Reluctance to Fund Gas Threatens West Africa Power Projects
(Bloomberg) -- Africa’s newest gas producers are concerned that projects utilizing the resources to broaden access to electricity are under threat by a push to avoid the funding of fossil fuels.
“Many companies operating in the sector are scaling down or pulling out completely” following COP26 pledges to lower carbon emissions, Senegal Oil Minister Sophie Gladima said in an interview at the sidelines of the MSGBC Conference in the city of Diamniadio.
Senegal is set to supply its own gas for the first time with the Greater Tortue Ahmeyim project, expected to start production in late 2023 or early 2024, according to Gladima. A smaller Yakaar-Teranga project, with an estimated 15 to 20 trillion cubic feet, is still looking for financial backers, she said. There are plans for the field to be connected to the Tortue project and help fuel power plants in Senegal, which aims to reach universal access to electricity by 2025.
Mauritanian Oil Minister Abdessalam Ould Mohamed told Bloomberg Friday that a refusal to fund the country’s gas projects would lead to a “catastrophe” for African countries that remain energy poor. Mauritania and Senegal both have an equal share in the Tortue project that’s backed by BP Plc and Kosmos Energy Ltd.
BP, which operates the Cayar Offshore Profond block where the Yakaar and Teranga discoveries are located, with a 60% stake, declined to comment on funding plans. “BP is working with our partners on the development of national gas-to-power project Yaakar-Teranga,” a spokesperson said in an emailed response to questions.
Mohammad Barkindo, the secretary-general of the Organization of Petroleum Exporting Countries, called on climate-conscious investors Thursday not to overlook the needs of developing countries where 759 million people lacked access to electricity in 2019, with most of them located in Africa, which accounts for about 3% of global emissions.
Funding for gas-to-power projects in developing markets already dropped by 10% in 2020 compared to a year earlier, according to BloombergNEF.
“We’re hoping that some of the countries that came out strongly at COP26, saying they will no longer finance gas and oil projects, will come around,” Gladima said.
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