Table of Contents
1 Energy Demand in Africa
Electricity has become an indispensable requirement to improve human life and achieve economic development. Households use it for cooking and refrigeration, essential facilities such as hospitals require it for cooling, lighting and emergency equipment. Agriculture is more efficient with electricity and industrial plants are heavily reliant on electricity to operate. 
Africa is on a back foot when it comes to electricity access and supply. In 2013 Africa had a total installed capacity of 147 GW, this was equivalent to what China was installing in one or two years to sustain their economy and way of life just a few years ago. Since then the gap has just widened.  This pulls into stark contrast the difference in electricity access between Africa and other countries across the world. Africa is in desperate need of electricity. Not only for their economy but to improve the life quality of people on the continent. As example, Uganda recently launched a project referred to as “The Uganda Rural Electricity Access Project” (UREAP) specifically focussed on driving development in providing rural areas with electricity access with the main aim to improve livelihoods. Many other African countries such as Ghana are currently busy with large projects to develop natural gas import facilities to address the growing energy demand. Mckinsey and Company predicts that the need for electricity in Sub-Saharan Africa will dramatically increase leading up to 2040 from 452 TWh to a potential total requirement of 1570 TWh. This is indicative of the expected and continued increase in the supply and demand gap that needs to be filled. 
Figure 1 illustrates the current energy mix in African countries located on the coast of Africa. The figure shows that most countries rely either on renewables or oil as their main source of energy. Important to note that due to location, these countries can more easily resort to importation of additional energy resources. South Africa is seen to have the highest reliance on coal, mainly due to its domestic coal resources. To fill the gap in increasing the amount of energy generated, these countries will have to either invest in more renewable energy sources, oil or natural gas.The use of natural gas to generate power has been rapidly increasing over the last few years. Mainly due to shale fracking in the USA, which has caused a significant drop in gas prices, resulting in gas becoming more competitive as an energy source globally. This made natural gas a feasible option to bridge the energy gap for African countries.
Currently, 22 African countries have proven gas reserves, which is good news for the continent’s energy demands . Nigeria, Libya, Algeria and Egypt hold 91% of Africa’s gas reserves, and Africa itself holds approximately 10% of the global gas reserves . This has driven many African countries to start developing their own gas reserves for exportation, especially for those who does not have a developed local natural gas market. But for some African countries, natural gas could be the best way to fill their local energy gap, and so initiate the need to develop domestic gas infrastructure to create a local market.
Under the current economic circumstances (low gas cost) and in most cases (depending on the capex and transport costs) natural gas is less expensive to use for power generation compared to coal. In situations where a country has access to renewable resources for hydro, solar or wind power generation, natural gas has also been found to be cheaper to develop. Hydro electricity is reliant on a country having access to sufficient water to generate power to even be considered but is mainly economically feasible on a large scale (> 100 MW). On a small scale (0.1 MW – 10 MW) the costs are higher per kW to generate and often it is not a feasible solution for power generation.  Hydro electricity is also affected by climate change and droughts introducing risk for investors and less reliable power . In terms of solar and wind power, both have long payback periods. Often the IRR is at the point when the plant starts needing significant maintenance, reducing the profitability of the project. This makes it less attractive to investors. 
One of the other benefits driving development in natural gas power generation is that power plants can be constructed faster, this means quicker turnaround times. This enables countries to address the energy demand faster. Which is seen as a huge benefit in countries desperate for electricity. It must be said that the shorter lead times may come at a higher price due to more labour required to get the plant up and running faster, which could offset some of the benefit. Natural gas is also flexible and different scales of plants can easily be constructed and remain profitable which is beneficial to address the specific energy demand in an area. This flexibility makes it an attractive solution in Africa especially as power generation can be size according to a specific area’s need.
The low gas cost, high flexibility and short lead times has made natural gas an attractive alternative for Africa to address the gap. In addition, this has made it a more attractive option for investors which has further driven the development of natural gas in Africa.
2 Natural Gas Power Generation
Three methods are typically used to generate power with natural gas:
- Burning the natural gas to generate power.
