The year 2023 has started with energy challenges for two of Africa’s largest economies, Nigeria and South Africa.
For Nigeria in West Africa, the year began with Nigerians suffering a prolonged scarcity of premium motor spirit, which is popularly called petrol in the country. Then, in South Africa, the most industrialized economy on the continent, the challenge of electricity load shedding resulted in a crisis.
Despite these challenges, the economic outlook for the African energy sector looks mostly positive in the year 2023, with a lot of major activities already carried out or lined up to take place later in the year across many nations on the continent.
For instance, President Muhammadu Buhari in January inaugurated the Bestaf lubricant plant at MRS Holdings Company Limited in Lagos state. The 200 million litre lubricant plant, which covers the whole value chain of lubricants, is the first of its kind in West Africa.
The Bestaf lubricant plant is owned by Sayyu Dantata, the Founder and Chief Executive Officer of MRS Holdings Limited, who said the plant, which has the capacity of producing 1,700 different products, will contribute to foreign exchange generation for the country through product export, while helping to meet the needs of other neighbouring countries.
The president also inaugurated the $1.5 billion Lekki Deep Sea Port, which is also important for the energy industry as a facility for crude oil export and for the import of refined petroleum products.
Away from Nigeria, on February 9, South African President, Cyril Ramaphosa, declared a National State of Disaster over the country’s electricity crisis during his State of the Nation Address, which was held in Cape Town.
During the presidential address, it was disclosed that measures will be introduced to tackle the electricity crisis, which necessitated the declaration of the National State of Disaster in the first place. The measures included the introduction of a new Ministry of Electricity in the Presidency to oversee the revitalization of Eskom’s operations and the country’s generation capacity.
Eskom is a South African electricity public utility, which was established in 1923 as the Electricity Supply Commission (ESCOM). It represents South Africa in the Southern African Power Pool and remains the largest producer of electricity in Africa, while ranking among top utilities in the world in terms of generation capacity and energy sales.
Eskom is also the largest of South Africa’s state-owned enterprises and operates a number of notable power stations, including Matimba Power Station and Medupi Power Station in Lephalale, Kusile Power Station in Witbank, as well as Kendal Power Station, and Koeberg Nuclear Power Station in the Western Cape Province, which is the only nuclear power plant in Africa.
The company is divided into Generation, Transmission and Distribution units and, together, Eskom generates approximately 95% of electricity used in South Africa, amounting to 45% of electricity used in Africa.
The African Energy Chamber (AEC), as the voice of the African energy sector, said it supports President Ramaphosa’s commitment to addressing the country’s electricity crisis, but also maintained that massive reforms from an investment and policy perspective need to be implemented to restore confidence among local, regional and global businesses for them to invest in the country’s energy sector.
This call from AEC became necessary as energy consumers in Africa’s most industrialized and technologically advanced economy is witnessing more than eight hours of blackout per day. The Chamber therefore strongly called on President Ramaphosa and the South African Government to accelerate the country’s gas agenda, as both a short and long-term strategy to alleviate the perennial electricity crisis affecting the rainbow nation.
South Africa’s gas reserves are immense and remain untapped, with massive discoveries including TotalEnergies’ Brulpadda and Luiperd prospects which hold combined reserves of 3.4 trillion cubic feet of gas and 192 million barrels of gas condensate. With TotalEnergies having applied for a production license to develop gas fields offshore South Africa, the Chamber is calling for the government to fast-track the permit approval and kick-start the country’s journey towards energy resilience and security.
In addition, massive projects such as Gigajoule’s $550-million Matola Liquefied Natural Gas Project in Mozambique, which will supply South Africa with gas; the 865-km Rompco Gas Pipeline from Mozambique to South Africa; and Renergen’s Virginia LNG project in South Africa are crucial and need to be fast-tracked.
According to Wood Mackenzie, capital spending in global upstream oil and gas projects will record a 10% increase in 2023 compared to 2022 levels. The sizable potential of new and large-scale gas discoveries across South Africa’s hydrocarbon-rich Orange Basin presents an ideal opportunity for the country to capitalize on this investment momentum and attract interest from international explorers.
