Africa’s natural gas resources have the potential to accelerate socio-economic growth and eradicate energy poverty. As a result, many countries are looking for increased investments to maximize and monetize resources. As the continent’s premier energy event, Africa Energy Week (AEW) 2021, aims to build on this momentum, promoting innovative monetization strategies, addressing challenges hampering development and charting a path forward. to follow for the African gas sector.
Speaking at an investor forum on “Monetizing natural gas: current opportunities and challenges,” panel participants studied the natural gas landscape in Africa. Panel participants included Mamadou Goumble, CEO of Energy Business, JCG; Frank Fannon, former US Assistant Secretary of State for Energy Resources; Olakunle Williams, CEO, QSL; Dr Tshepo Mokoka, COO, CEF; Gabriel Lorenzi, Vice President of Sales, Galileo Technologies; and Taiwo Okwor; Vice-President, Investments, African Finance Corporation.
During the discussion, participants provided insight into how African gas projects can be made more bankable and attractive to international investors. As the continent aggressively pursues the development of its natural gas resources to ensure sustainable socio-economic growth, Africa’s gas has garnered significant regional and international attention.
“The limitation we have as an African country from a research and development perspective. We have two constraints to develop: financing and technology. We need to find ways to finance our own development. You have to find better ways to open up the space. If we depend more on FDI, we rely on ministers in Europe, ”said Dr Mokoka.
“At the end of the day, it’s about risk and reward. Some of the key elements relate to the regulatory framework and the lack of credibility, one of the key points of which is transparency. There needs to be predictability and a regulatory framework that is planned for the long term. The second aspect concerns the security of supply. There must be abundant gas reserves and an uninterrupted supply. Another aspect concerns the lack of regional integration. There is no realistic approach to planning for infrastructure assets. If you want to develop your natural gas, you have to think about the aspects of transport and distribution on the national and international market. If you can fix it, you’ll see a lot more international and local investors, ”Okwor said.
“We firmly believe that small scale is the solution. From a financial point of view, it is always easier for financial organizations to approach the financing of small scalable projects. It will be a game-changer. Start small, then work your way up. We need to create jobs while offering solutions to evolve, ”said Lorenzi.
Meanwhile, the panel discussed concrete strategies to increase investor interest in gas infrastructure projects across Africa. With the African Continent Free Trade Agreement (AfCFTA) providing new and improved business opportunities for energy sector stakeholders, the panel promoted intra-African gas markets, made possible through improved infrastructure development.
“The AfCFTA is a wonderful opportunity for everyone in Africa. it will open up the market. Already the testament of the ZLECAf is already shown. In June 2021 a single electricity market was adopted. How do you integrate into a single energy market in Africa? 60% of the world today is used for manufacturing. We need to get more gas to our industries, creating a supply chain that will get our gas resources to demand centres in Africa, ”said Williams.
“In my opinion, this is an execution problem. How will countries at the individual level perform? How are we going to bring the high level of coordination to execution? By establishing these trade relations in the field of energy, it creates a halo effect of stability, economic integration and cooperation. With the high level and the political will, there will be a model for success, ”Fannon said.
Africa’s significant resources and emerging project developments will not only create opportunities for African countries but also provide the chance for Africa to help Europe in its current gas crisis. With the existing pipeline infrastructure already in place to supply Europe, panellists discussed how to improve supply chain networks.
“In Africa, we have two types of countries, those that have gas and those that don’t. Those with gas are wondering how to use it. By using gas throughout the region, it can help us access global markets. Let’s put the foundations in order so that we can have a suitable market before we succeed in exporting, ”said Mamadou.