South Africa: Energy Cooperation Between China And Africa

Last Updated: 26 November 2014
Article by Kenny Chiu

After years of rapid development, energy cooperation between China and Africa is facing new developments and challenges. It's worth considering how to realize long-term sustainable development in terms of energy cooperation between China and Africa; continue the development of new Sino-African energy resources; keep expanding Sino-African trade in oil; and how to vigorously promote energy cooperation between China and Africa.

While China continues its oil and mineral-resource development cooperation with Africa, there is, at the same time, great opportunity for the development and construction of renewable energy sources in Africa for the future energy cooperation between China and Africa. China is the world's leading nation with regard to renewable energy sources, and the mature renewable energy technology and strong financial support of China will deliver more clean energy for the African people. Since the establishment of the China-Africa Cooperation Forum in 2000, ministers from China and African countries have unanimously agreed to cooperate in the field of new energy. It was proposed at the Fifth Ministerial Conference of the China-Africa Cooperation Forum that: "China will continue to help African countries improve their ability to deal with climate change". This poses new tasks for Chinese enterprises to invest in the construction of new energy projects in Africa.

The result of cooperation between China and Africa in the new-energy field is promising. A solar power plant with huge production capacity has been built in South Africa by Suntech Power Holdings Co. Ltd., which is the largest solar panel manufacturer in China, and a new 204g watt hydropower station is to be built by Sinohydro Group Ltd in western Kenya. There is much potential for China to cooperate with Africa in the clean energy field.

The current energy situation of all African countries offers opportunities for new energy cooperation between China and Africa. For example, Egypt is seeking to use more new energy resources - a solar power station has been built, and a nuclear power plant is in the planning stages. It is estimated that Egypt will have the first nuclear power plant in operation after seven to eight years, at the latest.

In addition, Sudan is an agricultural country with rich biomass resources, and abundant solar and wind energy resources. According to an investigation of the distribution of wind, it also has potential to develop power in some regions like the coast of the Red Sea. At the same time, almost all regions in Sudan can develop 'wind pumping', because the required wind speed is low - about 3m/s of wind resource is suitable for wind pumping. Furthermore, there is also great potential for geothermal energy resources in Sudan - in 2003, Sudan cooperated with China in setting up a demonstration project of geothermal energy resources. In addition, there are numerous rivers in Sudan, and therefore there is huge potential for hydroelectric power, and the development potential for small hydroelectric power plants is also substantial in many regions.

Furthermore, in Ethiopia where no oil has been found, some sugar factories are being used to produce ethyl alcohol, which is used to substitute for oil in the proportion of 1 to 9. The biomass is also used for generating electricity, and a large part of electricity is from biomass energy, including for the operation of sugar factories. The use of ethyl alcohol is to be increased to 25% in the future. In addition, the development of biodiesel is planned, which is not only used for transportation, but also for domestic use in the kitchen.

African offshore oil shows great promise. In addition, offshore oil exploitation can, to some extent, stay removed from the complex political, economic and social environment faced by the exploitation of land energy resources. Previously, the development of China's petroleum enterprises was subjected to deep-sea technology – so they only have limited participation. As the technology of offshore oil exploration and exploitation matures, China-invested enterprises can increase their participation in African marine-petroleum exploitation projects, for example, the projects in the Gulf of Guinea and the Suez of Egypt. Therefore, offshore oil exploration is promising.

Since 1995, Africa has experienced a more favourable period in its history. The rapid economic growth, falling inflation, and political and regional security have increased overall stability, but political uncertainty remains. Africa still has a large investment risk – especially its political risk for several African petroleum-rich countries.

With the rapid development of China-Africa cooperation and the "localization" of Chinese energy enterprises, the risk inspection and assessment of the existing projects of Chinese energy enterprises in Africa should be strengthened in order to dissolve the risk of cooperation in the field of energy. Careful thought should be given to the potential investment risks, establishing the security mechanism associated with the risks in exploring African energy, and to reduce the risks associated with enterprise investment. Medium-term and long-term plans should be formulated for African energy resources and to guide China's petroleum enterprises in developing the African market. A unified coordination mechanism is essential for energy jobs in Africa and to enhance the overall competitiveness of Chinese enterprises in Africa. In addition, there should be integration into local culture, a faithful fulfilment of business responsibility, the creation of job opportunities for African people, assistance for African countries to strengthen infrastructure and the spread of education, and the promotion of development for local economies.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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