While environmental lobbyists try to block efforts by Shell to unlock South Africa’s upstream potential, the AEC believes more oil and gas exploration is key to ending the electricity crisis and is strongly advocating for South Africa to create an enabling environment for more oil and gas exploration to take place in 2023 and beyond.
While the impacts of the electricity crisis are significant, with the South African economy losing up to R900 million per day due to load shedding, coal has a crucial role to play in stabilizing the country’s energy sector and business environment. Against this background, the AEC believes that more coal power generation and the rejuvenation of existing coal facilities is essential, while accelerating renewable energy deployment to end the South African electricity crisis.
In the words of NJ Ayuk, the Executive Chairman of the AEC, “South Africa should be careful about demonizing its domestic oil and gas resources. The war against fossil fuels needs to come to an end if we are to address South Africa’s electricity crisis.
“More oil and gas exploration, development and exploitation remains key if South Africa is to achieve energy security and economic growth. Government should fast track permit approvals for more drilling, seismic surveys, pipeline developments, as well as for new LNG terminals to be constructed”.
In this regard, African energy stakeholders met with European investors at the Invest in African Energy Frankfurt Reception, which was staged by the AEC at Frankfurter Botschaft in Germany on February 23, and where South Africa’s energy policymakers, investors and project developers had a strategic opportunity to showcase the country’s gas market potential.
Moreover, South Africa will host the 2023 African Energy Week Conference & Exhibition from October 16 to 20 in Cape Town. As Africa’s premier event for the energy sector, the conference will unite regional and global energy leaders, decision-makers and financiers to explore investment opportunities across the country’s entire natural gas value chain and much more.
Back to West Africa, in Mauritania, Project partners bp and Technip Energy had their Floating Production, Storage and Offloading (FPSO) vessel officially move from China to the Greater Tortue Ahmeyim (GTA) development on the maritime border of Senegal and Mauritania.
On January 20, the FPSO vessel left China, bound for Senegal and Mauritania via Singapore. It’s departure from China followed three years of construction and successful sea trials, with the facility comprising eight processing and production modules and measuring 270 meters in length, 54 meters in width and 31.5 meters in depth. This vessel is built to accommodate 140 people onboard, while processing gas for the GTA’s associated Floating Liquefied Natural Gas (LNG) facility.
Representing a critical part of the wider GTA development, the FPSO vessel will enable the processing of up to 500 million standard cubic feet of gas, as well as the production of 2.3 million tons of LNG per annum (mtpa) as part of the GTA’s first phase of development. In its second phase, this figure will increase twofold, with up to 10 mtpa set to be produced.
Speaking to the achievement, Gordon Birrell, Executive Vice President of Production and Operations of bp, stated that “this is a fantastic milestone for this important project, which is a great example of bp’s resilient hydrocarbon strategy in action.
“The team has delivered this in a challenging environment, including through COVID, always keeping safe operations at the heart of what they do. With the continued support of our partners, Societé Mauritanienne des Hydrocarbures (SMHPM) in Mauritania, Petrosen in Senegal and Kosmos Energy, we remain committed to helping both countries to develop their world-class resources in a sustainable way.”
Jointly developed by operator bp; Kosmos Energy; Mauritania’s Ministry of Petroleum, Energy and Mines; Senegal’s Ministry of Petroleum and Energies; as well as Mauritania’s National Oil Company (NOC) SMHPM and Senegal’s NOC Petrosen, with Technip Energies having been awarded the Engineering, Procurement, Construction, Installation and Commissioning contract, the GTA – as the largest hydrocarbon development underway in the region– is on track for first production by Q3 2023.
The project itself is set to transform the regional energy space by introducing a long-term and viable supply of natural gas, thereby opening up opportunities for power generation, industrialization and revenue generation via exports. Up to 15 trillion cubic feet (tcf) of recoverable reserves will be maximized at a time when global stakeholders are looking at capitalizing on African gas resources.
However, the celebration of first gas does more than demonstrate the resilience of the respective governments to monetize offshore gas resources. Quickly following the start of the GTA, Senegal’s pioneer oil development, the 100,000 barrel per day Sangomar Project, is also set to see first production, further solidifying the commitment of both the energy majors involved and regional governments. In early December 2022, project developer Woodside Energy announced that the FPSO vessel has completed construction for the Sangomar Phase 1 Field Development, with production now on track for late 2023.
