By NJ Ayuk, Executive Chairman, African Energy Chamber

The recently signed liquefied natural gas (LNG) development project in South Africa’s Mpumalanga province is a promising step on the long road to Africa’s just energy transition.

The project, being jointly developed by Kinetic Energy of Australia and the Industrial Corporation of South Africa (IDC), a national development finance institution, will capitalize on Kinetic Energy’s recent 3.1 billion cubic feet natural gas discovery in Amersfoort, Mpumalanga. The project is expected to produce 50 megawatts (MW) of equivalent energy and eventually expand to 500 MW.

The project, which Kinetic Energy describes as South Africa’s largest onshore LNG project, exemplifies natural gas’ potential to grow the country’s economy and meet domestic energy needs.

This all comes about as South Africa works to expand its oil and gas operations in order to curb its reliance on coal and help pave the way to eventual decarbonization.

South Africa is not alone, either. As the African Energy Chamber (AEC) covers in our recently released “The State of African Energy 2024 OutlookReport,” natural gas production is on the rise both globally and in Africa. Even more promising, our report notes that “upstream operators are now revising their strategies and aligning their future investments more in line with energy transition, and natural gas is being looked at as transition fuel.”

The African Energy Chamber will make support the Invest in African Energy Conference in Paris this year organise by Energy Capital and Power.  African Energy Week will definitely be the home of Natural Gas investment in Africa.

 

Gas: A Logical Transition Fuel

I find it heartening that, despite calls by environmental organizations and wealthy countries to cease investment in African oil and gas projects, many of the companies actually operating in Africa appear to recognize natural gas’ value as a transition fuel. Too long has the solution to the climate crisis been oversimplified: Decarbonization is not a goal that can be reached overnight nor without first building up the infrastructure required to support development of renewables.

Such a task is relatively simple for Western countries, which have spent centuries building their economies and infrastructure off the backs of fossil fuels. The same cannot be said for African states, which have long lacked these same development opportunities and must now play catch-up at an accelerated pace.

Even worse, we are told to play this game of catch-up with our hands tied: to leave our natural resources in the ground while the developed nations of the world continue to exploit their natural non-renewable wealth. We are expected to jump straight to building wind farms, solar farms, and hydroelectric dams while hundreds of millions of Africans are still living without access to electricity.

Where will the capital for such a miraculous development come from?

Who will build the foundational infrastructure needed to support it?

Developed nations are quick to promise, “We will!” but reticent to follow through on their promises. What’s more, their foreign “aid” has frequently focused more on alleviating the symptoms of Africa’s economic and energy poverty rather than resolving the source.

With all this in mind, it is clear to me who must provide the lion’s share of capital and build the infrastructure: Africans ourselves. And we cannot do that without tapping our own natural resources, natural gas being the most vital among them. Its properties that burn cleaner than oil and coal, its abundance, its ease of storage and transport, and its applications in manufacturing and synthesis make natural gas the best option for Africans to establish energy security and achieve decarbonization.

Companies Leading the Way

So, again, it is encouraging to see that the AEC is not alone in our stance that natural gas production makes sense for Africa — and for energy companies. More and more energy companies describe policies that call for pursuing energy transition measures for tomorrow while providing the natural gas to power the world today.

Look at French major TotalEnergies, which is responsible for much of the upstream activity in our continent. Following the discovery of two huge gas fields in South Africa in 2019 and 2020, TotalEnergies is continuing its exploration and production efforts there, despite environmentalists’ efforts to block further activity. TotalEnergies also is driving the Mozambique LNG project, considered one of Africa’s most important hydrocarbon developments.

Then there’s German independent, Wintershall Dea, which is increasing its participation in the Reggane Nord natural gas project in Algeria by 4.5%. The company is acquiring interest from Italian utility company Edison in the project. Wintershall Dea, which has a strong presence in North Africa, also announced first gas with its partners (Cheiron Energy, INA, and the Egyptian Gas Holding Company) at the East Damanhur block in the onshore Nile Delta earlier this fall.

I love what Wintershall Dea’s CEO and Chief Operating Officer Dawn Summers wrote about natural gas in a November opinion piece, released just before the 2023 United Nations Climate Change Conference (COP28).

“At first glance, it would seem that the gas and oil industry is merely part of the climate problem — but it will also be part of the solution,” Summers wrote. “If gas were used instead of coal, CO2 emissions would immediately go down — by almost half. Already today, we are decreasing the environmental impact of our activities worldwide by drastically reducing our methane emissions. In addition, with technologies such as CO2 storage and H2 production, we are helping other sectors to decarbonise, and we aim to harness our expertise to ensure that the future energy system is more sustainable. In short, the oil and gas industry can, must and will be part of the solution to the climate problem.”

Well said! Africa’s gas industry is part of the solution as well. And, as our report notes, the forecast for continued natural gas projects in our continent is looking good.

Africa’s Tremendous Natural Gas Potential

Our report finds that Africa continues to hold immense natural gas potential and is positioned to not only increase its outputs but also capitalize on the underserved LNG market and meet Europe’s ongoing demand. Our estimates show an increase from Africa’s 2023 natural gas output of about 265 billion cubic meters (bcm) to over 280 bcm by 2025.

North Africa currently drives the majority of the continent’s output, although its production is expected to remain flat throughout the rest of the 2020s. Production ramp-up is expected through the second half of this decade as Mozambique increases its LNG output. As new-gas start-ups across the rest of the continent come online, this trend in increased output will become further pronounced.

Nigeria and Algeria, meanwhile, are expected to drive an increased focus on LNG exports, with additional flows coming from Egypt, Equatorial Guinea, Mozambique, and waters off Senegal- Mauritania.

Africa’s natural gas sector stands poised to prepare the entire continent for eventual decarbonization, as do many of the companies operating here.

The goal of a continent fueled by renewable power cannot be achieved, however, unless the developed world also recognizes this and allows African states to transition on their own schedule, not one imposed on it by others.

Download the AEC’s 2024 outlook report here.

By NJ Ayuk, Executive Chairman, African Energy Chamber

Western leaders often urge African nations to make a rapid transition from fossil fuels to renewable energy sources. They seem to think that African nations can switch to renewable power sources fairly easily, as if a good energy infrastructure was already in place.

But this is not the case in Africa, where roughly half of the population lacks access to electricity. Far too many our people can’t buy milk from a refrigerated grocery aisle, do schoolwork after sunset, or get an X-ray at their local hospital. Right now, those 620 million souls don’t need green electricity — they need electricity, period. Then there are the 900 million Africans who lack clean cooking fuel. For them, cooking with wood, charcoal, and even waste, is part of daily life. So is walking up to 20 hours a week to gather these fuels—and the dramatic health risks associated with inhaling smoke from cooking.

The sheer urgency of these situations demands that we prioritize a reliable grid first and everything else second.

Different Timelines

Contrast this with the United Kingdom and United States, where the majority of homes have been energized since 1930 and 1960, respectively. Currently, Britain generates 41% of its electricity from renewable sources, and the U.S. recently saw its renewable generation outpace coal. Worthy milestones, but let’s not forget that both nations had already been enjoying and expanding their fossil fuel-based grids for nearly a century. They spent decades industrializing and building robust infrastructure before implementing successful green policies. I don’t believe that every single African state must follow the same timeline, especially as renewable technology improves. I do, however, ask long-industrialized nations to consider the vast differences between their energy landscapes and ours.

