It was an African dream to create a cutting edge renewable energy industry in one of the continent’s biggest economies to attract foreign investment and train a pool of talent to run it; that dream is in tatters with the companies, that sank nearly $5 billion into it, left in limbo and out of pocket.
In the next few months, companies behind 37 signed-off renewable energy projects are likely to be on shaky ground because South Africa’s Department of Energy has failed to sign 20-year power purchase agreements. These agreements not only secure a connection to the national grid, but also revenue. Government promised to sign the PPAs on April 11. This evaporated and many fear they may not be signed before the next Integrated Resources Plan – the national plan for the energy mix to take the country to 2050 – to be finalized next year.
Reading between the lines, it appears the Department of Energy is more interested in eking out aging coal-fired operations, which generate more than 70% of South Africa’s power, and planning for a highly expensive nuclear program that could set back the taxpayer $50 billion. There have also been fewer power cuts this year. The feeling among many insiders at Eskom is ‘why should we pay for what we don’t need right now?’ The national power generator also pleads poverty.
“I would say of the 37 projects, 14 are very vulnerable right now,” Brenda Martin, the head of the South African Renewable Energy Council, said.
“If nothing happens in the coming months, companies will not be able to hold on and there will be closures and retrenchments in which hundreds of South Africans will lose their jobs.”
<a href="http://www.forbesafrica.com/cover-story/2015/09/01/power-people-people/" target="_blank" rel="noopener">Power For The People By The People</a>
If you want to check the temperature of the sick South African renewable energy industry you should look across the border into Botswana. It is a minor player in energy, let alone renewable energy, with peak demand of a mere 600MW for its tiny population of fewer than two million compared to around 40,000MW in South Africa.
In May, the state-run Botswana Power Corporation put out a call for an expression of interest for a partnership in a small 100MW solar project. Usually a call like this would attract a handful of bidders. This one attracted a staggering 166 bidders, most from South Africa – a clear indication of the hunger at home. A mere 62 of these were selected.
“It’s just crazy. We have to search to survive,” one of the South African bidders, who asked not to be named, said.
<a href="http://www.forbesafrica.com/focus/2017/06/01/false-dawn-new-nuclear-africa/" target="_blank" rel="noopener">False Dawn For New Nuclear In Africa</a>
The dearth of PPAs in South Africa appears to have unintended consequences across Africa.
“The markets are all opening up across Africa. We have seen shifts happen in sub-Saharan Africa in wind, solar and hydro. Biomass is moving quite fast too and energy from waste is very labor intensive. The bigger companies can go for these projects but the smaller companies won’t be able to afford to,” Martin said.
“But what we are doing now is training wind technicians for jobs in Zambia, Uganda and Ghana. This is the opposite of development that was meant to stimulate jobs for South Africa. We are simply creating jobs for other countries.”
As for a new date for the signing of the PPAs for South African producers?
“I don’t see any strong leadership among government officials right now,” rues Martin.
The Department of Energy requested FORBES AFRICA to e-mail questions over when the PPAs would be signed, which we did and followed up with numerous phone calls. Like the renewable energy producers of South Africa, we didn’t get any joy.

An Ill Wind Blowing Nobody Any Good

The tense, but eventually successful, haggling of a natural gas supply deal between Tanzania and Nigeria’s Dangote Cement is a pointer to what awaits East Africa as the region sets off the delicate journey of exploiting its new found vast reserves of oil and gas.
Tanzania’s President John Magufuli on December 10 announced that an agreement had been reached to supply natural gas to Dangote’s $500-million cement factory in the East African nation’s southeastern town of Mtwara, ending tensions after price negotiations with the state-owned Tanzania Petroleum Development Corporation (TPDC) stalled.
“They (Dangote Cement) will now buy natural gas directly from the state-run TPDC instead of going through middlemen,” Magufuli said after a meeting with the company’s chairman, and Africa’s richest man, Aliko Dangote.
Magufuli blamed unspecified middlemen for “interference”, saying Dangote Cement had sought “at-the-well prices” and that the issue had now been resolved to supply the company with the commodity at a “reasonable” tariff.
The Tanzania-Dangote price haggle offers a sneak-peek of the tough oil and gas supply contract negotiations that authorities in East Africa are certain to face in the exploitation of newly struck reserves.
East Africa has caught the attention of the global energy industry following the discovery of huge reserves of oil in Uganda and Kenya and natural gas in Tanzania. An estimated 6.5 billion barrels of oil were discovered in Uganda’s Albertine basin near the border with the Democratic Republic of the Congo (DRC). In Kenya it is estimated that the recoverable reserves total 750 million barrels of crude.
Tanzania said in February 2016 that it had discovered an additional 2.17 trillion cubic feet (tcf) of potential natural gas deposits, increasing its total estimated recoverable natural gas reserves to more than 57tcf.
The exploitation of these vast reserves will however require caution to ensure the region avoids the pitfalls of the unpopular oil curse. The nature of contracts reached with buyers has a direct impact on the country’s development.
Supply contract negotiations are not an easy task because one has to juggle maximizing revenue for government and investor protection from high cost of doing business. Given the lengthy life and complex nature of supply contracts, a miscalculation has monumental effects on either of the negotiating parties and it is vital that keen attention is paid during the entire process to attain a balance.
“One of the key concerns is that African governments that are major producers of fossil fuels (and other minerals) do not receive sufficiently large rents or revenues from the production of these extractive products. This is attributable to a number of reasons, including contracts and regimes that are not designed to extract maximum rents,” the African Development Bank (AfDB) and the African Union (AU) say in a joint study titled Oil and Gas in Africa.
Oil and gas supply contracts are particularly complex because they are not fully driven by demand-supply factors; at times they are driven by geopolitical factors. Newcomers in the game must tread carefully or risk being short-changed by the more experienced industry insiders who are privy to sale strategies.
The middle-men have a nose for quick cash and will not miss a chance to ride on the inexperience of new players in the industry to profiteer through deal-cutting. The middle-men, in most cases, fan graft in order to thrive, leaving in their wake massive damage.
Benchmarking with peers and best practice is the way to beat such odds because it helps build on contract experience. The World Bank-backed Extractive Industries Transparency Initiative (EITI) can help address such challenges by laying bare all the deals.
“Accountability and transparency in the management of public resources is critical in ensuring positive development results impact – and perhaps nowhere more so than when significant natural resource wealth such as oil and gas are present,” the AfDB and AU say in the report.
Under the EITI, mining firms are required to publish payments made to governments and to make public revenues received available for audit and monitoring. The EITI monitors and reconciles company payments and government revenues. Each signatory country owns the process, which is overseen by participants from the government, companies and national civil society.