With these developments, a new era of energy security is in sight for the region at a time when global markets are in a constant state of volatility. For Africa, first production at the GTA and Sangomar will kick-start industrialization and electrification, triggering opportunities across multiple sectors of the economy. For the global energy sector, a new supply of oil and gas will be on the market, enabling the transition away from Russian dependency and advancements in stability.
Moreover, the success of both GTA and Sangomar is set to create a ripple effect of project takeoffs across the region, with project developers hoping to mirror the success of these pioneering projects. Notably, GTA’s neighboring development, the 13 tcf Mauritania-based BirAllah project – representing the largest deepwater gas discovery of 2019 – has long been slated as a follow up to the GTA project itself.
Following first production from the GTA, interest is expected to turn to BirAllah, with project developers looking towards a final investment decision (FID). Similarly, the bp-Kosmos partnership has earmarked 2023 for the securing of FID for Senegal’s 20 tcf Yakaar-Teranga project, a promising new development located in the Cayer Profond Block to the south of the GTA.
As such, the success of first hydrocarbon production will trigger growth across the entire energy industry and wider economy, with details of these benefits set to be unpacked during the 2023 edition of the MSGBC Oil, Gas & Power Conference and Exhibition– taking place from November 21-22 in Mauritania.
During the 2022 edition, project developer Kosmos Energy delivered an update on the GTA project, and now, during the 2023 edition in November, relevant parties are expected to celebrate not only first production but discuss what happens next, as well as the progress of other developments. Therefore, 2023 is set to be the year of first hydrocarbon production for the MSGBC region, but 2024 will be the start of a new era of multi-project takeoffs.
Meanwhile, Mauritania is also hoping to mirror the success of GTA with FID slated for 2023 for the Banda Gas Field. Targeting widespread electrification on the back of natural gas, the 1.2 trillion cubic feet Banda gas field is set to transform the regional power sector through its Fast LNG Liquefaction technology, with the project set to produce LNG for Mauritania’s power market.
The project will see gas supplied to the existing 180MW Nouakchott Nord thermal power plant, alongside a 120MW gas-to-power facility. In December 2022, New Fortress Energy signed a development and partnership agreement with the Mauritanian Government for the project.
As Senegal and Mauritania seek to strengthen their reserve portfolios with the launch of new exploration activities and The Gambia, Guinea-Bissau and Guinea-Conakry look towards making large-scale discoveries of their own, 2023 is expected to become a hive of activity with the launch of new licensing rounds and drilling campaigns.
During the year, Mauritania is expected to award its Offshore Licensing Round- launched in 2022- and comprising 28 new offshore blocks. Also, following the launch of its second major offshore licensing round in 2022, Senegal is expected to award blocks in 2023 and Guinea-Conakry’s launch of a 22-block licensing round is also expected to unlock the country’s energy sector growth.
On its part, The Gambia is fast approaching its second major licensing round with seven new blocks on offer, while Guinea-Bissau opened five blocks for bidding under a special deepwater tender round in 2022.
In GDP terms, the MSGBC region has emerged as the destination of choice in 2023 when it comes to foreign investment. Following the start of production at both the GTA and Sangomar developments, the World Bank anticipates Senegal to generate up to $1.4 billion in hydrocarbon revenues by 2025, with GDP growth expected at 5% and 5.6% across the wider West African economy in 2023 and 2024, respectively.
Meanwhile, Mauritania will record a 4.9% increase in GDP spurred by increases in gas investments, according to research firm Economist Intelligence. Similarly, the Gambia is anticipated to record a 6.4% growth in its economy in 2023 while Guinea-Conakry will record a 5.3% increase in GDP in 2023 on the back of the country’s burgeoning extractives industry.
On a continent-wide scale, The OPEC Fund for International Development (The OPEC Fund) and Africa Finance Corporation (AFC) have signed a US$50 million loan agreement to finance the development of infrastructure critical to economic growth and job creation across the continent.
