AFREC Presentation to the 9th African Oil & Gas Trade and Finance Congress and Exhibition

1. NOT AN OFFICIAL UNCTAD RECORD AFREC African Energy Commission (AFREC) AFREC Presentation to the 9th African Oil & Gas Trade and Finance Congress and Exhibition Project Proposal: Organization of « African Gas Market Agreement » (AGMA, or AfriGas) Maputo, Mozambique 31 May-3 June 2005 Dr. Hussein Elhag Executive Director AFREC

2. AFREC is for : Energy Security for Africa THROUGH Energy Integration in Africa

3. Background of Natural Gas Industry in Africa • Total proven natural gas reserves as year 2002 was 13,107.3 Bcm (7.3% of World total). • Growth rate of reserves during the past 20 years was 6.8% (Double of the World average). • Algeria and Nigeria contain the majority of the continent’s proven gas reserves (each of 34 % of Africa in 2002). • Total production in 2002 was 138.73 Mcm (1% of total proven reserves). • Total African natural gas consumption in 2002 was 71.51 Mcm (50 % of total production). • Major natural gas producers in Africa in 2002 were: • Algeria (61% of total gas production on the continent), • Egypt (19.2%). • Nigeria (10.9 %). • Libya (4.5 %). • Tunisia and South Africa also produced significant amounts of natural gas.

4. African countries with significant gas reserves are: Sudan, Tanzania, Mauritania, Namibia, South Africa, and Rwanda. • Natural gas consumption in Africa is expected to grow significantly as domestic and trans-national gas-to-power projects are developed. • In each of Africa’s five energy regions there is at least one natural gas endowed country with enough gas reserves to meet the region’s domestic demand. • In several African countries, most of existing natural gas is either is flared or re-injected.

5. Examples of Flared Natural Gas in Africa • Gabon produced 2.6 Bcm of which 1.8 Bcm was flared and 0.6 Bcm was re-injected. • In Cameroon, the entire 2.1 Bcm gross production of gas was flared. • In the Equatorial Guinea 0.9 of 1.1 Bcm was also flared. • The two Congos have similar but lower figures.

6. Problems Hindering Effective Use of Natural Gas in Africa • Lack of plans for efficient domestic use. • Lack of management policies for inclusion in the national energy balance. • Lack of pipeline infrastructure and other equipment for deliver. • Heavy dependence on oil products. • Lack of technical skills and management capacity. • Lack of energy diversification policies. • Lack of joint cooperation for bilateral and regional development projects. • Lack of efficient and continental market for natural gas.

7. The Biggest Problem is • The widespread thinking which considers gas as little baby of oil!!

8. Areas in which Natural Gas Resources can Benefit Africa: • Combating desertification which mainly stems from deforestation. • Heating/Cooking in the households and services sectors. • Energy diversification. • Electric power generation. • Industrial feedstock. • Brick burning. • Fertilizers industry. • Energy Security. • Exports.

9. PROJECT PROPOSAL Africa Gas Market Agreement (AGMA, or AfriGas)

10. Definition: The «African Gas Market Agreement» (AGMA, or AfriGas) Is a continental inter-governmental natural gas organization compries all African States and concerns with establishing and operating a giant market for trading natural gas among all African countries in order to achieve energy security through an integrated natural gas industry in Africa.

11. Objectives: • To create an African continental market for natural gas trade; • To coordinate gas policies among African gas producers in order to secure fair share of supply and stable prices for African gas importing countries; • To privide diversification of energy use to Africa nations; • To guarantee regular natural gas supplies from African gas producers to the African gas importers through efficient delivery systems; • To create efficient means for fair return on capital to investors in the market;

12. Objectives: • To establish effective mechanisms to facilitate smooth financial transactions; • To encourage construction of strategically pipelines for gas delivery; • To develop natural gas-based industries by fostering cooperation, training, capacity building and exchange of information among African countries; • To contribute to the effective use of Africa’s energy resources, falicitage exploration activities, and strive to implement the AFREC’s Slogan; and • To create a buffer system to protect Africa against global energy turbulences.

13. Regional Map of Africa Showing Natural Gas Producing and Prospecting Countries

14. Prospects of Trade Flow in an African Continental Natural Gas Market

15. Basic Requirements: • Political Will!! • Leadership and Efficient Organization. • Capacity Building in Energy Management, Policy, Technical Skills and Strategic Planning. • Commitment for Pan-African Energy Integration. • Regulatory Framework. • Financial Schemes.

16. End of Presentation Thank you for your kind attention AFREC