Prepare For  tough negotiations

Since its inception 22 years ago, Unique Maritime Group (UMG) has grown from a company with three employees to more than 500; a local business to an international operation with five divisions across seven global regions; and a foray for Himanshu (Harry) Gandhi into entrepreneurship within the oil and gas industry that was purely accidental.
“You’re not born a businessman, you just become one when you grab an opportunity,” he says.
It’s a blistering Middle Eastern morning en route to meet him in Sharjah, United Arab Emirates, where UMG’s headquarters are located in the Hamriyah Free Zone, an industrial area far from the glamour of Dubai, its emirate sibling.
The quintessential businessman, Gandhi has 25 years of industry-savvy and a knack for seizing opportunities to form partnerships and acquire companies to expand his empire. His initiation into entrepreneurship was by chance, but his success has been no accident.
The son of an electroplating engineer born into a middle-class family in Mumbai, Gandhi started out on a different path with a chemistry degree from Bombay University, later studying computer science in Singapore when his father was transferred there in 1981.
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A programmer with Associated Onshore Offshore Services (AOOS) in 1984, Gandhi quickly graduated to sales engineer, ultimately being given the opportunity to open a Middle East branch in Dubai as general manager. The future looked bright but Gandhi was about to meet his first challenge.
“In 1986, there was a big oil price drop and they decided to withdraw from this area,” he says. “I presented my then chairman with a plan and basically became owner with him of the company – so I got into business because my employment was shutting down.”
Restarting in 1993 as UMG, the company grew as a specialized equipment supplier providing offshore and onshore services including the sale, rental, manufacturing and servicing of equipment to the oil, gas and marine industries.
UMG evolved as oil and gas opportunities in the Middle East grew and Dubai became an international hub. Today, Gandhi has grown the business by looking beyond Middle Eastern shores. His investment in African companies has seen technology out of the continent excelling in one of the biggest oil and gas industries worldwide.
One such company in Cape Town, Unique Hydra, began as a small team of engineers. Approaching Gandhi with their diving engineering equipment, he recognized its quality and began selling it in the Middle East. Seeing the potential for growth with financial and commercial help, he provided infrastructure and resources, gave them challenging hi-tech jobs overseas and set up a huge factory.
“The amount of talent we have in South Africa is incredible,” says Gandhi.
As a result, Unique Hydra has grown from a small equipment manufacturing company to the leading diving equipment supplier to the world.
Much of UMG’s technology is developed on the Unique Hydra premises; Gandhi says his company has grown overseas due to their business in South Africa. UMG has spent the last three years investing in research and development there which has culminated in a new product: HYDRACraft. A marine vessel that is used to support diving operations.
“It’s more out of Africa and we globalize it,” says Gandhi.
Also operating in Nigeria as Unique Wellube, exporting their services to various industries, Gandhi says UMG wants to keep growing in Africa. Opportunities exist from Angola, Ghana and Gabon to Kenya and Tanzania.
“As a group, for us, 25% of the market comes from Africa, so we are going to regionally diversify there.”
Gandhi has witnessed a transformation in Africa’s workforce in the last decade.
“There is a lot of demand from the workforce to educate themselves further so that they can economically grow themselves and that is very amazing.”
Building a multinational operation hasn’t been easy.
“Today, I face the same challenge I had when I was a three-man company; finding the right people to do the right jobs and to be loyal.”
Dr. Saeed Alhassan, Director of the Gas Research Center and Assistant Professor at the Petroleum Institute in Abu Dhabi, agrees.
“Sustainable development of the human capital is among the most challenging aspect of the oil and gas industry because training and retaining top notch talent requires a good deal of investment; aligning human development with business strategy has to be accounted for.”
Gandhi says oil and gas is a good industry because of its growth cycle.
“The demand for oil is continuing to grow; there is still not enough oil in the world to take care of the final demands of people.”
He says oil and gas is cyclical and in his 25 years in the industry he has witnessed three cycles.
“It’s the case of it consolidates, it grows, it consolidates, it settles down, then it will grow again.”
Tomorrow is always on Gandhi’s mind, but today he acknowledges he wouldn’t have amassed such success without his team. He says good camaraderie makes employees family and if they value company culture, the organization will always succeed.
Gandhi expects to reach seven divisions in three years by growing UMG’s business lines, appealing to the same customer with different technology.
“We innovate, we learn, we buy the technology or we acquire a company doing that and so we build or business.”
He enjoys giving back, from the Lighting a Billion Lives campaign (LaBL), a solar lighting initiative where he helped light up 23 villages across India, to partnering with the EKAL Vidyalaya Foundation in India to fund 50 schools for impoverished children.
For this CEO, success isn’t represented by his Lamborghini with its elite three-digit license plate or his villa in the posh Emirates Hills district in Dubai; hard work is paramount.
“I still work from nine to five every day!”

