Energy, Capital & Power (www.EnergyCapitalPower.com) spoke with Rogers Beall, CEO, Fortesa International Senegal (https://bit.ly/39CCDtJ) about the role of gas power in supercharging African economic development, the role of domestic and European markets, pricing and future investment.
Please tell us your views on the role that gas power will play in the global energy transition?
Gas is essential for the transition as a fast-track mechanism and stepping stone to decarbonization, ensuring rapidly developable power supply that develops African economies. At a base level, it switches out heavy fuel oils, diesel fuel and coal as a lower footprint alternative within much of the existing infrastructure, equipment and generation facilities. But it also allows African economies to compete with industrialized powerhouses on the global market, spring-boarding the continent’s social and economic progress forward.
Of course, natural gas is a blanket term and typically we differentiate it into two types. Most of the countries currently using gas in Africa are using associated gas, i.e. gas coming up along with oil production. And for years, we flared this off as a byproduct – burning up literally enough gas to fuel Africa’s demand for power. Thankfully this is being phased out and globally significant gas monetization has hit Africa. As a fuel source, its carbon footprint is roughly 30% lower than that of crude oil. And with the European Union recently backpedaling on years of blocking gas development, now labeling it as a green fuel source, international markets have opened up, which MSGBC nations are ideally positioned to supply.
Why are so many African countries still flaring?
Historically, extracting gas economically across most of Africa has been a non-starter. Gas wells cost more than oil wells with greater hazards because gas is volatile on the surface and explosions can be deadly. But mostly it was a money thing. Oil prices were and are high at about $108 a barrel whilst many of the oil-producing countries regulated their own gas prices set at next to nothing. Nigeria for instance had the price of gas at 10 cents in MMBTU, then 20 years ago they raised it to 20 cents. Yesterday, natural gas hit $9 in the USA. Governments were keeping gas prices low in the mistaken belief that it would mean cheap power for their citizens, but really it meant no-one was investing in utilizing the resource, so the infrastructure never got built. Senegal’s got the right idea in that it’s legally a free market for gas and many other nations are catching on, with LNG on the rise, new European market opportunities and world-class gas megadevelopments now arising in the MSGBC basin (https://bit.ly/3yKZYnA).
How do you feel about the energy transition?
I’m 100% in favor of the energy transition and of selling excess gas to Europe. Here in Dakar, the fumes from the coal smokestack in the Bargny settlement are blown over the city and you can see the pollution. Gas is cleaner, greener and essential fuel source until such a time as we have effective renewables in place for Africa’s 1.1 billion people.
Most importantly, people need cost-effective power and domestic gas achieves that. The cost per unit of power output for diesel as an energy source is almost twice that of gas yet still much Senegalese power production relies on this heavy fuel oil at $14 in MMBTU. Besides, of the $9 equivalent you might spend on gas instead, half of that goes directly back into the local economy as taxes and to the people developing the resource instead of being shipped back abroad to the country which exported the diesel fuels to Senegal.
During the MSGBC Oil, Gas & Power 2022 conference (https://bit.ly/3a4fuRb), discussions will be centered around the role oil and gas will continue to play in Africa’s energy future. What topics would you like to see addressed at west Africa’s premier energy event and how will Africa, Fortesa and Senegal fit into the dialogue?
For me, the key is that African energy should first develop Africa. Today the Shell station’s out of fuel because we have to import the diesel and so when supply fails, the economy skids to a halt. They’re talking about using naphtha in the new combined cycle gas turbine power plant here but naphtha is more expensive than diesel fuel. We need investment in cleaner fuels for development.
Senegal already has over 30% renewables in its grid. But data from Europe shows renewables there are less than 40% efficient on average which eats into the supply and cost efficiency of these sources. So, I would encourage dialogues around how to drive investment into domestic gas exploration. The oil industry stopped exploring years ago– there’s not 10% of the exploration going on today that was going on globally a decade back. There’s only development and exploitation. So, it is up to we working here in Africa to shift the narrative from talking first about exports. We must take the lead in our own defense to develop Gas fuel not waiting for others risk-taking investors to come while we still have many without access to electricity, while we all pay too much here for the electricity that we do have due to expensive oil sourced fuels and resulting pollution, and onshore African prospectivity can effectively accomplish much of this for African and right now!
Distributed by APO Group on behalf of Energy Capital & Power.
