Africa’s newest gas producers are concerned that projects that utlilise fossil fuel resources to expand access to electricity are under threat as a result of the winding down of funds for fossil fuels.
The pace of this trend is gaining momentum and dimming hopes for the region to find solutions to its energy poverty issues that have plagued it for years.
“Many companies operating in the sector are scaling down or pulling out completely” following COP26 pledges to lower carbon emissions, Senegal Oil Minister Sophie Gladima said at the sidelines of the MSGBC basin summit.
Senegal is set to supply its own gas for the first time with the landmark Greater Tortue Ahyemi (GTA) and the Sangomar oil field developments both coming online in 2023 or early 2024.
The Yakaar-Teranga project, which has an estimated 15 to 20 trillion cubic feet, is still looking for financial backers, she said. There are plans for the field to be connected to the Tortue project and help fuel power plants in Senegal, which aims to reach universal access to electricity by 2025.
European Oil/Gas firms Are Without Plans to Develop Unsanctioned Reserves
However, these hopes are at the brink of collapse due to the ongoing dwindling of investments in the oil and gas sector. There are even doubts whether existing oil companies such as BP which operates the Cayar Offhsore Profond block where the Yakaar and Teranga discoveries are located have plans to fund operations there.
Besides, there is evidence as GlobalData hinted earlier in the middle of the year that most European oil companies, BP included, do not have plans to develop unsanctioned reserves in the region.
Meanwhile, Chemsdine Sow Deina, the exploration director at Société Mauritanianne des Hydrocarbures et de Patrimoine Minier (SMPHM) is cited to have said:
“MSGBC basin has become a basin that matters in the global oil and gas landscape, even if it is still today a frontier area. We have an enormous potential and we must find the right solutions to use these resources for the development of the country, as we are in an ideal position to export to American and European markets.”
Chemsdine Sow Deina
Despite the importance placed on large-scale gas discoveries made in the region in terms of their role in aiding Africa’s energy poverty and security, the risks are very high. Nonetheless, some dedicated fossil-fuel producing companies are showing interest in the African region to capitalise on its resources.
Thierno Seydou Ly, director of hydrocarbon, Ministry of Petroleum and Energies, Senegal explained that:
“It is clear that these gas projects can have multiple effects on our economy. Naturally, their production capacity far outpaces our domestic needs, so the strategy must be directed at LNG production, but we also explore every other option for gas valorisation.
“However, it is clear that the gas-to-power solutions are truly the ones that will have the most profound impact in the economic development of the country.”
Thierno Seydou Ly, Director of Hydrocarbon
The prospects for gas-to-power projects in developing markets are high, yet funding has already dropped by 10 per cent in 2020 compared to a year earlier, according to BloombergNEF.
Sophie Gladima underscored during the conference that, “we’re hoping that some of the countries that came out strongly at COP26, saying they will no longer finance gas and oil projects, will come around.”
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