AFRICA A NEW PLAYER IN THE ENERGY MARKET: - EAST AFRICA - EAST MEDITERRANEAN

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1 AFRICA A NEW PLAYER IN THE ENERGY MARKET: - EAST AFRICA - EAST MEDITERRANEAN Eng. Khaled Abubakr Middle East & Africa Regional Coordinator, IGU Chairman, Egyptian Gas Association Chairman, TAQA Arabia BUILDING A SUSTAINABLE NATURAL GAS INDUSTRY

2 Today s Presentation Agenda Regional Gas Demand African Energy: Overview & Outlook East Africa East Mediterranean Egypt: A robust Energy Hub 2 2

3 ENERGY & AFRICAN DEVELOPMENT BUILDING A SUSTAINABLE NATURAL GAS INDUSTRY 2

4 What s the Energy Role in the Continent Development? Engine for Economic Growth (Energy Consumption Vs GNP) Facilitator of Social Progress Key to Poverty Reduction Employment Generation Promotes Gender Equality Vital Input in Production (All Sectors of Economy) Increasingly Becoming a Need Rather than a Luxury Key Element for Attracting Foreign Investment Foreign Exchange Earner 2 4

5 What s Ahead For the Global Gas Industry NORTH AMERICA Exploit shale resources for positive economic and environmental benefits, continue to earn social license, secure export approvals SOUTH AMERICA ASIA AFRICA & EAST MIDETEREAN EUROPE & CIS Develop plentiful resources, encourage trade, improve regional connectivity, regulatory reform and improve investment climate Develop gas resources, indigenous and imports, at affordable prices to fuel growing economies and clean the air Undeveloped gas resources, exports potential, high regional connectivity, regional gas hub, regulatory reform in-progress De-carbonization, integration of gas with renewables, diversify supply sources, security of demand 2 5

6 AFRICAN ENERGY OVERVIEW & OUTLOOK BUILDING A SUSTAINABLE NATURAL GAS INDUSTRY 2

7 Primary Energy Demand by Region IEA New Policies Scenario 2 7

8 Gas Consumption per Capita 2014 Tonnes oil equivalent Source: BP and Includes data from Cedigaz. 2 8

9 Natural Gas Demand Prospect by Region Billion cubic metres 2 9

10 USD BN Africa Energy Demand Drivers Africa s population is expected to reach 1.5 billion by 2030, being the highest growth rate if compared to any other continent, and almost 3 times of the World s growth rate. The region median age is 20, compared with 30 in Asia and 40 in Europe. Africa now has the fastest-growing middle class. Rapid urbanisation (50% of population will live in cities by 2035) Over the past decade, 6 of the world s 10 fastestgrowing economies were African: USD 1.1 trillion economy at market prices, USD 1.9 trillion purchasing power, Average of USD 1,340 GDP/capita In the last ten years, FDI ballooned from USD 20 bn p.a. to USD 75 bn p.a. According to the IMF, Sub-Sahara GDP is forecasted to grow from USD 1.8 tn in 2011 to USD 2.7 tn in 2016 at a CAGR of 7.3% well above the World s and MENA s CAGR that are forecasted at 6.1% and 6.3% respectively. 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Source: United Nations 1,700 1,650 1,600 1,550 1,500 1,450 1,400 1,350 1,300 1, % Population (Millions) 5.8% 5.9% 1,400 1, % 1,561 GDP Growth Rate (%) Source: International Monetary Fund (IMF) 1, % 1, % 5.5% Real GDP y-o-y growth Africa Growing Economies Africa Rest of the World 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Percentage Africa is moving towards being a large energy consuming society 2 10

11 NG Demand Growth by region BCMY Two regions explain two-thirds of the incremental demand: Asia-Oceania (42%), of which China (28%) and India (5%) The Middle East (24%) Source: Medium and Long Term Natural Gas Outlook CEDIGAZ February 2015

12 Africa Gas Outlook Africa World 2005 Source: US Energy 2020 Information Administration 2035 (EIA) Africa Worl d Natural Gas Consumption (BCM) Natural Gas Production (BCM) Source: US Energy Information Administration (EIA) Source: EIA 4.3% 2.1% 1.9% 3.4% NG Consumption Growth NG Production Growth 2 11