Different Needs

Many Western states supplement their grids with wind or solar but ultimately rely on natural gas, oil, or coal. Take the U.S., which generates 60% of its electricity with fossil fuels and 21% with renewables. The hard truth remains: Fossil fuels are still more reliable.

How much more reliable? Natural gas has a capacity factor of 65%, which means that gas-powered plants operate at full power 65% of the time. Contrast that with wind and solar, which operate at 36% and 25%, respectively. In other words, these renewables are about half as reliable as natural gas.

Asking developing nations to ignore natural gas is essentially requesting that they ignore half their power capacity. It’s a declaration that Africans deserve half the energy, half the standard of living, and half the safety of their Western peers.

It’s admirable and forward-thinking that many modern states supplement their grids with wind or solar. However, when panels crack or wind farms fail, their people have the luxury of falling back on a safe, reliable, and established fossil fuel grid. It’s significantly easier to make an existing network eco-friendly than it is to build a green one from the ground up. Once Africans have universal access to electricity, climate-centric conversations will be much more welcome.

Different Costs

 Africa contains 70% of the least developed nations in the world. Only one state – South Africa – is fully industrialized. It’s one thing to hear these statistics, and quite another to make decisions on the ground of a developing nation. I believe that many talented, well-meaning Western thinkers simply aren’t accustomed to the fiscal environment that African leaders operate in.

For example, consider the logistics behind solar panels. In the U.S., it can cost anywhere from USD15,000 to USD35,000 to purchase and install a panel — and that’s not counting the upfront costs of fixing a roof that’s not solar-ready, the recurring cleaning and maintenance fees, or replacing the panels every 20 to 30 years.

And for undeveloped areas, those fees are just the tip of the iceberg. Even in a scenario where a subsidy pays for every single panel, transporting them (via gas-powered engines, seeing as we don’t have the grid to support electrical vehicles) to their destinations becomes ruinous — there are no reliable trains or roads in our poorest areas. The labor costs of finding people to install, repair, and replace the panels also add up.

Once these panels are magically purchased, installed, and repaired, the biggest problems still remain: Storing and transmitting the energy. Even first-world nations have not overcome the technological hurdles of creating reliable, long-term batteries and long-distance transmission for renewable plants. Developing, much less implementing, that infrastructure will entail staggering expenses even for an industrialized nation.

I do not say this to discourage solar solutions as a whole— the technology has great potential for Africa, which contains 60% of the world’s best solar resources. My point is simply that, as of now, widespread renewable energy use is not realistic for most developing nations. Our capital is limited, and we need to invest it in more tried and true solutions.

Different Investment

Attracting foreign investment into Africa is difficult enough under the best of circumstances. Despite the enormous potential of our natural resources and growing population, investors often put African projects on the chopping block first. As we point out in our 2024 Outlook Report, the ratio between actual greenfield spending and potential spending remains concerningly low. And those numbers only involve investments into tried and true fossil fuel exploration — pouring billions of dollars of capital solely into renewables is an even less feasible venture.  When it comes to renewables, we’re dealing with relatively fragile and unreliable technology, along with the challenges of high startup costs, poor infrastructure, and urgent energy needs.

For activists who refuse to believe this economic reality, I invite them to reread the financial pledges made by developed states at COP15. Wealthy nations acknowledged the transition challenges facing developing nations and pledged USD100 billion by 2020 to help them fight climate change. Thirteen years later, the real spending value came in around $24.5 billion. Climate promises do not often survive first contact with a checkbook.

Solar, wind, hydroelectric, green hydrogen, and geothermal energy have vital roles to play in Africa’s future — but it is ludicrous to suggest that our developing nations go 100% renewable before Western nations manage it first. Our current humanitarian, infrastructure, and financial situations require actionable solutions that will reward investors.

Natural gas has supported the West’s grocery stores, hospitals, and schools for decades — let’s use our abundant reserves to do the same.

Priorities

World leaders saw approximately 2.3 million people dying each year from COVID-19 and acted accordingly. Swathes of the globe locked down for months, shut down businesses, and changed social routines. Today, nations continue to pour millions of dollars into revamping their public health infrastructure. Policymakers advocate changes in medicine, law, and even culture to cope with the crisis.

Meanwhile, approximately 1.1 million Africans die each year from using hazardous cooking fuel. In other words, from 2020-2023, unsafe fuel caused at least half as many deaths as COVID. Why don’t more world leaders treat energy poverty with a fraction of the urgency, compassion, and resources that they put into COVID containment?

Simply put, energy poverty is a humanitarian crisis. That is why African leaders will continue to advocate for the most pragmatic solutions possible, particularly natural gas. This plentiful, clean-burning, tried-and-tested resource remains our best tool to tackle energy poverty. I urge investors to embrace gas, and I encourage the global community to respect African leaders’ commitment to using every means possible, including our petroleum resources, to meet Africans’ needs.

By NJ Ayuk, Executive Chairman, African Energy Chamber

When examining how fossil fuel exploration, production, and usage differ between African and more developed nations, the contrast is so stark that it essentially defines the core mission of the African Energy Chamber (AEC). We exist not to bring these rates on par with each other but to amplify Africa’s standing in the global energy industry such that it results in massive improvements in the quality of life across the continent.

Consider this: While Africa holds roughly 13% of global natural gas stores and 7% of its oil, when it comes to per capita use of these hydrocarbons for energy, Africa’s consumption rate is the world’s lowest.

Or this: While we’re under pressure to adopt renewable energy resources, Africa already relies on renewables more than any other continent, but this refers to the wood and cow dung that fuel the cooking fires, which account for essentially half of Africa’s energy consumption. Of course, both are linked to hazardous indoor air quality, adding to the already long list of vexing issues that many Africans must deal with daily.

In total, nearly one billion Africans have no access to clean cooking fuels. Another 600 million, with a majority living in the sub-Saharan regions, survive without access to electricity from any source.

Africa deserves relief from such difficulties.

As much as the African people stand to benefit from access to their own fossil-fuel resources, Africa’s hydrocarbon-bearing nations possess a vast wealth they’re willing and ready to share with the world. The prospect of forging development partnerships with foreign nations and international oil companies would offer much of Africa a path toward modernization, advancement, and prosperity while at the same time providing much-needed energy security to its business allies abroad.

We’ve been waiting for Africa to take its place alongside the equally resource-rich yet developed regions of the globe for far too long. However, Africa’s readiness for this overdue transformation comes at a strange time in modern history. Just as we’ve observed increases in GDP per capita and average life expectancy parallel the proliferation of fossil fuels, we’ve also seen the rise of a small but vocal and influential minority that has set out to obstruct their continued extraction.

Activists and ill-informed ideologues mainly comprise this opposing faction. And either knowingly or as a result of having been taken in by false promises, they propose alternative energy solutions which are still far too expensive for Africa to implement effectively.

Africa needs affordable, readily available energy, but this group has steadily garnered sway over individuals, financial institutions, and world governments, convincing them that, for the sake of the planet’s health, Africa’s untapped resources must indefinitely remain right where they are today.

Over the years, these activists brought many to their side, ratifying their intentions through measures like the Paris Agreement of 2015 and the Glasgow Climate Pact of 2021 that require signatories to commit to green energy initiatives at home and abroad.

