The discussion around 'ESG standards and regulations' has become pivotal in the realm of finance, steering a significant shift in how investments are approached Investors have been increasingly pouring money into ESG funds, and asset managers have taken notice and responded to this trend by embracing ESG factors within their strategies to attract more inflows, balancing ESG requirements with traditional risk and reward considerations. Despite a lack of legal requirements from policy makers, stakeholders, both individual and institutional, have been seeking greater clarity regarding the impact of their contributions. They are keen to understand not only “if” asset managers are committing to ESG, but proactively asking questions about managers’ stewardship approach. What is ESG Standards? [caption id="attachment_5144" align="aligncenter" width="687"] Asset management firms manage funds for individuals and institutions by making investment decisions on their behalf while considering their unique circumstances, risk appetite and preferences[/caption] ESG stands for Environmental Social and Governance and refers to the three key factors when measuring the sustainability and ethical impact of an investment. Environmental factors include climate change, greenhouse gas emission, waste, pollution etc. Social include human rights, labor practices, talent management, product safety and data security. Governance refers to a set of rules or principles defining rights, responsibilities, and expectations between different stakeholders in the governance of corporations like board diversity, executive pay, and business ethics. ESG Fund Flows The year 2019 has been a memorable one for ESG investments as it saw a significant jump in sustainable fund flows. In the US, for instance, investors poured a record $21 billion into socially responsible investment funds, almost quadrupling the rate of inflows in 2018. In Europe, sustainable fund flows reached €120 billion in 2019, nearly triple the previous year’s amount which stood at €44.8 billion. [caption id="attachment_5156" align="aligncenter" width="626"] European sustainable fund inflows (€ billion)[/caption] To illustrate ESG’s rising popularity among investors, Legal & General Investment Management “LGIM”, the UK’s largest asset manager with £ 1.2 trillion under management*, has more than doubled its business in 2019 due to its excellent ESG track record. The company’s assets under managements were boosted by a £37 billion mandate from the Government Pension Investment Fund of Japan, the world’s largest retirement scheme (more than $1.5 trillion in assets*) and a vocal advocate of responsible investing. LGIM’s CEO Nigel Wilson stated: “ESG is really contributing to our success... the brand is travelling very well.” Industry Response While the degree to which asset managers have embraced this responsibility varies widely, we see growing evidence that some are taking this role seriously and using their influence to encourage greater sustainability. For instance, in 2019, BlackRock, the biggest money management firm in the world with more than $7 trillion under management*, announced its intention to start divesting from companies that get more than 25% of their revenue from coal production by mid-2020. (* figures are as at 31st December 2020) [caption id="attachment_5158" align="aligncenter" width="628"] A growing number of asset managers have voluntarily signed and embraced the United Nation’s Principles for Responsible Investment “UN PRI”[/caption] Regulatory Challenges: On much of this, the investment industry has been running ahead of the regulator, meeting market demands for a greater focus on ESG. However, the market has not been able to agree on common definitions, resulting in fragmentation. Ultimately, regulators will need to intervene. Investor Sentiments Investors are sending strong signals that they are unsatisfied with asset managers ESG criteria and disclosures. For instance, big names such as Morgan Stanley and Vanguard have been denounced for their “sin” stocks. Morgan Stanley Global Brands Fund had 6.83% in Philip Morris, its third largest holding, compared to 0.29% in the benchmark. The allocation comes despite the fact that the investment policy explicitly states the fund incorporates ESG considerations into its approach. The Vanguard SRI European Stock Fund did not have any tobacco exposure but was also criticized for its 5.7% allocated to alcohol, gaming and defense stocks. When questioned about their ESG criteria, some asset manager respond that they want to maintain a “seat at the table” with companies that do not score well on ESG metrics, that ESG does not equal ethical investment, or that their specific methodology does not reject a given product. Some investors might question such approaches, but from managers’ point of view, they carry potential for gains, both environmentally and financially. A Vanguard spokesperson said: “There are different flavors to socially responsible investing. Investors should look closely at a fund’s methodology and exclusion policy to ensure it matches their beliefs.” ESG Policies In their current form, ESG policies seem to be lacking two core elements: first, a universal consensus on what constitutes an ESG investment and a way for asset managers to assess ESG compliance in their portfolio; and second, reporting on ESG is still non-coercive and even if it were, without a proper framework, these policies remain inefficient. European Regulatory Landscape To demonstrate the ineffectiveness of current regulations, we turn to the EU, leaders in ESG regulations, to get an idea of current world standing in ESG policies. [caption id="attachment_5161" align="aligncenter" width="700"] Europe has been leading the race in sustainable finance regulation. The progress on the matter started immediately after COP 21.