African Oil and Gas decision makers must think

By Babajide AGUNBIADE (Dr)

African leaders most often than not pay a blame game with other parties with regards to the mismanagement of the continent’s resources due to extensive corruption, political instabilities, regulatory uncertainties, and civil wars which have created financial poverty, energy poverty and plagued the standard of living across the continent. Multinational companies have often been the main extractor of these resources with little or no benefit to the indigenous population. It is imperative for African countries to come together and consolidate their experiences and develop a common legal template for negotiating better deals with mining, oil, and other natural resource corporations (Fabricius, 2017)

The decline in oil prices negatively imparted the continent by creating a disturbing blow to African oil-producing nations. With many African economies slowly recovering and gross domestic product (GDP) expected to accelerate by the end of 2020, there is every reason to be optimistic. One key constant that remains unaltered throughout this period is the potential of the African oil and gas sector. The continent has 7.5 per cent and 7.1 per cent of global oil and gas reserves respectively. The continent is again attracting investors with the recent increase in oil prices. Below is a table showing the main oil and gas producers in Sub-Saharan Africa.

African Oil and Gas decision makers must think

From historical data, oil and gas has been the main driver of economic growth in African energy-exporting countries. More than 90 per cent of revenues and bulk of fiscal revenues can be attributed to oil exports. In spite of all these, African countries have still been unable to harness these dividends for sustainable economic growth (Deloitte, 2019).

African leaders need to be more analytical and outside-the-box thinkers in eradicating energy poverty across the continent. A multi-sustainable and dynamic approach which involves the use of both renewable energy sources and fossil fuels has been recommended by the African Energy Chamber.

This robust strategy is designed include Africa’s abundant, readily available natural gas in the continent’s energy mix (Ayuk, 2020). Gas especially most of Africa’s low carbon LNG, is the cleanest of all fossil fuels, and it can create a pathway to minimizing energy poverty through gas-to-power programs. It can also open the door to economic growth and diversification by serving as a feedstock for petrochemical production and fuel for industrial facilities. Imagine Nigeria giving up on Gas after passing its historic Petroleum Industry Bill. Same with Mozambique which is scheduled to be the third largest producers of LNG in the world. Senegal, Algeria, Congo-Brazzaville, Cameroon, Equatorial Guinea, Angola, South Africa, Tanzania, Mauritania, Egypt are all ramping up.

Expanding the production and use of gas within Africa would also give African countries something very important. Which is more time to make sure that the African people and businesses develop the capability to enjoy the full benefits of renewable energy jobs and business opportunities. Africa logically needs that extra period within the cycle. This option is certainly more reasonable as compared to taking oil and gas production abruptly off the table just to accommodate world leaders, businesses, and organizations that will never have to live with the consequences of such actions. Africa will always feel the consequences and pain if realistic decisions are not made at the high level.

Africa at this stage does not require the international community to present solutions that disregard the indigenous priories and opinions to resolve  the continent’s energy poverty. The African leaders need to avoid making decisions that suit the priorities and desires of the western world while ignoring the African ambitions and priorities. This is one reason why fossil fuels are so vitally important for Africa. Natural gas and crude oil don’t just provide Africans with reliable electricity. They also provide Africans with a wide range of employment and business opportunities across the continent in the realms of upstream exploration and development, transportation, refining, marketing, and petrochemical production.

It is these prospects that have led African governments to spend years developing and modifying local content policies to make sure that Africans reap the rewards of oil and gas activities in their countries. At this stage we cannot confidently say the same approach will be employed for renewable energy. Even before African leaders fully consider alternative sources of energy, the question of whether or not local content policies have been considered within the European Green New Deal being imposed on Africa needs to be addressed. Whether these new deals will empower young African entrepreneurs, companies. The main driver for local content and technology transfer across Africa has been the upstream oil and gas industry. Other industries even older than oil and gas learnt a lot from the industries’ local content strategies.

The question of whether there are capacity-building initiatives that will prepare Africans to assume renewable energy jobs at all levels, from labor to leadership roles and how long that will take also still remains (Ayuk, 2020).

If we take a look at solar energy for example,  10 per cent of the world’s off-grid companies are African – and many of them are relatively small. This implies that if the switch to renewables especially with the deal from the European Commission and the International Energy Agency is rushed, there is the likelihood that only a few (or almost none) of the companies involved in filling this space will be based in Africa. There is also the chance that if multinational firms lead the way, they will, in all likelihood, hire people from their own countries to take the jobs they create from the start before they hire Africans. This will just be another déjà vu of our past repeating itself. The hard truth is that Africans do not need ‘help. Africans need the jobs, contracts, and empowerment

If energy poverty is really a problem in Africa, then it is indeed an irony to see calls for terminating overseas funding for coal projects that would give the continent’s power production a boost. Regardless of whether the subject is coal, gas, or crude oil activities in Africa, international organizations have no business interfering with African investment opportunities or compelling energy companies not to do business in Africa. That’s why the African Energy Chamber has announced that it will encourage African countries to boycott companies that boycott African oil and gas (African Energy Chamber, 2020). Statistics show that African nations collectively emitted seven times less CO2 than China last year, and four times less than the US, according to the Global Carbon Atlas (Ayuk, 2020).

To conclude, African leaders will have to come together as one and make collective decisions regarding the continent’s energy situation. In the midst of the European Commission and the International Energy Agency calling on African leaders to help get rid of oil and natural gas, the response from the African leaders must not be affirmative. No matter how much empathy the global community shows about Africa’s strengths, opportunities, and challenges, no one will be more discerning, or more enthusiastic to find the best solutions than the people who call Africa home. This initiative begins with effective decision making amongst the African leaders.

He is the  Director at National Oilwell Varco, Houston, Texas, USA



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