This movement proved effective in achieving its own goals and was allowed to carry on with its agenda unimpeded for many years. However, recent global events have rather suddenly forced both participants and onlookers to reconsider the merits of its claims and the value of any allegiance to it.

Eastern Aggression, Western Hypocrisy

When then-U.S. President Donald Trump, speaking before the United Nations General Assembly in 2018, warned Germany against their dependence on Russian energy, the German delegation in attendance famously snickered at his concerns. After Russia’s invasion of Ukraine in 2022, the European Union’s sanctions against the Russian energy sector that followed, and the subsequent sabotage of the Nord Stream pipelines, Trump’s remarks appear more prescient in retrospect than they did at the time.

The war in Ukraine and the supply chain disruptions and fuel price spikes it induced sent world leaders scrambling to secure new energy sources for their countries.

Spring 2022 saw a frenzy of energy industry activity as Italy’s foreign minister brokered new liquid natural gas (LNG) deals with Angola and the Congo, Germany engaged in gas talks with Senegal, and the energy ministers of Algeria, Niger, and Nigeria pledged to accelerate their work on the long-delayed Trans-Saharan gas pipeline project.

Even President Joe Biden, who notably vowed to end the United States’ involvement with fossil fuels during his campaign, reached out to Saudi Arabia, urging the nation to increase oil production.

Coal: Don’t Call It a Comeback

The 2021-2023 global energy crisis also led many nations to continue or increase their reliance on coal — the fossil fuel even conventional oil and gas companies are quick to disparage due to its negative impacts on human health and its history of environmental harm.

With their own power generation capacities in peril thanks to war shortages, below-average winter temperatures, overcast skies, and a wind drought that still threatens to starve turbines across Europe, the countries often most critical of Africa’s modernization ambitions rushed to refill their stores of the very fuel they had scheduled for phase-out years before.

According to the International Energy Agency’s mid-year Coal Market Update, global coal consumption grew by 3.3% in 2022, reaching an all-time high of 8.3 billion tons. While 2023 and 2024 might show a slight decrease in coal-fired power generation, the 1.5% rise in industrial coal use expected with improving economic conditions during the same period will likely negate this drop.

Putting a pause on an initiative begun in 2015 to shutter all its coal-fired power stations, the United Kingdom relaxed permitting conditions in July 2022, keeping its remaining plants operational albeit on standby into 2024.

Around this same time, the EU imported roughly 11 times more coal than usual from Australia, South Africa, and Indonesia.

In August of 2023, in a move highlighted by opponents of the green agenda, German energy firm RWE began dismantling its wind farm in North Rhine-Westphalia to allow for the expansion of its Garzweiler II lignite coal mine.

Had these nations engaged in more earnest development negotiations with African oil and gas producers when we suggested they should, perhaps they would have found a better footing for dealing with unforeseen climate-related events, natural or political.

Gas Gets the Greenlight

In a move that helped to lessen the stigma cast upon a fuel much cleaner burning than coal, the EU voted in 2022 to officially recognize natural gas as a “green” or “sustainable” energy source. Unsurprisingly, this decision angered environmental activists. At the AEC, though, we support this development; we regard natural gas as crucial to Africa’s battle against energy poverty and key to its future success as a sizeable supplier for the international market.

While the EU was at one point one of the loudest voices calling for full-scale decarbonization, we applaud this concession as this more positive classification will likely encourage European investment in African natural gas projects. And, as the AEC has always suggested, it will support our eventual transition to an emissions-free, fully renewables-based energy economy.

Our critics breathlessly warn us that future price drops could render African natural gas suppliers unable to compete against larger, established producers. Naysayers suggest that renewable energy technology will get up to speed and become widely adopted before any new African natural gas outfits can get underway. While these cynics regard oil and gas as merely trends in danger of falling out of fashion by next season, we remain confident that we are on the best course for Africa’s future.

And while the wealthy, developed nations of the world have much to say about appropriate energy solutions for Africa, even as they flout the rules they’ve set for their own, we know we are in pursuit of the most beneficial gains for our people.

Just as the fuels that supported humanity progressed from wood to coal to oil as economies and technological needs evolved, so too will Africa’s — naturally, and never as a consequence of dictated policy.

By NJ Ayuk, Executive Chairman, African Energy Chamber As the hottest year ever recorded draws to a close, climate change is passing from theory to reality and gaining ever-increasing urgency in statehouses around the world. The goal of achieving net zero CO₂ emissions worldwide by 2050 is widely agreed upon by climate experts as necessary to avoid irreversible changes in Earth’s weather patterns that could cause centuries of harm for everyone. The big question, of course, is how do we get there? Who bears what burdens, and how?

For the developed world, the answer is strikingly simple: cut, cut, and cut some more. The countries that generate and consume the most energy have brought us to this point, and it’s their responsibility to become more efficient and find new and cleaner ways to maintain their current, comfortable lifestyle. While the cutting part has left much to be desired so far, the new and cleaner part looks promising. The cost of renewable energy (RE) sources such as wind and solar have been drastically reduced over the last decade to become some of the cheapest options available.

This is where the question gets thorny: What about the developing world, which has barely even begun to emit carbon, yet desperately wants (and deserves) to catch up to the developed world’s standard of living? How do places like Africa get what they want without erasing progress toward net zero? For many, the answer is leapfrogging.

What is Leapfrogging?

In short, leapfrogging is the idea that developing nations can bypass the last century and a half of carbon-heavy energy technology and jump straight to 100% renewable energy with no middle stage. It’s easy to see why this idea is tempting, and why so much talk of it is focused on Africa. Cheap technology is appealing to poor countries, and our equatorial continent between two oceans has some of the greatest potential for solar and wind power to be found anywhere on the planet. Currently, more than 600 million people in sub-Saharan Africa have no access to electricity, and the total population is expected to double in the next three decades, so the demand is already enormous and accelerating by the day. By 2050, one in four people on Earth will be African. Western attendees at climate conferences such as the 2021 and 2022 United Nations Conference of Parties (COP26 and COP27) have opined that the world “cannot afford” for developing countries to follow the same trajectory as Europe, the U.S., and China to reach abundant, reliable energy supply. Mohamed Adow, director of the energy and climate think-tank Power Shift Africa, states that “Africa stands on the cusp of sweeping economic development. Whether this development is powered by clean renewables, or dirty fossil fuels, will go a long way to determining if the world meets the Paris Agreement goal…” Greenpeace urges African leaders “to avoid falling into the fossil fuel trap and lead the continent towards a clean, renewable, affordable and sustainable energy future.” Boiled down, the implication is that Africa should avoid ANY investment in fossil fuels —complete prohibition. Suggesting otherwise in some circles verges on taboo. But is it realistic to expect Africa to go all-in on the latest technology and forego other resources it has in great abundance, like natural gas? Do the numbers back up their assertions? And is it even fair to ask so much from people with so far to go?

Not as Cheap as It Sounds

Even as solar panels and windmills drop in price, obtaining them is only one part of a much larger equation. Solar arrays, for instance, can be installed on a single home or in a microgrid connected to a small group of residences to power them directly. Multiply this by hundreds or thousands and the arrangement is known as distributed solar energy. Leapfrogging using distributed solar has been described as similar to how the developing world leapt right past landlines and straight to cell phones with seeming ease just in the last couple of decades. If we can do it with communications, then why not energy?