13 Africa Power Outlook Source: EIA Installed Generation Capacity (GW) Africa Rest of World Africa s installed generation capacity is forecasted to reach 214 GW in Although coal is comprising nearly 40% of Africa power generation, NG is the fastest growing, at CAGR of 4.7% p.a., and will account for 47% of Africa power generation capacity by Source: EIA 50% 45% 40% 35% 30% Liquids Nuclear 25% Renewables 20% Coal 15% 10% Natural Gas 5% 0% Africa Electricity Generation (% by type of Fuel) 2,5% 1.7% Power Generation Growth 2 12

14 EAST AFRICA BUILDING A SUSTAINABLE NATURAL GAS INDUSTRY 2

15 East Africa: The new promised land With the huge recent discoveries in offshore East Africa; in particular, Mozambique and Tanzania; the future of African gas is, however, expected to shift eastward. East African LNG is expected to be very competitive into Asian gas markets, unless there are more incentives to direct gas to Europe. The region has more potential if limited gas activity in other East African areas such as Sudan, Ethiopia, and Uganda takes a positive turn from infrastructure woes and political issues. 2 14

16 East Africa in the Global Gas Trade East Africa could supply an estimated 36 MM metric tones / Year to Asia from % of Rovuma basin production will be exported initially as LNG The Mozambican channel is an important trade route between Africa & Asia 2 16

17 EAST MEDITERRANEAN BUILDING A SUSTAINABLE NATURAL GAS INDUSTRY 2

18 East Med: A Source of Prosperity & Peace Reserves are sufficient to meet the domestic demand growth of East Med countries The reserves provide an opportunity to improve geopolitical tensions, improve the quality of life, source of government revenues, and a tool for regional peace New gas finds are regional game changers 2 18

19 EGYPT A ROBUST ENERGY HUB BUILDING A SUSTAINABLE NATURAL GAS INDUSTRY 2

20 East Med Major Fields Excess reserves can be exported, however, for efficiency, they will likely need to be brought to a single hub, Egypt being the most logical location 2 20

21 East Med Local Gas Demands Distribution Year BCMY Kills Idku LNG Damietta LNG Existing infrastructure & a ready market will help fast-track development: via a strong grid & different pipelines via 2 Egyptian LNG facilities 2 21

22 Regional Recent Developments

23 Current IGU memberships Middle East & Africa 2016 Africa Algeria Angola Cameroun Egypt Equatorial Guinea Ivory Coast (Cote d Ivoire) Libya Morocco Mozambique Nigeria South Africa Tunisia Middle East Bahrain Iran Iraq Kuwait Lebanon Oman Qatar Saudi Arabia United Arab Emirates Yemen

24 CONCLUSION BUILDING A SUSTAINABLE NATURAL GAS INDUSTRY 2

25 Africa Energy Challenges Economic growth & energy poverty / access issues remain major concerns. Regional dynamics & global recession issues are coming as high critical uncertain issues to Africa. The continent has seen trade barriers, considered as uncertain issues. Moreover, with huge gas reserves & its new discoveries, further development and prospects of LNG markets and cross-border pipelines are anticipated. Energy efficiency, renewable energy, energy prices and energy poverty are also viewed as requiring bold immediate actions. Climate change issues have been considered as a lower priority. 2 23

26 Climate Change, A Lower Priority In Africa, hundred of millions of houses cook their food with dirty fuels like wood, dung and coal Household air pollution is the second biggest risk factor for death in Africa Household air pollution is the third biggest risk to health, causing stroke, heart disease, lung cancer, pneumonia and more I am telling COP 21 s leaders: It would be unethical for rich nations to demand that the world s poor should bear the burden of lowering carbon emissions. It s not the cooking of the poor that threatens the climate, it is you and me who are. So lets help these families to connect to gas for a better quality of life 2 25

27 Conclusion North & East Africa are growth markets for gas: Exports from North Africa, should remain stable. Algeria remains Africa s serious exporters up to the end of the decade. Mozambique & Tanzania remain sleeping giants. East Mediterranean will be a game changer, particularly with respect to gas. Africa could increase its role as a gas exporter with the start-up of potential LNG projects in Mozambique. While the prospects for additional gas exports in the global market are dim for the short/medium term, the region still contains huge amounts of gas resources waiting to be developed. Egypt is now positioned as a ready gas hub. Development of Africa s unconventional gas resources - largely in North Africa & South Africa - could substantially add to the potential new supply. If various countries in the region are able to overcome obstacles... The rewards could be great, considering the abundance of untapped resources 2 24

28 THANK YOU