Low-carbon energy development scenarios for Africa: Trade of fossil energy carriers

Low-carbon energy development scenarios for Africa

Trade of fossil energy carriers

Literature thesis May 2016 Eric Schuler

2

Content

ACRONYMS AND UNITS: ... 5

INTRODUCTION ... 6

MOTIVATION ... 7

TIAM-ECN ... 7

ENERGY RESERVES AND CONSUMPTION IN AFRICA ... 9

Reserves ... 9

Consumption ... 10

ENERGY TRADE IN AFRICA TODAY ... 12

Natural gas ... 12

Transport modes ... 12

Pipeline ... 12

LNG ... 13

Floating LNG device ... 13

Installed trade capacity ... 13

Regions with special interest ... 15

Eastern Africa ... 15

Egypt ... 15

Western Africa and Nigeria ... 15

Crude oil and oil products ... 16

Transport modes ... 16

Pipeline ... 16

Harbour ... 17

Floating devices ... 17

Working method ... 17

Installed trade capacity ... 18

Crude Oil ... 18

Oil products ... 20

3

South Sudan, Sudan and Kenya:... 20

Uganda, Kenya and Tanzania ... 21

Nigeria ... 21 Libya ... 21 Coal ... 21 Transport modes ... 22 Ship ... 22 Train ... 22 Capacities of harbours ... 22

Capacities of railway transport ... 22

Regions with special interest ... 23

South Africa ... 23 Mozambique ... 24 Botswana ... 24 Nigeria ... 25

PROJECTIONS OF CAPACITIES TO 2050 ... 26

Recommendations for refinements ... 28

Energy consumption ... 28

Method ... 28

Results ... 29

Recommendations for refinements ... 30

Production ... 30

Method ... 30

Results ... 31

Recommendations for refinements ... 33

Projection for import capacity ... 33

Method ... 33

Results ... 34

Recommendations for refinements ... 36

4

Method ... 37

Results ... 38

Recommendations for refinements ... 39

CONCLUSION ... 40

BIBLIOGRAPHY ... 41

5

Acronyms and Units:

AfDB African Development Bank Group

$Bn Billion International Dollars BAU Business-As-Usual

COP21 21st Conference of the Parties CTL Coal-to-liquids

ISIS Islamic State of Iraq and the Levant

EIA Energy Information Administration of the U.S. Department of Energy EJ Exajoule

FID Final Investment Decision

FLNG Floating Liquefied Natural Gas production unit FPSO Floating Production, Storage and Offloading unit FSO Floating Storage and Offloading unit

FSRU Floating Storage and Regasification Unit

GDP Gross Domestic Product - purchasing power parity per capita GT Gigatons

GTL Gas-to-liquids

IEA International Energy Agency IMF International Monetary Fund

INDC Intended Nationally Determined Contributions IPCC Intergovernmental Panel on Climate Change LNG Liquefied Natural Gas

MT Megatons PJ Petajoule

TIAM-ECN TIMES Integrated Assessment Model - Energy Research Center of the Netherlands UNFCCC United Nations Framework Convention on Climate Change

6

Introduction

In December 2015 the 196 participating at the COP21 meeting in Paris agreed to try to limit the global average temperature increase to 1.5 or 2.0°C.[1] As the rise in temperature already reached 1,1 °C this ambitious goal puts pressure on them to set more ambitious climate policy goals and a framework to lower emissions of greenhouse gases.[2] Beforehand they decided at COP19 to hand in intended nationally determined contributions (INDC) in which they suggest how much and by which means they seek to reduce their GHG emissions.[3]

Africa is among those regions which will face more than doubling of population by 2050 and an even higher increase in wealth.[4]–[6] Both will increase energy consumption and thus require new energy production capacities to serve these needs. In order to find options to reach climate goals, various models are available to simulate the development of global energy systems.[7] Various reports such as the IPCC annual report or the IEA world energy outlook are based on models as they provide a tool to evaluate different mitigation options.[8] Main goal of this literature study is to give an overview on the trade potentials off all main fossil energy carriers - natural gas, oil and coal for the 17 African sub-regions in TIAM-ECN. This includes capacities available today, planned extensions in the near future and projections of possible developments till 2050.

The model used for the project is TIAM-ECN, which is going to be adapted for performance on the African continent and has been used for several other tasks before. [9]–[12] The research is part of the three-year Project EU-Horizon2020 ‘Transitions pathways and risk analysis for climate change mitigation and adaptation strategies’ (TRANSrisk) which is done in collaboration with 12 research institutes under the head of the University of Sussex. The project explores different pathways for transitions towards lower emissions and aims to analyse the associated risks, uncertainties, costs and also benefits. The idea is to identify low emission transition pathways which are technically and economically feasible and acceptable from a social and environmental viewpoint. To evaluate these potentials, a focus was put on different modes utilized to transport fossil energy carriers. Not only traditional options, such as harbours and pipelines, but also new technologies such as floating terminals and production facilities were examined. In addition, countries with special situations are explained in detail. These include offshore gas discoveries in Egypt and Mozambique, as well as Botswana’s attempts to exploit its domestic coal reserves but also problems Nigeria or Libya face with attacks on their infrastructure from rebels or terrorists.

7

Motivation

In their INDC each country presents a business-as-usual (BAU) scenario for its future emission development and how much they seek to reduce them compared to the BAU scenario. Therefor actions individually fitted to each country’s situation were determined. Extensive background was requested, such as quantifiable information on the reference point, time frames and periods for implementation, scope and coverage, planning processes but also how the Party considers that its intended nationally determined contribution is fair and ambitious, in light of its national circumstances .[13]

To estimate action needed for desired reductions, a BAU scenario for emission development serves as a comparison. However, these BAU scenarios are prepared by the states themselves and thus might overestimate emissions. As the reduction goal stays the same, higher BAU emissions lead to a mitigation goal with higher emissions. In conclusion, the difference between the realistic and overestimated BAU scenario lowers the need for action to achieve the proposed reductions as figure 1 shows. In order to check whether BAU scenarios were overestimated, trade capacities and their availability in the future are needed to calculate them.

TIAM-ECN

TIAM-ECN is based on the popular model family MARKAL-TIMES, which is used for example by the IEA to back up conclusions for their Energy Technology Perspectives.[14] It is a bottom-up model, that uses detailed represented technologies in a partial equilibrium model for the energy sector in isolation. Thus, macroeconomic feedbacks from other economic sectors are disregarded.[15] The scope of the model is to build an energy system covering the full energy chain from extracting the resources up to the final energy use. Thus production, conversion, transmission, distribution and end-use technologies are included in the model. There are lots of different technologies available for these different nodes, which are characterized by a set of economic and technological parameters. Furthermore, these nodes are linked with relations and constraints as not all of them can be combined with each other in a logical way. With the given portfolio of technologies, the model builds a technology network that needs to satisfy certain energy demand levels. It is thus a demand driven and describes how the demand should be fulfilled. These demand levels are not fixed, but also calculated within the model, leading to a Figure 1 – Difference between real and claimed BAU and Mitigation scenarios.

8 partial equilibrium as the energy demand is related to the energy price. The latter in turn is related to the technology choices made.

The model will always choose the cheapest option for the whole time horizon including cost components such as investment, operation, maintenance, taxes, subsidies, decommissioning and demand reductions. Furthermore, also environmental variables such as the three major greenhouse gases CO2, CH4 and N2O are calculated. Energy

related greenhouse gases are described endogenously whereas non energy related GHGs are exogenously given. These entail CO2 - emissions related to land-use change, CH4 emissions caused by landfills and others.[16] This

gives the opportunity to find scenarios for low GHG emissions or to check carbon-taxes for their effects on a modelled scenario.

To further improve the model, Africa was divided into 17 sub-regions to better represent their individual characteristics. The division is based on the gross domestic product (GDP) and trade capacities leading to a subdivision in twelve countries and five pools that include 2 to 18 countries. For every region, parameters that were originally set for whole Africa, were adjusted to local circumstances. Trade within a region is not favorited over trade with other regions. Figure 2 shows the regions on a map with the colour coding used throughout the whole work.

