+27 71 448 3496
leon@whyafrica.co.za

Energy diversification drives Gabon’s economic growth

Share Article
Gabon is one of the most carbon-positive countries globally, as tropical forests cover 88% of its territory and are estimated to absorb four times more carbon dioxide than it produces. Image credit: Flo Lorenz on Unsplash

Energy diversification drives Gabon’s economic growth 

Buoyed by political stability, an influx of foreign direct investment and growing support from international partners, Gabon is expected to become an emerging economy by 2025, with projected GDP growth of roughly 3% by the close of 2023.

In the Central African region, Gabon stands out for its political stability, investor-friendly policies and enduring status as one of Africa’s most prolific oil producers.

The country’s 2023-2027 economic plans are on track to usher in a new era of growth on the back of the diversification and industrialisation of the Gabonese energy sector.

As Gabon gears up for its 2023 election, the ruling Parti Démocratique Gabonais (PDG) is expected to retain power and the government’s 2023-2027 economic plans look set to proceed.

These plans focus on strengthening and diversifying the national economy by breathing new life into Gabon’s oil and gas industry, increasing domestic processing of raw materials, rendering industrial services more competitive, and promoting the sustainable development of natural resources.

Meeting current and future energy demand (Energy diversification drives Gabon’s economic growth)

While Gabon has one of the highest urbanisation rates in Africa, 70% of the country’s south and interior are not electrified, inhibiting industrialisation and private sector growth.

The government has stated its objective of universal electricity access by 2030, with a view to eliminating electricity imports and developing energy-intensive industries like mining, agriculture, and manufacturing.

Currently, about half of the electricity consumed in Gabon comes from hydroelectric generation, largely from the Grand Poubara Hydroelectric Dam (160 MW) and Kinguele Aval Hydroelectric Dam (70 MW).

The construction of several solar photovoltaic power plants has also been launched in a bid to electrify rural provinces, including a 120 MWp solar plant by Solen and eight hybrid solar plants totaling 2.2 MW by Engie.

In terms of fossil fuels, gas-fired power plants operated by Perenco provide 70% of Libreville’s electricity and 100% of Port-Gentil.

Projects like that resulting from Perenco’s recent Memorandum Of Understanding MoU) with Gabon Power Company – which promises to electrify 80,000 households in remote southern provinces with an eventual 50 MW of generation capacity through a new gas-fired power plant in Mayumba – demonstrate the scale of what can be achieved through investments in gas monetisation and related infrastructure.

According to the African Development Bank, Gabon flares about 35 billion cubic feet of gas per year, which represents around 200 MW of electricity. Accordingly, the Gabonese power market, expected to grow by 3.4% between now and 2028, represents a promising opportunity for investors.

Reinventing the upstream industry (Energy diversification drives Gabon’s economic growth)

Although production has been in decline since 1996, Gabon remains Africa’s fifth-largest oil producer, and the country’s large but maturing fields still have plenty of fuel in the tank.

Tech-savvy international oil companies like Perenco, BW Offshore and VAALCO Energy are applying the latest secondary recovery techniques to extend a field’s lifespan and stabilise production.

Marginal fields (https://apo-opa.info/3IdKSLv) that do not fit into their portfolios present home-grown production companies, like Stream Oil Olawi, with the opportunity to move up the value chain, while maximising production from existing assets.

Emphasis is also being placed on frontier exploration in Gabon’s deep offshore. Recent game-changing discoveries in Mauritania and Angola have been made in deep-water blocks with geological formations that are remarkably similar to Gabon’s, whose North Basin area is thought to contain undiscovered pre-salt deposits that could open a new chapter in the country’s hydrocarbon history.

Creating Gas-Based Industries (Energy diversification drives Gabon’s economic growth)

While oil production has long been the lifeblood of Gabon’s economy, natural gas is emerging as a key pillar of diversification, encapsulated in the country’s Gas Master Plan that aims to reduce gas flaring, increase energy security and expand access to affordable energy.

This foresees the elimination of flaring and the harnessing of Gabon’s estimated 1.2 trillion cubic feet of natural gas reserves – which primarily come in the form of associated gas – to produce a range of downstream industries and a gas-based network.