Diving Into  An Ocean Of Cash

The daughter of liberation fighters, I was born in Russia, raised in Angola as a refugee, and was blessed to witness the independence of my country Namibia. My parents, both of whom are lawyers, taught me determination and the value of service for the greater good. Their passionate belief in a nation’s right to self-determination imprinted upon me from a young age and they instilled in me the significance of harnessing natural resources as a catalyst for unlocking national development. As a young girl, my late father, Handupula Shimutwikeni, taught me my gender is only a barrier if I chose to see it as thus. My mother, Panduleni Shimutwikeni, by her example, taught me that the world is my oyster and that forging ahead against all odds is the only way forward.
My upbringing influenced my education odyssey across three continents. While in high school, I was awarded a scholarship to pursue a Business Management and Computer Information Systems degree in the United States. After obtaining my Bachelor’s, I returned home and worked in the diamond industry in a public-private partnership, under the pioneering Inge Zaamwani-Kwami, the former MD of Namibia Diamond Corporation. This experience sparked my interest in natural resources. Recognizing the need to bolster the national voice in the international world of negotiations, I went on to attain a LLM degree from Leeds University and a LLM in Mineral Law and Policy at Dundee University, making me one of a handful of Namibians with such a qualification.
However, when I returned home, I was in for a surprise as it was difficult to get a job! I was told I was too young, overqualified and a woman! A ‘triple threat’ as some professionals labelled me. It was discouraging and made me question my purpose. I drew on my mother’s strength and decided to forge ahead, rise above the inequalities and in the process empower others with this truth. Thus I embarked on my entrepreneurial adventure and opportunities opened up in support of my vision. I leapt at the opportunity to consolidate my skills through a contract with the International Telecommunication Union and European Commission to co-draft Namibia’s cybercrime bill under the ‘Harmonisation of ICT Policies in Sub-Sahara Africa’ project.
In 2011, with a fellow Dundee alumnus from Angola, I birthed Rich Africa Consultancy. The Consultancy specializes in natural resources law and policy, and facilitates investment linkages in the sector. A key objective of Rich Africa is to be a trusted advisor and catalyst to unlocking our resource potential. Its creation was inspired by the need to invoke a sense of pride in Africa and its vast natural resources.
Rich Africa launched the Namibia International Oil and Gas Conference in 2012; an initiative I conceptualized and led to fruition with the endorsement of the Namibian government. Themed the ‘Road to Discovery &amp; Beyond’, the inaugural conference brought together decision-makers, and international and national thought leaders to share best practices associated with the discovery of oil in Namibia.
This biennial conference was followed in 2014 with ‘Unlocking and Optimising Our Resource Potential’ which focused on the evolution in the industry. It is a humbling honor that these initiatives have received recognition placing Namibia on the international oil and gas platform.
On this journey, I was often confronted by scepticism because Namibia is considered a frontier territory in the oil and gas arena and such an undertaking was too big for “a petite young woman”. This only strengthened my resolve. I also used this platform to inspire women by presenting a new avenue to transformation through natural resources, a sentiment shared by Bridgette Radebe, one of South Africa’s successful black female mining entrepreneurs, and keynote speaker at our 2014 conference.
Not surprisingly, I do face moments of self-doubt but have been fortunate to have an extensive and supportive network of mentors.
A guiding tenet of my life has been, ‘when writing the story of your life, don’t let someone else hold the pen’. I believe I am here to finish the work my parents started.
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– The writer is one of two mineral lawyers in Namibia, is CEO of Rich Africa Consultancy and an oil and gas entrepreneur.

Selma-etch-1

‘Young,  Over Qualified  And A Woman!’