9

Energy reserves and consumption in Africa

Reserves

Energy reserves distinguish themselves from resources by their economic viability. Whilst resources include the sum all energy carriers in the ground, reserves just entail energy carriers which are cost effective to recover and have a high certainty of their presence.

The reserves of the three main fossil energy carriers natural gas, crude oil and coal are found in nearly all of the 17 sub-regions as shown in figure 3. However, the figure also shows, that these resources are not equally distributed. Whilst oil is mainly found in the northern African regions and Nigeria, natural gas can also be found offshore in Southeast Africa. Coal reserves are located in the south, with South Africa and Botswana holding the biggest reserves.

The amount of recoverable reserves for natural gas has seen a strong increase with the findings in Southeast Africa in 2013 and Egypt in 2014 as seen in figure 4A. Especially Southeast Africa which just had small reserves before, became one of the five regions with big gas reserves. They so big that it has the potential to become the world’s fourth biggest exporter.[17] The field discovered offshore of Egypt in 2014 was the largest field ever found in the Mediterranean Sea.[18] Large findings of oil reserves in Africa date back to 2004 with the discovery of new offshore fields in Nigeria.[19] The recoverable amounts of oil located in Libya however steadily increased since 2003 still making it the region with the largest reserves of all 17 sub-regions as figure 4B shows. Coal can mainly be found in the south of the African continent. In southern Africa, the regions with the second biggest recoverable reserves of coal the estimates have been increasing over the last years but the difference between the statements is rather big as can be seen in figure 4C, which shows the reserves of all 17 sub-regions. Moreover some estimates even exceeded the reserves available in South Africa.[20]

Figure 3 Reserves of fossil energy carriers Natural gas (yellow), Crude oil (red) and Coal (black) of 17 sub-regions in same scale. Based on numbers from: [17], [18], [20], [108], [117]

10

Consumption

The energy demand of a country is dependent on various factors such as wealth, population, climate, industry just to name a few.[21] Among these factors the growth of population from 1,1 billion today to a 2,4 billion in 2050, which makes the fastest growing continent. Development in GDP magnifying it 5-10 fold through industrialization is the other main reason for growing energy demand of Africa in the future. [4], [22]

The share of fossil energy carriers is different for each sub-region as seen in figure 5A. Employment of different energy carriers correlates with available reserves in the regions or their neighbours.

The consumption of Natural Gas has seen an average growth of 160% from 1980 to 2010. Figure 5D shows the development for all 17 sub-regions. With the highest growth in Tunisia (742%), Egypt (450%) and Nigeria (360%), all countries exploiting their own natural gas reserves. Egypt, Algeria and Tunisia are the biggest consumers of natural gas, which is mainly used for electricity generation.[23] In Kenya, Ethiopia, Madagascar, Eastern- and Southern Africa natural gas is not used as an energy source yet. These countries don’t have any or just low reserves themselves and employ mainly oil products to serve their energy needs.

C

Government Highest published estimate

EIA Co al re se rv es [E J]

Figure 4 - Development of natural gas (A) and crude oil (B) reserves from 2000-2015. Coal reserves for 2011 (C). Based on data from:[18], [108], [20], [117]

A _B

11 Petroleum products from crude oil are consumed all over the continent and have seen an average growth of 140% from 1980 to 2010. Angola (309%), Ethiopia (253%) and Eastern Africa (237%) increased their consumption the most. Overall increase however, is more balanced over the regions as can be seen in figure 5C. The main consumer of petroleum is the transport sector although it is used also for electricity production in some regions.[23]

Figure 5B illustrates that South Africa has been and is still by far the largest consumer of coal. It doubled its consumption since 1980. The average increase for Africa as a whole of 40% is significantly lower compared to other fossil fuels. This is mainly caused by the decrease or stop of consumption in regions such as Nigeria, Tunisia or Libya. The biggest increases have been seen in Western Africa (233%) and Morocco (214%). The latter plans to further increase its coal consumption as new coal fired power stations are being built. [24] Egypt, a minor consumer of coal today plans to build a 3000 MW coal fire plant and thus will increase its consumption by high means in the future.[25] The same accounts for Botswana in the Southern- and Mozambique in the South eastern – African region, which plan to exploit their local reserves and thus will have cheap access.[20]

Co al co ns ump tio n [ PJ] A _B C D

Figure 5 – Share of gas, Petroleum and coal in total fossil fuel consumption (A). Development of coal (B), oil products (C) and natural gas (D) from 1980-2010. Based on data from: [108]

12

Energy Trade in Africa today

Africa with its rich sources of energy carriers such as oil, gas and coal is of interest for globally acting oil and gas companies such as Shell, ExxonMobil or BP just to name a few. These companies run a vast number of production, processing and exportation facilities there. As the local market is still reasonably small, a lot of the produced resources are exported by ship all over the world and pipelines to Europe and the Middle East. Furthermore, trade between the sub-regions by pipelines takes place.

The following chapter covers the potentials or capacities for trade with fossil fuels in the 17 sub-regions. A distinction made between crude oil and oil products. As the different modes for transport are needed, these are introduced for each type of fuel. In many cases absolute yearly trade capacities were not published. For those the used working methods are explained. In order to make quantities and trade capacities easy to compare all of them were converted into PJ. Furthermore, the time when the trading capacity will be available was considered. All capacity available till 2015 is listed in the category ‘2010’, capacity added till 2025 was listed in ‘2020’. Trading capacity available till 2035 or capacity without a final decision of investment (FID) or other uncertainties was listed in ‘2030’ under the assumption that it will be available by then the latest. The resources used to acquire the information on existing and planned trade capacities are listed in the last supplementary information.

Natural gas

Exporting natural gas has a long history in Africa with the world’s first terminal built in Algeria in 1968. [26] The main producers are countries north of the Sahara and western Africa with Nigeria as the biggest producer on the continent.[27] The natural gas sector is expected to grow further with recent discoveries in Egypt and Mozambique and a rising demand for gas on the world market.[17], [18], [28] Natural gas from northern Africa is mainly exported to Europe via pipelines. Other exporters reach worldwide markets by shipping LNG especially to Asia with India, Japan and China as the main partners.[27], [29]

Transport modes

Natural gas is distributed mainly with two major ways - via pipelines both on land and undersea or as Liquefied Natural Gas (LNG) which is transported in tankers built for that purpose. The two modes vary mostly by their need for pre-treatment of the gas before being transported.

Pipeline

Besides the pipe there is more infrastructure needed to transport gas through a pipeline. Natural gas needs to be cleaned first as it can contain unfavourable liquids. Processors remove these, water and other impurities.[30] Compressor stations reduce the volume and pump it through the pipeline. The location of supporting facilities determines in which direction the pipeline can be operated. If operation is desired in both directions these facilities are required at both ends. However, they can be added later to the system, as planned for the Arish-Ashkelon Pipeline, which is desired to be operated in reverse in the future.[30], [31]

13 A problem with pipelines is their vulnerability for attacks. This accounts both on land and undersea, as the West Africa pipeline has shown. [32] They are especially an interesting aim for rebel groups as the impact of attacks is high and possible sites to attack are huge.[33], [34] Further problems arise, when local population does not agree with pipelines crossing their land, which leads to further attacks and disruptions.[35] Another drawback is their lack of flexibility, as they always have a fixed starting and end point and thus do not allow for a quick change in import or export destinations.

LNG

The second mode to export is LNG, which implies liquefaction of gas in a liquefaction train and shipping on special equipped vessels. To import gas a regasification facility is needed. Liquefaction trains are among the most expensive infrastructures existing with costs up to $10Bn.[36] Furthermore, prices for construction of these plants have experienced a strong increase over the last years.[37] The regasification plants are cheaper and less complicated to build.

