With the availability of natural gas in countries such as Mozambique and Namibia, coupled with the discovery of gas reserves off the shores of Mozambique and South Africa, the piped gas industry in Southern Africa is undergoing rapid expansion, says the South African Gas Association (SAGA).
In November 2015, Republic of Mozambique Pipeline Investments Company – a joint venture better known as Rompco between chemicals company Sasol, Mozambique’s State-owned gas company Companhia Mocambicana de Gasoduto and State development agency South African Gas Development Company – announced a plan to expand the 865 km gas pipeline into South Africa. This expansion has since been completed and recently petrochemicals company Sasol announced further drilling in the regions adjacent to the existing Pande and Temane fields. Mozambique will soon undergo expansion, with over 2 600 km of gas pipelines projected to be laid and the pipeline to be in full use by 2020.
According to Sasol president David Constable, the Mozambique gas industry is playing an increasingly important role in the regional energy landscape, and this project represents a major milestone in further developing natural resources, which will significantly benefit Southern Africa.
The Value of Piped Gas
In the US, about $456.46-billion worth of piped gas expansion projects is currently active, with the number of gas projects expected to increase in the future. The SAGA attributes this increase to the collective understanding that, gas, as a significantly cheaper fuel, will continue to shape the future of the American industry. The SAGA notes that this presents challenges to global fuel pricing and the very future of oil supply.
However, in Southern Africa, the landscape is different. The challenge lies in marrying infrastructure cost with long-term profits and product competitiveness. For example, not all South African industries support the use of gas, while many companies see the South African governments’ transition to gas as an ill-thought-through decision that was simply rubber-stamped. The SAGA notes that, according to reports in the Mail & Guardian, natural gas has been identified by the country’s top policymakers as a key energy for the future, but new regulations designed to facilitate the switch to a gas economy immediately resulted in a court challenge by some of the country’s largest gas users.
“Technically, Southern Africa is ripe for the piped gas picking, and the industry is showing relative growth, but the challenge remains in the collective willingness by the two main role players: government and industry,” states the SAGA, noting that the development of the gas industry hinges on government’s willingness to keep costs relatively low (by world standards) and industry’s willingness to adapt to using piped gas.
In the last few years, the SAGA has recorded significant growth in demand for piped gas. However, the cost of infrastructure and the development of pipelines play a major role in slowing piped gas demand. The general consensus by research companies and consultants is that piped gas could be the preferred energy supplier in Africa in the future, if obstacles are overcome.