It took the prestigious, New York City-based Columbia University two years to snag Wale Tinubu as keynote speaker at their annual Africa Economic Forum. Not surprising, Tinubu maintains an extremely busy schedule running Oando Plc, the first Nigerian company to list on the Johannesburg Stock Exchange as well as the Nigerian Stock Exchange, with a market capitalization of $1.4 billion and more than a thousand staff.
The forum, in its eleventh year, was held at the Ivy League school’s sprawling campus on the Upper West Side of Manhattan. It highlighted the rise of Africa and provided perspective from various industry titans from the continent. Tinubu, the group chief executive officer of Oando, the sub-Saharan African indigenous integrated energy group, joined Raila Odinga, the renowned politician and former prime minister of Kenya, Rosalind Kainyah, the managing director of Kina Advisory Limited and Emmanuel Nnadozie, the executive secretary of the African Capacity Building Foundation (ACBF) to discuss the continent’s economic rise.
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It has been more than two years since the African oil magnate featured on the cover of FORBES AFRICA. Back in November 2011, Tinubu ended his first interview with the magazine, saying &#8220;Africa is a challenging continent; you fight for water, you fight for food, you fight for shelter. We compete by nature, so it&#8217;s always difficult but we don&#8217;t always know it is difficult because we have a spirit of survival. Here at Oando, we deliver on the tough things.&#8221;
Fast-forward to 2014, it seems that Tinubu still has that philosophy.
Standing in the lofty hallways of the university, dressed in denim jeans, crisp white shirt, dark-colored suede blazer and his signature horn-rimmed glasses, one could have easily mistaken Tinubu for a professor; fashionably modern but unassuming even though he sits at the helm of a $1.7-billion energy conglomerate.
During the chat with FORBES AFRICA, Tinubu discusses his company’s acquisition of the Nigerian upstream oil and gas business of ConocoPhillips, an American multinational energy corporation, in a $1.7 billion transaction.
“We were looking to acquire a company that was three times our size. We had to do several rounds of fundraising, which we successfully did. We did a rights of issue first, then we did a private placement, and then we organized a corporate facility. We had about five or six work series running simultaneously in an environment where we were deemed not to be able to do the transaction because anybody wanting to do a $1.5 billion or $1.7 billion transaction in such a short space of time is unheard of. Finance is still a challenge; it’s always been a challenge in Africa.”
The London-trained attorney-turned oil baron is known for being innovative in identifying funding opportunities from across the globe as well as from different classes of institutions. In 2012, Oando’s upstream business, Oando Energy Resources, became the first Nigerian indigenous company to be listed on the Toronto Stock Exchange with a market capitalization of $184 million.
His company started off as a trading company in oil and gas. It then went into downstream marketing, where they filed registration and diversified into gas, built three different gas fire systems, 130 kilometers of pipelines went into the services industry and now they are finally in the upstream sector.
“Our ultimate goal was to diversify our business to the upstream — exploration and production of oil and gas — because there is a substantial amount of profitability that exists and there’s an incredible value that we can add towards our indigenous participation in our oil industry.”
Tinubu explains that Nigeria is producing around 2.3 million barrels of oil a month but should be producing 4 million barrels. He also says that 65% of the reserves are on land but most of the focus is offshore because of the better return it offers.
“It is not unrealistic for us to build a $10 billion exploration and production indigenous company. When we started 20 years ago, we had no money. Today, we are probably an enterprise of $3.5 to 4 billion and by the time we complete this acquisition we will be around $6 billion and that is with zero equity.”
This is the result of delivering on the tough things.