High initial investment is one of the major problems for African countries as they require a lot of foreign investment. A further issue is the high energy consumption of up to 15% to liquefy the gas, which reduces the exportable volumes and makes it a viable option just if the gas is shipped to destinations further away than 3000 km.[38], [39]

Floating LNG device

Recent development also has shown a trend towards using vessels equipped with a liquefaction or regasification plant instead of land based infrastructure. Especially the Floating Storage and Regasification Units (FSRU’s) are used in a lot of places around the world. Three of those are currently used in Egypt.[40]–[42] The more complex Floating Liquefaction Units (FLNG’s) are ready until 2017 but planned for the Fortuna gas field in Equatorial Guinea. [43], [44] Especially for Africa, where financing expensive plants often is an issue, floating devices are an interesting alternative. Those are usually leased from globally acting shipping companies such as Golar LNG which own the ships and lease them for periods starting from five years.[45] This practice reduces initial investment costs. Further benefits are a shorter construction time compared to traditional plants and increased flexibility as the location of the ship can be changed. Last but not least floating devices are cheaper to build with just a fourth for the same capacity as compared to a land based facility.[46] Thus they are more attractive to investors as they promise higher rates of returns on investment.[47] Floating devices have not yet been considered in energy models yet. However, they should be included as the higher flexibility and lower costs can change the energy landscape created by a model.

Installed trade capacity

Import capacities of natural gas are illustrated in figure 6A. Natural gas is imported in Egypt, South Africa and Western Africa for local consumption only. Countries in Western Africa plan to use gas power stations to serve their increasing needs for electricity. To import gas both the existing pipeline is desired to be extended in capacity

14 and new floating devices installed in Ivory Coast and Ghana.[48]–[50] The special situation in Egypt will be elaborated in a separated section.

Morocco, Algeria and Tunisia also have big import capacities, however this gas just passes through to destinations in Europe such as Spain or Italy.[51]–[53] The import capacities to Algeria account for the planned Trans-Sahara-Pipeline with which Nigeria seeks to reach the European Market via pipelines.[54]

Total export capacities for natural gas exceed the import capacities by far, as figure 6B shows. Most of the existing capacity from countries north of the Sahara is mainly exported to Europe and was connected to the European pipeline network in 1997 with the Pedro Duran Farell Gas Pipeline from Algeria to Spain.[55] Until 2011 four pipeline projects, GALSI, TRANSmed, Medgaz, Greenstream became online adding another connection to Spain and three to Italy.[51], [52], [56], [57] Egypt also has pipelines to export gas to Israel via the El Arish – Ashkelon pipeline and to Jordan, Lebanon and Syria via the Arab gas pipeline.[31], [58] The northern sub-regions also exhibit a large capacity for LNG exports. All sub-regions in

the Gulf of Guinea export their produced gas as LNG including the regions Nigeria, Central Africa and Angola. Natural gas produced by Africa’s leading producer Nigeria is mainly shipped as LNG but also exported to its neighbouring countries via the Western African Gas Pipeline.[59] The largest extensions are planned for Southeast Africa where Tanzania and Mozambique seek to exploit their huge offshore reserves and address markets in Asia with LNG. Installed capacity for natural gas exports

increased over the last decades as figure 7 shows. Figure 7 Added trade capacity for natural gas in decades.

Ad de d n at ur al g as cap ac ity [P J]

Figure 6 – Import (A) and export (B)capacities for natural gas in 2010, 2020 and 2030.

Imp or t c ap ac ity n at ur al g as [P J] Ex po rt cap ac ity n at ur al g as [P J] A B

15 The share of added pipeline capacity increased with time. However, this share will most likely decrease with the Trans-Sahara-pipeline as the only pipeline planned for the future and the largest demand for natural gas imports in Asia.

Regions with special interest

In Mozambique and Tanzania offshore gas fields compromising 110 EJ of recoverable gas were discovered in 2014.[60] This was one of the biggest discoveries in world history. For the countries ranked on place 150 for Tanzania and 180 for Mozambique on the Human development index of the United Nations, these reserves entail a big opportunity to increase their income.[61] To be able to exploit the gas new legislative framework is on its way. This new framework will determine the conditions under which the licences for the gas fields will be given and how local companies interact with international investors or gas companies. However, those policy makers, including the former president Guebuza and his family own or are shareholders of these local companies and thus follow own monetary interests. Also his political rivals seek to profit from the new gas sector. This situation leads to delays in the legislative process and increases the risk for foreign investors.[62] High cost for infrastructure to export natural gas, such as LNG liquefaction plants, which require an investment of $9,5Bn in Mozambique alone, is another reason why things move slowly. Total investment of around $20Bn is required.[36], [62] Nevertheless, the geographic position is ideal to export gas to the rising markets in Asia, mainly India and China.

Egypt

Egypt represents a special case when it comes to natural gas. It has been one of the main export nations only a few years ago with newly installed LNG terminals commissioned in 2005 and pipelines for export to Israel, Jordan, Lebanon and Syria, commissioned in 2009. Now Egypt turned into the major importer of natural gas.[31], [58] Reason for the change is an increasing local demand for natural gas combined with a decrease in gas and oil production as a consequence of the Arab spring and following political instability.[63] It is now importing gas via two FSRU’s with a third on its way.[40] Furthermore, there are considerations to reverse the existing Arab Gas Pipeline to import gas from newly discovered Lebanese offshore fields. [31], [64] An agreement on importing gas from Israel has already been signed.[65] There are even considerations to use the existing liquefaction facilities in Egypt to export Lebanese and Israeli gas as there are no capacities in those countries yet.[64] The whole situation is very complex as the Arab countries suffer from shortages due to lack of gas from Egypt, and Israel tries to take advantages of the situation in order to sell gas to its neighbours.[66], [67] However, with the newest discoveries of in the Mediterranean Sea just off the coast, the situation in Egypt might change again.[18]

Western Africa and Nigeria

The countries in the Western African sub-region often suffer from electricity shortages caused by either insufficient infrastructure or shortage of fuel for power plants.[68], [69] The Western African Gas Pipeline was built to supply Togo, Benin, Ghana and Ivory Coast with natural gas from Nigeria to overcome these issues.[50] However, up to now this project failed through various factors. Damages caused to the pipeline by attacks of rebel

16 groups and an accident with an anchor from a pirate ship lead to a stop of gas supply. Although many recommendations have been made prior to construction of the undersea pipeline, a sufficient plan for repairs and failure management wasn’t taken care of. Thus the repairs of the damages took longer than expected.[70] Moreover, Nigeria has a problem serving its own needs. Although it has one of the world’s biggest reserves for natural gas, infrastructure is not ready yet to produce the amount of gas locally needed. In addition, Lagos, the biggest city in Nigeria, is on the route of the pipeline to Western Africa leaving not enough gas to secure supply for neighbouring states. [71] Some countries in Western Africa also reached out for other sources to secure their fuel supply. Ivory Coast and Senegal teamed up to install a FSRU to import LNG and decrease the dependency on Nigeria.[48] A continuous supply with electricity is important to accommodate economic growth and attract businesses or make businesses competitive on the world market.[72] The problem is, that high initial costs to build the necessary infrastructure can’t be raised by the countries themselves. On the other hand, the poor economic situation scares possible investors. Leasing models for FSRU’s hold a chance to overcame issues due to lower initial investment requirements.

Crude oil and oil products

A distinction between crude oil and oil products was made due to their difference both in value and in purpose. Whilst crude oil is mainly a tradable good, that still needs to be processed, oil products are valuable as chemicals and fuels for transport or electricity production. Transport modes are basically the same for Crude and Products although floating devices are not used for products.

Transport modes

Crude oil and products are mainly transported via pipelines or by ship. This requires infrastructure such as pipelines and ships themselves but also terminals to load and unload ships and refineries to convert crude oil to products. Transport in trucks or by train was not considered as no sufficient information was available.

