Africa has the potential to play a leading role in global energy demand over the next few decades, given the right policy clarity and economic stability in the region.
This was the major view from Tullow at the just-ended Africa Oil Week 2023 in Cape Town, South Africa. Chief Executive Rahul Dhir, on a panel to discuss global opportunities for Africa’s energy resources, was emphatic about the need for deep collaboration between governments and operators in order for this view to be realised in the short-term.
It has been an exciting few months for Tullow in Ghana, having reached 100,000 bpod with its Greater Jubilee Field production. This is a testament to Tullow’s strategic shift in 2020, when it chose to invest more in existing assets rather than new ones. This decision led to developing the Jubilee South-East (JSE) project, which significantly boosted oil production from 70,000 to 100,000 barrels per day.
Tullow also plays a crucial role in Ghana’s TEN fields, known for their abundant domestic gas resources which are essential for the nation’s growing electricity needs. Tullow has licences in various African countries, including Kenya, Ivory Coast and Gabon, with a focus on expanding oil production and optimising gas resources in these countries.
Recent developments in Africa reflect a renewed interest and substantial investment in energy projects that were previously overlooked due to cost and environmental concerns. According to Reuters, Africa is now considering oil and gas projects worth over US$100billion. Given the escalating geopolitical tensions in Europe resulting from the Russia-Ukraine conflict and instability in the Middle East, Tullow shares the belief that Africa could potentially replace a significant portion of Europe’s energy demand by 2030.
However, challenges persist. Economic instability, regulatory pressures, inflation and rising food and energy costs continue to pose hurdles in Africa’s quest for energy sustainability. Added to these is the increasing global shift toward renewable energy and net-zero targets. Tullow supports a just energy transition for African nations, which means leveraging oil and gas resources for immediate economic development in a cleaner, more affordable and secure manner.
As Chief Executive Rahul Dhir has emphasised: “The upside of Africa’s elevated role in global energy demand is high. However, there is a real and present need for a deeper collaboration between governments and operators on the continent, to reduce perceived risks and make the continent a desired oil and gas destination. Operators like us require assurances of an enabling environment for increased investment and partnerships for shared prosperity”.
Tullow is currently in negotiations with the Ghanaian government on two critical issues – a new Gas Sales Agreement and the revised Plan of Development for the TEN oil field. These agreements are essential for Tullow’s plan to invest over US$4billion in Ghana over the next decade. Managing Director for Tullow’s Ghana operations, Wissam Al-Monthiry, is upbeat about charting a smooth way forward with government on these issues for the Ghana business’s success.
“To date, we’ve invested over US$17billion with our partners in developing Ghana’s Jubilee and TEN fields; contributing to sustainable economic growth and transforming lives. We’re optimistic about the vast potential for further investment in Ghana, particularly in gas production, and we hope to conclude these soon,” he said.
The global energy landscape is at an inflection point, and Africa stands as a light of hope. With sound policies, collaborative partnerships and a focus on clean, efficient energy, Africa can unlock its full potential on the world stage. Tullow’s success story in Ghana and its ambition to invest further on the continent demonstrate the vast opportunities awaiting those willing to invest in Africa’s energy sector. To seize this pivotal moment, African nations must adopt a just energy transition.
This transition should harness oil and gas resources for immediate economic development while ensuring a focus on solving the energy trilemma. The way forward lies in deeper collaboration between governments and energy companies to mitigate risks and make Africa a prime destination for energy investments.