Cost, for starters. A basic 8W solar array can cost 10 times more than a cell phone in a single year in Kenya. An 8W system is just enough to power a couple of LED lights and a cell phone charger. If you want to power a TV, a refrigerator, a washing machine, or other energy-intensive appliances, you’ll need a bigger and more costly array. If your village’s microgrid is small, what happens when too many people get refrigerators and air conditioning? Time to increase the size of the grid. And then inevitably, what happens when the sun doesn’t shine? Add storage batteries, or a local power storage facility. Expand from powering homes to industrial and agricultural use? Now your costs are growing exponentially. Realistically, who would stay satisfied for long with just two lights and a phone charger? The difference between distributed cellular and distributed solar is networks. Distributed cellular works because everyone’s cell phone connects to a huge, centralized network of cell towers that are connected to reliable power and do all the work of connecting calls on the back end. Imagine if every home had to have its own cell tower and all the necessary hardware and software to connect to all the other phones in the world, and you can see how quickly that would get very expensive. That is distributed solar’s disadvantage — every separate grid has to do it all, and if one fails, the others can’t pick up the slack. The end result is a patchy, uneven, and unreliable supply of energy that is easily sabotaged by spikes in demand or ebbs in supply. Like cellular, energy works best with economies of scale. Large central networks allow energy demand to be distributed based on supply and demand, with one region’s excess balancing out another’s shortage such that only the largest events can impact the entire grid at once. Can solar and wind grids be built this way? Yes, but to support industrial and agricultural use, it requires a huge investment in land as well as money for a payoff that is currently underwhelming at best. The Benban Solar Farm in Egypt covers more than 37 square kilometers (14.3 square miles) — large enough to be visible from space — but can still only power 420,000 Egyptian homes; a small fraction of the country’s 102 million people. Expanding further might be fine in a country that’s mostly empty desert, but how much land can be set aside in more humid, arable climates where every scrap of farmland is needed to survive? Mixed Energy Won’t Be the End of the World While renewable energy does look like a great way to get people up and running who are starting with nothing, it clearly isn’t ready to solve all the problems of nations seeking higher levels of prosperity without all the guilt. African countries need to tap the power of the grid and every resource available to them in order to achieve what the West takes for granted every day. That includes fossil fuels, which Africa possesses in abundance, like it or not. But wouldn’t industrializing Africa with fossil fuels lead to climate catastrophe? The answer to that question is often greatly exaggerated. Adding 250 million homes to the grid with 35 kWh/month usage (enough for a TV, refrigerator, and fan), even entirely from coal, would only increase current global greenhouse gas emissions by 0.25%. Of course, no one is suggesting firing up hundreds of coal plants across the continent, but natural gas is widely acknowledged as the cleanest form of fossil fuel, its use for generating electricity is well established, and Africa already has massive amounts of it. Instead of starting at the bottom of the carbon ladder, burning the dirtiest stuff first in its own industrial revolution, Africa is poised to start at the top. The no-carbon approach may not be fully feasible, but a low-carbon approach most certainly is. A Question of Fairness According to a special report from the Intergovernmental Panel on Climate Change (IPCC), staying within a 1.5°C maximum average global temperature rise will require a 45% decline in global CO₂ emissions from 2010 levels by 2030. In reality, it needs to decline more than twice that fast since global emissions actually grew 10% between 2010 and 2019. In 2021, Africa accounted for just 3.9% of all CO₂ emissions worldwide. All of sub-Saharan Africa could triple its electricity use overnight using only natural gas and still account for only a 1% increase in global emissions, so low is its starting point. By combining natural gas with renewable energy to make the best use of both, the increase would certainly be less than that. It is hardly fair for the rest of the world to tell Africa to hold itself back for the “common good” while they continue to belch out 96% of the problem. The solution to climate change is not for the developing world to risk “leapfrogging” over vital steps to industrialization, but for the developed world to do far more to reduce its own output that created the mess in the first place. Africa deserves the chance to improve the quality of life for its people, and it has the resources to solve its own problems if given the chance.

By NJ Ayuk, Executive Chairman, African Energy Chamber

In an era when Africa needs oil and gas investments more than ever, attracting those investments has become increasingly difficult.

Part of the challenge lies in the mounting pressure on oil companies to shift their focus from exploration and production to investments in renewable energy in response to global emissions-reduction goals.

The perception that African energy assets are more carbon intensive than average certainly has not helped. I could simply laugh at this absurd claim, point out that our entire continent produces less than 10% of global upstream emissions, and move on with my day. As our newly released “The State of African Energy 2024 Outlook Report notes, when compared to other global regions, Africa may not have the lowest oil and gas extraction emissions, but it certainly does not have the highest.

Nevertheless, myths about carbon intensive African energy assets are hurting our oil and gas industry.

And that makes a very real African problem, excessive gas flaring, all the more disheartening.

We need to end this practice immediately.

The environmental implications are obvious — if Africa stopped flaring tomorrow, then the continent’s upstream emissions would decrease by half. Flaring releases methane, soot, and nitrous oxide into the atmosphere. Locals who breathe air near flaring sites have complained of poor eyesight, chronic headaches, and difficulty breathing — and those are just the functioning flaring sites. Flaring-related accidents have also led to severe burns and deaths.

Yet despite these horrific effects, the practice continues. Annually, global regions flare enough gas to power all of sub-Saharan Africa. Well-intentioned regulations on flaring often fall short because they don’t address the core problem: When oil developers encounter gas, they must deal with it or risk deadly accidents. Unfortunately, the physics behind compressed gas explosions does not care about government fines or restrictions. For companies that still lack the infrastructure to reinject or transport the gas, flaring isn’t just the safest and cheapest option — it’s the only option. How can states significantly reduce flaring, much less end it?

The answer is simple: Treat the symptom, not the disease. Flaring happens because raw gas is a nuisance to many developers; they lack the resources to reinject or treat, store, transport, and market it. To fight flaring effectively, all actors — from consumers to governments to investors — must embrace natural gas.

I was pleased to see African leaders doing so at COP27, and hope that we continue the momentum. While reinjecting gas into the ground also has its place, I firmly believe that African nations should focus on monetization. Natural gas burns cleaner than any other fossil fuel, generates electricity, and serves as feedstock in fertilizer production. Because it can also power grids in conjunction with developing renewables like wind and solar, it serves as an excellent tool for a green energy transition. More than 600 million Africans subsist without electricity — it’s common sense to use the gas that oil companies would otherwise waste. And those are just the potential domestic uses — as more Western nations seek to divest from Russian gas, they increasingly turn to African exports. The transition from flaring to monetization will not happen overnight, but I am encouraged to see progress from states like Egypt, Nigeria, and Algeria.

Open to Investors

Since 2016, Egypt has reduced its overall gas flaring by 26%. Lower flaring often accompanies a corresponding drop in oil production, but that was not the case in Egypt — oil production only lowered by 16% during the same period. This 10% decrease in flaring intensity owes much to Egypt’s 2017 energy reforms, which gave consumers and private companies access to its national gas grid. (Prior to this change, only its national oil company purchased Egyptian natural gas.) These changes also greatly encouraged foreign investment through practical measures, such as cutting waiting times for permit approval. Since then, Egypt’s natural gas production has risen by over 24 billion cubic meters. The investor-friendly environment also made gas recapture projects possible — both majors like Shell and IOCs Pharos and Apache have successfully implemented flare-to-power projects. Simply put, cutting the red tape and encouraging investment brought Egypt an energy boom — one that enabled greener practices.