Pipeline

Pipelines are used to transport oil and products both over long and short distances depending on the purpose. These include direct export to other sub-regions, supply for refineries and oil terminals with oil from offshore-platforms or oil-fields inlands. The throughput of pipelines is dependent on various factors such as its diameter, roughness of the inner surface, consistency of the transported oil, slope, and flow speed which in turn is related to strength and number of used pumps.[73], [74] Main factor still is the diameter, although still differences in capacity of up to 100% are possible.[73] The viscosity of oil is depending on its composition, which varies for all reservoirs. Thus the design of pipelines needs to be adapted. Oil containing high wax contents, such as newly discovered crude oil from Uganda requires a heated pipeline.[75] Higher cost for oil transport and initial investment, as well as vulnerability for defects are a consequence.[76] Problems entailed with land-use, vulnerability for attacks and a lack of flexibility are the same as for gas pipelines as recent attacks on Nigerian pipelines and a reconsideration of the pipeline route from landlocked Uganda have shown.[77], [78]

17

Harbour

Main export markets for African oil are Europe, America and Asia.[79] Oil-tankers are the transport mode of choice for exports to other continents as they are more flexible in operation and require less initial investment. Thus there is no oil pipeline connecting Africa with other continents. Ships can carry up to 650.000 tonnes and are too big to be moored in most of the harbours. To load or unload them, they use offshore buoys, which are connected to terminals via underwater pipelines. Offshore oil platforms often have their own buoys to load cargos with produced oil stored in undersea tanks.[80]

Floating devices

Floating devices are also used in offshore oil production. They have several advantages over fixed platforms such as operation in deeper waters and higher flexibility when moving to another field. Furthermore, no existing pipeline infrastructure is needed as the oil can be stored on the ship itself and then loaded on tankers via buoys. Moreover, the ability to directly export oil without building seabed pipelines or on-land processing plants and harbours led to a vast employment of these platforms in the Gulf of Guinea in recent years as figure 8B shows. This is the only place where they are employed in Africa so far.

Working method

The availability for trading capacities of oil-terminals is very low and often just storage capacities, loading speeds or maximum cargo sizes are available. However, none of these numbers is useful to estimate a maximum annual trading capacity. To get a trade capacity different other information was combined. Pipelines reaching terminals were considered as well as refineries located at or close to the harbour. A further drawback was, that also pipeline capacities are rarely published and just their diameter was available. Hence the pipeline capacity was calculated with a formula based on the rule of thumb from McAllister et al.[73] The formula was modified to get the minimum annual capacity in PJ:

𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 𝑐𝑐𝑐𝑐𝑃𝑃𝑐𝑐𝑐𝑐𝑃𝑃𝑐𝑐𝑐𝑐𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎= �𝑑𝑑𝑃𝑃𝑐𝑐𝑑𝑑𝑃𝑃𝑐𝑐𝑃𝑃𝑑𝑑 (𝑃𝑃𝑃𝑃𝑐𝑐ℎ)�2𝑥𝑥 300 �_{𝑑𝑑𝑎𝑎𝑑𝑑 𝑥𝑥 𝑖𝑖𝑎𝑎𝑖𝑖ℎ}𝑏𝑏𝑎𝑎𝑏𝑏𝑏𝑏𝑏𝑏𝑎𝑎 2 � 𝑥𝑥 6,2 𝑥𝑥 10−6�

𝑃𝑃𝐽𝐽 𝑏𝑏𝑎𝑎𝑏𝑏𝑏𝑏𝑏𝑏𝑎𝑎�

Although this calculation method still entails a variability of at least 100% for capacities of pipelines, it was used due to lack of further information to perform more accurate calculations.[73] With the calculated capacities for pipelines, the capacities of terminals were calculated based on the following assumptions:

1) The sum of capacities of all pipelines reaching the terminal is basis for the terminal’s capacity both for import and export of crude oil

2) Refineries located at terminals for export, which produce oil products from oil for local and export use reduce the estimated export capacity for crude oil by their nameplate capacity

3) Refineries located at terminals or connected to terminals via pipelines, which produce oil products from oil for local use without pipeline connection determine the import capacity for crude oil

4) Pipelines connecting terminals in different waters such as the Mediterranean and Red Sea increase import and export capacities as they function as a transit capacity

18 These assumptions lead to the following equations to estimate the import and export capacities (C) for crude oil:

𝐶𝐶𝑖𝑖𝑏𝑏𝑎𝑎𝑑𝑑𝑏𝑏 𝑜𝑜𝑖𝑖𝑎𝑎 𝑏𝑏𝑥𝑥𝑒𝑒𝑜𝑜𝑏𝑏𝑒𝑒= �∑ 𝐶𝐶 𝑒𝑒𝑖𝑖𝑒𝑒𝑏𝑏𝑎𝑎𝑖𝑖𝑎𝑎𝑏𝑏𝑝𝑝− ∑ 𝐶𝐶𝑏𝑏𝑏𝑏𝑟𝑟𝑖𝑖𝑎𝑎𝑏𝑏𝑏𝑏𝑖𝑖𝑏𝑏𝑝𝑝 𝑎𝑎𝑜𝑜𝑖𝑖 & 𝑏𝑏𝑥𝑥𝑒𝑒 � + ∑ 𝐶𝐶𝑒𝑒𝑖𝑖𝑒𝑒𝑏𝑏𝑎𝑎𝑖𝑖𝑎𝑎𝑏𝑏𝑝𝑝 𝑒𝑒𝑏𝑏𝑏𝑏𝑡𝑡𝑖𝑖𝑎𝑎𝑎𝑎𝑎𝑎−𝑒𝑒𝑏𝑏𝑏𝑏𝑡𝑡𝑖𝑖𝑎𝑎𝑎𝑎𝑎𝑎

𝐶𝐶𝑖𝑖𝑏𝑏𝑎𝑎𝑑𝑑𝑏𝑏 𝑜𝑜𝑖𝑖𝑎𝑎 𝑖𝑖𝑡𝑡𝑒𝑒𝑜𝑜𝑏𝑏𝑒𝑒 = �∑ 𝐶𝐶 𝑒𝑒𝑖𝑖𝑒𝑒𝑏𝑏𝑎𝑎𝑖𝑖𝑎𝑎𝑏𝑏𝑝𝑝 𝑎𝑎𝑜𝑜𝑖𝑖− ∑ 𝐶𝐶 𝑏𝑏𝑏𝑏𝑟𝑟𝑖𝑖𝑎𝑎𝑏𝑏𝑏𝑏𝑖𝑖𝑏𝑏𝑝𝑝 𝑎𝑎𝑜𝑜𝑖𝑖� + ∑ 𝐶𝐶𝑒𝑒𝑖𝑖𝑒𝑒𝑏𝑏𝑎𝑎𝑖𝑖𝑎𝑎𝑏𝑏𝑝𝑝 𝑒𝑒𝑏𝑏𝑏𝑏𝑡𝑡𝑖𝑖𝑎𝑎𝑎𝑎𝑎𝑎−𝑒𝑒𝑏𝑏𝑏𝑏𝑡𝑡𝑖𝑖𝑎𝑎𝑎𝑎𝑎𝑎

To estimate the capacities for oil products other assumptions had to be made:

1) Pipelines for distribution of oil products inside the country were compared to refinery capacities for local use at the terminal. Excess capacity of pipelines added to import capacity for oil products

2) Refineries located at terminals, which produce oil products from oil for export increase the capacity for oil products by the same amount

3) Regions need to have a minimum import capacity matching the size of their consumption less their refinery capacities for local use

For oil products these equations were used:

𝐶𝐶 𝑜𝑜𝑖𝑖𝑎𝑎 𝑒𝑒𝑏𝑏𝑜𝑜𝑑𝑑.𝑏𝑏𝑥𝑥𝑒𝑒𝑜𝑜𝑏𝑏𝑒𝑒 = ∑ 𝐶𝐶𝑏𝑏𝑏𝑏𝑟𝑟𝑖𝑖𝑎𝑎𝑏𝑏𝑏𝑏𝑖𝑖𝑏𝑏𝑝𝑝 𝑏𝑏𝑥𝑥𝑒𝑒

𝐶𝐶 𝑜𝑜𝑖𝑖𝑎𝑎 𝑒𝑒𝑏𝑏𝑜𝑜𝑑𝑑.𝑖𝑖𝑡𝑡𝑒𝑒𝑜𝑜𝑏𝑏𝑒𝑒 = ∑ 𝐶𝐶 𝑒𝑒𝑖𝑖𝑒𝑒𝑏𝑏𝑎𝑎𝑖𝑖𝑎𝑎𝑏𝑏 𝑎𝑎𝑜𝑜𝑖𝑖+ �∑ 𝐶𝐶 𝑒𝑒𝑖𝑖𝑒𝑒𝑏𝑏𝑎𝑎𝑖𝑖𝑎𝑎𝑏𝑏𝑝𝑝 𝑎𝑎𝑜𝑜𝑖𝑖− ∑ 𝐶𝐶 𝑏𝑏𝑏𝑏𝑟𝑟𝑖𝑖𝑎𝑎𝑏𝑏𝑏𝑏𝑖𝑖𝑏𝑏𝑝𝑝 𝑎𝑎𝑜𝑜𝑖𝑖� + �∑𝑥𝑥>0�∑ 𝐶𝐶𝐶𝐶𝑃𝑃𝐶𝐶𝐶𝐶𝑑𝑑𝑃𝑃𝑐𝑐𝑃𝑃𝐶𝐶𝑃𝑃 −

