Economy

Natural Gas Is Booming In Africa

by OilPrice 1 week ago · 2 min read
Natural Gas Is Booming In Africa

In 2018, while much of the world was leaving coal-fired power in the past and moving toward greener pastures (so to speak) coal was barreling full steam ahead in the African continent. In North Africa in particular, 2018 saw a flurry of thermal energy projects and brand-new coal fired plants. First, “Siemens completed the world’s three biggest combined-cycle gas-fired plants for Egyptian Electricity Holding Company: Beni Suef, New Capital and Burullus, which collectively provide a colossal 14.4 GW in new capacity.” Then, in the same year, another 1.4 GW of coal-fired energy came online in Morocco courtesy of the new Safi plant.

Far from being the beginning of a renaissance for a fossil fuel that has largely fallen out of favor, however, that very well may have been coal’s last hurrah in Africa. With Morocco and Egypt in particular, both countries are increasingly embracing natural gas and renewable energies, and according to reporting by African Business, “it is likely that such big thermal projects will become increasingly rare.” In fact, this is likely not just limited to North Africa but to the entire African continent: “This could be an Africa-wide process in the case of coal, as its forecast rise as an African generation feedstock seems to be fizzling out,” reports African Business.

In fact, large-scale coal projects are already being shelved. In Egypt, the construction of the Hamrawein coal-fired plant has been halted, representing just 6.6 GW of a considerable 15.2 GW’s worth of coal projects in Egypt alone that are now cancelled or on indefinite hiatus. The swift move away from coal is occurring in conjunction with the development of gas and renewable projects, and has continued at a brisk clip even as COVID-19 has thrown a wrench into the continent’s transition toward natural gas as a cleaner alternative and effectual stepping stone toward decarbonization. 

Despite the persistence of the move away from coal throughout the pandemic, it remains to be seen whether current plans for added liquefied natural gas (LNG) capacity will be able to continue as planned. According to African Business, the COVID crisis along with repeated (and unrelated) delays could threaten the development of a planned $4.5bn LNG import terminal to be located in Morocco’s Jorf Lasfar. Another massive natural gas project is currently underway in Algeria, where a South Korean consortium is developing what will be the biggest project of its kind in North Africa. If that project is not derailed by the pandemic or other unforeseen obstacles, it will be online by 2025.

While North Africa is certainly leading the charge toward natural gas and renewables, there is also some development in West Africa, with Côte d’Ivoire (Ivory Coast) at the helm. The gas-fired capacity being added by Côte d’Ivoire, however, is the exception in the region, which has been very slow to follow in their northern neighbors’ footsteps. “Improved regulatory environments in some markets, coupled with a desire to replace ageing diesel-fired generators with more efficient gas-fired plants, were expected to result in the development of smaller fields or stranded gas reserves but this has still not happened,” African Business reports. And in East Africa, coal is still king, although some projects have recently stalled or lost funding.

It's not surprising that most of the new energy projects in Africa are funded by outside interests, in particular China. Africa is seen as a largely untapped market with very lucrative potential for international companies to push into in order to corner new markets. Africa has found itself at the center of a geopolitical battle between powerful international interests like Russia, China, and South Korea, all of whom want to get a piece of the pie and establish their presence (if not all-out dominance) in the region.

This is exemplified by the Chinese and Russian struggle to spread nuclear energy across Africa. Tellingly, many of these projects being pushed onto the continent are unneeded for the countries’ energy security, but they could have positive potential for future decarbonization efforts.

last updated: 2020-10-17@09:10