Earth Finds

Earth Finds

Great, South Africa Found Gas. Now What?

By Zwelakhe Gila

Coming at a time when South Africa’s policy makers are struggling to diversify the country’s energy mix, Total Exploration and Production Southern Africa recently announced a major offshore gas discovery.

The Brulpadda well off the shore of Mossel Bay is one of a number of highly anticipated exploration prospects in South Africa. First reports of the field indicate that it holds between 500 million to over 1 billion barrels of oil equivalent. In comparison, neighbouring Mozambique’s 2012 discovery held over 350 billion barrels of oil equivalent.

Those familiar with the history of Africa’s energy sector, and even those that aren’t, rejoice with a faint concern of what has been the outcome for many other resource abundant countries on the continent.

Granted, while Total’s finding alone is not enough to eclipse the plethora of other resources in South Africa – coal and gold in particular – it does find the country at a weak moment of energy policy and, more importantly, energy security. South Africa’s Integrated Resources Plan (IRP) that covers the 2010-2030 period was indeed reviewed only once since its release in 2011.

The 2018 IRP draft, yet to approved, does expect to see 8,100MW of additional gas-to-power capacity set up by 2030, but remains what it is: a draft.

This further justifies the need for adequate and timely gas regulatory policy and balanced local content regulations to avoid squandering an opportunity to catapult South Africa into a booming African energy frontier.

This crucial need is further highlighted considering that month’s prior to Total’s discovery; Minister of Mineral Resources Gwede Mantashe halted all applications for oil and gas exploration in order to change its licensing process.

The move notably saw super major Royal Dutch Shell relinquish a license to search for oil off South Africa, citing legislative uncertainty. Uncertainty does indeed prevail across South Africa’s oil & gas licensing and regulation.

Careless expedience to reopen the licensing process given the inevitable interest that follows such a discovery could still ultimately be detrimental to the country’s benefit from possible reserves.

Natural gas allows for the creation of a cheaper, domestically-sourced, and more environmentally-neutral energy grid that has now become a global imperative. Natural gas is widely considered to be a key component to this impetus.

Although South Africa is the largest electricity producer in the continent, and even exports electricity to neighboring countries like Namibia, it still suffers from inadequate infrastructure management that has seen an increasing rate of nation-wide blackouts.

This begs many to question if the popularization of gas-to-power infrastructure – electric power generated by gas-powered turbines – motivated by the recent Total find will have a true impact on energy security or suffer the same fate as the coal-powered plants.

Given natural gas's primary usage and function as a source of heat and power production, South Africa is now posed with answering the difficult question of how invested the country will be in its coal reserves and coal-reliant power infrastructure that practically serve the same purpose as gas.

Especially when considering that South Africa holds approximately 11% of the worlds total coal reserves, coal mines being the largest direct job creator in the mining industry, and coal being South African economy’s highest foreign exchange earner.

President Cyril Ramaposa’s recent announcements to debundle the debt ridden Eskom is detailed to be an effort to motivate private power producers. This progressive approach to incentivize private companies, if conducted through a fair and inclusive manner, stands to be a significant determinant in attracting investment into gas-to-power facilities.

The trend for discoveries of this scale, especially in countries whose markets and infrastructures are unable to absorb the resource, is for immediate exporting of the resource to more lucrative European and Asian markets.

Natural gas consumption in such regions as Western Europe, South or East Asia are currently at the highest level since 2001 and on the 20th consecutive monthly high deliveries.

Natural gas exports are also the highest since EIA began tracking monthly in 1973. The incentive to move the natural gas found in South Africa to international markets is overwhelmingly promising and would follow recent trends adopted by African countries that have recently discovered gas such as Mozambique or Senegal.

It is the duty of the Department of Energy and the Department of Mineral Resources to ensure that the regulatory master plans for such discoveries are adequately aligned with further developing local natural gas infrastructure as well as further incentivizing International Oil Companies to carry out more exploration. It is a task whose failure to deliver accordingly has led to a litany of wasted gross domestic prosperity.

Zwelakhe Gila, is the Head of Commodities, African Energy Chamber 

Kiwanda Commends Sudhir’s Ssese Gateway Beach Hotel Plans

Sudhir Ruparelia’s plans to construct a new-5 star hotel at Ssese Island on Lake Victoria have received plaudits from State Minister for Tourism Godfrey Kiwanda saying the new development will go a long way in boosting Uganda’s tourism sector.

In January, Ruparelia announced he was going to spend $10m to construct a luxurious Ssese Gateway Beach Resort and Conference center. Ruparelia said the hotel will give both Ugandans and foreigners new options in regards to accommodation, meals, beverages and conference facilities.