∑ 𝐶𝐶 𝑏𝑏𝑏𝑏𝑟𝑟𝑖𝑖𝑎𝑎𝑏𝑏𝑏𝑏𝑖𝑖𝑏𝑏𝑝𝑝 𝑎𝑎𝑜𝑜𝑖𝑖��

Floating devices also lacked on publications of their nameplate capacity. Often the storage capacity of the vessels was published. However, as mostly old tankers are retrofitted to serve as production and offloading facilities and their capacity was not customized for the later installed production capacity.[81] Floating offload vessels were treated as terminals for which the earlier defined assumptions apply. Thus following assumptions were made:

1) The maximum production capacity determines the capacity as all that can be produced needs to be shipped and vice versa: maximum production of oil determines the maximal shippable amounts.

2) Floating production devices cannot be used as import terminals as they are usually not connected to the mainland by pipeline.

Installed trade capacity

In Figure 8C the total import capacities for crude oil are illustrated entailing pipelines, on- and offshore terminals. The highest import capacity has Egypt which is also amongst the biggest consumers of oil and imports it to feed its refineries and produce products for the local market. On top of that the SUMED line, consisting of two parallel 42 inch pipelines can carry crude oil worth 5600 PJ per year.[82] This oil is transiting Egypt as the canal can’t accommodate big oil tankers.[83][84] The bypass makes it economically feasible to ship oil through there, whereas without bypass, the route around the Cape of Good Hope would be economically more feasible.[85] South Africa is the second biggest importer of crude oil. However, Kenya and Southeast Africa plan to extend their import

19 capacity with pipelines from Uganda and South Sudan to give these countries access to the ocean and bring their oil to market.[75], [86] Tunisia imports oil from Algeria and ships it together with own oil at La Skhirra.

Figure 8A shows the trading capacities for crude oil for each decade. Due to the lack of data most of capacity of oil terminals are not represented in the figure. Almost all capacity added in the last decades were floating devices. Which is accredited to the oil boom in the gulf Guinea namely in Angola, Nigeria, Western and Central African sub-regions. The overall FPSO distribution is shown in figure 8B.

The biggest export capacity for crude oil has Nigeria followed by Angola and Libya as illustrated in Figure 8D. Extension are planned in Eastern Africa and Kenya. These however are attributed to the same oil resources with the pipeline from South Sudan to Kenya and a terminal in Kenya to export the oil. Angola and Nigeria plan to further increase the number of floating devices. Libya, which holds the biggest reserves of all sub-regions has the biggest land-based export infrastructure. Its availability however is questionable due to the unstable political situation and damages in war. Lately ISIS started attacking Libyan oil to weaken the position of the government and competing rebel groups. Terminals and pipelines were attacked. [87]

Ex po rt cap ac ity cr ud e o il [P J] C D

Figure 8 Added trade capacity for crude oil per decades(A). FPSO (B) and total import (C) and export (D) capacities for crude oil exports in 17 sub-regions for 2010, 2020 and 2030.

Ad de d c ap ac ity cr ud e o il [P J] FP SO cap ac ity cr ud e o il [P J] A B

20

Oil products

All sub-regions except Libya and Madagascar import oil products as figure 9A shows. Libya provides its oil products with refineries. Madagascar lacked on data both for import capacities and consumption. Although it has own reserves these are not exploited at the moment and no local refinery is available. However, plans to exploit its potential are existing and production of crude oil is about to start.[88], [89] The only new planned capacity is the pipeline project from Djibouti in the Eastern African sub-region to Ethiopia. The latter is landlocked and depends on imports due to lack of local reserves.[90], [91]

Nowadays the population rich regions Nigeria, Egypt, South Africa and Western Africa have the biggest import capacity. Although Western Africa and especially Nigeria produce huge amounts of crude oil, their infrastructure of refineries is insufficient to cover their local consumption.[72] To overcome these issues they build new refineries and plan to increase their biofuel consumption.[92], [93]

Algeria and Libya have the biggest export capacities of oil products, which are mainly used to supply Europe with fuel and chemicals.[94], [95] Mozambique exports fuel via pipeline to South Africa. The capacity planned to be added to Eastern Africa is the harbour capacity needed to supply the planned pipeline to Ethiopia. Kenia however is the only country which plans to add export capacity for oil products to bring a share of the output of the new Lamu refinery to market.[96]

Regions with special interest:

Since South Sudan declared its independence from Sudan in 2011 the relations to its neighbour are difficult. Oil reserves of former Sudan are situated in today’s South Sudan, whereas the terminals to export the oil are situated in the northern part. As South Sudan is a landlocked country it relies on a neighbour to export its oil on the global market. Thus plans exist to build a new pipeline from the oil fields in South Sudan to Lamu in Kenya. They include a new port with a crude oil terminal and a refinery desired to produce oil products for both local consumption and

Figure 9 Import (A) and export (B) capacities for oil products in 2010, 2020 and 2030.

Imp or t c ap ac ity o il p ro du ct s [ PJ ] Ex po rt cap ac ity o il p ro du ct s [ PJ ] A B

21 export.[97], [98] What happens to existing infrastructure in Sudan is unclear. To feed its refineries Sudan needs to import oil in the future if no agreement with South Sudan is made. [98]

Uganda, Kenya and Tanzania

In Uganda oil reserves have been discovered recently. The country seeks to exploit these and profit from exports.[99] Therefore it needs to gain connection to the sea as it is a landlocked country. With Kenya and Tanzania two potential partners were found and a pipeline either to Tanga in Tanzania or Mombasa in Kenya was considered.[99], [100] Finally, a decision was made to build the pipeline to Tanzania due to the threat of attacks of Somalian Islamists on the Kenyan route and construction is scheduled to start in 2016.[78], [101] Kenya however does not give up and still plans to build a pipeline which then could also supply its capital with oil from Uganda, as it is located next to the route of the proposed pipeline.[100] In addition to that, oil from Uganda requires a special configuration of the pipeline as it to be heated during the transport due to its high wax content. This in turn will make the pipeline the longest heated crude oil pipeline in the world when completed but also increases the price to build and operate it.[75]

Nigeria

Although being the largest producer of crude oil in Africa, Nigeria runs short on oil products and thus needs to import expensive Diesel to run generators to generate electricity. The refineries in Nigeria just run on 30% of their nameplate capacity. Hence the planned construction of a new refinery will decrease dependency of imports.[93] In addition, the government seeks to increase employment of Biofuel and plans to build 30 new refineries.[92] Poverty also is big problem in Nigeria. This lead to a threat for the oil production as local militant groups chose to attack production capacities and pipeline in order to request money to stop their activities. In the past, government paid militants and could reduce the problem. However, lately new militant groups formed and old ones consider to get back to weapons as their situation didn’t change. They are still poor without a perspective of change.[77], [102] The resulting political instability reduces interest of foreign investors on land based infrastructure. This one of the reasons for the extensive increase in floating devices just desired for export as they don’t involve local issues and threat to attacks is marginal.

