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World Bank Leads Discussions on African Natural Gas in Gabon

Available in: Français

LIBREVILLE, July 6, 2009—An international conference on the future of natural gas in Africa was held in Libreville, on June 4–5, 2009 under the auspices of the World Bank. The meeting brought together representatives of ministries of hydrocarbons and finance from eight African countries―Angola, Cameroon, Chad, Congo Republic, Côte d’Ivoire, Equatorial Guinea, Uganda, and Gabon, the host country―as well as representatives of oil companies such as Shell, Total SA, Perenco, and Vaalco; members of civil society organizations, and journalists.

Participants familiarized themselves, through presentations made by experts, of the importance of the African continent’s gas reserves. Discussions also touched on challenges related to the development of gas industries in Africa, the analysis of the necessary legal, fiscal, and regulatory frameworks for the development of African gas potential, and the need for sustainable development, especially in terms of the management of social and environmental impacts.

Natural gas currently represents more than 20 percent of global energy consumption, compared to 40 percent for crude. Since 2005, it has been the third largest source of energy in the world, after petroleum and coal. Its high energy yield and environmental advantages place it the “clean” energy category. The International Energy Agency estimates that global consumption of natural gas will double between now and end-2030. Africa has 8 percent of the world’s known reserves, ranking second after the Middle East. The two leading countries in terms of reserves are Nigeria and Algeria.

Because of this position, the African continent can aspire to an important role in the production, domestic use, and export of this source of energy. A number of African countries have already incorporated the use of natural gas into their national energy policy.

However, Africa still has the lowest consumption rate of natural gas in the world, because it exports more than half of what it produces. It would therefore seem that African countries face a dual challenge―on one hand, to find the means of developing their natural gas reserves, and on the other, to use much more of their natural gas production domestically to develop their economies and improve the living conditions of their populations. In facing this dual challenge, ongoing attention should be paid to environmental protection, in the context of sustainable development.

Furthermore, the flaring of most of the gas released during petroleum production represents a waste of natural resources, an environmental problem, and a considerable economic and financial loss for the African continent.

Natural Gas, a Vector for Development

“The World Bank believes that national energy policies should include greater use of natural gas. This can take two forms. First, the production of electricity by gas-fired power plants, followed by the development of a domestic gas market, with the involvement of small and medium enterprises, among others,” said Mary Barton Dock, World Bank Country Director for the Central African Republic.

Generally, the production of natural gas, apart from the major infrastructure investments and prior bankable supply contracts needed for its production, remains an indisputable development factor. It should become a natural vector for development of the socio-economic fabric. In West Africa, for example, the 678 km West African Gas Pipeline will transport gas from fields in Nigeria to three countries―Benin, Togo, and Ghana. The construction of this gas pipeline is a means of regional integration and represents significant progress in the supply of energy and the efficient use of gas, without harming the environment. This project will remain an example of successful regional cooperation.

From a strategic standpoint, African natural gas is a major international issue. Dependence on the Middle East for energy supply is causing major consumers, such as the United States and Europe, to diversify their energy sources, and to increasingly turn toward Africa. From a geopolitical standpoint, the advantage of African hydrocarbons is that a large portion is found on the Atlantic, or near the West African coast, which makes transportation to the United States easier.

For its part, the European Union, in order to guarantee its energy security, is trying to reduce its dependence on Russian gas. Large infrastructure projects are therefore being planned, in particular the Trans-Saharan pipeline project, which will transport Nigerian gas to Algeria, and then supply the European market. It is the result of a cooperation effort that the World Bank is following with interest.

Over the past few years, several African countries have overcome the formidable challenge of exporting Liquefied Natural Gas. The development and success of Nigeria LNG and Punta Europa in Equatorial Guinea prove that Africa can become a competitive supplier of Liquefied Natural Gas. Angola LNG should complete this picture, with its start up of production in 2012, which demonstrates that the African continent has a role to play in this sector.

The current context, marked by the international economic and financial crisis, is undoubtedly difficult, because these projects require mobilization of large amounts of capital. However, this should not serve as an impediment to a proactive and persistent stance.

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