Renewables shift lays bare Africa’s energy dilemma

REUTERS
Africa must build oil and gas pipelines, liquefied natural gas terminals, distribution hubs and gas-fired power plants over the next 20 years to unlock its energy market of over 600 million people, officials, executives and analysts say.

But the rapid shift in the rest of the world towards renewable energy means that countries in the region that boast vast untapped hydrocarbon reserves - and depend on exporting those resources for revenue and attracting investment funding - will face increasing challenges.

Some projects are underway and more are needed, according to six officials, investors and experts, but challenges including financing, security and coordination are vast.

“We have been hearing that, by 2030, developed nations will no longer need our oil and gas,” Gabriel Mbaga Obiang Lima, Equatorial Guinea’s hydrocarbons minister told a recent oil conference in Senegal’s capital, Dakar.

“The question is, what are we going to do if we can no longer sell to Europe, America or Asia?”

At least eight memorandums of understanding have been signed in recent weeks for major oil and gas infrastructure networks that would criss-cross the continent, targeting export, domestic and regional markets.

Main market

Obiang Lima said that by 2030, African fossil fuel producers’ main market will be Africa itself, and without it, they will likely be left with stranded assets.

He was presenting the Central Africa Pipeline System, a new 6 500-kilometre oil and gas network with hubs, terminals, and storage facilities expected to stretch from Chad to Angola and inland into Rwanda.

“The objective of the project is to create areas where we can transport, store, distribute and create petroleum hubs. The best example of this is Rotterdam,” he said.

Other projects include a trans-Sahara gas project involving Nigeria, Algeria and Niger, who have revived decades-old talks. The 4 000-kilometre, US$13 billion pipeline could send up to 30 billion cubic metres a year of gas to Europe.

Senegal and Mauritania signed four memorandums of understanding on 15 October with Nigeria and Morocco for the estimated US$25 billion Nigeria-Morocco gas pipeline project, while construction is underway on the 2 000-kilometre Niger-Benin oil pipeline.

Energy supply and demand

Africa holds around 13% of the world’s natural gas and 7% of its oil, but has the world’s lowest per capita energy use.

Although renewables could play a major role in the continent’s energy supply in the years ahead, governments say they need fossil fuels for baseload power generation that will power industries.

Africa is home to 60% of the best solar resources globally, yet has only 1% of installed solar capacity.

Energy demand is expected to grow rapidly over the next two decades, 30% higher than today, compared with a 10% increase globally, consultancy McKinsey said in a report in June.