The Botswana government, bearing the goal of local beneficiation in mind, established Botswana Oil Limited (BOL) in 2014, to support the development of the country’s hydrocarbon industry.
By Kuda Gamba
Despite the drive for a reduction in the carbon emissions footprint globally, petroleum products remain an essential energy cornerstone in the global economy, but many countries on the African continent lack the refineries and related infrastructure required to turn their black gold (Bituminous Coal) resources into sufficient liquid fuels to meet domestic demand and the potential that exist to export any surplus.
The Botswana government, bearing the goal of local beneficiation in mind, established Botswana Oil Limited (BOL) in 2014, to support the development of the country’s hydrocarbon industry, ensuring the security and efficiency of fuel supply to Botswana, and to moderate the fuel price increase in the country.
“However, even with the establishment of BOL, Botswana is yet to achieve its goal in reaching a self-sufficient fuel status in the near future.”
The age of cheap oil or petroleum has been reported to have reached an end, with more developed economies eager to actively pursue moving away from ancient, finite resources as energy sources and fuel for their transport systems.
However, contrary to this trend, demand continues to increase from major economies such as China and India and emerging economies, such as South East Asia and Africa in particular. The increase in demand has created a dilemma where many developing and low income countries face a likelihood of higher oil and fuel prices, while producers gain exponentially.
However, even with the establishment of BOL, Botswana is yet to achieve its goal in reaching a self-sufficient fuel status in the near future. Will Botswana reach the ranks of competing with other African petroleum exporters, specifically South Africa or Nigeria?
According to the United Nations Development Programme’s Energy Policy Brief1, Botswana’s energy sources consist primarily of electricity, fuelwood, liquefied petroleum gas (LPG), petrol, diesel, and aviation gas. Solar, biogas, and biodiesel constitute a small proportion, amounting to about 1%.
Fuelwood usage has however gradually faced a decline in recent years, owing to advances in technology, which has seen LPG and electricity consumption rising.
To date, over 1.2 billion litres of petroleum products 2(LPG, petrol, diesel, and paraffin) are still being imported to Botswana; however, the extent of their use does not match the levels of availability. Driven by population growth, increased vehicle ownership, and economic development, the demand for energy fuels continues to rise in the country and globally.
Petrol fuels dominate Botswana’s energy requirements and currently, the country does not have any petrol reserves, prompting it to import all required petroleum in its refined form from neighbouring countries like South Africa and Mozambique.
Coal-to-liquid (CTL) technology, a means to attaining the goal Coal-to-liquid
(CTL) technology, which is the conversion of coal to liquid fuels is a viable solution to Botswana’s fuel woes. The technology dates back to the 1920s, when two German chemists, Franz Fischer, and Hans Tropsch, developed a process to convert coal into a gas and use it to produce synthetic fuels. CTL technologies have steadily improved since the Second
Technical development has resulted in a variety of systems capable of handling a wide array of coal types. Liquid fuels from coal provide ultra-clean liquid fuels because of the top of the range clean coal liquefication processes that capture and store potentially harmful emissions from the manufacturing process.
With Botswana’s estimated 212 billion tons of coal reserves3, this technology will utilise this domestic natural resource that the country has in abundance. This lucrative solution helps mitigate the risks of energy security pressures and ever-increasing fuel prices. It would also reduce and potentially remove the reliance on imported petroleum, produced synthetic liquid fuels and certain speciality chemicals, which is the status quo in Botswana and guarantees a reliable supply of liquid fuels for national security and economic stability.
Benefits of Botswana building its own fuel production capacity
CTL projects provide a long-term solution to the fuel supply security of Botswana. It is a national imperative to focus on alternative sources of fuel supply in order to reduce Botswana’s dependency on South Africa for fuel and mitigate the potential supply disruptions emanating from the recent civil unrest in that country. As it has been the case in the past, when such political unrests run their course, Botswana’s fuel supply security is called to question, including the potential impact on mining production – specifically Debswana Diamond Mines, which are the mainstay of the country’s economy.
With the average monthly consumption of 100 million litres and an average Basic Fuel Price (BFP) of P5.00/litre, Botswana’s fuel import bill amounts to P500 million ( US$50 million) per month or P6 billion (US$60 million) per annum, there is a dire need to substitute fuel importing. CTL projects will ensure that this significant portion of state expenditure is redirected within the local economy to create jobs and broaden the tax
revenue base for the country.
Investing in technology to promote economic growth:
One of Botswana’s Vision 20364 goals is innovation through transformation and progress through investments in innovation, research and development. This cutting-edge CTL technological innovation will contribute towards transforming the economy through the exploitation of the country’s coal reserves to promote the security of supply and create jobs.
Exploiting Botswana’s Massive Coal Reserves:
In 2011, the Botswana government developed a national strategy (goal) on coal development that constitutes as a blueprint for the orderly, timely and beneficial exploitation of the coal resources.
This initiative was called the Botswana Coal Road Map. A local CTL production facility is in line with execution of the objectives of this initiative.
Shumba Energy (“Shumba”), the Botswana listed mining and Energy Investment Company, in a bid to assist with easing the petrol fuels pressures in Botswana and the region, has committed to a CTL project through an 80% owned subsidiary Coal Petroleum Limited.
Having signed an agreement with PowerChina International Group and Wison Group, and with a bankable feasibility study (BFS) underway, the company is working to develop a CTL plant using coal reserves from its Mabesekwa project.
The plant is expected to produce 20 000 barrels per day of diesel and 5 000 barrels of gasoline per day when it is complete, as well as potential for additional production circuits for AVGas for airlines, fertilizer for farming, and speciality chemicals (Aromatics) for the hydrogen fuel and related energy storage
technologies also being pursued by Shumba.
While developed economies are moving away from coal-fired power generation, which is perceived as excessively pollutive in comparison to renewable energy sources such as solar and wind, the reality remains that coal-fired baseload power will be required to drive economic development both in Botswana and within the SADC region.
However, the development of CTL operations will ensure that the Botswana coal industry still adds value to
the country’s parallel efforts to also, where possible, utilise perceived pollutive energy sources such as coal in a manner which minimises environmental impacts while driving growth in the gross domestic product, spurring industrialisation, reducing its reliance on importing energy and contributing to increased regional trade.