ENERGY
POSITIONING FOR THE ENERGY TRANSITION Increasing E&P in gas and strengthening the mineral supply chain By Ogi Williams – Associate Director, In On Africa
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“ Gas-power generation is set to increase driven by strong demand from regions such as the Asia-Pacific, China and India. – Williams
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GAS SET TO BE THE NEW OIL …
The technological developments in shale oil and gas brought online cheap sources of supply, with producers springing up across key regions of the United States in aid of weaning off Middle Eastern oil. Russia for its part also moved to aggressively tap into its hydrocarbon resources and raced up the global supply ladder to become the largest producer alongside Saudi Arabia.
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espite the setbacks incurred off the back of the COVID-19 pandemic, the trajectory for African participation in the global energy transition was already set in motion in prior years. New technology and developments in shale oil exploration and production (E&P) caught up with demand in mid-2014 and sent the oil price crashing from record highs of $120 per barrel to less than $40 within a matter of months. The crash kick-started the global shift towards cleaner fuels with gas becoming the low-hanging fruit for energy generation while renewable generation capacity catches up. In parallel, new battery storage technology developments and the impetus to switch to electric vehicles (EVs) is further driving demand for key minerals such as cobalt, copper, graphite and lithium. Though economic and other activity has been stifled over the course of 2020, pulling the oil price down to new lows, the outlook for new developments in gas E&P and further mining exploration surrounding battery minerals looks positive. Markets such as Gabon and Tanzania are aligning policies accordingly in catering for new developments, while others such as Algeria, Mozambique and South Africa move towards tapping into undeveloped resources. Activity during 2021 will be somewhat subdued as the world returns to some sense of normality, however positioning to capture on future opportunities to participate in the energy transition will be key during this time.
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SA MINING
MARCH / APRIL 2021
www.samining.co.za
The culmination of developments has plagued the ability to stimulate interest in new oil E&P given oversupply with focus gradually shifting towards extracting further value from existing fields rather than looking for new developments. This has been evident in mature oil producers such as Angola, Equatorial Guinea and Gabon. Additionally, as environmental policies on CO2 emissions tighten across the world, gaspower generation is set to increase driven by strong demand from regions such as the Asia-Pacific, with China and India being the key drivers of consumption given strong policy support for a transition to gas. Dominant suppliers in the Middle East including Saudi Arabia and Qatar as well as outsider Russia have all moved towards increasing supply to cater accordingly, but await the uptick in global demand and economic growth before committing to too many new projects. Not to be left behind, African markets have begun to position with a sizable number of projects including liquefaction plants, transport terminals and gas treatment plants >