Sub-Saharan Steps

Nigeria and Algeria, by contrast, remain two of the largest flarers globally — despite harsh penalties on their books for illegal flaring. However, hope may be on the horizon: Both nations lowered their flaring intensity this year, not just their total flaring volumes. Nigeria-based oil companies have begun using gas to power their operations, and Algeria’s investments in both reinjection and recapture technology are beginning to pay off. While neither sub-Saharan nation is ready to commercialize the recaptured gas, they have taken a valuable step in the right direction.

Breaking the Cycle

Gas flaring often comes down to a vicious PR cycle. Faced with environmentalist pressure, investors avoid hydrocarbon projects. Lacking funds and certainty about the future, oil developers shy away from up-front costs of implementing reinjection and recapture technology. Said developers resort to gas flaring, which sparks more bad press.

This self-fulfilling prophecy hurts the entire energy industry, but particularly Africa’s: As we point out in our 2024 Outlook Report, African energy assets face higher scrutiny. However, the narrative has begun to change on natural gas. Many African states have stepped up to help Europe replace Russian gas supplies, and African leaders presented a united front at COP27. There has never been a better time to create operator-friendly policies and treat natural gas as a vital tool. Let’s start by investing in projects that reinject and recapture flared gas. Burning this resource was always harmful and wasteful. In a time of rising gas prices, flaring makes about as much sense as lighting cash — and our planet — on fire.

Download our 2024 Outlook at: https://energychamber.org/report/the-state-of-the-african-energy-2024-outlook-report. 

By NJ Ayuk, Executive Chairman, African Energy Chamber

When the African Energy Chamber (AEC) published its African Energy Outlook for 2023, there was ample reason for optimism that Senegal was just months away from becoming a producer of both crude oil and natural gas.

On the one hand, Australia’s Woodside Energy was talking confidently about bringing Sangomar, an oil-bearing offshore block, online before the end of 2023. On the other hand, the British giant BP and its U.S. partner Kosmos Energy were gearing up to start extracting gas from Greater Tortue/Ahmeyim (GTA), an offshore block shared with neighboring Senegal, in the third quarter of 2023 and then processing it into liquefied natural gas (LNG) in the final quarter of the year.

By mid-year, though, those plans had been derailed. Woodside said in July that it had pushed the target date for first oil at Sangomar back to mid-2024 after discovering problems during the construction of a floating production, storage, and off-loading (FPSO) unit that had forced it to raise its budget.

Then in August, BP also announced a delay, saying that GTA would begin gas production in early 2024. Its decision appears to have been the result of similar problems — that is, cost overruns and the late delivery of the floating LNG (FLNG) vessel needed to realize BP’s vision.

Revised Capital Expenditure Forecast

As a result of these recent developments, Senegal looks set to enter 2024 still waiting for its domestic oil and gas industry to gain the momentum it needs to take off.

In a somewhat similar fashion, Africa’s oil and gas industry is looking a bit flat as it reaches the final quarter of 2023. That is, as AEC details in its newly released 2024 African Energy Outlook, capital expenditure (CAPEX) on upstream projects is still rising, but it is on a relatively slow upward trajectory — and it is moving up more slowly than we had predicted last year because of changes in the timeline of certain African upstream projects.

That’s the bad news.

There is good news, though.

For one thing, we don’t expect cumulative CAPEX to go down in the long term, even if it starts out by rising more slowly. We do expect the rate of increase to be lower than previously projected during the 2023-2026 period, but we’re no longer expecting CAPEX to drop from 2026 to 2027 before resuming its climb until the end of the decade. Instead, we’re forecasting that CAPEX levels will rise more or less steadily from 2023 to 2029 before leveling out in the last year of the decade. We’re also projecting that overall potential cumulative CAPEX in Africa’s upstream sector will approach USD450 billion, and that number is unchanged from last year’s forecast.

Actual Spending Falls in Line With ‘Mean’ Climate Scenario

There are likely to be some shifts within that figure of USD450 billion, though.

The AEC is expecting the share of actual spending — that is, all of the spending coming from upstream projects with break-even prices less than forecasted Brent crude prices — in total spending to average about 60% over the 2024-2030 period.

But the figure will not remain constant. Instead, it will drop from around 95% in 2024 to less than 40% in 2030.

What’s more, this drop will make actual spending levels fall fairly closely into line with estimated spending levels under a “mean” climate change scenario that limits global temperature shifts to +2 degrees C. The implication of this is that if efforts are made to limit global temperature shifts even further (say, to +1.5 degrees C) or to achieve specific goals (such as, say, net zero carbon dioxide emissions by 2050), actual spending could drop to an even local share of total spending coming from African upstream projects by the end of the decade.

This would, of course, have a significant negative impact on the African oil and gas industry.

Lower CAPEX Would Be Detrimental for African Oil And Gas

And by extension, the drop in spending would have a significant negative impact on many African countries and African people.

In an economic sense, it would complicate efforts to attract investment from companies that have the funding, the technology, and the experience needed to create jobs and provide African workers with new skills and training. It would frustrate efforts to establish and expand local businesses that can support oil and gas operations. It would deny national and regional African governments new sources of tax revenue.

And in a socioeconomic sense, it would leave hundreds of millions of Africans in a position of continued dependence on traditional biomass fuels — wood, charcoal, and/or dung — while they wait for renewable energy solutions that are not yet available in mass quantities or in remote communities. This is an unacceptable health hazard, given the pollution and dangerous emissions that such fuels are known to produce. It is also avoidable, given that multiple African countries possess natural gas that could be used to fire power plants to produce electricity for local markets or processed into liquid petroleum gas or LPG (cooking gas) for local consumption.

Despite these concerns, though, it’s too early for pessimism about African oil and gas CAPEX. There are encouraging signs, such as the steady number of high-impact wells (HIWs) scheduled for drilling through the end of 2024 and the recovery of rig demand to pre-COVID levels.

To learn more, download the 2024 African Energy Outlook at https://energychamber.org.

Par NJ Ayuk, Président exécutif, Chambre africaine de l’énergie

Six mois après que l’Organisation mondiale de la santé (OMS) a déclaré que le COVID-19 n’était plus une urgence sanitaire, il est encore difficile de saisir pleinement les dommages considérables que la pandémie a infligés, qu’il s’agisse du nombre considérable de vies humaines ou de la dévastation économique.

Le chaos s’est certainement fait sentir dans l’industrie pétrolière, qui a connu des distorsions record pendant la période de la pandémie, en particulier au cours des premiers mois.

Comme l’a écrit David Gaffen pour Reuters en février 2022, « comme beaucoup d’autres choses pendant la pandémie, ce qui se passait sur les marchés des carburants était sans précédent. La demande avait tellement baissé, les gens ayant cessé de voyager, que l’industrie pétrolière ne pouvait tout simplement pas réduire sa production assez rapidement pour y répondre ».

Ajoutez à cela une guerre de l’offre entre la Russie et l’Arabie saoudite, membres de l’OPEP+, au début de l’année 2020 – inondant des marchés déjà saturés – et en avril de la même année, nous avons vu le prix d’un baril de pétrole brut West Texas tomber sous la barre des 0 $, ce qui signifie que les vendeurs ont dû payer pour s’en débarrasser.