Libya

After former dictator Gaddafi was disposed in 2011, the country which holds the largest oil reserves in Africa, turned into chaos. The international community failed to install a stable government. Although a new government was elected in 2015, struggles still remain present. Especially the appearance of ISIS in eastern Libya poses a threat on oil production. ISIS discovered oil pipelines and terminals as vulnerable targets. They seek to weaken the governments in Tripoli and Topruk and push themselves into power.[87] In conclusion oil production and especially new investments to increase it are unlikely for as long as the threat exists.

Coal

The main coal reserves are located in the south, mainly in South Africa and less in its neighbouring countries Botswana, Mozambique, Zambia, Zimbabwe. Morocco and Nigeria hold small reserves as well. The reserves

22 located in Botswana and Mozambique are not yet exploited extensively, leaving South Africa as the only major coal producer and consumer.

Transport modes

Coal is mainly exported as bulk by ship. As vessels used for shipping are large, requirements for terminals are high. The quay needs to be long and the water deep enough to accommodate fully loaded ships. All these requirements lead to limited sites for export terminals and make them expensive investments. Furthermore, equipment at harbours needs to be able to load ships in a reasonable time to shorten lay days and therefor decrease associated shipping cost. Most harbours in Africa however are poorly equipped and sometimes just operated on 30% of their nameplate capacity.[103]

Train

As most of the coal reserves are inlands, it needs to be transported to the export terminals. Using trains is the most efficient way to do so, as there are no developed inland waterways available.[104] The Richards Bay Coal Line (RBCL) in South Africa has a capacity of 76 MT/y and is powered by electricity. However, trains can be both powered by electricity or Diesel. The electricity powered version gives the option to use coal unsuitable for export to power the train and reduce Diesel usage. To exploit the coal reserves in Botswana, Mozambique and Zimbabwe new train lines are planned.[20]

Capacities of harbours

The biggest coal export harbour is Richards bay located on the east coast of South Africa. Up to today this terminal is by far the biggest but new terminals in Walvis Bay, Namibia and Nacala, Mozambique are planned to help exploiting the reserves of Botswana and Mozambique. When it comes to imports, Morocco is leading and plans to extend its coal generated electricity capacity.[24][105] The capacities for all 17 sub-regions are presented in Figure 16.

Capacities of railway transport

Today there is no railway connection between regions to serve coal transport. A connection from Botswana to Mozambique or South Africa would change this situation. A final decision if these connections are going to be realized has not yet been made.[106]

23

Regions with special interest

South Africa is both the biggest producer and consumer of coal in Africa.[107] The country holds 30 GT or 87 EJ of reserves which is equal to 95% of all African coal reserves.[108], [109] South Africa uses the main share of its produced coal for local consumption to generate electricity and produce chemicals. The country is heavily relying on coal as an energy source. However, there are also critical voices that warn that coal reserves were overestimated , as it happened to Britain in the 1980s.[110] The south African government thus also seeks to secure supply for the future by agreeing on coal imports from its neighbour Botswana.[106]

In 2013 the country produced 260 MT or 7540 PJ of which it consumed 182 MT (5278 PJ) itself.[109] The rest of the produced coal was exported via the world’s biggest coal Terminal in Richards Bay with a capacity of 100 MT (2900 PJ) per year and Darwin and Maputo port. The Richards bay coal line, connecting the coal fields with the harbour, currently limits the capacity of export as it can just deliver 74 MT/y. Extension projects such as the SwaziLink, a route that takes trains off the coal route, are under construction. Only SwaziLink will increase the coal transport capacity by 15 MT/y.[111] In interest of importing coal from Botswana and shipping it at Richards bay an extension, as seen in figure 11, is considered.[106]

Figure 11 Richards Bay Coal Train with old (blue) and new route (yellow) Connection to Botswana requires new tracks (red-dashed line) Source: [54]

Figure 10 - Import (A) and export (B) capacities for coal in 2010, 2020 and 2030.

Imp or t c ap ac ity co al [P J] Ex po rt cap ac ity co al [P J] A B

24

Mozambique

Mozambique has coal resources of 23 GT (667 EJ) of which 849 MT (24621 PJ) are recoverable with economic viability.[112] However, the range of the published reserves varies a lot.[108] Most reserves are located in the Tete province inlands. Especially the quality of coal as coking coal has a big potential that might express in a 25% share of the world’s coking coal exports.[17] A major constraint is a lack of suitable infrastructure to export coal. Several different railway routes are under consideration including a line from the Tete region to Macusa with a capacity of 20 MT (580 PJ) per year for as much as $2Bn.[113] Also an upgrade of the only existing Sena line from 3 MT to 20 MT is on its way. Along with that, other lines to the

main harbours of Maputo, Beira and Nacala, as shown in Figure 13 are planned. Nacala is the most interesting port due to its deep water level which makes it suitable to load big vessels. The total volume of the project is estimated to $12Bn resulting in an ambitious export capacity of 120 MT (3480 PJ) per year. A major problem with exporting from the harbours is their lack in cranes, tugs and general inefficiencies making the ports operate at just 35% of their capacity. Also waiting times of up to 28 days for vessels prior loading make it unattractive by now.[20]

An increase in coal production can also have another positive effect. Plans for a Coal-to-Liquids plant include the use of coal that is suitable for export to produce Syn-Fuel generation and minimize waste. Around 60% of the fuel produced is desired for export to Europe whilst the rest is designated to serve the local market.[114]

Botswana

Although the Diamond industry still is the most important sector, Botswana is generally a resource rich country.[115], [116] Besides its big reserves in Diamonds and other ores it holds 66% of Africa’s not yet used coal resources estimated at 202 GT (5858 EJ). Of these are just 7.3 GT (2011 EJ) measured, the rest is based on estimates.[117] However, the estimated recoverable share ranges from 44 MT to 40 GT. The government speaks about 3,3 GT.[20], [108], [118] If these resources are being exploited, Botswana could ramp up its coal production from currently 0.9 MT (26 PJ) to as much as 90 MT (2600 PJ) per year, overtaking South Africa as the biggest coal exporter in Africa due to low local demand.[117] In 2012 the ministry presented the ambitious plans for the coal emerging coal industry in the Botswana coal Roadmap to bring the development on the way.[116]

Other than Mozambique or South Africa, Botswana is a landlocked country without access to the ocean. There are three options considered to export the mined coal illustrated in Figure 13. First is the Trans-Kalahari route with a newly built export terminal in Walvis Bay, Namibia. The construction on this route started in 2015. This option is ideal for exports to Europe. To serve the bigger markets in Asia however, shipping the coal either from South Figure 12 Four options to export coal from Tete in Mozambique via one of three harbours in Nacala, Beira and Maputo. [52]

25 Africa or Mozambique is beneficial. At the time

when the Trans-Kalahari route was initiated mainly exports to Europe, were considered. As the biggest and most suitable market today is India this provides arguments for local coal industry to build alternative connections to export via South Africa or Mozambique.[106]

Another argument to start with the eastern routes is to improve logistics till the other is ready and start production as fast as possible. South Africa offered a 20 MT connection for this case.[119] Furthermore, the needed railway is 400 km shorter

compared to the Trans-Kalahari route. This accounts for both connecting the Richards Bay Coal line from South Africa with Botswana or building a new line to Ponta Technobanine in Mozambique. The problem entailed is the economic viability in case all routes are being built at once. Thus a lot of different interests of several shareholders and countries are interwoven in the situation leading to further delays in the construction of the railway. [120]

Nigeria

Coal was found in Nigeria already in 1908 and the first coal mine starting operation in 1916 in Enugu state.Today coal production plays no role in Nigeria’s economy anymore. The production of coal peaked in 1959 when Enugu Coal was shipped from Port Harcourt.[121] The decline started when the national railway and electricity operators switched from coal to newly found hydrocarbons as primary energy source. This lack of a local- and the weak international market lead to a decline in production. Further problems for the industry evolved with the civil war and following mismanagement of the national coal corporation from managers appointed by the military regime.[122] A step towards privatization in 1999 accompanied with lack of investment meant the end of the Nigerian coal industry and a stop of operation in 2002.[121] Today there are efforts put into revitalization of coal production for local electricity production.[123]

Figure 13 Five different options to export Botswanan via Namibia, South Africa (2 ports) or Mozambique (2 ports). Source: [66]

26

Projections of Capacities to 2050

The performed projections, are desired to deliver input for the TIAM-ECN model in order to improve BAU scenario calculation. The approach was to use a simplistic model that refers to up-to-date data as a basis which was extrapolated with expected GDP, consumption and production development. Historic developments were implemented to represent BAU behaviour. Possible refinements for each calculation are presented at each of chapters. Those were extrapolated first.

