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Oil At A Crossroads As COVID-19 Infections Surge

Oil At A Crossroads As COVID-19 Infections Surge

Soaring U.S. crude inventories and…

New Gas Find Could Save This Nation’s Economy

Tunisia has started production at the long-awaited Nawara gas field, a development that is expected to transform the country’s energy balance and provide a significant boon to state finances.

Production began at the field, located in the southern governorate of Tataouine, in early February. The launch was the culmination of a decade-long process: the reserves were first discovered in 2006 and preparation work started in 2008.

The TD3.5bn ($1.2bn) development, the country’s largest energy project, is expected to boost gas production by 2.7m cu metres per day, increasing national gas output by 50%. It is also expected to produce 7000 barrels of oil and 3200 barrels of liquefied petroleum gas every day.

Speaking at the inauguration, then Prime Minister Youssef Chahed said the gas field would augment GDP growth by 1 percentage point, while cutting the energy and trade deficits by 20% and 7%, respectively.

This would have a significant impact on national finances. The trade deficit reached a record high of TD19.4bn ($6.8bn) last year, according to official statistics, with the energy deficit making up around one-third of the shortfall.

In addition to addressing domestic energy needs and reducing imports, the discovery will open up the possibility of exporting surplus gas through the Trans-Mediterranean pipeline, whi­­ch links the country to Europe.

Push for greater diversification

While the launch of production at Nawara is an important development for the sector, Tunisia is also looking to diversify its energy mix through renewables and energy efficiency policies in order to secure long-term self-sufficiency.

At present, natural gas still dominates, accounting for around 97% of power generation.

While Nawara will make a big difference, the country is still projected to depend on imports to meet around 55% of demand this year, according to forecasts from oil and gas analysts MEES.

Related: The Boldest Permian Plays To Watch As The Oil Market Circles The Drain

To help bridge this gap and secure a more stable energy mix moving forward, the authorities have been looking at the country’s long-recognised renewables potential, as well as promoting energy efficiency measures such as combined heat and power (CHP), also known as cogeneration, systems.

“As the price of renewable energies drops year-on-year, the solution to the energy question can clearly be found in cogeneration units and renewables,” Sahbi Amara, Africa director at Clarke Energy, told OBG.

CHP development in Tunisia was launched in 2001. At the end of 2019 the total running capacity exceeded 100 MW, with around 200 MW to be installed across various industries. This will allow for a more than 30% savings in natural gas and a 40% reduction in CO2 emissions.

In late 2016 the government released its Renewable Energy Action Plan 2030, which outlines plans to generate one-third of electricity from renewables by 2030, up from around 5% at the end of 2018.

The ambitious plan is divided into two phases: the first, covering 2016-20, aims to add 1000 MW of renewable generation capacity and reduce energy consumption by 17%; the second, covering 2021-30, should see an additional 1250 MW of new renewable capacity come on-line.

To this end, in mid-2018 the government announced tenders for six solar photovoltaic power plants with a combined capacity of 500 MW.

These included a tender for a 120-MW photovoltaic power plant in the Gafsa governorate, awarded in January this year to French utilities supplier Engie and Morocco-based Nareva. Also in January, China’s TBEA Xinjiang New Energy and the UAE’s Amea Power were awarded the contract for a 100-MW solar power plant in the Kairouan governorate.

While these projects will undeniably provide Tunisia with much-needed power supply, maintaining a mix of sources will likely remain a priority.

“The use of different types of gas offers vast opportunities for new projects. Using landfill gases to generate electricity and heat by trapping biomethane, for example, is an energy creation process already employed in several markets around the world. The key advantage of using these gases for energy is that they are constantly released as landfills are continuously replenished,” Amara told OBG.

By Oxford Business Group

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