Monday April 18, 2022
Although occupier Russia is threatened by sanctions, there
is speculation as to how much Africa needs to become an oil and gas supplier.
The continent is already positioning itself.
Somalia is considered a dangerous place and a failed state:
it has been shaped by tribal wars, drought and the terrorism of al-Shabaab, an
Islamic militant group. Nevertheless, an unstable government is trying to
return to normalcy and want to lure companies to the horn of Africa – recently
re-creating fossil resources.
Oil Minister Abdirashid Mohammad Ahmed says there are high
oil and gas reserves in the Okadan Basin and beyond the Somali coast. At the
next big industry conference for African Energy Week in Cape Town in October,
he wants to “meet with global investors and give a decisive impetus to the
The Somalia Petroleum Law, an oil authority and the Somali National
Oil Corporation – all have a legal framework in place to attract international
oil companies. A few years ago, in the first round of licenses, oil reserves
were estimated at 30 billion barrels and natural gas reserves at 5.7 billion
cubic meters. Shell and ExxonMobile blocks are protected, but not used due to
Between hype and
Somalia is special – but currently the country is not an
isolated case in Africa. There is speculation across the continent that Africa
could become Europe’s new energy hub, while occupied Russia is threatened by
sanctions – or Western consumers simply do not want to buy oil and gas
suspected of being war criminals. Some warn against exaggerated expectations.
However, the oil and gas states are certainly keen on expanding their fossil
fuel infrastructure before the start of the green transition – especially as
large sections of the population are still short of energy.
The population of Africa is growing rapidly. Today,
one-sixth of the world’s population on the continent accounts for only six
percent of global energy consumption and three percent of all climate-damaged
emissions. A good 600 million Africans are still without electricity, and many
residents – all over Europe – will flock to cities in the next 20 years. The
continent faces the dual challenge of producing more energy without harming the
climate. That’s why Africa is not the only seasoned conservationist facing.
“Africa’s energy path is of global significance,” said Fatih
Berol, head of the International Energy Agency’s IEA. The IEA emphasizes that
“Africa can play a key role in transforming the world’s energy systems into a
renewable age.” Throughout sub-Saharan Africa, despite high demand, it is
“heartbreaking” to see one-third of total solar energy produced by Britain,
Nigeria and Angola
play only a minor role
So industrialized nations are primarily promoting Africa’s
renewable energy – renewable energy – from wind and solar power and more
recently to green hydrogen. Various initiatives, including development banks,
states and the IEA, “Desert to Power” are seeking financial assistance,
technology transfer and investors because capital spending on the continent is
seven times higher than in Europe or North Africa. The risk is high. But
Africa’s basic needs – and essential government revenues – will initially come
from coal, oil, gas and hydropower.
Today, Africa accounts for about 8 percent of world oil
production, compared to 12.4 percent for Russia and 31 percent for the Middle
East, according to the IEA. Compared to world market leaders Saudi Arabia (352
million) and Russia (269 million), Nigeria will play a smaller role as net
exporters in 2019 with 99 million tonnes and Angola 63 million tonnes. Other
oil producers are small wells and deposits in Libya, Algeria, Egypt and Sudan,
Ghana, Congo, Uganda, Gabon and Chad. Most recently, Namibia celebrated the discovery
of significant oil and gas fields by Total and Shell, promising three billion
barrels of oil.
In the African gas sector, too, some radical players now
account for six percent of global gas production, with Algeria accounting for
2.3 percent above all – compared to Russia’s 18 percent worldwide (US 23.6,
Middle East 16, OECD 38). However, net exports of 41 billion cubic meters from
Algeria and 27 billion cubic meters from Nigeria (2020) are not far from the
net exports of Africa to the US (77 billion) or Russia (230 billion).
How quickly can
producing countries increase capacity?
