The European Union’s (EU) initiative to stimulate African countries into capturing gas instead of flaring is faced with investment hurdles, according to analysts.
In a bid to curtail the projected gas deficits of its member countries, the EU announced the “you collect, we buy” approach to accelerate the pace of change.
The “you collect, we buy” scheme simply put, means that African countries are encouraged to capture and store natural gas rather than flare it and the EU will buy it to meet its energy demands.
It will also provide technical assistance to partners to capture methane from leaks, venting, and flaring sustainably and cost-effectively and supplying it to its member countries.
According to the International Energy Agency (IEA), an estimate of 141 billion cubic feet (four billion cubic metres) of additional natural gas could be made available to the EU with this initiative over the next 12 months with “concerted efforts” by African exporting countries, and incentives from buyers.
Analysts said that the “concerted efforts” by African exporting countries might prove a mountain to climb for African exporting countries rather than a hill in order to make this initiative come to fruition.
Jide Pratt, chief operating officer of Aiona and country manager of Trade Grid, said as noble as the initiative is, the critical component to being sorted out is “who bears the cost of the associated infrastructure to achieve it?”
“The technology for carbon capture utilisation and storage (CCUS) is pricy with very few financial instruments in that regard in Africa.
Pratt said the process of gas flaring and capturing is to strip and compress the flared gas and use it in modular electric plants or mini gas to liquid plants through pipes to point of use.
“That cost of infrastructure must be a tariff or commercially reflective to stimulate that investment by the company. It has to be incentivised,” he said. “Nigeria has a gas flaring policy but the implementation is not at its best.”
IEA said that most of the identified potential that could be exploited in the near term to bring additional gas to Europe lies in Algeria and Egypt.
The EU external energy Strategy has also planned for negotiation with different countries for additional gas and hydrogen supplies, including Algeria, Angola, Azerbaijan, Canada, Egypt, Japan, Korea, Nigeria, Norway, Qatar, Senegal, and the US.
“While the sudden interest in flare gas volumes, may be due to the urgent need to replace Russian gas supply, it is doubtful, if the “flare gas volumes” will be enough to meet Europe’s growing appetite for natural gas,” said Olufola Wusu, partner and head of oil and gas at Megathos Law Practice.
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He said it is possible that a focus on the upstream development of deep offshore gas fields may prove to be a more viable and sustainable energy strategy for the export of natural gas while leaving sufficient supplies for domestic use.
“Flare gas can be captured and liquefied using micro liquefied natural gas modules; it can be compressed into compressed natural gas, liquefied petroleum gas can be stripped from wet natural gas, it can be piped to power plants to generate power, or it can be used as a feedstock for animal feed.”
Wusu said that it would be best for operators in the flare gas capture industry to pool resources like marginal field operators have been advised, to reduce their capex and opex requirements and to ensure the buy-in of the asset owners so that they can help guarantee access to reliable supplies of flare gas.
“Given the realities of a number of attacks on oil and gas pipelines in Africa, a fuel supply crisis, energy scarcity, and pre-election volatility facing Nigeria, carbon capture technology is not likely to be high on the priority list of many investors in the African and Nigerian oil and gas industry,” Wusu added.