- Burning natural gas to generate steam which in turn generates power. Steam powered plants are the traditional method of power generation, and coal plants can be converted to replace coal with natural gas which holds great potential for many African countries who have existing coal power stations .
- Natural gas cryogenic power generation. For this article we will only focus on the first two methods.
Natural gas power stations can be divided into two types, open cycle (simple-cycle), and combined cycle (this video describes it well). An open cycle plant makes use of a gas turbine, the natural gas and air is mixed and burned to form a high-pressure gas which turns the gas turbine. A combined cycle power station uses this same principle to generate power but then seeks to utilize the hot gas as it exits the gas turbine. This hot gas, or waste heat, is then used to turn water into steam, which can drive a steam turbine. This added Heat Recovery Steam Generator (HRSG) can add up to 50% more electricity than can be achieved with only the open cycle gas turbine. The open cycle generating units are often employed as back-ups to generate additional electricity based on an increase in demand while the combined units tend to be utilized for the day to day electricity usage. 
As mentioned, another alternative is to convert an existing coal power station to use natural gas. The feasibility and profitability of a conversion is, however, highly depended on each specific case. Different economics would drive the investment opportunity. The efficiency of the equipment is also affected and needs to be considered.
One benefit of this method is that the conversion technology for a coal fuel plant to use gas has is mature. There are also existing training and maintenance procedures. This significantly reduces the risk of conducting such a conversion and design time required which reduces development costs.
The overall economics of such a conversion should however be considered. The potential lower cost of gas or easier access to gas and growing energy demand must be weighed against the conversion cost and cost of operations. Logistics such as access to gas and transmission and distribution infrastructure is also a major consideration.
The downside of converting to gas from coal is a reduction in boiler efficiency, along with the initial CAPEX investment. Some changes to the O&M are also expected. The upside, however, is reduction in auxiliary power requirements; it is expected that annual non-fuel O&M costs will be lower compared to coal . No two plants are alike, and emust be evaluated on a case by case basis to determine if conversion makes economic sense.
Taking all of this into account in many cases natural gas is a more efficient method of power generation. Giving credence to African countries adopting natural gas as the solution to address the energy gap.
3 Natural Gas Development Challenges
There are still numerous challenges to address, despite the desperate need for energy in Africa and rapid development of natural gas. Some of which other natural gas consumer/producing countries have also faced or are still addressing.- while others are unique to African. A few of these challenges currently faced in Africa are:
The sustainability of import needs. It may be that gas importation is a temporary solution while a country’s production recovers or is increased. After a period, domestic production may be sufficient and import contracts cancelled. This poses a high risk for countries who invest heavily in import infrastructure that may be abandoned or export facilities if they cannot secure off-takers. As a result investors are also a bit reluctant in some cases if there is a possibility of cancellation in the future. 
Sizing of the future gas market is problematic. A FEED or feasibility study is usually required before continuing with any development project. Such a study includes a market analysis to understand the demand and supply of the product. In Africa this poses a challenge as development could spark additional investment and growth resulting in a larger market than initially anticipated. It also poses a risk to attract future investment if a high confidence in the bankability of the project cannot be provided because of these uncertainties.
Another challenge is payment for natural gas in forex. This makes import countries more susceptible to economic changes and volatile prices.
The lack of infrastructure and the need to develop ports, pipelines and LNG facilities  is a major challenge. There are precious few existing gas transmission and distribution facilities, which are critical to optimising the value of the natural gas. Without the adequate infrastructure, the gas cannot be fully utilised . This challenge is faced by countries wishing to export/import or utilise their own gas domestically.
There is also a challenge with obtaining funding for midstream infrastructure. Investors are often eager to invest in import facilities or power generation but reluctant to invest in pipelines or distribution networks. Without this, development is severely hampered. 
In Africa there are often significant distances between domestic gas sources and the major demand centres. This makes it more expensive and requires additional resources for the necessary infrastructure to connect the source and demand centres . Similar challenges are faced in the case of linking sources to export facilities and getting the imported gas to demand centres.
