Angola and Mozambique Gas Monetization for Economic Development Gas Based Industry Feasibility Study For: The African Development Bank, Tunis By: DNV KEMA Energy & Sustainability June 30th 2013 Contract N° / OPSM.2/2012 Final report Authors: Melahn Parker / Henk Kreuze Angola and Mozambique Gas Monetization for Economic Development Contents List of Acronyms ...................................................................................................................................... 6 Executive Summary ................................................................................................................................. 9 1 Introduction ....................................................................................................................................... 12 1.1 Southern African Development Community (SADC) ................................................................... 12 1.1.1 Economics ............................................................................................................................ 12 1.1.2 Current Energy and Gas Use ................................................................................................ 13 1.2 Angola ......................................................................................................................................... 13 1.2.1 Economics ............................................................................................................................ 13 1.2.2 Demographics ...................................................................................................................... 14 1.2.3 Current Energy and Gas Use ................................................................................................ 14 1.3 Mozambique ............................................................................................................................... 15 1.3.1 Economics ............................................................................................................................ 15 1.3.2 Demographics ...................................................................................................................... 16 1.3.3 Current Energy and Gas Use ................................................................................................ 16 1.4 Outlook ....................................................................................................................................... 18 2 Gas Reserves and Production ............................................................................................................ 19 2.1 South African Development Community (SADC) ........................................................................ 19 2.1.1 South Africa .......................................................................................................................... 19 2.1.2 Tanzania ............................................................................................................................... 20 2.1.3 Kenya (adjacent to SADC) .................................................................................................... 20 2.1.4 Republic of the Congo (adjacent to SADC) ........................................................................... 20 2.2 Angola ......................................................................................................................................... 21 2.2.1 Discoveries and Natural Gas Reserves ................................................................................. 21 2.2.2 Oil & Gas Production and Gas Flaring .................................................................................. 22 2.2.3 Current Infrastructure and Use ............................................................................................ 22 2.2.4 Conclusions .......................................................................................................................... 24 2.3 Mozambique ............................................................................................................................... 25 2.3.1 Natural Gas Reserves ........................................................................................................... 25 2.3.2 Existing Gas Utilization Plans ............................................................................................... 27 2.3.3 Conclusions .......................................................................................................................... 28 1 3 Eight Natural Gas Industries............................................................................................................... 29 3.1 Summary of inputs and results ................................................................................................... 29 3.2 Netback analysis methodology ................................................................................................... 32 3.2.1 WACCumulator: ................................................................................................................... 32 3.2.2 Netback comparison ............................................................................................................ 33 3.3 LNG .............................................................................................................................................. 34 3.3.1 Global Market Outlook ........................................................................................................ 34 3.3.2 LNG Use and Pricing in Africa ............................................................................................... 40 3.3.3 Capex, Opex, Pricing, Gas netback value ............................................................................. 43 3.3.4 Risks & Abatements ............................................................................................................. 45 3.4 Power Generation ....................................................................................................................... 46 3.4.1 Global Market Outlook ........................................................................................................ 46 3.4.2 Electricity Use and Pricing in Africa ...................................................................................... 46 3.4.3 Capex, Opex, Pricing, Gas netback value ............................................................................. 54 3.4.4 Risks & Abatements ............................................................................................................. 56 3.5 Urea ............................................................................................................................................. 58 3.5.1 Global Market Outlook ........................................................................................................ 58 3.5.2 Urea Use and Pricing in Africa .............................................................................................. 60 3.5.3 Capex, Opex, Pricing, Gas netback value ............................................................................. 67 3.5.4 Risks & Abatements ............................................................................................................. 69 3.6 Methanol ..................................................................................................................................... 70 3.6.1 Global Market Outlook ........................................................................................................ 70 3.6.2 Methanol Use and Pricing in Africa ...................................................................................... 73 3.6.3 Capex, Opex, Pricing, Gas netback value ............................................................................. 74 3.6.4 Risks & Abatements ............................................................................................................. 76 3.7 Gas-to-Liquids ............................................................................................................................. 77 3.7.1 Global Market Outlook ........................................................................................................ 78 3.7.2 Oil-product Use and Pricing in Africa ................................................................................... 81 3.7.3 Capex, Opex, Pricing, Gas netback value ............................................................................. 84 3.7.4 Risks & Abatements ............................................................................................................. 86 3.8 Aluminum .................................................................................................................................... 87 3.8.1 Global Market Outlook ........................................................................................................ 87 3.8.2 Aluminum Use and Pricing in Africa ..................................................................................... 89 3.8.3 Capex, Opex, Pricing, Gas netback value ............................................................................. 91 2 3.8.4 Risks & Abatements ............................................................................................................. 93 3.9 Steel ............................................................................................................................................ 94 3.9.1 Global Market Outlook .......................................................................................................