Population growth

The African continent is expected to see the strongest increase in population in the future. Data for population growth from the UN was accumulated for the 17 sub-regions and is shown in figure 14.[4] Nigeria, Western Africa and Eastern Africa experience the strongest total growth and keep their leading positions. Southern Africa and Congo face the highest relative growth and will catch up with Ethiopia, Egypt and South Africa. Higher developed countries such as Libya, Morocco, Tunisia, Algeria and South Africa just grow slow in comparison. Egypt is the only exception here as still a strong increase in population is expected for the future.

GDP development

As energy consumption is related to the GDP development, specifically the purchasing power parity per capita, it needs to be projected till 2050.[21]

Method

In order to get the most accurate results the GDP development for each region is desired. As such data was not available, the most recent region specific forecasts from the IMF till 2021 were used and corrected for the future with AfdB estimates. These cover the decades 2000 till 2060.[22], [124] The IMF releases its GDP projections for each country as total numbers in international dollars. Hence these projections were accumulated for those of the 17 TIAM sub-regions that entail more than one country. The GDP’s were normalized by their population with:

𝐺𝐺𝐺𝐺𝑃𝑃𝑏𝑏𝑏𝑏𝑟𝑟𝑖𝑖𝑜𝑜𝑎𝑎= _{∑ 𝑃𝑃𝑜𝑜𝑒𝑒𝑎𝑎𝑎𝑎𝑎𝑎𝑒𝑒𝑖𝑖𝑜𝑜𝑎𝑎 𝑥𝑥 ∑ 𝑖𝑖𝑜𝑜𝑎𝑎𝑎𝑎𝑒𝑒𝑏𝑏𝑖𝑖𝑏𝑏𝑝𝑝} ∑(𝐺𝐺𝐺𝐺𝑃𝑃 𝑥𝑥 𝑃𝑃𝑜𝑜𝑒𝑒𝑎𝑎𝑎𝑎𝑎𝑎𝑒𝑒𝑖𝑖𝑜𝑜𝑎𝑎)

Figure 14 Historic and future population development in 17 sub-regions

27 The relative GDP (g(year)) increase was calculated from the IMF data with:

𝑔𝑔𝑑𝑑𝑏𝑏𝑎𝑎𝑏𝑏 = �𝐺𝐺𝐺𝐺𝑃𝑃(𝑦𝑦𝑦𝑦𝑦𝑦𝑦𝑦+1)_{𝐺𝐺𝐺𝐺𝑃𝑃𝑦𝑦𝑦𝑦𝑦𝑦𝑦𝑦}−𝐺𝐺𝐺𝐺𝑃𝑃(𝑦𝑦𝑦𝑦𝑦𝑦𝑦𝑦)

As the AfDB just distinguishes between 5 regions, the 17 TIAM-ECN sub-regions were assigned to those as listed in table 1.

Table 1 Assignment of TIAM-ECN to AfDB regions

The average between the high (ghigh) and low (glow) GDP growth rates from the AfDB was used for the calculation:

𝑔𝑔𝐴𝐴𝑟𝑟𝐺𝐺𝐴𝐴 =𝑟𝑟ℎ𝑖𝑖𝑖𝑖ℎ + 𝑟𝑟₂ 𝑙𝑙𝑙𝑙𝑙𝑙

From AfDB data just relative changes over the whole timespan were used to correct the IMF data for the future. In order to get balance results average IMF growth rates from 2010-2015 were used as basis:

𝑔𝑔(2010+10𝑎𝑎)= 𝑔𝑔(2010−2015) 𝑥𝑥 𝑟𝑟𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴 (2010+10𝑛𝑛)_{𝑟𝑟𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴 (2010)} 𝑓𝑓𝐶𝐶𝑑𝑑 𝑃𝑃 = 1,2,3,4

To get smaller time-steps for the GDP growth rate the average between the lower and higher time period was used.

Results

All of the 17 sub-regions experience a growth in total GDP till 2050. The strongest average annual growth is expected for Ethiopia (9,31%) followed by Southern (7,26%) und Southeast Africa (6,6%). On average, GDP grows by 4,28% in the 17 sub-regions. Expectations for Central Africa (0,5%), Nigeria (2,25%) and Angola (2,48%) were the lowest. Figure 15 shows the developments in total numbers. Libya is expected to keep its leading position whilst South Africa will catch up with the other northern African

AFDB REGION TIAM-ECN REGION

North Africa Algeria, Egypt, Libya, Morocco, Tunisia Southern Africa South Africa, Southern Africa

East Africa Ethiopia, Kenya, Madagascar, Eastern Africa, Southeast Africa West Africa Nigeria, Western Africa

Central Africa Angola, Democratic Republic of the Congo, Central Africa

Figure 15 Historic and future GDP development in 17 sub-regions from 1980 till 2050

28 regions. Furthermore, for the calculation method for Libya was altered due to the special situation after the civil war. The GDP experienced a strong rise back to pre-war levels. Thus the pre-war GDP development was used as a basis.

Recommendations for refinements

As the used projections are performed by intentional expert committees there is little improvement possible as a wide range of influencing factors are considered in their estimations. However, if possible estimations from more sources could be implemented if available.

Energy consumption

Lee has shown, that energy consumption follows economic growth in developing countries.[125] Thus energy consumption increases when the GDP rises. Furthermore, earlier research on the relationship between energy consumption and economic growth from Kraft and Kraft have shown a dependency between income and energy consumption.[126]

Method

Based on the previous mentioned findings, development of energy consumption was related to both GDP (g) and population growth (p):

𝐶𝐶𝐶𝐶(𝑎𝑎+1)= 𝐶𝐶𝐶𝐶(𝑎𝑎) (1 + 𝑃𝑃(𝑎𝑎+1)+ 𝑔𝑔(𝑎𝑎+1))

Backed by the belief that energy consumption is a necessity, Belke et al. have shown that it is in-elastic for energy prices. In conclusion development of energy prices does not need to be included in a BAU scenario.[21] Also scenarios, such as a shift to a less energy consuming economy which would, according to Costantini and Martini stimulate its growth weren’t implemented as they would imply a change from BAU.[127] Likewise, historic consumption data from the EIA was used to pronounce BAU behaviour of consumption development.[108] The historic relations between consumption to GDP and population development were introduced as a scalar factor (sp

for population; sg for GDP) for the drivers:

𝐶𝐶𝐶𝐶_(𝑎𝑎+1)= 𝐶𝐶𝐶𝐶_(𝑎𝑎) (1 + 𝑃𝑃_(𝑎𝑎+1)∗ 𝐶𝐶𝑒𝑒+ 𝑔𝑔(𝑎𝑎+1)∗ 𝐶𝐶𝑟𝑟)

Historic values for consumption and driver development were averaged over the regions to reduce the effect of anomalies in reaction of consumption growth:

𝐶𝐶𝑒𝑒=𝑖𝑖_𝑒𝑒𝑦𝑦𝑎𝑎(1980− 2010)_{𝑦𝑦𝑎𝑎(1980−2010)} 𝐶𝐶𝑟𝑟 =𝑖𝑖_𝑟𝑟𝑦𝑦𝑎𝑎(1980− 2010)_{𝑦𝑦𝑎𝑎(1980−2010)}

The scalars were implemented leading to the finally used equation:

29

Results

Consumption of fossil energy carriers will increase by high means in a BAU scenario till 2050. Egypt has seen a strong increase in natural gas and petroleum consumption in the past. It will keep its leading role as a consumer for those two carriers, as figure 16A&B shows. This growth is also stimulated by the strong increase in population and the high welfare compared to other regions. These experience a higher population growth, but exhibit a lower basic level of welfare and historic growth of energy consumption. Nigeria shows a low increase in natural gas consumption although it faces a strong growth in population and has a high level of production and reserves for natural gas. Nevertheless, most of the in Nigeria produced natural gas is exported as LNG and not used locally. If existing plans for capacity extensions in natural gas power plants are implemented the natural gas consumption will see a strong increase.[72]

When it comes to oil products, the distribution of growth is more balanced between the 17 sub-regions as all of them employ to fuel their transport as figure 16B shows. Egypt will take the leading role. The strong growing regions Western and Eastern Africa will outgo the consumption of South Africa which is currently the second largest consumer on the continent.