Bien sûr, le marché pétrolier est volatile, mais peu d’époques ont connu des hauts et des bas aussi spectaculaires que ces dernières années. Au début de 2022, lorsque M. Gaffen a écrit son article, les contrats à terme sur le pétrole Brent atteignaient 100 dollars le baril¬ – à la suite de l’invasion de l’Ukraine par la Russie.

Pour l’instant, les extrêmes sauvages de l’ère pandémique semblent être derrière nous. Comme l’indique la Chambre africaine de l’énergie dans sa nouvelle publication « The State of African Energy 2024 Outlook », nous prévoyons un « calme relatif » sur le marché des liquides pour le reste de l’année 2023. Nous prévoyons que 2024 restera équilibré et quelque peu plat, avec seulement une croissance marginale.

Notre rapport indique qu’un marché plat est également prévu pour l’Afrique, mais avec un déclin progressif de la production de pétrole en 2024.

Si, d’un côté, l’arrêt des fluctuations spectaculaires du marché est intéressant, une croissance marginale et une baisse de la production ne sont pas vraiment des nouvelles réjouissantes. De plus, même si les facteurs qui influencent la demande de pétrole sont indépendants de notre volonté, je ne pense pas que les acteurs de l’industrie pétrolière africaine doivent se résigner à une mentalité complaisante de “c’est comme ça” face à la baisse de la production au cours de l’année prochaine.

Nous devrions saisir toutes les opportunités de capitaliser sur nos ressources pétrolières et gazières. Chaque goutte de pétrole extraite est une voie vers la croissance économique – des revenus qui peuvent financer des programmes sociaux, le développement d’infrastructures et des transferts de technologie indispensables de la part des compagnies pétrolières internationales (IOC) qui investissent en Afrique.

Même en période de calme, nous devons agir avec un sentiment d’urgence.

Demande et production mondiales

Quels seront donc les moteurs de la demande mondiale de pétrole à court terme, en l’absence d’événements majeurs tels que des pandémies ou des conflits mondiaux ?

Comme l’indiquent nos Perspectives, les restrictions du COVID-19 étant derrière nous, la demande de produits liquides provenant du transport routier et de l’aviation – principalement des États-Unis et de l’Asie – représentera probablement plus de la moitié de la demande mondiale au cours des 18 prochains mois.

La demande industrielle, en particulier celle du secteur pétrochimique au Moyen-Orient, en Asie et aux États-Unis, ainsi que les projets de production d’électricité, constitueront un autre facteur clé.

Notre rapport tient également compte de l’augmentation de la demande de pétrole dans l’hémisphère nord au cours des troisième et quatrième trimestres de 2023, ainsi que de la diminution de l’offre due à la baisse des exportations russes et aux réductions volontaires de la production par l’Arabie saoudite. Il en résultera un déficit de l’offre qui ouvrira la voie à une augmentation de la production – au moins dans certaines régions du globe – en 2024.

Nous prévoyons que la production mondiale s’élèvera à plus de 84 millions de barils par jour (bpj) l’année prochaine, ce qui représente une augmentation de 1,6 % par rapport à 2023. Les Amériques, nord et sud confondus, devraient connaître une croissance marginale de 4 % de la production d’une année sur l’autre (YoY) en 2024, tandis que le Moyen-Orient devrait connaître une croissance plus faible de 2 % YoY par rapport à la production de 2023.

Mais ces augmentations seront probablement compensées par des baisses marginales de la production dans d’autres régions, notamment la Russie, l’Asie, l’Europe et l’Australie.

Baisse de la production en Afrique

En ce qui concerne l’Afrique, notre production pour 2023-2024 devrait rester relativement stable, à environ 6,77 millions de bpj. Mais la production mensuelle semble un peu plus sombre, avec une baisse de la production de 6,9 millions de bpj en janvier 2024 à environ 6,62 millions de bpj en décembre 2024.

Actuellement, une poignée de pays africains sont à l’origine de la production de pétrole et de condensats. Il s’agit notamment du Nigeria, de la Libye, de l’Algérie et de l’Angola, pays membres de l’OPEP, qui devraient produire respectivement 1,51 million de bpj, 1,31 million de bpj, 1,18 million de bpj et 1,01 million de bpj en 2024. Dans ce groupe, le Nigéria est un producteur de premier plan, puisqu’il représente un peu plus d’un cinquième du volume annuel total combiné de ces pays.

L’Égypte, le Tchad et le Ghana sont également des moteurs de la production pétrolière africaine. L’Égypte, par exemple, devrait voir sa production de pétrole atteindre 560 000 bpj d’ici la fin 2023 et 520 000 bpj en 2024.

En savoir plus sur les pays africains membres de l’OPEP

Notre rapport explore également l’impact de l’adhésion à l’OPEP sur les pays africains, notamment en ce qui concerne les exigences de réduction de la production. Le cartel établit ces réductions pour contrôler l’équilibre entre l’offre et la demande mondiales et les situations de marché volatiles ou les prix mondiaux du pétrole irrégulièrement élevés ou bas.

« Les pays membres sont censés adhérer à ces réductions afin que le cartel maintienne son contrôle sur les marchés mondiaux et ne perde pas sa part de marché et son contrôle au profit du schiste nord-américain », explique notre rapport sur les perspectives d’avenir.

Pendant des années, les membres africains de l’OPEP ont eu une capacité de production supérieure au quota du cartel et ont eu tendance à produire davantage, même pendant les périodes de baisse de la production en glissement annuel. Mais ce n’est plus le cas. Le Nigeria, par exemple, a connu des arrêts de production dus au vandalisme sur les oléoducs, à des activités militantes et à des cas de force majeure imposés par les opérateurs, exacerbés par le déclin des anciens champs et l’absence de nouvelles mises en production. L’Angola et la Guinée équatoriale ont également connu des arrêts de production, qui atteindront probablement une moyenne de 25 000 bpj en 2023.

Ces interruptions doivent être résolues : Les projets de production en cours dans les pays africains de l’OPEP représentent environ 44 % du potentiel total des réserves de liquides de notre continent, qui s’élève à plus de 70 milliards de barils. On estime que 33 % supplémentaires se trouvent dans les découvertes non exploitées de ces pays, ainsi que 2 % dans les projets sous-développés.

C’est pourquoi les dirigeants africains doivent faire tout leur possible pour stimuler et exploiter l’activité pétrolière et gazière dans leur pays. Nos gouvernements doivent créer des environnements favorables pour que les entreprises puissent opérer dans leurs pays et faire tout ce qui est en leur pouvoir pour minimiser les risques des investisseurs en créant des environnements commerciaux sûrs et accueillants et des conditions fiscales attrayantes pour les investissements. Et c’est MAINTENANT qu’il faut agir. C’est particulièrement vrai pour les gouvernements des pays membres de l’OPEP.

Téléchargez nos perspectives pour 2024 à l’adresse suivante : https://energychamber.org/report/the-state-of-the-african-energy-2024-outlook-report

By NJ Ayuk, Executive Chairman, African Energy Chamber

Six months after the World Health Organization (WHO) declared COVID-19 is no longer a health emergency, it’s still difficult to fully grasp the far-reaching damage the pandemic has inflicted, from the tremendous toll on lives to economic devastation.