The Nigerian  Oil Baron  Buying Up America

Europe and America have surely made inroads when it comes to environment-friendly electric vehicles (EV), manufacturing and finding enough customers for them, but Africa is still lagging behind in this respect.
Electric cars, which help curb greenhouse gas emissions, have been introduced in Africa, but car manufacturers admit they are yet to see a major shift from petrol- and diesel-driven cars to green cars. Clynton Yon, Product Manager of car major Toyota in South Africa, says it’s simply due to a lack of interest from the market.
“Hybrid technology is not cheap but in Europe and the US, the financial rebates buyers receive from the government [on initial purchase and also when it comes to taxes for insurance and emissions, for example congestion tax] make it a far more viable proposition. There also appears to be reluctance on the part of South Africans to adopt a greener lifestyle if it’s going to involve a higher initial financial outlay,” says Yon.
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Electric cars are still fairly expensive, and with reference to local sales, admittedly, hybrids have not achieved the kind of retail numbers they have elsewhere. The most obvious reason for this is the financial rebates offered by first-world countries are not available in South Africa, according to Yon.
“That said, Toyota has made a concerted effort to make hybrid variants more accessible. The Yaris HSD for example is the most affordable hybrid on the market,” says Yon. The Yaris HSD costs R230,000 ($21,700).
Electric engines give electric cars instant torque, creating strong and smooth acceleration. These cars first appeared in the 1880s, and were popular in the 19th and 20th centuries, until advances in combustion technology and production of cheaper petrol vehicles led to a decline in the use of electric cars.
Since 2008, a renaissance in electric vehicle manufacturing has occurred due to advances in battery and power management technology, concerns about increasing oil prices and the need to reduce greenhouse gas emissions.
If as a continent, Africa were to catch up with markets such as Europe, a lot needs to be done to educate the consumer about the effects of global warming.
About 144,000 units of another green car entrant, the Nissan LEAF, have been sold around the world, a large percentage of those sales owing to Europe since its launch in December 2010. At the moment, the LEAF commands 33% of the EV passenger car market in Europe, it sold more than 5,600 more units in 2013 versus 2012, cementing its position as a best-selling 100% electric vehicle.
The success of the Nissan LEAF in Europe has been especially propelled by strong sales in Norway where it became the best-selling car at the end of January with 650 units.
Since its launch in South Africa in November last year, the LEAF has taken off well, according to Dudu Mwelase, General Manager of Corporate Communications at Nissan South Africa. About 20 Nissan LEAF cars were sold in the first three months, but Nissan expects to sell a 100 in the first year.
Mwelase says her company’s aim is to bring about as much EV ownership as possible.
“As mobility in Africa starts to increase, there will obviously be a move to introduce environmentally-friendly vehicles. We do not foresee a mass Nissan LEAF introduction on the continent at this stage.”
Customers see electric cars as an appendage of the ongoing endorsement of all things green. For example, Heleen Ball, one of South Africa’s first LEAF customers, says that even though she was not supportive of the idea when her husband first suggested it, the car now works very well with their green lifestyle. She uses the car two or three times a week.
Plans to bring the BMW electric models to South Africa are also in full swing. The first model, the BMW i3 is earmarked for March 2015. The i3 could have been here earlier but because demand was exceeding expectations in a number of key European markets, South Africa has had to wait.
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“To ensure an acceptable waiting period for all customers who have ordered the i3, we have decided to delay market launch in South Africa and a number of countries where the i3 is not yet on sale,” says Edward Makwana, Automotive Communications Manager of BMW, South Africa.
At this stage, these cars will only be available in South Africa.
“We currently have around 11,000 pre-orders worldwide and more than 100,000 test drive requests. Customer-demand and interest in test drives exceed current production capacity. Dealers worldwide report they could sell more BMW i3s if they had them. We are also seeing a growing interest from local customers,” says Makwana. It’s clearly a green signal for electric cars.

Eco-warriors  On The Road

Another answer to Africa’s energy shortage could be sitting thousands of meters off the south coast of the continent. Its extraction could cause a row between interested parties.
British company, OK Energy Limited, is on the hunt for potential oil and gas energy (hydrocarbon) reserves in the East Algoa Exploration Area, under the Indian Ocean. The area is off the eastern coast of Port Elizabeth and is 9,314km² and reaches a depth of approximately 4,000m.
OK Energy appointed a South African company, Environmental Resources Management (ERM), to prepare the environmental management program for Petroleum Agency South Africa (PASA) ahead of consideration and approval by the government.
OK Energy submitted two applications to PASA between March and August as per government’s licensing requirements. A decision is expected before the end of the year. If the bid is successful, it will add to the existing exploration of ExxonMobil reserves in South Africa and the Great Rift Valley in Kenya.
The applications included a consultation process. According to ERM reports, community meetings and an environmental program were required. These activities involved the evaluation of the environmental and social setting, identifying potential impacts and developing a plan to reduce them. The company received approval to go ahead with seismic processes in 2014.
“For the East Algoa Area, currently there are no outstanding stakeholder issues and the process is likely to lead to PASA granting the exploration right later this year. We would then look at acquiring seismic data, either in conjunction with another operation in 2013, or our own in 2014,” says Paul Barrett, OK Energy’s director and geologist.
“South Africa will benefit from significant tax and royalty revenues—the local area, especially Port Elizabeth’s port, will benefit from a large amount of fabrication and support activity to build and operate any oil field development.”
“The geology of the coastal region suggests that deepwater oil reservoirs may have been deposited. This is totally unproven and ourselves and Impact/ExxonMobil, our neighboring licence holders, are using worldwide analogues to drive our exploration focus. It is a high-risk area in terms of finding hydrocarbons, but if it works it will be significant,” says Barrett.
“The rights to all of South Africa’s oil resources should be given to PetroSA because it’s state-owned. There’s no guarantee that oil will be cheaper because it’s being sourced from our oceans,” says Bobby Peek, director of a non-governmental organization Groundwork.
Peek, an environmentalist, also warns that the seismic activities in the oceans could drive dolphins and whales away.
PetroSA has proposed an amendment bill to Parliament, which significantly widens the scope of state involvement in mineral production, making it the custodian of the state’s allocation for all petroleum rights.
This has led to a backlash from the industry’s interested parties, like ExxonMobil and Anardako, with warnings that the proposed amendments could deter investment in South Africa at a time when prospects for gas and oil discoveries are good.