[/caption] In terms of ESG compliance, the EU has been working on creating ESG and climate change standards by deploying a Technical Expert Group on sustainable finance (TEG). However, most guidelines are still voluntary, non-legislative and unbinding for now. The current proposals include: - An EU green bond standard: The TEG proposed that the Commission creates a voluntary, non-legislative EU Green Bond Standard to enhance the effectiveness, transparency, comparability and credibility of the green bond market and to encourage the market participants to issue and invest in EU green bonds. In 2019, the TEG published a report on EU Green Bond Standard. - EU taxonomy: On June 2019, the TEG published a report on EU Taxonomy that sets out the basis for a future EU taxonomy in legislation. However, this report only tackles the climate change area of ESG. - Benchmark: The TEG has been working on recommending minimum technical requirements for the methodologies of the “EU Climate Transition” and “EU Paris-aligned” benchmarks, with the objective to address the risk of greenwashing (greenwashing refers to marketing that portrays an organization’s financial products, activities or policies as producing positive environmental outcomes when it is not the case). As part of its mandate, the TEG also worked on recommending the alignment with the Paris agreement and ESG disclosure requirements, including a standard format to be used to report such elements. Nonregulatory bodies have also been looking for solutions to help companies audit green conformity and provide companies with step by step instructions , such as the UN PRI. Signatories of the UN PRI recognize the potential impact of ESG issues on the performance of investment portfolios, they acknowledge that in order to be effective fiduciaries, they must integrate these factors into their investment analysis, seek appropriate disclosures, and incorporate ESG issues into their ownership and voting practices. As per ESG reporting, it is also still voluntary in most EU countries except for France which has made it mandatory for asset managers and institutional investors to report on how ESG are incorporated in their investment and risk-management processes with specific mention on climate change considerations (Article 173 of French Law on energy transition for green growth), and the Netherlands, where pension plans are required to disclose in their annual report if ESG criteria are incorporated. Reporting guidelines were only published recently in 2019 by the TEG and they provide non-binding advice to help disclose climate change mitigation investments and activities. In order to express their frustration, 631 institutional investors with more than $ 37 trillion in assets organized the largest ever joint call for climate change to governments during the 2019 COP 25 in Madrid. These investors wrote and signed a petition reiterating their full support for the Paris agreement and urging all governments to implement the actions that are needed to achieve the goals of the Agreement, with the utmost urgency. Conclusion It has become clear that regulations that govern ESG are still insufficient. The introduction of such regulations will be beneficial threefold: First for investors as they deserve more transparency, second for asset managers to simplify the current disclosure standards that are both confusing and expensive for them and to renew their trust with their clients, and third and most importantly for the greater good of society and the planet. Sources: A sea of voices, Evolving asset management regulation report, KPMG, June 2019, https://assets.kpmg/content/dam/kpmg/xx/pdf/2019/06/a-sea-of-voices-eamr2019.pdf Action Plan on Sustainable Growth”, European Commission, August 3rd, 2018 https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52018DC0097&from=EN Climate action in Financial institutions, https://www.mainstreamingclimate.org/initiative/ Climate change and Green finance: summary of responses and next steps, FCA , October 2019, https://www.fca.org.uk/publication/feedback/fs19-6.pdf ESG Investing 2.0: Moving Toward Common Disclosure standards, State Street, February 2020, https://www.statestreet.com/content/dam/statestreet/documents/Articles/1369%20ESG%20Metric%20and%20Reporting%20Standards.pdf ESG: Understanding the issues, the perspectives and the path forward, PWC, February 2019, https://www.pwc.com/us/en/services/assets/pwc-esg-divide-investors-corporates.pdf EU technical exert group on Sustainable finance, report on climate related disclosures, January 2019, https://ec.europa.eu/info/sites/info/files/business_economy_euro/banking_and_finance/documents/190110-sustainable-finance-teg-report-climate-related-disclosures_en.pdf EU technical exert group on Sustainable finance, Report on EU green bond standard, June 2019, https://ec.europa.eu/info/sites/info/files/business_economy_euro/banking_and_finance/documents/190618-sustainable-finance-teg-report-green-bond-standard_en.pdf