H.E. Gabriel Mbaga Obiang Lima, Minister of Mines and Hydrocarbons of Equatorial Guinea, launched the landmark Central African Pipeline System (CAPS) during the second day of MSGBC Oil, Gas&Power 2022 (https://bit.ly/3a4fuRb) . Aimed at establishing a regional market for energy commodities based on the creation of hubs and pipeline systems, the CAPS marks a significant milestone for African producing and non-producing countries, serving as a launchpad for the creation of a sustainable and interconnected African market.
Boasting 11 member countries, the CAPS comprises three multinational pipeline systems. The first is the Central North Pipeline System, linking Cameroon, Central African Republic and Chad; the second, the Central West Pipeline System, linking Equatorial Guinea, Gabon and The Republic of the Congo; and the third, the Central Southern Pipeline System, links Angola, the Democratic Republic of the Congo, Rwanda and Burundi. Through the creation of a series of hubs across Central Africa, the establishment of interconnecting pipeline systems that have the ability to transport a number of different commodities, the region will be able to establish and benefit from a domestic African market.
“The objective of this is to create areas where we can transport, store and distribute – hubs. These hubs will ensure the transportation and distribution of energy so that every single country can benefit. How are we going to do that? You create terminals in all those countries. In those hubs, you have terminals where you can receive oil, gas and LNG. The only thing you need to do is connect those hubs so that they can distribute to landlocked countries. You receive the gas; you burn gas in a power plant and you export electricity. If you design a refinery with installation pipelines, send it regionally where they need it, all our refineries will be profitable. If you only think about your own market, you will never be profitable,” stated H.E. Minister Lima.
The CAPS is being initiated in the same manner as international systems in Europe, the US and China. With regional collaboration serving as the backbone, the system targets the widespread distribution of energy from producing countries to non-producing ones.
“This isn’t a dream; it is what Europe is doing. In Africa, you see trucks because the pipeline system has not been developed. You need to do a pipeline for gas, oil, chemicals and for many different things. The countries who need those resources the most are the landlocked countries,” H.E. Minister Lima continued.
What makes the system unique and highly attractive for prospective investors is that investment is distributed across the entire system. Rather than relying on a singular financier, the system allows for many investors to isolate and concentrate their investments, reaping the rewards while African citizens’ benefit.
“This is a lot of money; governments sign, investors go to the hub. The only thing the investor is doing is investing in the plant. The hub is a mechanism for them to be able to do an investment, from there it is put in the grid and benefits everyone. Investors who want to concentrate their investment won’t have to invest in the entire infrastructure. This is a regional project that will be able to make sure it can last any government changes. You will be able to deliver products to any of those hubs.”
The memorandum of understanding (MoU) for the project is expected to be signed next week by host governments, with the initiative itself led by the African Petroleum Producers Organization (APPO). According to H.E. Minister Lima, “APPO is going to lead this initiative and all the governments are already, in principle, in agreement. How do you coordinate? We focus on collaboration. We have a central bank that is responsible for the monetary aspect. There will be three different entities: one responsible for the pipeline, one responsible for the power and one responsible for the refining. This project is for 11 member countries who 99% have given the greenlight.”
As a number of large-scale oil and gas projects come online in the upcoming years, the CAPS will be instrumental in ensuring the African continent benefits from its own resources. With a focus on eradicating energy poverty, the system is expected to accelerate energy access, industrialization and multi-sector growth, while at the same time setting Africa on its own pathway towards a clean energy future.
Distributed by APO Group on behalf of Energy Capital&Power.