The proceeds of the 10-year loan will be used to improve connectivity, transport, logistics, trade and to boost access to energy across the African continent. The loan doubles the OPEC Fund’s commitment to AFC following an initial US$50 million 10-year loan provided in January 2021, and builds on collaboration initiated through a cooperation agreement in 2017. It is also aligned with the United Nations Sustainable Development Goal (SDG) 9- Innovation and infrastructure, and SDG 17– Partnerships.
“Africa continues to be a key region for the OPEC Fund, with more than 45 percent of our aggregate financing dedicated to the continent,” said OPEC Fund Director-General Dr. Abdulhamid Alkhalifa. He added further that “sustainable infrastructure development is key to unlock Africa’s vast potential and enable it to fully utilize its resources. Working with local partners on the ground such as AFC helps to deepen our impact and support Africa’s development agenda.”
AFC President & Chief Executive Officer, Samaila Zubairu, remarked that “AFC has enjoyed a long-standing partnership with the OPEC Fund and we are delighted to collaborate again to support the work we do in developing critical infrastructure in Africa.
“Developed and developing countries alike are battling the chronic challenges brought on by a wave of global shocks, and these challenges will only be solved by working together through partnership and engagement between the world’s leading finance institutions.”
Africa’s economic growth has been slowed by global supply chain disruptions and rising costs in the aftermath of the COVID-19 pandemic, further widening the continent’s infrastructure funding gap. The collaboration between the OPEC Fund and AFC is targeted at increasing access to long-term sustainable finance for infrastructure projects.
AFC is a multilateral financial institution with 39 member countries, established to provide financing and private sector-driven solutions for infrastructure in key sectors including power, transport, heavy industries, telecommunications, and natural resources. To date, AFC has invested over US$11 billion in projects across 36 African countries.
The OPEC Fund for International Development (the OPEC Fund) is the only globally mandated development institution that provides financing from member countries to non-member countries exclusively. The organization works in cooperation with developing country partners and the international development community to stimulate economic growth and social progress in low and middle-income countries around the world.
It was established in 1976 with a distinct purpose: to drive development, strengthen communities and empower people. Our work is people-centered, focusing on financing projects that meet essential needs, such as food, energy, infrastructure, employment (particularly relating to MSMEs), clean water and sanitation, healthcare and education.
To date, the OPEC Fund has committed more than US$23 billion to development projects in over 125 countries with an estimated total project cost of US$190 billion and is rated AA+/Outlook Stable by Fitch and AA, Outlook Positive by S&P.
Then, AFC was established in 2007 to be the catalyst for private sector-led infrastructure investment across Africa. Its approach combines specialist industry expertise with a focus on financial and technical advisory, project structuring, project development and risk capital to address Africa’s infrastructure development needs and drive sustainable economic growth.
Fifteen years on, AFC has developed a track record as the partner of choice in Africa for investing and delivering on instrumental, high-quality infrastructure assets that provide essential services in the core infrastructure sectors of power, natural resources, heavy industry, transport, and telecommunications. AFC has invested over US$11 billion in 36 countries across Africa since its inception.
In Oriental Africa, the Ministry of Minerals of the United Republic of Tanzania, in collaboration with dmg events and Ocean Business Partners Tanzania, has announced that the next edition of the Tanzania Mining & Investment Forum will be hosted in Dar Es Salaam from October 25 to 26, 2023 at the Julius Nyerere International Convention Centre.
The Forum is proudly held under the patronage of Honourable Dr. Doto Mashaka Biteko (MP), who is the Minister for Minerals, with government representation at the highest level.
Over the last decade, East Africa has been experiencing a rapid expansion in its mineral sector. In Tanzania, the mining sector’s contribution to the Gross Domestic Product (GDP) has been increasing yearly.
In the year 2020/2021 the mineral sector contribution to GDP rose to 7.2% from 6.7% in 2019/2020. Following the notable development, the sector became the economy’s leading foreign exchange earner.
Under the leadership of Her Excellency Dr. Samia Suluhu Hassan, President of the United Republic of Tanzania, the government has been focusing on ensuring the mining sector contributes at least 10 percent of the GDP by 2025. Engagement with the international community to mobilize capital and investment in the mining sector is prerequisite to materializing this ambition.