EU technical exert group on Sustainable finance, Report on EU green bond standard – summary , June 2019, https://ec.europa.eu/info/sites/info/files/business_economy_euro/banking_and_finance/documents/190618-sustainable-finance-teg-report-overview-green-bond-standard_en.pdf EU technical exert group on Sustainable finance, Taxonomy technical report, June 2019, https://ec.europa.eu/info/sites/info/files/business_economy_euro/banking_and_finance/documents/190618-sustainable-finance-teg-report-taxonomy_en.pdf European Commission, Technical expert group on sustainable finance (TEG), https://ec.europa.eu/info/publications/sustainable-finance-technical-expert-group_en Europeans make record investments in sustainable funds, Chris Flood, Financial Times, January 2020, https://www.ft.com/content/c2952357-c28b-4662-a393-c6586640404f FCA urged to take action as investment industry shamed for greenwashing, Portfolio Adviser, November 4th 2019, https://portfolio-adviser.com/fca-urged-to-take-action-as-investment-industry-shamed-for-greenwashing/ Guidelines on certain aspects of the MiFID II suitability requirements, European Securities and Markets Authority (ESMA), May 2019, https://www.esma.europa.eu/system/files_force/library/esma35-43-869 _fr_on_guidelines_on_suitability.pdf?download=1 Investment Stewardship and the asset manager of the future, Legal & General Investment Management America, March 2020, https://www.lgima.com/landg-assets/lgima/insights/esg/esg-stewardship-and-the-asset-managers-of-the-future.pdf Monstrous run for responsible stocks stokes fears of a bubble, Financial Times, Temple-West, P., February 20, 2020. New business surges at Legal & General Investment Management, Financial Times, March 4th 2020 Regulating the growth of ESG Investing, A look at the landscape of ESG regulation around the world, across three main areas, Morningstar, June 3rd, 2019 https://www.morningstar.com/blog/2019/06/03/esg-regulation.html The Evolving Approaches to Regulating ESG Investing, Morningstar, June 3rd 2019 The Pension Protection Fund (Pensionable Service) and Occupational Pension Schemes (Investment and Disclosure) (Amendment and Modification) Regulations 2018, October 1st 2019, http://www.legislation.gov.uk/uksi/2018/988/regulation/4/made The Pension Protection Fund (Pensionable Service) and Occupational Pension Schemes (Investment and Disclosure) (Amendment and Modification) Regulations 2018 full PDF, made 10th September 2018 http://www.legislation.gov.uk/uksi/2018/988/made/data.pdf US Forum for sustainable and Responsible Investments, https://www.ussif.org/index.asp
"Power to X" in few words "Power to X" or "PtX" is a technology that consists in transforming electricity into another energy vector. This "X-vector" could be heat (Power to Heat) to meet industrial needs or to supply heating networks. It could also be a synthesis gas (Power to Gas) such as hydrogen for mobility purposes, or methane which can itself be injected into the gas network for industrial, heating, or mobility needs. "Power to X": What opportunities exist for Morocco? Thanks to its strategic geographical position and exceptional wind and solar energy potential, Morocco could capture a significant share of Power to X demand, estimated at 2- 4% of global demand in 2030. This was the most prominent result of the two studies carried out simultaneously by the three German Fraunhofer Institutes in 2018 that aim to explore the economic and ecological impact of Power to X on Morocco. In this regard, a workshop about Power to X technology and its opportunities in Morocco was organized on February 11, 2019 within the framework of the Moroccan-German Energy Partnership (PAREMA). The purpose of the workshop was to showcase the results of these studies that reveal to which extent this technology will constitute an opportunity for renewable energy in Morocco as a local industry with high export potential given the country's objective of reaching 52% of the renewable energy mix by 2030. However, according to Prof. Wolfgang Eichhammer project coordinator from Fraunhofer ISI, investing in technologies substituting fossil energy sources but involving other environmental risks such as increasing the consumption of land, water and resources have to be assessed very carefully and linked to sustainability criteria. In this respect, Morocco could become an exporter of carbon-neutral energy sources and make a major contribution to achieving the Paris Climate Agreement target if and only if it is able to deal with the risks associated with PtX. To this end, the Minister of Energy, Mines and Sustainable Development announced the establishment of a national task force supported by a consortium of public and private actors as well as the elaboration of an in-depth study to prepare the PtX roadmap for Morocco. Hydrogen & Ammonia: main development focus by 2030 The Research Institute for Solar Energy and Renewable Energies (IRESEN) has announced recently that Morocco will become a carbon-neutral energy exporter by 2030 through the launch of construction works for a dedicated platform for green hydrogen and ammonia starting January 2020. This infrastructure, with an investment amounting MAD 150 million, results from a partnership between IRESEN, via Green Energy Park, and both OCP and the Mohammed VI Polytechnic University on the Moroccan side, as well as Fraunhofer institutes on the German side. The