Energy Under The Waves

When you walk off the main street in Graaff-Reinet and into Derek Light’s office he has to talk to you over a mountain of files. The small-town lawyer, who is taking on a number of the world’s largest energy companies, apologizes for the mess and very carefully moves his pile of lever-arch folders onto the floor. Scribbled on the spines with blue marker pens are the names Falcon Oil and Gas, Bundu Oil and Gas, and Shell.
“I have another eight cabinets full, all to do with fracking,” says Light.
It could have been a quieter twilight of his professional life in the Karoo, when he moved back to his hometown to raise his two children. It could have been measured days of drawing farm-owners’ contracts and settling disputes over wandering sheep. Now he has to tackle big businesses and its threat to turn his backyard into one giant fracking well pad.
“The problem is that the process of explorative fracking is not normal. It’s invasive and has the potential to destroy the environment,” says Light.
“Things like land, air and water are emotional subjects. In Britain, we’ve seen people super-gluing themselves to fences and being incarcerated for wanting to prevent the development going ahead. Those are extreme conditions. People act in that way because they don’t have any other way of resisting. They don’t have the means of accessing the courts and employing the scientists and economists,” he says.
According to Light, fracking will change the face of the Karoo.
“If the reserves are there and you go into well fields, you won’t recognize the country. You will have well pads every 5 kilometers in every direction. You will have flaring, false lighting, masses of vehicles on the road. The air quality will deteriorate. The effect is massive.”
He disagrees with the suggestion by Shell and others that it won’t.
“They will be using multi-well pads, with 30 wells on one site. The point is that rock formation needs to be targeted as broadly as possible; if you can only drill horizontally you would have exhausted the rock within 2.5km. You would have to establish another well 5km away.”
The legal costs to fight fracking have been daunting.  Until November 2011, Light was by himself with hardly a budget at all. It was light at the beginning of the tunnel for the lawyer.
“Now there is a big team of councillors, scientists and environmentalists. It would not have been possible without the help of  Africa’s third richest man, Johann Rupert. He made it possible to get the expertise of people to take on the biggest companies in the world like Shell,” he says.
The lawyer has no problem taking on the big guns of the fossil fuel industry. He believes that if you are standing on the right side of the law you can take on anyone, no matter how deep their pockets are.
Light also put his own money on the line.
“I know as a professional you have to be objective, but in this case it is my whole community that is being threatened. I want to keep what we have here, it’s a great environment to bring your family up in and it should never be destroyed,” he says.
“I try not to get caught in that sort of emotional debate because it clouds your own judgment. But I can only achieve what I have set out to achieve with the support of individuals. We have just been very lucky that we have sufficient access so far.”
One of his biggest worries is not enough people know about fracking to make an informed decision. According to Light, most people in the cities do not understand the impact this will have on the countryside.
“I remember about two years ago, of all people interviewed in the urban areas, only 50% knew about fracking and of them 15% knew what fracking really was. So I think it’s a question of if it doesn’t affect you nobody cares.”
“It’s moving as quickly as the oil and gas companies are allowed to move. And we’ve said no. We didn’t make the same mistake that the United States made. They allowed it to happen and then tried to regulate it,” he says.
At a time when most people are looking to retire, he looks set to become a household name.
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<h4>The world refuses to frack down</h4>
From London to Perth people have been fighting police, clashing with truck drivers and super gluing themselves to fences all for the same reason—fracking. In South Africa the debate is still in its infancy. Fracking in Australia, Britain, Bulgaria, Canada, China, Denmark, France, Germany, Ireland, Netherlands, New Zealand, Poland and the United States has provoked violence. In France it was banned completely, Tunisia soon followed.
One of the most violent protests came in a small town in West Sussex, Balcombe in Britain. British oil and gas exploration firm Cuadrilla, built a test well to take samples of rock.
Protestors super glued themselves to fences. The 1,000 protestors also set up camp by the road to the site. In August, police moved in to evict them and it was reported to have cost tax payers £3.7 million ($5.8 million).
In September, Cuadrilla announced it would suspend operations until a new planning application had been approved. Its drilling rig was moved to look for oil elsewhere.
“The drilling rig and associated equipment will be removed from site in September and testing equipment will not be mobilized to site until planning consent has been granted,” says Francis Egan, CEO of Cuadrilla in a statement.
On the other side of the coin, in North Dakota, United States, oil-fracking is seen as a boon. From 2005 to 2011, it helped the state’s economy grow from $4.4 billion to $30.5 billion. Eight thousand wells, producing more than 820,000 barrels a day was just the start. These wells are expected to increase to 50,000.
Among the landowners of North Dakota, 2,000 new millionaires are made every year, according to Bruce Gjovig, founder of the Center for Innovation at the University of North Dakota. Oil royalties range from $50,000 to $100,000 a month.
The quest for oil has drawn in thousands from across America to towns such as Watford City, which has grown from 1,700 to 10,000, according estimates in March.
The fracking revolution has been bitter sweet for some. Many long-term, low income residents have been priced out of their homes through property price rises. The population boom has led to overused roads, polluted streams and created the worst aspects of urbanization.
In South Africa, residents of the Karoo are the latest to join the battle. According to Julius Kleynhans, head of environmental affairs at AfriForum, the biggest problem is only one in five South Africans have heard about fracking.
“At the moment the government is doing nothing. It’s refusing to address the public outcry. They are just power drilling their wants through,” he says.
“Why would they care if the Karoo was contaminated? What they were told was the value of getting this energy game-breaker gas was far more important than the value of the Karoo. The fact that the Eastern Cape has a third of the country’s livestock population; I cannot tell you how important this part of the country plays in production. We also produce more wool, mohair and ostriches than any other part of the country and 25% of the citrus in the country,” says local farmer Doug Stern.
You can be sure this time next year many more Africans will know what fracking is and how it could change their lives.
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Light At The Beginning  Of The Tunnel