“We need more hotels in the country to reduce the cost of accommodation,” the minister recently told Business Focus in an interview. Kiwanda encouraged hotel owners to make partnerships with international hotel brand managers so that its gates will be opened to more visitors. “We also need international brands to set up here and this can be achieved through partnerships,” the minister said.

Ruparelia noted that the hotel will provide a number of employment opportunities and contribute to national development.

“The construction of the new hotel is estimated to take a period of three years. It will consist of 350 guest rooms. This will boost the country’s tourism sector and create more jobs for Ugandans. We want to give both Ugandans and foreign visitors something new and contribute to national development,” Sudhir said.

Kabira Country Club Set For Football Tournament

The Kabira Country Club six-a-side corporate Football Tournament is set to take place on on 31 March at the hotel playground in Bukoto, Kampala. Registration to participate in the tournament is ongoing at a cost of Shs200, 000 per team.

The Director of Kabira Country Club Rajiv Ruparelia said the fun filled tournament is great for networking and comes with many health benefits and a lot of cash prizes will be won. The tournament is receiving technical support from Federation of Uganda Football Association (FUFA).

The one day tournaments attracts teams from different corporate institutions and celebrities to play football for fun. Last year in June, over 20 teams, including Yokuku, Bet Yetu, Midocm, Bukoto Heights, Katon Rainbow, JBM FC, Victoria University and Riham, took part in the tournament.

Prozone Soccer team won the tournament after defeating Victoria University 1-0 in the final and in the process taking the grand Prize of Shs1Million.

Kabira Country Club general manager Vismay Maniyar said the tournament will go a long way in improving the levels of fitness and standards of the game.

“This is a very important tournament as we build to grow the game through bringing together corporates and integrating people with our facilities like pitches, gyms and swimming pools.” he said.

Dangote, Chevron Nigeria Sign Historic Agreement On Gas Supply

Dangote Fertilizer Limited has entered into a long-term agreement with Chevron Nigeria Limited (CNL) for the delivery of Natural Gas from Chevron's supply portfolio to the fertilizer plant, which is poised to start operations soon.

The contract, under the Gas Sale and Aggregation Agreement (GSAA) is part of International Oil Company (IOC)'s gas obligation to the domestic market through the Gas Aggregation Company Limited (GACN).

The signing ceremony, held at the Department of Petroleum Resources (DPR) office in Lagos, was executed on behalf of the parties by Group Executive Director, Strategy, Capital Projects & Portfolio Development, Dangote Industries Limited, Devakumar Edwin; Chairman/Managing Director, Chevron Nigeria Limited (CNL), Jeffrey Ewing; Head, Gas Monitoring & Regulation Division, Department of Petroleum Resources (DPR), Sanya Bajomo; and Managing Director/CEO, Gas Aggregation Company Nigeria Limited (GACN), Engr. Morgan Okwoche.

Dangote Fertilizer Limited, which is ready to be commissioned before the end of this year, will produce 3.0 million metric tonnes per annum (mmtpa) of Urea.

The fertilizer plant consists of twin train, with each single train having a capacity of 1.5 million tonnes per annum of Urea and Ammonia, which makes each of them the largest train available in the world. Hence the total capacity of the plant is 3 million tonnes per annum, and it sits on an area of 500 hectares.

Speaking at the signing ceremony, Group Executive Director, Strategy, Capital Projects & Portfolio Development, DIL, Devakumar Edwin, commended the Managing Director of GACN for his role in the new business relationship between Dangote Fertilizer Limited and Chevron Nigeria Limited.

He said the company is looking forward to having a long-term relationship with Chevron Nigeria Limited as well as synergies in other upstream and wider areas of operations in the oil and gas sector.

Chairman/Managing Director, CNL, Jeffrey Ewing commended GACN, DPR for helping with the signing of the gas supply agreement. He said: "We are looking forward to working with Dangote Fertilizer and maintaining a good relationship with the company. This agreement is very important for the country and Chevron is committed to Nigeria's economic development."

The Managing Director/CEO, GACN, Morgan Okwoche, expressed delight to be part of the domestic gas agreement. "This is the beginning of fruitful relationship between Dangote Fertilizer Limited, Chevron Nigeria Limited and other parties. I am excited that this is happening during my term in office. You cannot imagine my satisfaction in having this contract signed at this time," he said.

Head, Gas Monitoring & Regulation Division, DPR, Sanya Bajomo, said: "I am glad that GACN, Chevron and Dangote have signed this gas supply agreement. I want to say that this gas supply agreement is an issue of national interest and what happened today is going to be transmitted to the presidency. I believe everybody is going to benefit from this agreement when the fertilizer plant starts operation."

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