platform will be dedicated to the R&D demonstration of Power to X technologies, with a diversified research program on hydrogen applications in the production of high added value green molecules such as ammonia and methanol. It is worth pointing out that this technology is complementary to renewable energies and will help to reduce carbon emissions while creating a strong opportunity for economic and social development through exports due to the current lack of profitability of conventional electricity exports given the sharp drop in renewable energy costs compared to electricity transmission. In addition, beyond the existing infrastructures, in particular, the Maghreb-Europe Gas Pipeline and the port infrastructure, capable of playing the role of a liquid fuel export platform, economic relationship with the European Union are constantly strengthening. In Europe, Germany which is the Kingdom's privileged partner in renewable energy sector, intends to replace its fossil fuel (coal) and nuclear energy needs starting from 2022 until 2038 by importing clean energy, in accordance with its environmental commitments. According to Badr IKKEN the General Director of IRESEN, this situation represents an important opportunity for countries like Morocco, capable of producing clean fuels, particularly green molecules such as hydrogen and green derivatives. Fertilizer industry: a good illustration of the economic opportunity for Morocco Together with hydrogen, green ammonia represents a promising economic opportunity to satisfy not only the needs of its local fertilizer industry but also those of the international market in the long term. Indeed, the Kingdom is highly dependent on imported ammonia as an input for phosphorus-based fertilizers from Ukraine, Trinidad & Tobago, and the USA. Replacing these imports with green ammonia may, therefore, strengthen local fertilizer manufacture. In terms of capacity, about 3 GW will be needed to produce 1 Mt of green ammonia, which corresponds to Morocco's current imports. A domestic production of ammonia would represent, for Morocco, not only an opportunity for independence but also an opportunity to diversify its traditional markets. Furthermore, the export of clean ammonia can reduce greenhouse emissions by ~95% making it beneficial for both exporting and importing countries. National task force to present a study on the development of PtX roadmap In April 2020, a study on the development of the roadmap was presented at the 3rd meeting of the National Power-to-x task force. According to the study, the draft roadmap should propose: - Short-term actions that aim to reduce costs along the entire production and operating value chain through the establishment of a dedicated industrial cluster to deal with the development of an infrastructure master plan. The actions also aim to ensure technology transfer through capacity building and the development of local content and to create the right conditions for the export of P2X products. - Medium-term actions through the development of a storage plan for the electricity sector and the establishment of an appropriate regulatory framework for the use of Power-to-x in transport. - Long-term actions through the development of a regulatory and commercial framework to extend Power-to-x technologies to heat production. It was also recommended that three working groups be set up. The first should be tasked with translating the roadmap into a portfolio of concrete, pilot and deployment projects for Power-to-x technologies. The second group will be responsible for developing an appropriate approach to develop exports of green molecules, in order to seize the opportunities offered in Morocco and which are already reflected in the interest expressed by the Kingdom's European partners. While the third group will be responsible for further strengthening research and development in the various fields related to Power-to-x. World "Power to X" Summit 2020: a showcase of the Moroccan leadership Organized by IRESEN, the first edition of the World Power-to-X Summit is a conference gathering policymakers, industry leaders, research experts, and worldwide innovators to discuss the PtX technology and its uses in producing renewable electricity, green molecules and feedstock, CO2 recycling.... This two-day conference was planned to take place in Marrakech from June 10 to June 12, 2020, however, with the current circumstances due to the COVID-19 pandemic, a rescheduling might take place. Safae Laghmari - Senior Analyst at Infomineo References: Ait Almouh, H. (2019). "Power To X: Quel intérêt pour le Maroc?", lavieeco.com, March 12, available at: https://www.lavieeco.com/economie/energie/power-to-x-pour-le-maroc-quel-interet-pour-le-maroc/ Benmalek, S. (2019). " Énergies propres : le modèle marocain intéresse l’Allemagne, selon Rabbah", lematin.ma, December 10, available at: https://lematin.ma/journal/2019/energies-propres-mode-marocain-interesse-lallemagne-selon-rabbah/327813.html Bladi.net (2019). "Énergies Renouvelables : les ambitions du Maroc à l’horizon 2030", bladi.net, December 2, available at: https://www.bladi.net/energies-renouvelables-maroc,62055.html Challenge.ma (2019). " Le Maroc bientôt exportateur de pétrole… vert", challenge.ma, November 30, available at: https://www.challenge.ma/petrole-vert-le-maroc-bientot-exportateur-124529/ Fédération de l'Energie (2020). "World Power to X summit 