The chaos certainly was felt in the oil industry, which saw record distortions during the pandemic era, especially during its first few months.

As David Gaffen wrote for Reuters in February 2022, “Like much else during the pandemic, what was happening in fuel markets was unprecedented. Demand had fallen so sharply as people stopped traveling, the oil industry simply couldn’t cut production fast enough to match it.”

Add a supply war between OPEC+ members Russia and Saudi Arabia in early 2020 — flooding already saturated markets — and by April of that year, we saw the price of a barrel of West Texas crude fall below $0, meaning sellers had to pay to get rid of it.

Of course, the oil market is nothing if not volatile, but few eras match the last several years for dramatic ups and downs. By early 2022, when Gaffen wrote his article, Brent crude futures were reaching $100 a barrel­ — the result of Russia’s invasion of Ukraine.

For now, the wild extremes of the pandemic era appear to be behind us. As the African Energy Chamber reports in our newly released “The State of African Energy 2024 Outlook,” we are forecasting a “relative calm” in the liquids market for the remainder of 2023. We predict that 2024 will stay balanced and somewhat flat, with only marginal growth.

A flat market likely is in store for Africa, as well, our report notes, but with a gradual decline in oil production in 2024.

While, on one hand, a break from dramatic market swings has its appeal, marginal growth and declining production are not exactly welcome news. What’s more, even though the factors that impact oil demand are beyond our control, I don’t believe African oil industry stakeholders should resign themselves to a complacent “it is what it is” mentality about declining production during the next year.

We should be seizing every opportunity to capitalize on our oil and gas resources. Every drop of oil extracted is a pathway to economic growth — revenue that can fund social programs, infrastructure development, and much-needed technology transfers from the international oil companies (IOCs) that invest in Africa.

Even in a period of calm, we must act with a sense of urgency.

Global Demand and Production

So, what will be driving global oil demand in the short term, absent major events like pandemics or global conflicts?

As our Outlook says, with COVID-19 restrictions behind us, road transportation and aviation-driven liquids product demand — primarily from the U.S. and Asia — likely will comprise more than half of global demand during the next 18 months.

Another key driver will be industrial demand, particularly from the petrochemical sector in the Middle East, Asia, and the U.S., along with power generation projects.

Our report also considers increasing oil demand in the Northern Hemisphere in the third and fourth quarters of 2023, along with diminished supply due to decreased Russian exports and voluntary production cuts by Saudi Arabia. The result will be a supply deficit setting the stage for increased production — at least in some regions of the globe — in 2024.

We are forecasting global output to total more than 84 million barrels per day (bpd) next year, which is a 1.6% increase over 2023. The Americas, both north and south combined, are expected to see a marginal 4% growth in output year over year (YoY) in 2024, while the Middle East is expected to see a smaller 2% YoY growth over 2023 output.

But these increases likely will be offset by marginal declines in output in other regions, including Russia, Asia, Europe, and Australia.

Production Declines in Africa

As for Africa, our 2023 – 2024 output is expected to stay relatively flat at about 6.77 million bpd. But month-on-month production looks a bit bleaker, with production declining from 6.9 million bpd in January 2024 to approximately 6.62 million bpd in December 2024.

Currently, a handful of African nations are driving oil and condensate output. This includes OPEC member nations Nigeria, Libya, Algeria, and Angola, which are expected to achieve outputs of 1.51 million bpd, 1.31 million bpd, 1.18 million bpd, and 1.01 million bpd respectively in 2024. Out of that group, Nigeria stands to be a star producer, contributing a little over a fifth of these countries’ combined total annual volume.

Also driving African oil output are Egypt, Chad, and Ghana. Egypt, for example, is expected to see its oil output reach 560,000 bpd by the end of 2023 while totalling 520,000 bpd in 2024.

More on African OPEC Nations

 Our report also explores the impact of OPEC membership on African nations, especially in the areas of production cut requirements. The cartel establishes these cuts to control the global supply-demand balance and volatile market situations or irregularly high or low global oil prices.

 “The member nations are expected to adhere to these cuts so that the cartel maintains its control on the global markets as opposed to losing the market share and control to North American shale,” our Outlook report explains.

For years, African OPEC members had a higher production capacity than the cartel’s quota and tended to produce higher, even during periods of YoY production decline. But that is no longer the case. Nigeria, for example, has experienced production outages caused by pipeline vandalism, militant activity, and resulting force majeures imposed by operators, exacerbated by declining legacy fields and a lack of new start-ups. Angola and Equatorial Guinea have experienced outages as well, which likely will reach an average of 25,000 bpd over 2023.

These outages must be addressed: Current producing projects in African OPEC countries represent about 44% of our continent’s total liquids reserves potential of more than 70 billion barrels. An additional 33% is believed to be in the undeveloped discoveries in these countries, along with 2% from under-developed projects.

With that in mind, African leaders must do everything possible to drive and capitalize on oil and gas activity here. Our governments must create enabling environments for companies to operate in their countries and do what they can to minimize investors’ risks by creating safe and inviting business environments and investment-attractive fiscal terms. And the time for action is NOW. This is especially true for the governments of OPEC member nations.

Download our 2024 Outlook at: https://energychamber.org/report/the-state-of-the-african-energy-2024-outlook-report. 

By NJ Ayuk, Executive Chairman, African Energy Chamber Earlier this year, South Africa was making headlines around the globe for the daily extended power outages plaguing the country.

The best solution, environmentalists said, would be to replace the country’s aging coal-fired electricity plants with wind- and solar-energy solutions. My argument was that renewables should be part of a multi-pronged approach to resolving South Africa’s energy crisis. They were not, however, going to be the solution. Instead, I argued, South Africa needed more coal-powered generation and the short-term regeneration of existing coal facilities while the country develops its renewables and natural gas sectors to provide long-term relief. Why would I encourage South Africa to continue relying on “dirty coal?” Because I’m a pragmatist. South Africa has the resources, infrastructure, and supply chains in place to keep coal supplies flowing. The country’s renewable and natural gas industries definitely should be developed, but that’s going to take time. Consider what’s happened since South Africa re-launched its renewable power purchase program in 2021. After remaining dormant for six years, the program held a bidding round for solar and wind projects, attracting more than 100 responses. But as of July 2023, only half of the 2,583 megawatts (MW) that were supposed to be generated as a result of the 2021 bidding round were expected to come online, according to South Africa’s government. Of the six entities that won the 2021 bidding round, one — the Ikamva Consortium (led by London-headquartered independent power producer Globeleq and Mainstream Renewable Power of Ireland) — secured 12 of the 25 projects on offer based on extremely low tariff bids. Those projects fell through. If we go back a bit further, to South Africa’s efforts to address rolling power outages in 2020, we see that 11 power projects selected in a fast-tracked auction (mostly solar, wind, battery storage, but also natural gas) were struggling to secure investment as of November 2023 because of rising interest rates and higher materials and labor costs since the COVID-19 pandemic.

My point is not that South Africa’s efforts to grow its renewable energy sectors are doomed. On the contrary: I’m confident that more solar and wind projects will come online. The project cancelations and delays are, however, a reminder that, as much as the world wants renewable energy to swoop in and save the day — in South Africa and other regions of our continent — relying on renewables alone simply isn’t realistic. It’s going to take an energy mix that includes fossil fuels like oil and gas — and even coal in South Africa’s case — to meet our needs.