Coal will also just play a role in South and Southern Africa in the future as the major reserves are just found there. Plans to increase coal consumption in Southeast Africa due to exploitations of the own reserves come not into play in the model yet and thus no increase is seen there.[20]

Figure 16: Consumption development for natural gas (A), oil products (B) and coal (C) for 17 sub-regions.

A

B

30

Recommendations for refinements

Projections for future energy consumption hold most possibilities for improvements. GDP growth affects consumption in different sectors such as industry, households or transport in different ways. Energy consumed in industry for example increases the GDP when used for production. Increased consumption in households due to increased wealth has no such feedback on GDP development. Furthermore, energy consuming sectors take different shares for each sub-region. These refinements require knowledge of the composition of consumption sectors and correlations between GDP and consumption development for each of those.

Improvements in energy efficiency are a crucial development in Africa due to high transmission losses or old power plants, which consume comparatively large amounts of fuel.[72], [128] As replacements of old power plants, transport utilities or industrial complexes will most likely increase their efficiency, the growth of fuel consumption will decrease. A scalar to account for these developments should be added for each region as their potential for efficiency increases vary widely.[129]

Production

To estimate changes in imports and export the local production development is crucial, thus its development till 2050 was estimated. The calculated total production was compared to currently available reserves.

Method

In African countries production and GDP development are closely related as the hydrocarbon industry is a mayor economic sector. In conclusion future development of hydrocarbon production was related to the earlier extrapolated GDP development with:

𝑃𝑃𝑑𝑑_(𝑎𝑎+1)= 𝑃𝑃𝑑𝑑_(𝑎𝑎) 𝑥𝑥 �1 + 𝑔𝑔_(𝑎𝑎+1)�

To account for the historic relation between GDP growth and production growth a scaling factor (spr) was

introduced:

𝑃𝑃𝑑𝑑(𝑎𝑎+1)= 𝑃𝑃𝑑𝑑(𝑎𝑎) 𝑥𝑥 �1 + 𝑔𝑔(𝑎𝑎+1) 𝑥𝑥 𝐶𝐶𝑒𝑒𝑏𝑏�

It expresses the relationship between production and GDP growth for each year from 1980-2010 and was implemented in the extrapolation for the average over this timespan with:

𝐶𝐶𝑒𝑒𝑏𝑏=

∑ (1+𝑝𝑝𝑦𝑦(𝑛𝑛))

(1+𝑖𝑖(𝑛𝑛)) 1980<𝑛𝑛<2010

∑ 𝑎𝑎

Altogether the production was extrapolated with:

𝑃𝑃𝑑𝑑(𝑎𝑎+1)= 𝑃𝑃𝑑𝑑(𝑎𝑎) 𝑥𝑥 �1 + 𝑔𝑔(𝑎𝑎+1) 𝑥𝑥

∑ (1+𝑝𝑝𝑦𝑦(𝑛𝑛))

(1+𝑖𝑖(𝑛𝑛)) 1980<𝑛𝑛<2010

31 In order to compare the estimated production with available reserves, the totally produced or exploited amounts (Ex) were calculated with:

𝐸𝐸𝑥𝑥2010−2050 = ∫₂₀₁₀2050𝑃𝑃𝑑𝑑(𝑎𝑎+1)

Results

Figures 17 and 18 show, that production for all energy carriers will increase. Natural gas is the hydrocarbon that is expected to see the biggest increase with Egypt and Algeria as the main producers in the future. Egypt which just recently discovered a new gas field in the Mediterranean is expected to take the leading role as a producer. However, if Egypt increases its production as projected it would overexploit its reserves as figure 18D shows. The same accounts for Algeria. Nigeria’s production is, despite holding the biggest reserves, not growing by strong means due to the low growth in GDP. This might change when natural gas is consumed stronger locally. Sufficient reserves are available in the case of Nigeria. Southern Africa where huge reserves were discovered just recently and plans for their exploitation does not show a growth as big as desired by the leaders, just a third of its available reserves are going to be exploited.[17]

Crude oil production growth rates in Eastern Africa and Libya are expected to increase strongest. This leads to Libya taking the second position after the all-time leader Nigeria which also is expected to double production till 2050. Whilst Libya could increase its production as projected, all other oil producing regions would relate on new discoveries to do so. Results presented as figure 18E shows clearly. Production capacities for oil products are expected to grow in all regions as seen in figure 17. To really see this happen an even bigger

effort would be needed as most of the currently available capacity is outdated and thus not only new production capacities need to be built but older ones replaced.[130]

Coal production in South Africa is expected to further increase. Newly planned production in Southern and Southeast Africa has not been considered in the projection yet. Southern Africa might then play a bigger role in coal production and exploit a higher share of their available reserves. None would currently exploit all reserves as figure 18F shows.

32 Figure 18 - Left side: Forecasted production development natural gas (A), crude oil (B) and coal (C) till 2050. Right side: Comparison of total production of natural gas (D), crude oil (E) and coal (F) till 2050 compared with reserves available 2015.

B

A _D

C

E

33

Recommendations for refinements

The overexploitation of reserves for the BAU scenario indicates the need to refinements. A first step could be the implementation of a maximum reachable exploitation of reserves. Furthermore, one needs to define to which extend reserves are desired to be exploited. Their increase with time, assuming an increase in energy prices and improvements in technology to exploit them, needs to be considered as well. A coupling of production growth to new discoveries could improve production development estimations.

In the current model, production facilities, more specifically their age, remaining commission times and fitness are not considered. However, as the future production is limited by available production facilities, these should be included in the projections. This also requires implementation of planning and construction times as the latter lead to a time lag and required capacities are not built from one day to another. Moreover, construction and refurbishment are depending on foreign investment due to high cost. Therefor investment climate could be another scaling factor to further refine projections.

Projection for import capacity

Imports of hydrocarbons in the 17 African sub-regions are mainly petroleum products for local consumption. Furthermore, some serve as transit to for either import or export from neighbouring sub-regions. Imports were extrapolated with consumption developments with different dependencies of the latter in consideration.

Method

Projections for import capacities were based on the assumptions, that imported energy carriers are either consumed locally or exported to neighbouring sub-regions. First, expected capacities for imports (Ci) were

extrapolated by developments of energy consumption (co):

𝐶𝐶𝑖𝑖 (𝑎𝑎+1)= 𝐶𝐶𝑖𝑖 (𝑎𝑎) 𝑥𝑥 �1 + 𝑐𝑐𝐶𝐶(𝑎𝑎+1)�

Changes in consumption were calculated with:

𝑐𝑐𝐶𝐶

=

𝐶𝐶𝐶𝐶(𝑃𝑃)

𝐶𝐶𝑖𝑖 (𝑎𝑎+1)= 𝐶𝐶𝑖𝑖 (𝑎𝑎) 𝑥𝑥 �1 +𝐶𝐶𝑜𝑜(𝑛𝑛+1)_{𝐶𝐶𝑜𝑜(𝑛𝑛)}−𝐶𝐶𝑜𝑜(𝑛𝑛)�

However, landlocked countries use harbours of their neighbours, such as Ethiopia does in Djibouti. Hence Djibouti’s import capacity is both based on the internal (Coi) and external consumption (Coe). In addition, some

regions are used as transit for others to export their goods. This is the case if exporting regions are landlocked or transited ones are in the way to a trade partner such as Morocco and Tunisia need to be passed by Algerian gas to reach Europe. All import and export relations are listed in table 2.