Perenco is leading the construction of a 700,000-ton-per-year Liquefied Natural Gas (LNG) plant, which promises to enable gas exports for the first time.

Meanwhile, the refining capacity of SOGARA, Gabon’s sole refiner, is in the process of being expanded from 1.2 million tons of oil per year to 1.5 million tons, which could make Gabon self-sufficient in refined petroleum products by 2030.

Leading the African Energy Transition (Energy diversification drives Gabon’s growth)

These developments and more have made Gabon a regional leader in the African energy transition. Gas monetisation is a key tenet of Gabon’s environmental policy, as it serves to eliminate flaring and capitalise on a relatively clean burning fossil fuel.

Gabon is also considered to be one of the most carbon-positive countries globally, as tropical forests cover 88% of its territory and are estimated to absorb four times more carbon dioxide than it produces.

In December 2022, Gabon became the first African country to make carbon credits available under the United Nations Framework Convention on Climate Change, claiming 90.6 million tons of carbon offsets between 2010 and 2018.

Coupled with the expansion of installed renewable energy generation capacity, investors are advised to take advantage of Gabon’s move towards green energy and stated plans to reduce carbon emissions by 50% by 2025.

All this and more will be further unpacked in Energy Capital & Power’s upcoming market report, Energy Invest Gabon. Keep following for more information about this exciting report!

Energy diversification drives Gabon’s growth

WhyAfrica provides on the ground information and business intelligence about the sustainable utilisation and extraction of natural resources in Africa, and can assist your company through:  

  1. Membership:
  • WhyAfrica’s membership offers great business insights to you, your company, and clients.
  • Amongst many other benefits, we will publish editorial content about you or your company on the WhyAfrica online platform and on all WhyAfrica’s social media pages – the annual fee is R5,500 and you can find out more or subscribe here: https://www.whyafrica.co.za/product/membership/ 
  1. Sponsorship:
  • WhyAfrica’s annual 45-day African Road Trip takes place in July and August. We will visit more than 30 project sites and this year we plan to visit the Limpopo Province of South Africa, Zimbabwe or Botswana, Zambia, Malawi, Tanzania, and Kenya. Sponsoring the Road Trip, or to be a WhyAfrica member, gives you unparalleled insight into the business environment of the countries that we travel to and the project sites we visit.
  • To be a member or sponsor allows you access to invaluable, on the ground, business intelligence and a great marketing opportunity for all companies doing business in Africa.
  • The main aim of our Road Trips is to promote Africa as an investment destination and to showcase Africa’s greatest companies, and projects to our large global audience, which includes a list of potential investors, venture capitalists and serial entrepreneurs.
  • To view the photos of last year’s Southern Africa Road Trip click on the gallery link or follow our Instagram account at why.africa https://www.whyafrica.co.za/road-trips/whyafrica-road-trips/. 
  1. Advertising:
  • We publish daily online articles on our WhyAfrica platform and post them on social media every day. Our combined online reach is more than 45,000. In-article banner ads are highly successful advertising tools as is advertising space on our website.
  • In addition to our bi-weekly newsletters, we publish two printed- and two interactive digital magazines per year. The printed magazines are distributed at major events and conferences throughout the year, and also on our WhyAfrica Road trips.
  • Digital magazines are e-mailed to all our subscribers and shared on our social media platforms. A copy of the latest edition is automatically attached to all our outgoing e-mails.
  • WhyAfrica magazines provide great marketing opportunities. There are also in-article and on-line advertising opportunities at exceptional rates. Contact me for more information on leon@whyafrica.co.za or give me a call.
  • To subscribe to WhyAfrica’s free newsletters and magazines click on the link and register: https://www.whyafrica.co.za/subscribe/  
  1. 4. Partnerships
  • Maximise your African exposure and link with our large business network through becoming one of only 10 WhyAfrica partners. We have only five prime partnership positions left for 2023, so contact me at leon@whyafrica.co.za before the end of March to get the best deal. 

Energy diversification drives Gabon’s growth

 

Share Article

Sectors

AgricultureEnvironmental Management & Climate ChangeEnergyESGInfrastructureMiningPolitical EconomyTourism and ConservationWater Management