rodney j. macalister - ceo - monetizing gas africa - rj... · rodney j. macalister - ceo august...

WORKSHOP 8 – Addressing Africa’s Power Deficit Part III – Natural Gas Value Chain

Rodney J. MacAlister - CEO August 2015

About Us

• Monetizing Gas Africa Inc. is a US corporation

• Our HQ is in Cape Town, South Africa

• The Co-Founders are Rod MacAlister and Ebrahim Takolia

• We believe that “energy poverty” is the key challenge constraining Africa’s emergence, and that gas can do more than any other fuel to satisfy Africa’s growing energy demands for the next several decades

August 2015 © Monetizing Gas Africa Inc. 2

Purpose & Vision• MGA exists to maximize the commercial provision

of natural gas to end-users through targeted infrastructure

• Our vision is:• to build a robust portfolio of missing African gas

infrastructure assets between producers and consumers that adheres to a strict code of governance; and

• to facilitate a shift to gas from coal and oil by promoting gas exports to the rest of the world, and developing Africa’s domestic gas markets.

• Our business is based on sound commercial objectives, which will also yield a high developmental impact


Large Energy Deficit

• Model for Development: economic growth runs on energy

• Gas will serve many needs• Electricity

• Base load• Peaking• Distributed• Support for renewables

• Gas to Liquids• Liquid fuels• Chemicals / fertilisers

• Direct mobility


620 million

Sub-Saharan Africa has more people living without access to electricity than any other region in the world, 50% of the global total

Access to Electricity


<50%Electrification Rate

Installed capacity is just 12.1% of China’s, and 56% of India’s

New Africa 2015, Closing Africa’s Energy Gap

Share of Gas Reserves

• Africa’s gas reserves have remained stable at about 8% of global total since 1993• ~2/3 deep water, ~1/3 land

• New recent additions to Reserves will increase Africa’s share of global reserves

• Flared gas, ~35 Tcf flared to date in Africa*

• Biggest Challenge is Monetizing existing gas reserves

• Africa Gas Production pa• Natural Gas = ~7 Tcf pa (85%)

• Flared Associated Gas = ~1.2 Tcf pa (15%)


>600 TCF

Africa’s gas reserves’ growth:604 Tcf (2015) - est498 Tcf (2013)489 Tcf (2003)355 Tcf (1993)

Natural Gas’ share of energy in 2035: 35%, (vs. 24% in 2013)

BP Statistical Review of World Energy June 2014*World Energy Outlook, Africa Energy Outlook, 2014

Missing Gas Infrastructure


Underinvestment in Infrastructure in Midstream

and Downstream

Saturated upstream with many stranded deposits

due to limited or no infrastructure

~10%

With only 10% of Africa’s gas currently monetized, there is an immense need for infrastructure that connects Africa’s gas resources to both global and local markets.

Linking African

Demand to Supply

Gas-to-Power Potential


20% Average

Gas will be a significant source of electricity generation.Africa will require major investments in generation, infrastructure, transmission & distribution to meet its electricity requirements

McKinsey (Brighter Africa – The Growth Potential of the Sub-

Saharan Electricity Sector)

McKinsey (Brighter Africa – The Growth Potential of the Sub-Saharan Electricity Sector)

Obstacles

• Most of Africa’s resources have been monetized for international markets and export

• Low domestic investment

• Development of domestic markets is held back by:• Inability to Assess the Market with certainty;• Investment inefficiency (significant opportunity cost) through:

• Corruption, “cost of government”• Delay, Inaction• Lack of professional gas and infrastructure expertise

• Under-developed Policies & Frameworks

• Patient Capital - time horizon for returns• Private Equity / Funder time horizon – 3-5 Years• Requirement – 10+ years


Why has Africa not realised the potential of its gas resources to meet domestic energy requirements?

Project Timeline IssueP

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“Financing has to be patient enough to outlast electoral cycles.”

An example of the way investment is deterred in this sector

7 Year Average delay

Solutions

• Increased recognition of gas by governments, producers, consumers and financiers

• Technology development

• Direct government action and incentives

• Financing instruments tailored for African gas

• Increased gas skill sets


What will it take to fully realise the era of Gas in Africa?

Source: Compact GTL

Each existing technology has its place. More are needed, especially small-scale.

Recommendations - 1

• Policies• Prioritise gas• Promote incentives• Promote domestic markets

• Laws• Fit-for-purpose laws applying to gas, with equal sophistication

as those for oil, incentivizing investment• Promote gas as the preferred hydrocarbon energy source

• Regulations• Ensure fast and smooth implementation of laws. No “creep”• Limited, intolerant of corruption, confusion and delay


What are the tools in the government toolkit to enable gas to realise its full energy supply potential?

Recommendations - 2

• Procedures• Clear, transparent and streamlined

• Penalise corruption

• Appeals process for indecision or sub-optimal decisions

• Personnel• Experienced people with expertise and understanding of

gas industry and its character and requirements


More ideas for tools…

Seeking…

• Countries to invest who are in favor of such recommendations;

• Non-public asset opportunities;

• Seed finance;

• Expert engineers; and

• Advisory opportunities.


Corporate Headquarters: Washington DC, USAAfrica Headquarters: Cape Town, South Africa

[email protected]

Disclaimer


The material in this presentation has been prepared by Monetizing Gas Africa Inc.(“MGA”) and is based on information available at the date of this presentation. This information is given in summary form and does not purport to be complete. Information in this presentation, including forecast information, should not be considered as advice or a recommendation. Before acting on any information you should consider the appropriateness of the information and the risk of adverse or unanticipated market, financial or political developments. This presentation may contain forward looking statements including statements regarding our intent, belief or current expectations with respect to oil and gas industry businesses and operations, market conditions, results of operation and financial condition, capital adequacy, specific provisions and risk management practices. Readers are cautioned not to place undue reliance on these forward looking statements. MGA does not undertake any obligation to publicly release the result of any revisions to these forward looking statements to reflect events or circumstances after the date hereof to reflect the occurrence of unanticipated events.While due care has been used in the preparation of forecast information, actual results may vary in a materially positive or negative manner. Forecasts and hypothetical examples are subject to uncertainty and contingencies outside MGA’s control. Past performance is not a reliable indication of future performance.

rodney j. macalister - ceo - monetizing gas africa - rj... · rodney j. macalister - ceo august...

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