In view of the large number of deposits, these amounts can
always be expanded. Approximately 13 trillion cubic meters of natural gas
reserves are due to the continent. In 2021, the proven oil reserves total 125
billion barrels. However, the question is under what conditions and at what
speed can they be created. Thomas Scurfield, an economist at the London-based
Natural Resources Governance Institute, said: “Africa certainly has great
potential to become a powerful energy hub.” But there are no mature plans to
start production quickly. In one study, Scurfield calculated that the average
growth time from the discovery of deposits in Africa to the actual production
in the 1960s was 12 years.
To further liberate Europe’s energy supply from Russia, the
European Union has already announced its intention to involve Africa more
closely in its REPowerEU program. EU Energy Commissioner Kadri Simpson says
Egypt, Algeria and Nigeria are the most reliable suppliers. “We want to
However, it is uncertain to what extent oil and gas will be
operational here – above all to what extent the leading producing countries can
quickly increase their capacity. Market observers point out that neither
Nigeria nor Angola have pumped enough to reach their OPEC quota today,
especially in the case of oil. According to market reports, investments in
capacity building have been low in the politically unstable environment plagued
by corruption in recent years.
Given the rapid availability of natural gas, NRGI’s product
experts believe it would be a good idea to look to Europe, North America or
elsewhere to change supply gaps. Large export volumes will require large
investments in LNG terminals or pipelines. “These are long-term investments,
and banks need more network than expected today to ensure profitability,”
Scurfield warns. After all, the global North is heading towards the Renewable
Mozambique has big
plans to build LNG terminals
Nevertheless, the BP Group expects gas production in Africa
to increase by 80 percent by 2035. In its view, the African Energy Chamber
estimates that more than 60 percent of fossil resources will be generated in
gas fields over the next ten years. Nigeria has high gas reserves, but the West
African country produces half as much as Algeria and less than Egypt. According
to Scurfield, the recently politically revived plan to pump 30 billion cubic
meters a year to Europe via the “Trans-Sahara” pipeline via Niger and Algeria
was “in the drawer for years.”
Algeria is geographically very close to Europe and aims to
double its gas field development and production over the next five years. Italy
and Spain in particular are focusing on making greater use of existing
pipelines or adding them. But the government in Algiers has deep diplomatic
divisions with Spain over the controversial status of the Western Sahara. So
ROM may have better cards. A 2,000-kilometer transmit pipeline is planned for
Italy, to be completed by 2027.
In the southeast of the continent, Mozambique has higher gas
reserves than Egypt and Libya and has large plans to build an LNG terminal over
the years. But the unrest in the country has not even allowed production to
cross the initial stage, and real progress is not expected until 2025.
Tanzania, on the other hand, which borders Senegal and Mauritania to the north
and has recently discovered deposits, wants to start quickly.
According to the trusted American firm Brookings, it has
“recognized the long-term development opportunities arising from the conflict
between Russia and Ukraine” – and Tanzania is one of the countries seeking to contribute
to Europe’s independence from Moscow. President Samia Zuluhu Hassan says he has
the sixth largest gas reserves on the continent at 1.6 trillion cubic meters.
Previous disputes with energy companies should be a thing of the past, and
maritime projects should be updated by 2023.
Hype or true?
There is a certain enthusiasm in Africa, says Silas Olong,
an energy expert at the Resource Governance Agency. But in the long run it does
not apply to the risk assessment that companies make. In his view, perspectives
are inconsistent, and the potential increase in energy supplies from Africa is
still many years away – and the fundamental question arises as to whether
Europe, in view of the planned transition from fossil fuels to renewable
sources, will adopt new ones. Long-term obligations to oil and gas want to let
But Olang warns that if Europe really wants to develop the
continent as an energy supplier, it must put pressure on better governance: it
can also introduce accountability in presidential palaces, while at the same
time fighting the energy poverty of the people – and finding a way to a
sustainable energy supply in Africa in the medium term. “Then it could be a
Otherwise, his colleague Scurfield warns, “the current
heated debate will end in disappointment and dire consequences” – meaning
governments promise rich wealth to their citizens, but take on new debts to
build infrastructure and utility networks, and cannot pay them off when
problems arise. The situation was similar in Ghana in recent years.
This text is original Capital Published.
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