There are a number of projects in Africa that continue to illustrate the role of gas-fired power generation in helping to eliminate the continent’s energy backlog. Although the development of important parts of the gas industry in Africa has slowed in recent years as international demand – especially from the US and China – has tapered off, a major role is emerging for liquefied natural gas (LNG) in simultaneously fuelling power plants and providing an anchor for the development of regional and domestic gas economies.
The discovery of enormous gas reserves in Mozambique in 2010 and Tanzania a year later, as well the gas potential of Ghana’s Jubilee oil field (discovered in 2007) came at a time when pundits were singing the praises of the resource. It is cheaper to burn than oil, cleaner than coal and can be brought rapidly on-stream through small flexible baseload power stations. Electricity-from-gas has so many advantages that the International Energy Agency released reports in 2011 and 2012 titled the Golden Age of Gas. In combination with the successful development of LNG-producing ‘trains’ in established oil-producing countries Nigeria and Angola, the new discoveries put power from gas firmly on the agenda.
Mozambique’s Ressano Garcia power plant, which came on-stream in December 2015, illustrates the advantages of the resource. The new power station, on the South African border and utilising gas from the established Temane-Secunda pipeline (which provides South African petrochemical giant Sasol with feedstock for its Sasolburg facility), was constructed in just 18 months. It added 120 MW to the national grid, increasing Mozambique’s non-hydroelectric-generation capacity by one-third, and went some way towards eliminating the frequent blackouts that have long-troubled the south of the country, including the capital, Maputo.
Jointly owned by Mozambique’s national energy company, Electricidade de Moçambique (EDM) and Sasol, Ressano Garcia is the first of several planned gas-fired power plants in the country. The two partners are planning to build an even bigger plant – with 400 MW capacity – in the Inhambane province between Maputo and Beira. The planned project illustrates the catalytic role that even a relatively small project can play in a developing country.
The plan for the Inhambane plant includes a transmission line linking it to southern Mozambique. This is intended to be the backbone of a network that will finally integrate the existing 2 000 MW capacity of Cahora Bassa dam in Tete province to the north with the more developed south of the country, where demand growth is expected. Integration and local production are the key concepts in the Mozambique energy industry.
Under the present system, Cahora Bassa’s power is exported to South Africa and then sold back to meet demand in southern Mozambique. The construction of the Ressano Garcia power station has made a difference but energy imports from South Africa still account for more than half of southern Mozambique’s needs.
A separate development is a 100 MW gas-fired baseload plant to secure the supply of electricity to Maputo. Built by Japanese interests and backed by the Japanese International Co-operation Agency, it is planned to come on-stream in 2018.
The new power plants in Mozambique all take their feedstock directly from gas sources. The same is true of developments in Tanzania, where a 232 km pipeline has provided feedstock to the 150 MW Kinyerezi power plant south of Dar es Salaam since 2015. Tanzania started construction of the second of four planned gas-to-power plants this year, intended to have a combined capacity of 1 000 MW. Kinyerezi II will have a capacity of 240 MW, while Kinyerezi I is being upgraded to a 335 MW gas-to-power plant this year.
According to Tanzania’s National Investment Agency, in 2017, gas fuelled 45% of the country’s power. So rich in gas are Mozambique and Tanzania that none of the power projects has found it necessary to utilise LNG.
In fact, the big LNG projects anticipated in both countries are lagging well behind initial expectations. Mozambique had hoped to have a plant operational by this year but now estimates have been pushed out to 2023.
Tanzania is even further behind, with Norwegian company Statoil suggesting it could take five years before a final investment decision is made. The reason for the slow progress is faltering international demand. Chinese use of gas has weakened as that country has attempted to transition away from manufacturing industry. Meanwhile the other major market, the US, no longer imports LNG as the rise of shale gas has made it a net exporter. The result is that there is an excess of LNG production capacity over demand in the global economy. LNG prices have fallen 60% in Asia over the last three years.
However, while bad news for the LNG trains planned for Mozambique and Tanzania, this could not have come at a better time for Africa’s other potential gas economies. Within the continent, both Nigeria and Angola are searching for new LNG markets.
The world’s top cocoa grower, Côte d’Ivoire is planning to bring two gas-fired power plants on stream in 2018. The country has previously stood out in Africa for the reliability of its energy supply and Côte d’Ivoire in fact exports electricity to its neighbours. However, several years of high growth have strained local generation capacity, with demand growing at 10% annually. With its hydropower resources fully utilised, Côte d’Ivoire has turned to gas.
The country does possess promising oil and natural gas reserves but these are as yet underdeveloped. Until this bottleneck is resolved, Côte d’Ivoire will import LNG to fuel the two new 370 MW power stations. The chilled and compacted resource will be landed at a terminal near the country’s commercial capital, Abidjan, regassed at a floating storage unit and then piped to the new power stations. Construction rights were awarded to a consortium led by Total in November last year.
Ghana has been the other pace-setter. In April 2017, recently elected President of Ghana Nana Addo inaugurated construction of what will initially be the world’s largest liquefied petroleum gas-fired power station.
The 400 MW Bridge power plant represents a very neat solution to the hurdles that have afflicted the power-from-gas industry in that country in recent years. It will be the fifth gas-fired power plant to be built in Ghana. Feedstock will be imported LNG supplied through the Takoradi oil and gas facility, which opened in March this year and will be used until local capacity makes direct gas feedstocks viable.
It may seem a little odd for a potential gas superpower such as Ghana to be importing LNG, yet this is an emerging development route. Ghana’s problem has been security of gas supplies with local production from the Jubilee field having been unreliable, and the alternative – the West African Gas Pipeline (WAGP) – having proven inconsistent.
The WAPG, which runs from eastern Nigeria, has been repeatedly disrupted by sabotage and theft. There have also been disagreements over debt owed by Ghana to the pipeline’s managing agent.
South Africa also seems to be following the route of importing LNG to fire power stations. Three power stations are planned – at Richards Bay, Coega (near Port Elizabeth) and Saldanha Bay. The Saldanha Bay facility is likely to be a small open-cycle plant offering peaking power when the national grid is under stress. The other two plants are, however, intended to be larger and are expected to sell baseload power into the national grid. The national Department of Energy has allocated 2 000 MW to Richards Bay and 1 000 MW to Coega in a bid process that closed last year.
Both plants will require re-gassing facilities and are regarded as ‘filling the gap’ while the country continues to search for its own gas resources. In March, the government announced the go-ahead for the exploration of Karoo shale gas. This came after a four-year delay that had seen the withdrawal of Shell’s upstream exploration team from the country. LNG offers a way of anchoring the gas industry while awaiting both local exploration results and developments in Mozambique.
According to Standard Bank, other African countries that are either planning or thinking hard about using imported LNG include Benin, Senegal, Morocco and Namibia. The bank suggests that most of these countries are considering using floating storage and re-gasification units as the mode of import. It argues that these are ‘more flexible, involve limited capital expenditure, compared to land-based terminals’ and can be rapidly deployed. It points out that LNG is cheaper than diesel, which is often the alternative.
The development of Africa’s gas industries has been negatively impacted by the lack of growth in the world economy since mid-2014. How serendipitous it is then that gas producers can turn to a solution to the energy deficiency to bolster business. It may turn out to be a golden age of gas for Africa after all.