less than one percent of the energy mix. Today in Beijing, natural gas is 22 percent of its energy mix making it the top natural gas consuming city in China and the third in the world. The development of infrastructures including pipelines and underground storage has been key in this growth. Also the strong support of the government, with specific “Work plans on Accelerating the Promotion of Clean Energy to Replace Coal” and establishing coal free zones in the city have been a main driver for the natural gas industry.
Graeme Bethune, Chief Executive Officer of EnergyQuest, spoke about the “Development of the Australian Coal Bed Methane (CBM) Industry.” The CBM reserves in Australia have increased but early reserve forecasts were over-optimistic. Exploration and appraisal drilling continue but has be affected by the oil price slump. Regarding regulation, government support is critical and requires heavy regulation not anticipated by companies or governments. Bethune pointed out the importance of winning support from towns, local governments, the farming industry and the media. Although some examples of successful CBM start-ups can be found, project cost increased 7-36 percent due to, among other factors, rising oil and gas development costs globally, the LNG development boom, rising exchange rate, tight labour market and uncertainties of novel development projects.
Christopher Gunner, President & Country Chairman, Shell Japan: “Global Gas Developments”
Li Yalan, Chairperson of the Board of Directors, Beijing Gas Group: “The further scenario of China’s natural gas market taking reference of Beijing’s development”
Graeme Bethune, Chief Executive Officer of EnergyQuest, Australia: “Development of the Australian Coal Bed Methane Industry”