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Social and environmental sustainability are critical to securing the future of Africa's energy industry, says Pat Davies, Sasol Limited.
 Africa is increasingly seen as a major player in global energy. How large are Africa's energy resources?
Africa’s known oil reserves are about 110bn barrels; roughly 9% of the Global 1200bn barrels reserve (Libya 39bn barrels; Nigeria 35bn barrels; Algeria 12bn barrels; Angola 9bn barrels). Africa's oil is in high demand due to its quality (light and sweet), location, and different risk profile to other oil regions. (BP Stats)
Africa’s Gas reserves are about 500tcf; roughly 7% of the Global 6300tcf reserves (Algeria 160tcf; Nigeria 180tcf). There is still major room for development of Africa’s gas for international and local markets. Particularly in terms of diversification of the markets for gas away from the traditional electricity markets and heating markets into liquid fuels. (BP Stats)
Africa's Coal reserves are about 55bn ton; roughly 6% of the Global 900bn ton reserve – concentrated in Southern Africa (SA = 50bn t; Botswana 4bn t). Coal in Africa is well managed and developed. Africa has also taken the lead in using coal not just for the generation of electricity, but also to utilise for transportation energy and so create energy independence. (BP Stats)
With some of the world’s largest rivers, Africa has considerable hydro-electric potential. However, until now this has remained underdeveloped. The continent’s potential for solar energy is also very large, but also remains underdeveloped.
| Biomass is currently over utilised in Africa and is a result of the energy poverty that is to be found across much of the continent. This dependence upon biomass has significant environmental impacts in terms of deforestation, soil erosion and loss of bio diversity. Care should be taken in pursuing goals of energy security through the use of bio-fuels as this can have wide-ranging impacts, not only upon bio diversity in Africa, but also food and water security if not done carefully. |  |
"Through NEPAD and other initiatives, the governance and economic climate in Africa is steadily improving."
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How secure are these energy sources?
Through NEPAD and other initiatives, the governance and economic climate in Africa is steadily improving. This is already having a positive impact upon the security of Africa’s energy resources and the investments made in them. Sasol has seen this development and as a result, our first large energy investment, outside South Africa, was made in Mozambique. A GTL plant using our technology is currently being built in Nigeria.
There is unprecedented interest in the Gulf of Guinea as a source of oil for both established and emerging economies. What are the opportunities and challenges for local players in Africa’s energy sector?
Naturally, the resources and opportunities in West Africa are significant. I believe it would be a tragedy if Africa were not to utilize this opportunity. One way for Africa to benefit is to add greater value to its energy resources in-country prior to export. This is particularly true of natural gas, where I believe African countries can add significant value. In this way skills development can take place and other investment can be attracted.
Furthermore, through greater cooperation, of the sort we are witnessing with NEPAD, we can increase trade between the energy-poor and energy rich-countries of Africa. This represents a significant opportunity for African countries to share in these resources and the opportunities that they represent.
How will China’s demand for energy impact growth in Africa’s energy sector?
Africa is China’s largest source of crude oil imports. However, China is only one of many markets for African oil. Therefore, the rise of China has significantly increased the bargaining power of African oil producers. China is prepared to build a long-term, stable oil-supplying infrastructure in Africa to provide for its energy needs. At the same time, it is prepared to offer additional benefits to gain access to a stable oil supply. Inherently, this should be a positive development for Africa and, particularly, its energy sector. It is incumbent upon us as Africans to make the best use of this opportunity.
How can today's high profits from energy be reinvested to ensure the sustainability of the industry?
The sustainability of our industry depends upon two questions:
1. Our environmental sustainability
2. Our social sustainability
Environmental sustainability is one which I think most commentators are very aware of. At Sasol, we have become acutely aware of the need to reduce our environmental footprint. We are therefore looking very seriously at all our processes, and investing to improve their energy and carbon efficiencies in particular.
However, it is the social sustainability of our industry that I think many commentators, particularly in the developed world, often ignore. Too often, energy resources are extracted from countries and communities with little value added to them locally. This merely creates resentment of the sort we are witnessing ever more of. I believe that we as an industry should look at how we can increase the value we add to our commodity (particularly natural gas) in the countries we are involved in. In addition, the world faces an energy divide as deep and pervasive as the digital one. After all, a digital society is, by its nature, dependent upon energy. Energy poverty is therefore a critical question that has to be addressed to secure our industry’s future.
To address these issues I believe, will require the sort of technology and ingenuity we human beings have always been capable of. I believe therefore that we should be investing money in new technologies. Technologies that:
1. Increase the envelope of available energy resources
2. Improve the opportunities available to our host communities
3. Reduce our environmental footprint.
High energy costs can jeopardize the profitability of industries as they struggle to compete globally. Is what’s good for African energy generally bad for other African businesses?
I do not believe this is necessarily so. Africa is a net exporter of energy. Therefore, high energy prices are generally a benefit for the continent. The question is how do we ensure that the greatest number of Africans and their businesses, both in and outside the energy sector, benefit?
I believe the answer to this question lies in the points I made above. It is a question of making sure that we add greater value to our energy resources inside Africa before exporting them. In this way, we can create jobs, skills and opportunities for African businesses outside of the energy sector. Secondly, we need to build further upon the initiatives that have already been launched to improve inter-African cooperation and trade. In this way, we can ensure the benefits enjoyed by the energy sector are felt throughout the African economy. |
