The economic prospects for Mozambique, Namibia and South Africa of establishing a natural gas driven industry in Southern Africa

Langenhoven, Pieter Lesch (2004-12)

Thesis (MBA)--Stellenbosch University, 2004.

Thesis

ENGLISH ABSTRACT: Although natural gas is utilised as a major source of energy in the world, in the past it has made a negligible contribution to the primary energy needs of Mozambique, Namibia and South Africa. This deviation from the rest of the world is in spite of known natural gas reserves in Mozambique, as well as off the coast of Namibia and South Africa. The reasons why natural gas is not a primary energy source of note in Southern Africa relate to the fact that cheap coal has always been available in abundance in South Africa, past exploration activities were focused on finding crude oil and regional conflicts prevented the development of the available natural reserves. The current interest in natural gas as a source of energy relates to the environmental advantages of natural gas over coal and crude oil, as well as the stated objective of the governments of Namibia and South Africa to diversify the energy supply to these countries The purpose of this study was to determine the economic impact of establishing a natural gasbased industry in Mozambique, Namibia and South Africa. To this end it was necessary to estimate the potential size of the natural gas reserves available in Southern Africa. It was also necessary to calculate the economic value to be added by utilising the few technologies applicable to Southern Africa to consume the natural gas. Based on the economic value added, it was recommended that initiatives to develop the available natural gas resources in Southern Africa should continue. When developing a natural gas-based industry, care must be taken to ensure that a balanced supply chain is established. The principle of a supply chain holds that there must be balanced growth through all the links of the supply chain. The principle of a supply chain highlights the balance to be played in developing the upstream segment as well as the downstream segment of a natural gas industry. Excessive rewards for risks taken by developers in the upstream segment of a natural gas supply chain will be to detriment of encouraging new consumers for natural gas. Significant efforts have been made to establish a regulatory framework in Mozambique, Namibia and South Africa to facilitate a balanced development of the available natural gas resources. There are however areas where the established regulatory framework does not adhere to these requirements and must therefore be reviewed. Several initiatives must also be launched to establish large volume anchor consumers for natural gas. These initiative include increased access to foreign capital as well as a pricing mechanism promoting the long-term development of natural gas resources Once large volume anchor consumers have been established, is will be a simple matter to grow the natural gas industry by adding smaller consumers to the established distribution infrastructure.

AFRIKAANSE OPSOMMING: Alhoewel natuurlike gas 'n belangrike bron van energie is vir die res van die wêreld, het natuurlike gas in die verlede 'n weglaatbare breukdeel van die primêre energiebehoeftes van Mosambiek, Namibië en Suid-Afrika voorsien. Hierdie verskil teenoor die res van die wêreld is ten spyte daarvan dat daar ontdekte natuurlike gasreserwes in Mosambiek sowel as in Namibiese en Suid-Afrikaanse gebiedswaters was. Die redes hoekom natuurlike gas nie 'n belangrike bron van primêre energie in Suidelike Afrika is nie, is te wyte aan die feit dat goedkoop steenkool nog altyd in oorvloed beskikbaar was in Suid-Afrika; dat eksplorasie aktiwiteite gefokus het op ruolie eerder as natuurlike gas en dat streekskonflikte verhoed het dat die beskikbare natuurlike gasbronne ontwikkel kon word. Die huidige belangstelling in natuurlike gas as 'n bron van energie is te wyte aan die omgewingsvoordele wat natuurlike gas inhou bo steenkool en ru-olie, sowel as die verklaarde beleid van die Namibiese en Suid-Afrikaanse regerings om die energieverskaffing aan hierdie lande te versprei tussen verskillende bronne. Die doel van hierdie studie was om die ekonomiese effek te bereken wat die onwikkeling van 'n natuurlike gasgebaseerde industrie in Mosambiek, Namibië en Suid-Afrika teweeg kan bring. Om die ekonomiese effek te bereken moes 'n skatting gemaak word van die verwagte grootte van beskibare natuurlike gasvelde in Suidelike Afrika. Dit was ook nodig om die ekonomiese toegevoegde waarde te bereken deur gebruik te maak van die beskikbare tegnologie, van toepassing op Suidelike Afrika, wat natuurlike gas kan verbruik. Gebaseer op die ekonomiese toegevoegde waarde is dit aanbeveel dat die pogings om die beskikbare natuurlike gasbronne in Suidelike Afrika te ontwikkel, moet voortgaan. Wanneer 'n natuurlike gas-gebaseerde industrie ontwikkel word, is dit belangrik dat 'n gebalanseerde verskaffingslyn geskep moet word. Die beginsel van 'n verskaffinglyn is dat daar eweredige groei in al die onderskeie komponente van die verskaffingslyn moet wees. Die beginsel van'n verskaffingslyn beklemtoon die balans wat gehandhaaf moet word tussen die stroom-op en stroom-af segmente van 'n natuurlike gas industrie. Oormatige beloning vir risiko's deur ontwikkelaars in the stroom-op segment van die natuurlike gasverskaffingslyn sal tot nadeel wees van nuwe verbruikers in die stroom-af segment. Daadwerlike pogings is aangewend om 'n regulatoriese raamwerk te skep binne Mosambiek, Namibië en Suid-Afrika sodat 'n gebalanseerde ontwikkeling van die beskikbare natuurlike gasbronne kan geskied. Daar is egter areas waar die regulatoriese raamwerk nie aan die vereistes voldoen nie en daarom sal dit hersien moet word. Verskeie aksies sal ook geloods moet word om hoë volume ankerkliënte van natuurlike gas te vestig. Hierdie aksies sluit verhoogde toegang tot buitelandse kapitaal, sowel as die ontwikkeling van 'n prysmeganisme wat die langtermynontwikkeling van die natuurlike gasbronne ten doel het. Sodra 'n hoë volume ankerkliënt gevestig is, is dit 'n eenvoudige aksie om groei in die natuurlike gas industrie te bewerkstellig deur kleiner kliënte by die bestaande verspreidingsinfrastruktuur te voeg.

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