by Pierre Jouvellier
The changing structure of national energy mixes in several countries is currently giving new opportunities for natural gas exporters. For instance, with the declining oil price and the rise of environmental concerns, governments and nations are more attracted by natural gas instead of coal for power generation. Although coal and petroleum coke remain the less expensive commodities available on the energy market regarding electricity generation, natural gas is considerably more environmentally friendly with less CO2 and Sulphur emissions generated in the atmosphere.
South Africa’s energy mix in 2013 was quite the same as China’s. With 72% of coal, 22% of oil and only 3% of natural gas for the moment, considering that the remaining percentages are for nuclear power and renewables, the country is unsurprisingly still highly dependent on coal. Indeed, South Africa owns more than 3.4% of the global coal reserves with more than 30billion tons, which makes the country the 7th coal global producer and the most important of Africa with 147.7 million tons of coal produced in 2014.
However, even if South Africa generates a large amount of electricity thanks to coal-fired plants, more than 8 out 54 million people are currently living without any access to electricity. In 2012, electricity demand was 212TWh and is expected to reach 248TWh in 2020 and up to 364TWh in 2040. Therefore, South Africa will need to add new commodities in its energy mix in order to fill the gap between demand and supply, natural gas seems to be the most serious alternative in terms of environmental issues and proximity with Mozambique.
Destroyed by more than 15 years of civil war between 1976 and 1992 which killed nearly 1 million people, Mozambique is also one of the poorest countries in the world. The recent discovery in 2010 of giant gas fields off the coast has given more perspective regarding Mozambique’s future. Mozambique’s proved natural gas reserves are estimated to 100 trillion cubic feet (tcf), equivalent to 2,831,684,659,200 cm placing the country as the third-largest proved natural gas reserve of Africa, just after Algeria and Nigeria.
In 2012 Mozambique produced nearly 154 billion cubic feet of natural gas from the two onshore gas fields, Pande and Temane. About 82% of this natural gas (127 Bcf) was exported to South Africa via the 865km Sasol Petroleum International Gas Pipeline while the remaining 27 bcf were domestically consumed. More recently, the Mozambican state owned company ENH signed a cooperation agreement with the giant South African SacOil and the China Petroleum Pipeline Bureau for the construction of a new 2,600 kilometers large diameter gas pipeline. Other African companies are also involved in this project, such as Profin Consulting, The Public Investment Corporation (PIC) and the agency of the Government of Mozambique (IGEPE).
This 6 billion dollars project also called “the African renaissance gas pipeline” will allow Mozambique to provide South Africa with natural gas produced in the prolific Rovuma basin of Southern Tanzania and Northern Mozambique (Offshore). Besides, other countries of the Southern African Development Community (SADC) that would benefit from such project include Malawi, Zambia, Zimbabwe, Botswana, Lesotho and Swaziland. Mozambique could therefore dynamize the South East African economies by providing jobs and increasing access to electricity promoting cleaner energy.
Moreover, Mozambique is also preparing the next step of internationalization for its natural gas exports. By choosing to transport methane by sea under liquefied form LNG, the country will become the first LNG liquefaction plant in East Africa. The geography will allow it to send LNG carriers to important natural gas buyers such as India, China, Japan and South Korea. While Algeria has to pass through the Suez Canal and Nigeria has to navigate along the African west coasts, Mozambique could send vessels directly to Asia, saving fuel and time. Based on Dataloy VMS, the distance from Bonny LNG (Nigeria) to Dahej (India) is 7,246nm which means that at the speed of 17.5 knots it takes about 17.25 days to deliver natural gas to India. From Pemba (Mozambique) to Dahej the distance is only 2,817nm, which means that at 17.5 knots it would take less than 7 days to deliver this gas for the same destination. Thus, in addition to the fact that Mozambique would drive the South East African economies, the former Portuguese colony could also profit from geography in order to provide Asia with LNG.