The Tanzania Mining & Investment Forum 2023, themed “Unlocking Tanzania’s Future Mining Potential,” will once again connect the Tanzanian, African, and global mining community with global Ministers, CEOs, policymakers and industry leaders in Dar Es Salaam to meet in person and discuss cooperation strategies to unlock and advance the opportunities for development in this vital sector.
The Forum expected to attract over 2,000 global attendees from over 25 countries, will include a world-class conference with over 100 speakers, with more than 20 sessions, keynote addresses and presentations, which will run alongside a large-scale technology and innovation exhibition.
This year’s Forum will have a strong focus on global mining investments, including new projects and partnerships, technologies, regulations and financing. In addition, new topical subjects such as environmental, social and governance policies, strategic mineral developments, sustainable mining, and local content will also be at the centre of the discussion.
On announcement of the 2023 Forum, Hon. Dr. Doto Biteko (MP), Minister for Minerals, said, “I’m inviting all mining stakeholders in Tanzania, from across Africa, and around the globe to participate in the Tanzania Mining & Investment Forum.
“We look forward to making ground-breaking announcements, hosting bilateral and investor meetings, showcasing project development opportunities and working with our national and global partners to unlock the full potential of Tanzania’s mining sector. We look forward to meeting you in Dar Es Salaam as Tanzania is now placed in the high ranking African groups in attracting foreign direct investment.”
Over the past three editions, the Tanzania Mining & Investment Forum has attracted over 4,500 global attendees with participation from over 15 countries, which included a world-class conference alongside a technology showcase exhibition, and the award ceremony for mining companies and individuals who have excelled in various aspects of their activities via the Madini Gala Night. As a result of this, it has become one of the largest events held in the country.
Revisiting Southern Africa, the 2023 edition of the Namibia International Energy Conference will take place from April 25 to 27 in Windhoek, Namibia.
Under the theme, “Shaping the Future of Energy Towards Value Creation,” the 5th edition of the Conference will unite Namibian energy leaders and industry professionals with global partners to discuss challenges and opportunities within the country’s evolving landscape.
As a strategic partner for the annual event, the AEC says it is excited to play a leading role facilitating Namibian and African energy stakeholders to gather and engage with global counterparts and discuss ways to fast-track energy developments for energy security and economic expansion.
The emergence of Namibia’s oil and gas industry has revitalized Africa’s upstream sector with TotalEnergies and Shell making giant discoveries in the Venus and Graff-1 prospects in the Orange Basin, offshore Namibia in 2022.
Through high-level panel discussions and exhibitions, the Namibia International Energy Conference will focus on how Namibia’s vast oil and gas resources can be translated into tangible socioeconomic benefits for the local economy and people while driving regional energy security and the global energy transition.
Namibia has created an enabling environment for investment to flow into the country and has a respectable team managing its Energy Ministry under Minister Tom Alweendo and Namcor, who has given confidence to investors, “so I am not surprised to see energy companies wanting to invest in Namibia,” Stated NJ Ayuk, AEC Executive Chairman.
With the monetization of oil and gas from the Venus and Graff-1 discoveries anticipated to bring up to $5.6 billion in government revenues and double the size of the Namibian economy, a new era of GDP growth on the back of hydrocarbon resource development and exploitation has risen for Namibia.
In addition, with state utility Nampower exporting over 72% of its electricity to meet growing energy demand. With a significant share of the Namibian population still living without access to electricity, Namibia’s oil and gas reserves have a huge role to play in alleviating energy poverty and ensuring independence, while improving the environmental sustainability of the country’s power industry.
Furthermore, Namibia’s massive green hydrogen potential, owing to the vast renewable energy and gas resources, which remain untapped, has positioned the southern African country as a global energy hub with international markets, including Germany directing huge investment to the country and rallying towards grabbing a share of the market to meet growing demand.
“Namibia has a huge role to play in stabilizing energy supply and ensuring affordability across the region, as we seek to make energy poverty history in Africa by 2030. Globally, we are targeting economic expansion and a just and inclusive energy transition, in which oil and gas resources will be vital,” concluded Ayuk.