2020 du 10 au 12 Juin à Marrakech", fedenerg.ma, available at: http://www.fedenerg.ma/evenement/world-power-to-x-summit-2020-du-10-au-12-juin-a-marrakech/ Finances News Hebdo (2019). "Les grandes ambitions du Maroc sur le marché de l’hydrogène à l’horizon 2030", fnh.ma, December 9, available at: https://fnh.ma/article/developpement-durable/les-grandes-ambitions-du-maroc-sur-le-marche-de-l-hydrogene-a-l-horizon-2030 Fraunhofer - ISI, (2019). "Carbon-neutral energy from power-to-X: Economic opportunity and ecological limitations for Morocco", isi.fraunhofer.de, September 2019, available at: https://www.isi.fraunhofer.de/en/presse/2019/presseinfo-24-klimaneutrale-energie-aus-power-to-x-marokko.html H2 Today (2019). "Le Maroc veut se lancer aussi dans l’hydrogène", hydrogentoday.info, August 27, available at: https://hydrogentoday.info/news/5678 IRESEN (2019). "Terms of reference: Expert Mission for Assistance in a Study on 2050 Power-To-X Roadmap for Morocco", iresen.org, October 8, available at: http://www.iresen.org/Site_Iresen/wp-content/uploads/2019/10/ToR_ConsultMar_PtX-Road-Map-2050-Morocco_FV.pdf La Quotidienne (2019). "Le Maroc se met à la technologie «Power-to-X»", laquotidienne.ma, February 13, available at: https://www.laquotidienne.ma/article/developpement_durable%20/le-maroc-se-met-a-la-technologie-power-to-x Libération (2019). "Le Maroc pourrait devenir un exportateur de pétrole vert avant 2030", libe.ma, December 3, available at: https://www.libe.ma/Le-Maroc-pourrait-devenir-un-exportateur-de-petrole-vert-avant-2030_a113744.html MAP Ecology (2019). "«Power-to-X»: une commission nationale verra le jour", mapecology.ma, February 13, available at: http://mapecology.ma/actualites/power-to-x/ Media 24 (2019). "Energies renouvelables: le Maroc prépare sa feuille de route "Power to X", media24.com, February 13, available at: https://www.medias24.com/power-to-x-maroc-energie-145.html Media 24 (2019). "Le Maroc, exportateur de pétrole vert avant 2030", media24.com, November 30, available at: https://www.medias24.com/le-maroc-exportateur-de-petrole-vert-avant-2030-5925.html Ministry of Energy, Mines and Environment (2019). "« Power to X», Hydrogène et ammoniac verts: Quelles opportunités et priorités pour le Maroc?", mem.gov.ma, February 11, available at: https://www.mem.gov.ma/Pages/CommuniquesDePresse.aspx?CommnuniqueDePresse-89.aspx Morocco Travel Blog (2020). "World Power-to-X Summit 2020 Comes To Marrakech", moroccotravelblog.com, January 7, available at: https://moroccotravelblog.com/scalia_news/world-power-to-x-summit-2020-comes-to-marrakech/ www.energypartnership.ma (The Moroccan-German Energy Partnership - PAREMA website) https://industries.ma/la-feuille-de-route-nationale-pour-les-technologies-ptx-au-centre-dune-reunion-a-rabat/ https://leseco.ma/power-to-x-une-feuille-de-route-nationale-en-reflexion/
PwC South Africa's seventh annual Africa oil and gas review highlights significant developments and trends in Africa's oil and gas industry, focusing on the activity and advancements across the continent. The review outlines the main challenges faced by the oil & gas businesses, identifies hurdles to their growth, analyses the companies’ strategic focus in overcoming those challenges, and provides recommendations on how to achieve sustainable growth. The insights are based on the results of primary research conducted by research service provider Infomineo, totalizing 79 responses from international oil companies, national oil companies, oilfield service providers, independent oil companies and other industry stakeholders, across 11 countries[1] over the continent. The top five challenges faced by oil & gas businesses in Africa remain almost unchanged from previous years. For the fourth consecutive year, uncertain regulatory frameworks are seen as the most important challenge facing the industry; showing the persistent difficulties in designing effective regulations. Corruption moved from third to second place this year raising doubts about the effectiveness of the already implemented anti-corruption programs. Financing costs emerged as the third most pressing challenge in this year’s survey. According to the review, this is probably due to the overall regional issues and uncertainties prevalent in the continent (political issues, economic crises…), pushing financial institutions to wary of when funding projects that seem destined to bite off more than they can chew. Foreign currency volatility has also been an important challenge, especially for countries like Nigeria whose currency lost about a third of its value against the dollar in 2016. Finally, the taxation requirements’ uplift in the ranking is due to the move of the other challenges but makes it clear that heavy taxation becomes a burden for oil & gas companies. Another important concern addressed in the review are the hurdles to businesses’ growth. The survey emphasizes obstacles such as low investment in the development of capabilities (factories and others), a weak or incoherent strategy, weak leadership, and a strategy that is not reflected in the day-to-day business as highlighted by many of the survey respondents. Indeed, strategies are very often not precisely defined which is problematic. According to the survey, 75% of the participants mentioned that they have reviewed their Africa strategy in the last three years to confirm its adequacy. However, they also admitted that