The European Union (EU) initiative to encourage African countries to capture gas instead of flaring it faces investment hurdles, analysts say.
In an attempt to reduce the projected gas deficits of its member countries, the EU announced the “you collect, we buy” approach to accelerate the pace of change.
Put simply, the “you collect, we buy” scheme means that African countries are encouraged to capture and store natural gas rather than flaring it and that the EU will buy it to meet its energy demands.
It will also provide technical assistance to partners to sustainably and cost-effectively capture leak, vent and flare methane and supply it to its member countries.
According to the International Energy Agency (IEA), an estimate of 141 billion cubic feet (four billion cubic meters) of additional natural gas could be made available to the EU under this initiative over the next 12 months with “concerted efforts ” by African exporters. countries and buyer incentives.
Analysts said “concerted efforts” by African exporting countries could become a mountain for African exporting countries to climb rather than a hill for this initiative to come to fruition.
Jide Pratt, Aiona’s COO and Trade Grid country manager, said that as noble as the initiative is, the critical component to be resolved is “who bears the cost of the associated infrastructure to achieve it?”
“Carbon capture, utilization and storage (CCUS) technology is expensive with very few financial instruments for it in Africa.
Pratt said the gas capture and flaring process involves extracting and compressing the flaring gas and using it in modular power plants or mini gas-to-liquid plants through pipelines to the point of use.
“This infrastructure cost must be tariff or commercially reflexive to encourage that investment by the company. You have to encourage it, ”he said. “Nigeria has a gas flaring policy, but the implementation is not the best.”
The IEA said most of the identified potential that could be tapped in the near term to bring additional gas to Europe is in Algeria and Egypt.
The EU’s external energy strategy has also planned to negotiate with different countries for additional supplies of gas and hydrogen, including Algeria, Angola, Azerbaijan, Canada, Egypt, Japan, Korea, Nigeria, Norway, Qatar, Senegal and the US.
“While the sudden interest in flaring gas volumes may be due to the urgent need to replace Russian gas supplies, it is doubtful that “flaring gas volumes” will be sufficient to satisfy Europe’s growing appetite for gas. natural,” said Olufola Wusu. , Partner and Head of Oil and Gas at Megathos Law Practice.
Also read: Analysis: Can Africa fill the gap as the EU imposes a gas embargo on Russia?
He said it is possible that a focus on upstream development of deep offshore gas fields could prove to be a more viable and sustainable energy strategy for exporting natural gas while leaving sufficient supplies for domestic use.
“Flared gas can be captured and liquefied using liquefied natural microgas modules; It can be compressed into compressed natural gas, liquefied petroleum gas can be extracted from wet natural gas, it can be piped to power plants to generate energy, or it can be used as a feedstock for animal feed.”
Wusu said it would be better for operators in the flare gas capture industry to pool resources as marginal field operators have been advised, to reduce their capex and opex requirements and ensure the participation of gas owners. assets so they can help ensure access to reliable supplies of flare gas.
“Given the realities of a series of attacks on oil and gas pipelines in Africa, a fuel supply crisis, energy shortages and pre-election volatility facing Nigeria, carbon capture technology is unlikely to be high on the list. priorities of many investors in the African and Nigerian oil and gas industry,” Wusu added.