Gabaake Gabaake, executive director at Tlou Energy and minerals sector veteran, calls natural gas “probably one of the most widely used substances in industry”. The gas, in its various forms, powers everything from electricity generation to heating for homes. It is used for numerous industrial chemicals and can be converted to fuels amongst many other applications.
For ordinary Batswana, gas is most commonly used in the form known as Liquefied Petroleum Gas (LPG), the cooking gas used by hundreds of thousands of households across the country. Available figures show that annual usage of LPG in the country grew by 50 percent to 21 million litres between 2010 and 2020, as more Batswana moved away “dirtier” sources such as paraffin and firewood.
As popular as gas is, SASOL, the South African energy and chemicals giant which anchors most of the region, has warned that it will end supply to industrial users in 2026. This is due to the depletion of resources from southern Mozambique and while this week, SASOL said it now expected the “gas cliff” in 2027, supply would keep diminishing ahead of the shut off.
South African energy developers, the government and industry there, are scrambling to come up with viable alternatives ahead of the shut off, as the option of imports from outside the region are costly and would have a significant knock-on effect on the economy.
Tlou Energy, meanwhile, is one of the region’s most well-advanced gas developers, with two wells consistently flowing even before the pandemic. Tlou’s Lesedi gas to power project boasts proven, probable, and possible reserves of 427 billion cubic feet, one of the largest in the region.
“Botswana is well-placed in terms of meeting the regional shortfall because we have shown that we can actually produce gas in the country without any doubt,” Gabaake told Mmegi recently.
“The only issue is how fast we can get it out of the ground and that’s about capital deployment.
“You need thousands of wells to get the industry started and that’s a function of capital.
“We know the gas is there at rates that are economically viable and we know that the more we drill, the more our flow rates are going to improve.
“If we put in the investment, Botswana can take advantage of the regional shortfall in power and other industrial uses of gas.”
Powered over the years by private capital, Tlou has also received support from the Botswana Power Corporation through the signing of a 10MW Power Purchase Agreement, as well as the Botswana Public Officers Pension Fund, which in May increased its equity stake in the energy developer to 16.63%.
The region’s electricity deficit and the pending “gas cliff” both provide an opportunity for developers such as Tlou to better advance their projects. In addition, the type of gas found in Botswana has a longer lifespan than the one the region has been tapping through SASOL in Mozambique.
“The only way to make renewable energy work and work efficiently is if you have gas, because without that, even if you are generating a lot of renewable, what do you when the sun goes down or when wind is not there,” Gabaake said.
“You need to complement renewable with gas to support grid stability otherwise you may be generating 500MW renewable in a day and when you cannot get that, you have to import or resort to coal.
“These things are sometimes easier to demonstrate than to talk about, but the BPC is aware of that and that’s why they have invested in our project.”
He added: “It’s better to use flexible energy sources and these do not come better than gas which can generate when power is needed and when that demand goes down, you can shut one well a little bit.
“The 10MW is a pilot and the big prize is the region, to be able to supply it with peaking power.”
At Lesedi, a transmission line to the national grid has been completed, while the substation was 64% percent complete as at June 30. The first power generation is expected later this year, marking the country’s first electricity from gas.
In terms of LPG or cooking gas, Tlou Energy previously attempted a small scale pilot with BIUST. According to Gabaake, the idea was to supply the university’s township with gas cylinders, or the compressed, liquefied form of gas. The project did not success as the volumes required by the township proved too small.
Botala Energy, another fast-rising gas developer, is excited about the possibilities around the commodity.
“Botala’s substantial Coal Bed Methane resources provide a viable solution to the impending gas shortfall,” directors said in a recent market update.
“The key market entry points for Botala’s gas include local liquefied natural gas consumption, power generation, industrial use, and customers within the Southern African Power Pool.”
According to Botala, the “gas cliff” has raised alarm across various sectors in South Africa and beyond that heavily rely on natural gas, including manufacturing, healthcare, and households.
“The gas shortage threatens to disrupt industrial operations, power generation, and domestic energy supply, with possible severe economic and social consequences.
“The potential impact of this gas shortage is significant.
“South Africa's manufacturing sector, which in 2023 employed around 1.5 million people and contributed 11.4% towards the overall GDP, is particularly vulnerable.
“Key industries such as steel, aluminium, mining, agriculture, paper, glass, ceramics, construction, automotive, and food and beverage could face severe disruptions.
“This could lead to plant closures, increased production costs, and higher consumer prices, exacerbating the country's economic challenges,” directors said, citing several South African publications.
In the midst of the panic, Botswana has the opportunity to establish a brand new industry and associated value chain ecosystem, anchored on the gas’ applications in electricity generation and industry.
Gabaake said the key was commitment by all partners.
“We just have to believe a little bit more in ourselves and put in the money,” he told Mmegi.
“There’s a fair amount of risk involved in the development of any new industry but I think as a country, we have to look at the opportunities available to us and decide where we want to put in money.
“The next big thing does not happen without people taking risks.”