there are persistent incoherencies with the execution of the day-to-day business. Facing all these challenges, companies are focusing on a specific set of strategic improvements. The survey results show that oil & gas companies in Africa focus mainly on operational excellence, restructuring or creating new organizational designs, capital expenditure and expansion, regulatory and environmental compliance, and technology infrastructures. Moreover, the survey results point out that for a strategic growth, African oil & gas businesses should focus on repositioning their portfolios and focus on the upcoming sustainability trends by pursuing more low-carbon activities than what is currently the case (these activities are considered to be less harmful to the environment than the current prevalent oil & gas extractions). A way to achieve this portfolio repositioning is throughout the development mergers and acquisitions deals and partnerships. These particular adjustments are inspired by the changes either anticipated or experienced by the businesses in their competitive environments. The most expressed ones being the move to alternative fuels, the regulation’s impact, cost reductions, and technology-driven disruptions. Operating in a competitive environment, oil & gas companies are looking to achieve a sustainable growth. The use of disruptive technology is undoubtedly helping regarding that. Survey respondents stated that they implemented digital solutions (22%) and drones (4%) in their processes to surpass their competitors. However, the rise of new technology in the oil & gas industry led to the rise of new threats in the realm of cybersecurity. According to John Chambers, former CEO of Cisco Systems, “There are two types of companies: those that have been hacked, and those who don’t know they have been hacked.” Initiatives should thus be led to warrant the African oil & gas businesses’ security. The Africa oil and gas review describes the landscape of the industry in Africa and addresses the challenges faced and strategies implemented by businesses all over the continent. Given the gathered insights, PwC recommends oil & gas businesses to improve the current state of their industry, by not only focusing on catching up with the rest of the world; but by ‘learning to leapfrog’, using disruptive technologies and spearheading innovations to surpass the specific challenges of the African continent and to propel the industry’s and their businesses’ growth. Hinde Adjar, Analyst at Infomineo [1] Nigeria, SA, Ivory Coast, Gabon, Tanzania, Ghana, Uganda, Mozambique, Kenya, Chad, and Cameroon
Experiences from Oman’s Miraah power plant Over the last decade, due to its maturing oil fields and limited reserves, Oman's domestic crude oil production relied heavily on Enhanced Oil Recovery (EOR) methods. Just as in Oman, most of the global oil production comes from mature or maturing fields with an average recovery factor of around 30 to 35 percent. Since 50 to 70 percent of the oil hasn't been recovered, maturing oil reservoirs possess enormous potential. In previous years, production through the three main EOR methods, thermal recovery, gas injection, and chemical injection, was about 3 million barrels per day (b/d) or 3.5 percent of the world crude oil production per day (Gregory, Omom, and Greil 2014: 16). Of these 3 million b/d, 66 percent were produced through thermal recovery (Kokal and Al-Kaabi 2010: 1). In general, the process of recovering oil is broken down into three different phases: primary, secondary, and tertiary recovery. Source: Gregory, Omom, and Greil 2014: 14 Primary and secondary recovery are considered conventional recovery and target the mobile oil in the reservoir, whereas tertiary recovery targets immobile oil which cannot be recovered due to capillary and vicious forces. Tertiary oil recovery, referred to as EOR, relates to the injection of gases, steam, oxygen, air, polymer solutions, gels, surfactant-polymer-formations, alkaline-surfactant-polymer formations, or microorganism formations into the reservoir, as these fluids reduce the viscosity and thereby enhance the flow of oil (Gregory, Omom, and Greil 2014: 14). While steam injection is the preferred EOR method, especially for heavy crude[1] with a high viscosity, there are different ways of how to produce the necessary steam. In the conventional steam injection method, natural gas is burned to produce steam from boiling water. The Concentrating Solar Power (CSP) technology merely replaces natural gas with solar power. Petroleum Development Oman (PDO)[2], the major exploration company in the Sultanate, was fighting declining oil output from its maturing reservoirs with the enhanced usage of steam injection produced with natural gas. However, it became gradually more difficult for the country to satisfy the growing domestic demand, driven by the need for gas in generating power and the development of other industries (Sergie and Dipaola 2015). To limit the quantity of imported gas, the Omani government together with its partners, Shell and Total, decided to invest $600 million in the construction of the Miraah - Arabic for a mirror - solar power plant. Located at the Amal West oil field in the southern part of Oman, the 1,021 MW solar-thermal facility could save up to 5.6 trillion btu, enough to provide 209 000 Omanis, 5 percent of the country’s population, with electricity (Kantchev 2015; Kramer 