In the 1800s, Europeans referred to Africa as the “dark continent”, although the Victorian term has fallen from usage, until recently it accurately described the approach of foreign investors to Africa. Risk was thought to be too high, returns too low. A decade ago, the region’s share of FDI was less than one-tenth of the amount flowing into Asia or Latin America. Until a few years ago, a single company, Exxon Mobil, was worth more than all of Africa’s listed companies put together, excluding those of South Africa.
But what a difference a few years can make. Since the financial crisis hit in 2008, there has been a dramatic shift in how investors view Africa. One of the markets that has best epitomized this change is Ghana.
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The West African county was near the top of worldwide tables in 2011 in terms of GDP growth with a rate of more than 14%. 2012 figures were equally robust, coming in at above 8.5% buoyed by strong growth in the non-oil sector of 8%. While the country is largely dependent on commodities for export revenues, increased activity in housing, construction and banking has spurred an expansion of the services sector, which makes up more than half of GDP.
Last year saw a gradual depreciation in the cedi, which fell by around 14% against the dollar, driven by increased demand for imports. While the country’s robust growth also stoked inflationary pressures, at least over the short-term, the CPI fell to 8.8% in December—its thirty-first consecutive month of single-digit inflation.
The country benefited from a statistical rebasing a few years earlier, which dramatically improved data collection and accuracy. As a result, the country was catapulted into middle-income status.
The biggest recent watershed moment for the country is as a result of its newfound oil and gas reserves. The offshore Jubilee field, discovered in 2007, began production in record time, with the first barrel being lifted at the end of 2010. The speed with which Ghana went about capitalizing on its new oil wealth, 42 months from discovery to production, led to a few hiccups. For four months, light, sweet crude flowed without a regulatory framework to determine how the revenue would be channeled and how future production would be handled. Eventually, the Petroleum Revenue Management Bill was put in place. It allocates a proportion of revenue to future generation funds and price stabilization funds and some $444 million worth of oil revenue flowed into government coffers by the end of 2011. The production, in relation to the country’s overall economy, is modest and by some estimates will work out to around $50 per capita annually but the rush of investment into the sector—and ancillary industries, such as construction and services—helped ensure the country was one of the largest FDI destinations in Africa last year.
Associated gas deposits in the field brim with equally promising potential, particularly in terms of domestic industrial and electricity production, although timing has been problematic. Currently, with a ban on flaring and no offtake infrastructure, gas has been re-injected into the deposits but at a certain point this will negatively affect oil production. As a result, the country has been racing over the past year to finalize infrastructure for its gas master plan, which will see the construction of more than $750 million worth of new processing and pipeline infrastructure by China’s SINOPEC. Gas is due to begin flowing to the newly-built Aboadze power plant over the next month or two—and none too soon, given the blackouts last year when the country’s alternative gas supply, the West African Gas Pipeline, experienced supply shortages.
While hydrocarbons dominate the headlines, Ghana’s traditional commodities have provided the bulk of revenues in recent years. Cocoa, which indirectly supports more than one-sixth of the population, had a successful year with an estimated production figure of 860,000 tons, down slightly from the previous year but enough to make it the world’s second largest producer. The distribution of more than 20,000 new hybrid seedlings and efforts to improve the ability of small farmers to tend and replace their crops, looks set to strengthen output over the medium-term.
Similarly, gold, which accounts for roughly 40% of exports, grew by double-digit figures over 2012. Although production fell slightly, higher prices on international markets helped keep prices afloat and fund new exploration in marginal deposits. Ghana has revamped its regulatory scheme, introducing a new bidding system and increasing the fiscal burden for operators, including a windfall tax and higher royalties.
Of course, with all this laudable growth comes a note of caution. This rapid change must be managed carefully, for the downside risks facing the country are sizable. Ghana was the third-largest recipient of FDI in Africa last year, but it remains worryingly dependent on commodities. Gold, cocoa and oil dominate exports and while Ghana is not as sensitive to price fluctuations as it was in the 1980s, when the economy seesawed according to international prices, volatility still impacts overall performance. Furthermore, labor-intensive activities such as manufacturing remain marginalized, exacerbating unemployment and weakening the balance of payments. The benefits of the economic boom have been disproportionately concentrated in the south and development in the north lags significantly.
However, Ghana has the ideal foundation for future growth. It has natural resources, policy stability and reasonable infrastructure and it has benefited accordingly. But exporting raw materials, by sending gold and cocoa elsewhere for processing, is a short-term solution. The country has begun aggressively encouraging increased value-added production in the secondary and tertiary sectors, to improve the sustainability and inclusiveness of growth and to ensure that the country’s current performance is not a temporary blip.