Most African countries also don’t have the necessary policies and regulations in place, which delays development and discourages investment opportunities. Lack of well developed policies and regulations make financial investment decisions more complicated and risky.
Another serious issue that African countries in particular face is corruption, which discourages investments and leads to funding difficulties during the project, especially when it comes to the final investment decision. 
It is, however, encouraging to see that despite these challenges, there is still significant development occurring, which is discussed in the next chapter. Africa is working towards overcoming these challenges to ensure the sustainability and success of future developments.
4 Current KEY African LNG Development PROJECTS
Despite the challenges mentioned above, Africa has seen an annual increase of 4% in gas production and 6% in consumption since 2000 . A few of the current developments are:
Virginia Gas Project: Tetra4 (Pty) Ltd has reserved rights to develop the Virginia Gas Fields in South Africa. Natural gas containing high amounts of Helium will be extracted and sold as separate commodities. This is the first natural gas project in South Africa. 
Rovuma Liquid Natural Gas project: This is a significant development in Mozambique. It constitutes a 15.2 million tonnes per annum LNG export facility and is operated by the Mozambique Rovuma Venture (MRV). MRV is a joint venture by ExxonMobil, Eni, CNPC and smaller shares by Galp, KOGAS and Empresa Nacional de Hidrocarbonetos.
Eni is responsible for the upstream facilities and transportation to the onshore facilities. ExxonMobil is responsible for the midstream facilities. The project is based on three gas reservoirs of the Mamba complex in Area 4 of the Rovuma Basin, which is located approximately 40 km off the Cabo Delgado coast of Northern Mozambique. Successful completion of this project will see Mozambique become one of the biggest exporters of LNG in Africa. 
Mozambique LNG project: This is also a project being developed in Mozambique, which will have a two-train liquefaction plant with a capacity of 12.9 million tonnes per year. The project is led by a consortium which includes Total, Mitsui & Co, ONGC, ENH, Bharat PetroResources, PTEP and Oil India Ltd with Total leading the project. 
Tema LNG: There is a 1.7 million tonnes per annum LNG import facility being developed in Ghana. Tema LNG is the owner of the project and a combination of purpose-built FRU in parallel with FSU will be utilised for the facility. Russian oil giant Rosneft will supply the LNG. 
Tanzania Liquified Natural Gas Project: Tanzania is in the process of developing an LNG liquefaction plant. It is set to have two LNG trains where each has a capacity of 5 million tonnes per annum. The construction of a gas pipeline to supply Uganda was also in consideration. Unfortunately, development has been slow, and governmental complications have plagued the project. Construction is planned to start in 2022 and operation set to start in 2028. 
Gas Revolution Industrial Park (GRIP): In Nigeria, a downstream refinery and petrochemical complex is planned for Ogdigben in the Delta region. The Nigerian National Petroleum Corporation wholly owns the complex. The complex will also include new chemical plants which will use natural gas from Nigeria as feedstock. The complex will be fed from the nearby gas reserves in Odidi, Okan and Forcados fields as well as supplemented by a gas pipeline network called ELPS. 
Akonikien project: Equatorial Guinea launched their first gas-to-power development. It forms part of the LNG2Africa initiative. The initiatives’ primary objective is to develop small-scale LNG projects to supply gas to countries and regions with limited infrastructure. The plant will have a storage capacity of 14 000 cubic metres with 12 bullet tanks, once complete. These tanks are the largest cryogenic bullet tanks in the world with a capacity each of 1 228 cubic meters. 
Other projects which are all specifically related to power generation in Africa are:
- Soyo combined-cycle natural gas turbine plant introduced 750 MW of newly installed power capacity.
- In Cameroon, Victoria Oil and Gas PLC, through its subsidiary Gaz du Cameround (GDC) agreed to supply gas to a proposed new 150 MW gas-fired power station.
- In Senegal, BP took a positive final investment decision on the Tortue-Ahmeyim gas development project in 2018. The project involves a floating production storage and offloading unit alongside an LNG facility. 
There is already significant natural gas development occurring in Africa and the potential for even more. Natural gas is one solution to address the energy gap in Africa. What remains to be seen is whether this will be enough?
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