Often in the headlines for the right and wrong reasons, Africa is not just a region but a whole continent of development and prospect. With development comes promise, as do a number of challenges.
The times are changing and there appears to be much to look forward to in the coming years, throughout Africa. The proposed end of what may be described as Robert Mugabe’s tyrannical reign of power in Zimbabwe, coupled with the 2010 football World Cup in South Africa, are perhaps signs of the hope and promising future to come across the continent.
The 2010 World Cup is also indicative of the kind of development in the region that is driving gas demand. In order to stage the prestigious sporting event, significant infrastructure development is underway in South Africa which boosts the need for both steel and cement – and in turn the requirement for a variety of industrial gases, notably oxygen among others.
Wider infrastructure development is under implementation across the region and presents one of the many opportunities or challenges, as discussed recently at the gasworld African Conference.
Despite being in the grip of what may be seen as a period of transition, the African industrial gases market continues to show exemplary growth so far, as these developing economies and infrastructures drive gas applications.
Indeed, in terms of end use segments the Spiritus Group estimates metallurgy to grow by 17.3% in the period 2006-2011, eclipsed only by the electronics sector at 20.9% and chemicals at 17.9% for the same period.
Other notable rises for the region, as suggested by the Spiritus Group, are in the healthcare segment at a rate of 13.8% and in terms of glass, at 14.4% growth for the five year period.
Having grown by an impressive 15% in 2006, overall revenues in Africa appear to affirm the potential that the region upholds – if the aforementioned collection of challenges are met and resources addressed.
Overcoming these obstacles will be key to the market’s projected push forward, with the Spiritus Group estimating a compounded annual growth rate (CAGR) of 15.2% for the region for the period 2006-2011.
So which of the countries or areas of the market prosper or show particular growth?
South Africa accounts for around 40% of the total market in the continent and is perhaps the country of most fervent activity, though the wider region shows much promise too.
Dominated by Air Products and Linde’s Afrox, Southern Africa activity is the subject of much offshore oil and gas industry exploration.
Estimated figures suggest that both onsite and packaged gases could experience strong CAGR in the future however, with BOC and Air Products anticipated to see a growth of around 18% each in onsites for the period 2006-2011 and both companies expected to see a rise of around the 16% mark for packaged gases in the same period.
Opening new avenues
As already noted, South Africa is an area of much activity and this looks set to increase further with a number of new projects and investments underway.
Global Gases has recently revealed that its third helium facility, in Cape Town, is fully commissioned and ready to deliver to a wider band of geographies, from its ideally positioned new site.
Deepak Mehta, Managing Director and CEO of the Global Gases Group had said, “This is our third helium transfill after Dubai and Singapore and the group is very well positioned to supply wider geographies in Middle East, South East Asia and West Africa Diving contractors. Our customers have been very happy with the close proximity of collecting diving gases from Cape Town, versus logistics issues of previous supplies from Dubai and Aberdeen.”
“Global Gases Group will aggressively continue investments in this offshore gases sector and will be announcing further helium transfills globally soon,” added Mehta.
In terms of tackling fresh energy alternatives and addressing a cleaner future in prospect, activity ranges from coal-to-liquid schemes to nuclear power provisions and much more across the whole continent.
Providing one of the many solutions to South Africa’s power problems, the first in a new generation of helium gas cooled reactors is moving a step nearer after the demonstration reactor design reached completion.
Despite delays of almost 3 years due to controversy and a lack of support, the R17bn capital investment project is set to provide electricity by 2013 and looks likely to become the first commercial-scale high-temperature reactor in the world.
The helium gas cooled reactor entails building a demonstration reactor at Koeberg outside Cape Town and a pilot fuel plant at Pelindaba, near Pretoria. With construction due to start next year and the first fuel to be loaded four years later, if successful a further ten plants could later be built.
Still in South Africa, a proposed new coal-to-liquids (CTL) facility known as Project Mafutha could be on the horizon for the conversion of coal into primary fuel products, the gasification of coal to synthesis gas and other refinery technology.
The planned stand-alone greenfield CTL facility by Sasol Technology (Pty) Ltd, would produce around 80,000 barrels per day of synthetic fuel and will include other processing units, utilities and offsite facilities necessary to support the development.
