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11TH AFRICA OIL & GAS TRADE AND FINANCE CONFERENCE

USING GAS FOR AFRICA’S ENERGY FUTURE

PRESENTED BY:

SIYANGA MALUMO

FIELDSTONE AFRICA (PTY) LTDJOHANNESBURG

NAIROBI, KENYA 24TH MAY 2007

UNCTAD ME KENYA ITENATIONAL OIL

NOT AN OFFICIAL UNCTAD RECORD

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AFRICA TODAY

Zimbabwean Woman

Nigerian WomanSouth African Woman

Somali WomenCameroonian Women

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AFRICA TODAY

Geography 30 million Sq. km 53 Countries, including the Islands

Demographics (2002) 800 Million People

The Economy (2002) Gross Domestic Product: US$ 560 Billion Average Per Capita Income: US$ 720 Total Debt: US$ 300 Billion

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AFRICA TODAY

Gas Reserves (2002)Africa: 400 TCF

World: 5 500 TCF

Africa Share: 7%

Gas Consumption (2001) Africa: 20.9 Quadrillion Btu

World: 409.9 Quadrillion Btu

Africa Share: 5%

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AFRICA TODAY

Gas Reserves: African Countries Algeria (7th) Nigeria (10th) Egypt (16th) Libya (17th) Angola South Africa Cameroon Mozambique Congo DR Congo, Republic Ivory Coast Namibia

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AFRICA TODAY

Gas Reserves African Countries 2 Gabon, Equatorial Guinea Madagascar Tanzania Ethiopia Senegal Rwanda Benin Botswana

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AFRICA TODAY

Gas Pipelines (Km 2002)

Africa World * Africa’s Share

Present 2 000 11 600 17%

Planned 5 500 88 000 6%

Total 7 500 99 600 8%

*Excludes North America

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NEPAD OBJECTIVES 1

• Increase Access to Reliable & Affordable Commercial Energy Supply (from 10% to 35%) within 20 years;

• To Improve the Reliability and Lower Cost of Energy Supply to Productive Activities in order to Enable Economic Growth of 6% per annum;

• To Rationalise to Develop the Territorial Distribution of Existing and Unevenly Allocated Energy Resources;

• To Strive to Develop Africa’s Abundantly Available Solar Energy Resources;

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NEPAD OBJECTIVES 2

• To Reverse Environmental Degradation that is Associated with the Use of Traditional Biomass Fuels in Rural Areas;

• To Exploit and Develop the Hydropower Potential of the River Basins of Africa;

• To Integrate Transmission Grids and Gas Pipelines so as to Facilitate Cross-border Energy Flows;

• To Reform and Harmonise Petroleum Regulations and Legislations in the Continent.

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SALIENT STATISTICS 1(2003)

• WORLD ELECTRICITY CONSUMPTION: 14,767.75 Bn Kilowatthours

• AFRICA ELECTICITY CONSUMTION: 435.51 Bn Kilowatthours (3%)

• WORLD ELECTRICITY GENERATION: 15,852.41 Bn Kilowatthours

• AFRICA ELECTRICITY GENERATION: 471.05 Bn Kilowatthours (3%, cf middle east 3.3%, Asia Pacific 31.5%, Europe / Euro Asia 28.7% S / C America 5.2%, N America 28.2%)

• WORLD ELECTRICITY INSTALLED CAPACITY: 3,625.71 Bn Kilowatthours

• AFRICA ELECTRICITY INSTALLED CAPACITY: 104.38 Mn Kilowatts (2.9%)

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SALIENT STATISTICS 2

• Commercial Energy Consumption (World: 65 Mn per capita, Africa:14.9 Btu million per capita)

• Carbon Emission: (Africa: 72 Mn tonnes / 2% 1970, 202 Mn tonnes 1997 / 3%, 365 Mn tonnes 2020 / 3%, Africa total = Germany or India total)

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Sources of Commercial EnergyAfrica: 1970 - 1997

• Oil (86%)

• Coal (increased from 11% to 19%)

• Hydro (increased from 2% to 2.3%)

• Natural Gas (increased from 0.5% to 15%)

• Nuclear (increased from 0% to 0.5%)

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ROLE OF ENERGY IN DEVELOPMENT

• Engine for Economic Growth (High Correlation between Energy Consumption and GNP)

• Facilitator of Social Progress • Key to Poverty Reduction• Employment Generation• Promotes Gender Equality• Vital Input in Production (All Sectors of Economy)• Increasingly Becoming a Need Rather than a Luxury• Key Element for Attracting Foreign Investment• Foreign Exchange Earner

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REGIONAL PATTERNS IN ENERGY REPORTING

Percentage of reports, per region, citing each topic

Africa Arab States

Asia Europe & CIS

Latin America

Population using traditional (solid) fuels 30 % 30 % 42 % 5 % 28 %

Energy efficiency (rise or decrease in consumption

14 % 30 % 68 % 55 % 67 %

Air pollution and CO2 emissions from energy use

6 % 38 % 58 % 64 % 62 %

Use of wood fuel as cause of deforestation 54 % 23 % 21 % 9 % 5 %

Reporting national energy fuel sources 9 % 23 % 26 % 23 % 19 %

Energy infrastructure vis-à-vis development

14 % 8 % 37 % 23 % 19 %

Renewable sources as an increasing share of energy supply

3 % 8 % 16 % 14 % 20 %

14 Source: UNDP, A Review of Energy in National MDG Reports 2007

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TYPES OF GAS

• Biomass

• Natural Gas

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USES OF GAS

• Domestic (Cooking, Refrigeration, Heating, Lighting)

• Commercial (Cooking, Lighting, Air Conditioning, Refrigeration, Healthcare)

• Industrial (Manufacturing, Waste Treatment, Power Generation, Cogeneration)

• Locomotion (Motor Vehicles)• Fuel Cells• Synthetic Petroleum

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ADVANTAGES OF GAS

• Environmentally Friendly (Low Pollution)• Easy to Transport (Pipeline)• Low Cost (e.g. US $500-to $750 per Kilowatt in

Electricity Generation)• Low Production Costs • Very Compact Generators (Electricity Generation)• Quicker to Install (Electricity Generation)• Improved Thermal Efficiency in electricity generation

(modern machines Running at 38% Single Cycle & up to 60% Combined Cycle)

• Alternative to Expensive Fuels (like Petroleum)

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CONSTRAINTS OF GAS

• Finite Reserves • Production Challenges (Requires Significant

Investment to Extract)

• Produces CO2

• Transportation Challenges (Need for Pipelines)• Costly Logistics (Where LNG Involved)• Oligopolistic Industry (Few Gas Suppliers,

Limited Tanker / Train & Pipeline Capacity)

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CHALLENGES TO GAS DEVELOPMENT

Lack of InvestmentHigh Cost of FundsAmbiguous PoliciesPolitical InstabilityLack of Intra-Continental CooperationCulture

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FACING THE CHALLENGES

Investment

Cost of Funds

Policies

Political Stability

Culture

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CONCLUSION

Need for Pan African Strategy:

• Development of Continental Approach to Development (NEPAD, African Union, Sub-Regional Common Markets and Groupings)

• Accelerate Pipeline development (e.g. West Africa)

• Build Regional (rather than national) power stations

• Seek Assistance from Bilateral & Multilateral Institutions (e.g. World Bank’s ESMAP)

• Develop Continental Approach to Gas Development (e.g. Africa Energy Commission Under African Union, Forum for African Energy Ministers)

• Attract Foreign & Local Private Investment (BOO, BOT, PPP)

• Create Enabling Environment

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THE END