2017). Steam generated from the CSP technology has the same quality and temperature as the one generated from gas and resembles a perfect substitute. The solar technology used at the Miraah power plant does not use solar panels but large, curved mirrors which automatically track the sun throughout the day, concentrate the sunlight on a pipe filled with water, bring it to boil, and thereby produce high-pressure steam. Upon the successful completion of a 7-MW pilot project in 2013, the company GlassPoint started construction on the Miraah plant in 2015 (Renewable Now 2017). The American company pioneered an enclosed trough system which is particularly suited to transport the CSP technology from the arid region of southern California to the desert environment of the Arabian Peninsula. Setting up the solar mirrors inside a greenhouse results in three major advantages: reducing costs, achieving high energy density, and protecting sensitive technology. To avoid soaring custom project costs, GlassPoint builds its solar fields in glasshouse blocks using a series of standardized steps, where the majority of the system is comprised of prefabricated components that can be easily assembled onsite. Routinized constructions steps not only improve the speed of deployment, but by doing so also drive down the costs of construction. This point was validated on November 1st, 2017, when PDO and GlassPoint announced that the first out of 36 blocks that constitute the solar plant was completed on time and on budget (PDO 2017). Standardized construction measures as well as the availability to fall back on lower-cost material thanks to the protection offered by the glasshouse, drastically decreases the production costs. Furthermore, the straight surface of the greenhouse positively affects operating costs as it allows for easy cleaning by a robotic system, compared to a slightly more complicated cleaning process for the curved mirrors. Source: Operating CSP in Desert Conditions, Glasspoint The second advantage of the enclosed troughs is that the glasshouse blocks provide high energy density as 93 percent of the land area can be covered with mirrors. Since the materials used in an enclosed trough can be low-cost, it is more cost-efficient to pack the collectors tightly together into a smaller space (GlassPoint 2017: Standard Block). The additional energy generated during peak sun hours, when the sun is high in the sky, far exceed any losses from shading caused by neighboring mirrors during the low sun hours. Achieving high energy density is crucial for EOR applications because steam needs to be produced close to the oil field so that it travels the shortest distance. Without the protection offered by the glasshouse, sand and dust storms, common phenomena in the deserts of the Middle East, would decrease the efficiency of the mirrors through soiling. Because the glasshouse has a height of 6 meters above the ground, soiling rates are 50 percent less compared to objects that are merely 1 meter above the ground (GlassPoint 2017: Sealed from Dust). The glasshouse also prevents damages to the mirrors and other delicate components of the system caused by sand, wind, and humidity. The Miraah solar plant could produce up to 80 percent of the steam that is needed for the EOR (Power Technology). This would allow Oman to free up natural gas currently utilized for EOR and use it in other parts of its economy. Furthermore, substituting natural gas with solar steam would remove the largest and most volatile cost of thermal EOR: the price of gas. Even though a certain amount of gas would still be required to maintain steam injection at night, CSP has the potential to drive down the quantity of natural gas needed in producing steam. With a stabilized oil price in the range of $55 to $65 and an increasing demand for the use of natural gas in other parts the economy, the capital-intensive investment needed for CSP is becoming more attractive. Yet, the spread of the technology will also depend on the success of and insights from the Miraah power plant. As GlassPoint continues construction on time and on budget, national and international oil companies trying to increase the recovery rate of maturing fields might consider substituting natural gas for solar energy. [1] The viscosity resembles a particular attribute that defines the quality of crude oil and is expressed in API (American Petroleum Institute) gravity. An API of 40 and higher resembles low viscosity and stands for high-quality crude oil. Due to its increased mobility (fluidity), reservoirs containing light crude reach a higher recovery factor at a lower average cost, while at the same time light crude reaches higher prices on the world market as it requires a lower quantity of energy during the refinement process. Heavy crude on the other side, with an API below 20, is very thick and therefore immobile. Contrary to light crude, recovery costs for heavy crude are higher and the prices exporters obtain on the world market significantly lower as more energy is required for refinement. Thermal EOR methods for heavy crude become economically justifiable once the oil price reaches a certain level. [2] Owned to 60 percent by the Omani government, 34 percent Shell, 4 percent Total, and 2 percent PATEX. Kevin Matthees, Senior Analyst at Infomineo. References Gregory, Mark, David Omom, and Pierre-Alexandre Greil. 