A gas economy could significantly drive South African economic growth, and the discovery of substantial natural gas reserves in the Karoo would be akin to finding gold and sparking a new gold rush.
Speakers said at the opening of the 4th annual Africa LPG Summit and Natural Gas & CNG Africa Forum in Johannesburg yesterday outlined how LPG could pave the way for a gas economy, with imported LNG and indigenous South African gas exploration following, delegates heard.
However, challenges such as affordability and accessibility of LPG, the regulatory environment, and a dearth of infrastructure and skills stood in the way of a rapid move to a gas economy, they said.
Niall Kramer, CEO of the South African Oil & Gas Alliance (SAOGA), says: “There is enormous interest in potentially exploring for oil and gas in South Africa. However, the amended Mineral and Petroleum Resources Development Act (MPRDA) is not in place yet, and investors want clarity and stability before investing in exploration.
“This is a critical year for South Africa – we need the amended act to be passed, and we need stability so that when the exploration licenses are awarded they are accepted, and we can start harmonising policy.”
Opening session panelists said gas made up only around 3% of Africa’s energy mix currently, and could easily be pushed to up to 10% of the mix, creating jobs and growing the economy.
“If we do have a ‘bonsella’ resource such as large shale gas reserves in South Africa, we need to use it in a disciplined and strategic way,” Kramer adds.
Noting that LPG’s place within the gas economy could be to pave the way to widespread acceptance of gas, Kramer says lessons that could be learnt from LPG included managing competition, scale, access, transport, safety, price and scalability.
Renzo Bee, Chairman of the Policy, Regulation & Development Advisory Group at the Global LPG Partnership (GLPGP), says much of sub-Saharan Africa was completely under-developed in terms of gas consumption.
“In sub-Sharan Africa, the average is less than 3kg per capita,” he said. He forecast that by 2030, however, the region could have a population of 1,4-billion, with over 470-million cylinders in circulation, 17 500 marketers or distributors, 1,1-million retail outlets or shops and 420 filling plants.
“But to increase penetration, there must be investment in millions of cylinders. Without this, you won’t see development,” he says.
Bee disagrees with the notion that LPG prices were a significant barrier to market growth, citing regional focus groups who reported that LPG is easy to use, practical, and much faster to cook with than firewood.
However, focus groups in other developing countries had said that barriers to LPG are concerns about safety, poor quality cylinders and a lack of knowledge about how to cook with LPG.
Panellists say LPG is increasingly being used by consumers in Sierra Leone and Zimbabwe; but that better distribution networks could significantly increase LPG adoption. Delegates also note that safety concerns around LPG extended beyond the distribution network to the safety of cylinders and safe domestic use of the gas.