Gas And Cocoa Oils Ghana Growth

The South African government has taken a big step towards fracking in Africa’s biggest economy that is likely to lead to months of heated debate and court battles.
Hydraulic fracturing, or fracking, involves extracting natural gas from shale rock layers deep within the earth. The process requires vertical and horizontal drilling and the injection of pressurized fracking fluids, water and sand to extract the gas.
Oil companies see fracking as a potential boost for energy exports, jobs and foreign investment. Conservationists argue it will destroy ecosystems found in the semi-desert landscape of the Karoo, where much of the shale gas is located.
On April 29, 2011, the minister for mineral resources, Susan Shabangu, placed a moratorium on applications to explore fracking in the Karoo while her department conducted investigations. That ban on exploration was lifted on September 7 and the Investigation of Hydraulic Fracturing in the Karoo Basin of South Africa report, which the cabinet based its decision on, was released four days later.
Derek Light, an attorney for farmers in Graaff-Reinet, was unhappy with what he called a hasty decision to lift the moratorium.
“The task team could not have effectively performed its function in such a short a time. It should have performed a strategic environmental assessment in the broadest possible terms which would have enabled them to make a well-informed decision that would be in the best interests of the people of this country,” says Light.
Light was pleased to see that the report recognized the importance to revise the country’s regulatory framework, in order to control fracking.
Jonathan Deal, chairman of Treasure The Karoo Action Group—the official opposition to fracking in South Africa—says that the country’s first reaction was “let’s frack” instead of investigating other forms of energy.
“There is natural gas, offshore, in reservoirs which do not need to be fracked in order to remove it,” he says.
“We plan to lodge an appeal if and when exploration licenses are issued,” Deal says.
Ferrial Adam, a Greenpeace Africa climate and energy campaigner, also believes that the country should consider other forms of sustainable energy.
“Greenpeace’s research on ‘Advanced Energy Revolution’ scenarios shows that it is possible to create 50% of electricity from renewable energy by 2030, if we have the same political determination that government seems to put into fossil fuels,” she says.
Adam says that in a dry country like South Africa this decision by government is short-sighted.
“Contamination of groundwater aquifers and surface waters can occur due to fracking operations and through the disposal of waste waters. Small amounts of carcinogenic hydrocarbons are harmful to humans. In some cases, this waste water is minimally processed before being dumped into surface waters feeding public water supplies, or is held in ponds that may lead to releases of the chemicals into the environment.”
The head of Living Planet Unit, WWF South Africa, Saliem Fakir, says we can only see the outcome of fracking by looking at extractive industries at present. The track record for communities is rather dismal. The national coffers and private industry may benefit but the problem of impoverishment could be the inheritance of the local setting. Fakir pointed to countries like Nigeria, a country where Shell is active, to show how countries that are rich in oil can be poor.
“Extractive industries have boom and bust cycles. They often attract lots of labor and people from outside that leads to conflict, social pressure and displacement of local interests, the truth is that resource rich countries tend to have high levels of inequality. Elites tend to capture the rents and leave out the poor. We may see a similar phenomenon with shale gas if the extractive process suffers from poor governance and oversight,” says Fakir
Bonang Mohale, chairperson for Shell South Africa, was pleased with the details of the report.
“The suggestions made by the task team are in line with our exploration plans for the Karoo Basin,” says Mohale.
“South Africa needs energy now. Approximately 10 million people in South Africa do not have access to electricity. At the moment, South Africa is a net importer of energy. This means that South Africa needs the full range of energy sources. In combination with other energy sources, including renewables, gas could help secure South Africa’s energy future, while creating sustainable and permanent jobs for South Africans.”
Shell is preparing to submit a comprehensive environmental, social and health impact assessment (ESHIA) that is in line with the National Environmental Management Act. Shell promises to continue working closely with the people of the Karoo and South Africa to address concerns and ensure that they benefit from shale gas exploration.
Group Media Manager for Sasol Limited, one of the biggest energy companies on the continent, Alex Anderson, says that Sasol gave up its fracking license last year.
“We concluded an extensive technical study of the area and then decided not to pursue further exploration activities in the assigned TCP area. The decision was based on subsurface technical and operational considerations and was unanimously taken by the partnership,” said Anderson a few months back.
“Sasol has taken note of the decision by the South African government to lift the moratorium on shale gas exploration in the Karoo region. We continue to be very interested in the upstream oil and gas business landscape, which includes the shale gas in the Karoo and elsewhere. As a consequence we continue to monitor these developments with interest and if new opportunities present themselves we will actively evaluate and pursue if they are attractive from a technical and commercial perspective,” says Anderson.
The report commissioned by the department of mineral resources indicated that during the exploration phase, only normal exploration, would be allowed. This excludes hydraulic fracturing but instead includes a process whereby drilling, geophysical and geochemical mapping can take place.
The report spoke of the economic potential fracking would bring to the country. According to the United States Energy Information Administration there is an estimated 485 trillion cubic feet (Tcf) of gas in the Karoo Basin, which could reduce the national dependence on other fossil fuels. It mentioned the environmental and socio-economic implications of water use. and the disposal of the fracking fluids. The task team said that due to the high volumes of water to be used and the possible contamination of water with the fracking fluids, they would need to conduct further research into water sources.
The report called for aa re-evaluation of South Africa’s regulatory framework to ensure that any possible negative impacts would be alleviated. A monitoring committee will be appointed to ensure a comprehensive and coordinated framework and the supervision of operations.
Now the conservationist and protestors await the application for the first exploration license and will see the applicant in court.

Tag: Gas

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