African energy the big league beckons.

Author:Ford, Neil
Position:SPECIAL REPORT - Gross domestic product
 
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Business journalists often focus on oil, gas and coal production when they discuss African energy and rightly so. Energy production is the continent's biggest source of revenue and the cornerstone of African GDP. Globally, it accounts for just 7% of oil output, 3.6% of coal production and 1% of gas output, yet Africa's real importance is not in terms of headline production figures but in its export capacity, as about half of all its primary energy output is shipped elsewhere in the world. Moreover, although per capita energy consumption is very low, it has more potential to grow than any other continent. Economic growth and energy consumption are still closely linked and so Africa's current economic revival is exciting the interest of energy suppliers. This Special Report provides a comprehensive guide to Africa's various sources of energy, the growing importance of renewables, current projects and how these projects are being financed. Report compiled by Neil Ford.

The oil majors are well known for funding research into long-term energy production and consumption forecasts for all parts of the world. Slight annual changes can result in substantial differences to output and marketing strategies. We look at the conclusions of the most recent BP report into long-term African energy trends. 'The importance of a country as an energy market can be assessed by calculating its total energy consumption, including oil, gas, coal, electricity and even firewood. It is important to include biofuels, such as firewood, because this gives an idea of the size of the potential commercial market for other forms of energy, such as electricity and liquefied petroleum gas (LPG), which can be used to replace firewood. The usual international unit of measurement for energy consumption is British thermal units, or Btu. As Table 3 on the following page demonstrates, South Africa, Egypt and Algeria are by far the biggest energy consumers on the continent. Despite their huge populations, Nigeria, Ethiopia and Democratic Republic of Congo are still very modest per capita energy consumers, even in African terms. All but 19 African states consume less than 0.1 quadrillion Btu a year, meaning that they are irrelevant in international terms. This perhaps helps to explain why private sector investors are so reluctant to finance power plants in such markets. By contrast, the US consumes about 98 quadrillion Btu a year.

Oil companies, governments and international financial...

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