Foster Wheeler, through its subsidiary Foster Wheeler South Africa (Pty) Limited, has been chosen by Sasol to perform a pre-feasibility study for the project, evaluating the possible location as part of the study.
Sasol is also involved in a pipeline project with iGas and Compania Mozambicana de Gasoduto, as joint partners in the Republic of Mozambique Pipeline Investment Company (ROMPCO).
The venture announced in February the construction of an R1.1bn gas compression station to facilitate a 20% expansion of natural gas delivery from Mozambique in Southeastern Africa to South Africa, by the end
Construction is expected to commence by mid 2008 and eventually increase gas flow rates in ROMPCO’s 865km transborder pipeline that transports natural gas from the Pande and Temane gasfield in Mozambique, to Sasol’s operations at Secunda and Sasolburg in South Africa.
Preference will be given to local and South African suppliers for equipment and material sourcing, while Foster Wheeler South Africa has again been awarded a contract, for the engineering, procurement and construction management.
Meanwhile a change for future energy commitments in West Africa could be afoot, with a draft report apparently detailing plans for the most radical overhaul of Nigeria’s hydrocarbons industry in 40 years.
Officials have completed proposals and a draft of the report, which represents the biggest change in Nigeria’s oil and gas sector in four decades, notes that the overhaul will focus on four key areas.
These are the legal and regulatory frameworks that govern the industry, the implementation of the new policy framework and establishment of the National Petroleum Directorate (NPD), the restructuring, constitution and capitalisation of new national oil company National Petroleum Company of Nigeria (Napcon) and its subsidiaries, and the establishment of the National Petroleum Assets Management Agency and the incorporation of the joint ventures (JV’s).
The North African market remains relatively quiet in terms of the murmurs emerging from here of late, with both Morocco and Egypt continuing to dominate.
Egypt, with its strong steel and petrochemical trade, is the largest gas market in the North African territory and competes largely with the Moroccan market (valued at $45m in 2006) for the lion’s share of the region.
Landmark in Algeria
Close to the Tunisian border and 600km east of Algiers, the Skikda helium plant in Algeria successfully delivered its 100th container of helium in September 2007 and marked a milestone in liquid helium production at the site in the process.
Designed and built by Linde Engineering, the plant was handed over to Helison Production Spa, a joint venture between Algeria’s Sonatrach and The Linde Group, on 20th June 2006. Since commencing operations in April 2007, the plant has been supplying most of the helium that Linde sells in Europe.
Dr Hocine Laidouni, Deputy Managing Director of Helison Production, reflected, “The 100th helium container produced in Skikda marks an important milestone in the development of the Helium industry in Algeria. We are operating a best-in-class helium plant and look forward to continue working with Linde to consolidate our position as one of the most reliable helium sources worldwide.”
The Skikda plant has a capacity of 1,300 tpy, though a newly built LNG plant in Skikda expected to be operational by the end of 2011 will increase total helium production to 3000 tpy respectively.
Incidentally, Air Products will be providing its proprietary process technology and main cryogenic heat exchanger for the Skikda LNG facility, scheduled to be delivered to the site in late 2009.
Jim Solomon, Director of LNG at Air Products, enthused, “We’re pleased to continue this relationship and proud to be involved with the development of the largest-ever LNG project in Algeria.”
Overall, the outlook for the continent appears to be favourable as scope is explored for a range of new projects and possibilities.
Perhaps the positive outlook is exemplified by the recent operational results of Afrox, which demonstrates strong growth despite capacity constraints and the turbulent economic climate.
Capacity enhancements will ensure reliability of product into the sub-Saharan markets and particularly good growth was seen in CO2 (volumes up 12%), healthcare (up 6%) and LPG (up 4%).
Managing Director Tjaart Kruger explained, “We are now well positioned to compete, to deliver sustainable, superior results and restore Afrox’s core strength – that of being customer focused.”
Addressing the CO2 demand could also be seen as an arising window of opportunity to be explored, and critical to the smooth progression of the soft drinks carbonation business.
Carbonation problems have for some considerable time been an issue in South Africa and in March this year, fears of a crisis loomed again after SABMiller Plc, South Africa’s biggest bottler of soft drinks, revealed a shortage of gas after an unplanned refinery shutdown.
As of May 2008 the country is apparently still battling a shortage of CO2 for carbonation, with Coca-Cola SA indicating it is working on a plan to reduce dependence on external suppliers.