2014. “Solar Enhanced oil recovery. An in-country value assessment for Oman.” Ernst&Young. January. http://www.ey.com/Publication/vwLUAssets/EY-Solar-enhanced-oil-recovery-in-Oman-January-2014/$FILE/EY-Solar-enhanced-oil-recovery-in-Oman-January-2014.pdf. Kantchev, Georgi. 2015. “Oman to Build Giant Solar Plant to Extract Oil” Washington Post, 8 July. Kokal, Sunil and Abdulaziz Al-Kaabi. 2010. “Enhanced oil recovery: challenges and opportunities.” EXPEC Advanced Research Centre. Saudi Aramco. http://www.world-petroleum.org/docs/docs/publications/2010yearbook/P64-69_Kokal-Al_Kaabi.pdf. Kramer, Susan. 2017. “Solar EOR a Big Win for GlassPoint.” SolarPACES. July 3. http://www.solarpaces.org/glasspoint-solar-eor-miraah-start-august/. Petroleum Development Oman. 2017. “Miraah Solar Plant Delivers First Steam to Amal West Oilfield.” Press Release. November 1. http://www.pdo.co.om/en/news/press-releases/Pages/Miraah%20Solar%20Plant%20Delivers%20First%20Steam%20to%20Amal%20West%20Oilfield.aspx. Power Technology. Unknown. “Mirah Solar Thermal Project.” http://www.power-technology.com/projects/miraah-solar-thermal-project/. Renewables Now. 2017. “Miraah solar thermal plantin Oman delivers 1st steam for EOR.” November1. https://renewablesnow.com/news/miraah-solar-thermal-plant-in-oman-delivers-1st-steam-for-eor-589407/. Sergie, Mohammed, and Anthony Dipaola. 2015. “Oman said to consider LNG imports as domestic gas use surges.” Bloomberg. August 30. https://www.bloomberg.com/news/articles/2015-08-30/oman-said-to-consider-importing-lng-as-domestic-gas-use-surges.
Can Africa feed the world? The sector of Agribusiness in Africa has been experiencing steady growth, potentially positioning the continent as a significant player in global agriculture. With a focus on enhancing resource efficiency, Africa's agribusiness could not only achieve self-sufficiency but also contribute to global food security. The focus on agriculture emerged from the willingness of African policymakers to capitalize on their strengths to achieve economic growth. Following this line of thinking, as part of the first declaration of the Comprehensive Africa Agriculture Development Program (CAADP) for agricultural transformation, wealth creation, food security and nutrition, economic growth and prosperity made during the African Union Summit in 2003, African leaders committed to allocate 10% of the budgets to agriculture [1]. The past decade has been witnessing economic growth in African regions that endorsed the CAADP, with a 160% increase in agricultural output [2]. The upward trend in the sector uncovers the potential of agricultural investments in Africa in promoting growth and decreasing poverty levels, whereas, agriculture represents 30% of Sub-Saharan Africa’s GDP and more than 40% in export volumes [3]. African governments, business leaders, and global decision-makers are putting more efforts into funding the agribusiness in the region. Several measures are being placed together to reduce the obstacles for growth in the region, calling for creating common grounds to combat climate change, land degradation and desertification [4]. Moreover, investments in the continent have been booming in the past year. Rising to a total of $2.3 billion, with over $500 million in new private-sector investments in 2015 [5]. Being the land of the richest resources, Africa has naturally been attracting investors because of the large scale of unexploited resources in the continent. Only 7% of the 39 million hectares of land suitable for irrigation is currently irrigated , while the continent holds 60% of the world’s uncultivated arable lands, which leaves an incredible opportunity for investors willing to capitalize on agriculture [2]. Although Africa has promising prospects in agriculture, there are multiple challenges to overcome to achieve a leading position in the agricultural sector. It is true that investments in food production and capitalization on resources are a key measure, but African countries must focus on creating quality and branding Africa’s agriculture by following international standards and create quality reforms, a challenge that South Africa overcame by becoming a leader in product quality [6]. In addition, there is a greater need for knowledge and funding and investments in infrastructure that go in line with agricultural growth as production growth would lead to an increasing need for transportation networks and links to other countries in the world. Agriculture can drive Africa to rise as an economic power. The continent has the potential to feed the 10 billion world population projected in 30 years. Alongside global leaders, African government ought to put the focus on agriculture at the top of their agenda, to enhancing their food production and quality capabilities. Sofia Hazim, Analyst at Infomineo Sources [1] http://www.monitor.co.ug/Magazines/Farming/African-countries-agriculture-production/689860-3379910-wgisl0/index.html [2] https://qz.com/736626/african-farmers-say-they-can-feed-the-world-and-we-might-soon-need-them-to/ [3] https://www.theguardian.com/global-development/poverty-matters/2011/jul/27/africa-potential-to-feed-world [4] https://thewire.in/148694/africa-land-fertility-degraded/ [5] https://www.thisdaylive.com/index.php/2016/05/18/investments-in-agriculture-in-africa-rises-to-2-3bn/ [6] https://www.weforum.org/agenda/2016/09/africa-could-feed-the-world-if-it-overcomes-these-challenges