Greater Capacity Is Coming but Will Take Time

The African Energy Chamber (AEC) has been covering the continent’s renewable energy capacity for the last several years in our “State of African Energy Outlook” reports. What they’ve consistently shown is a sector that holds promise but could only be described as tiny.

If you review our newly released 2024 Outlook, you’ll see that little has changed in that regard. It states that the 2023 renewables capacity in Africa is a mere 24 gigawatts (GW) — largely driven by onshore wind and solar capacity.

Not only that, but our report didn’t expect that figure to change much next year. It predicts relatively flat capacity levels before we see onshore wind, solar, and hydrogen capacity increase by 55% from 2025 to 2026.

After that increase, we’re expecting to see onshore wind capacity reach 59 GW, solar capacity increase to 65 GW, and hydrogen capacity grow up to 22.5 GW by 2030.

“Through the 2030s, the capacity from these three energy sources is estimated to see a gradual increase, and the cumulative YoY (year-over-year) share as well as the average share of the total capacity during the period is estimated to be north of 95%,” our report states. “This growth is expected to take the continent’s overall capacity to close to 290 GW by 2035 and further to almost 360 GW by 2040.”

Global Perspective Those totals are certainly higher than Africa’s current capacity, but even when they reach their estimated 2040 levels, they fall far below current renewable capacity in other regions of the world.

Asia’s current capacity, for example, totaled 1.63 terawatts (TW) by the end of 2022 — the equivalent of 1,630 GW or 1,630,000 megawatts (MW). I’m mentioning Asia because the International Renewable Energy Agency (IRENA) noted that, while countries around the globe increased their renewables capacity in 2022, almost half of the new capacity that year was added in Asia, mainly because of China’s 141 GW contribution to the continent’s capacity. IRENA did report that renewables capacity grew by 2.7 GW in Africa in 2022 — but just compare that to Europe and North America, where capacity grew by 57.3 GW and 29.1 GW respectively. Again, I’m not suggesting that Africa’s renewables sector doesn’t have a bright future. It does. It will continue growing. I’m simply saying that we can’t pretend it’s going to be able to meet the domestic energy needs of Africa’s huge — and rapidly growing — population on its own in the near future. Africa’s current population, more than 1.4 billion people, is expected to surge to more than 1.7 billion by 2030 and 2.5 billion by 2050. And even more power will be required for African businesses, manufacturing plants, airports, hospitals, universities, and the many other entities that will be necessary to meet our population’s needs — especially as we strive to enjoy the same benefits of industrialization that other regions of the world benefit from. Leading the Pack It’s also worth noting that renewable capacity in Africa, as in all continents, is seeing more success in some countries than others. And there are many countries where renewables are virtually nonexistent. As our report points out, Egypt is leading the way. When it comes to installed and planned solar, onshore wind, and hydrogen capacity, its total exceeds 130 GW. But the devil is in the details: More than three-quarters of that capacity is still in the concept phase.

The country’s goals are to be generating 42% of its electricity from renewable sources by 2035 and 60% by 2040 through private-sector projects.

Examples include the 1.8 GW Benban Solar Park, online since 2019; the state-owned Zafrana wind farm, completed in 2010 with a 545 MW capacity; and the 10 MW Siwa solar project, a UAE-supported project that powers about 6,000 homes in Siwa City and the surrounding area.

Coming in second among renewable energy “high-achievers” in Africa is Mauritania. It has 70 GW of capacity in projects, with most still in the concept phase. Morocco, South Africa, and Djibouti follow, but again, most of their projects — a whopping 95% of them in Djibouti — are in the concept phase. Natural Gas: A Logical Solution With Africa’s renewable energy sector in the slow-but-steady growth mode, it only makes sense for the continent to use a readily available resource — our fossil fuels — to meet domestic needs during the next several decades. Clean natural gas is a particularly good choice. It supports emission-reduction goals. It’s a proven power source without the intermittency problems associated with wind and solar energy. And it can be monetized throughout its value chain, contributing to economic growth. That’s why we expect to see natural gas pave the way for Africa’s transition from fossil fuels to renewables. As our report notes, renewables are expected to make up as much as 75% of the continent’s energy mix by 2050. Logically, fossil fuel usage will decline along the way, but natural gas will be sticking around for a while.

As our report says, “Natural gas is expected to drive 30%, 20%, and 10% of the power generation in Africa over the years 2030, 2040, and 2050 respectively.”

While some may see these energy realities as “inconvenient truths,” I see them as good news. Renewables are on the way, even if they won’t be taking center stage in our continent as quickly as some would like. Meanwhile, fossil fuels — natural gas in particular — are more than capable of meeting Africa’s needs.

To download a complete copy of The African Energy Outlook 2024 report, visit https://energychamber.org/report/the-state-of-the-african-energy-2024-outlook-report

By NJ Ayuk, Executive Chairman, African Energy Chamber

Behind every discovery, final investment decision (FID), and first oil announcement in our continent are companies of all sizes, advancing our energy industry and bringing Africans closer to realizing the energy security and prosperity that their petroleum resources represent.

Collectively, these companies are validating the African Energy Chamber’s (AEC’s) long-held assertion that the African continent represents the next frontier for energy exploration and production.

Despite concerns over corporate divestment from the African oil and gas sector in recent years — moves made largely in an effort to conform to expanding global ESG expectations — international oil companies (IOCs) and African national oil companies (NOCs) continue to be the key driving forces behind Africa’ short-term supplies, hydrocarbon potential, medium-term production, and spending.

As detailed in the African Energy Chamber’s (AEC) newly released report, “The State of African Energy 2024 Outlook,” NOCs collectively hold the continent’s largest working interest share of African hydrocarbon potential and supplies due to their involvement in upstream operations while IOCs hold the second largest share from their legacy operations in both North and sub-Saharan Africa.

But we are also seeing increased activity by international NOCs (INOCs) and independent companies in Africa. These entities are also contributing to the overall success of Africa’s fossil fuel industry.

National Oil Companies in Leading Roles

As our new outlook report explains, we expect African NOC flow rates to reach approximately 2.63 million barrels per day (bpd) of liquids and 13.55 billion cubic feet per day (Bcf/d) of gas in 2023. In 2024, while we expect NOCs’ total liquid product to drop to 2.57 bpd of liquids, we are forecasting a significant increase in their natural gas production: to 14.17 Bcf/d.

Of all the NOCs operating across Africa, the efforts of just four amount to the lion’s share of the total supply. Estimates predict that, together, Sonatrach of Algeria, Angola’s Sonangol, Libya’s National Oil Corporation, and the Nigerian National Petroleum Corporation (NNPC) will be responsible for 85% of liquids and 88% of natural gas produced by African NOCs between 2023 and 2024.

The prominence of oil and gas production in the nations that these NOCs represent is due in part to an open and cooperative approach to development and a commitment to progress shared between them.

In September 2023, having failed to meet its OPEC quota and contending with a decline in production, the NNPC announced a substantial reduction of its standard contract negotiation period from three years to just six months. Formalizing the new terms in an agreement signed with oil majors Shell, Chevron, Eni, ExxonMobil, and TotalEnergies, the NNPC hopes they will help expedite foreign investment in Nigeria’s hydrocarbon sector. With $13.5 billion secured at present, Nigeria aims to reach a production level of 2.1 million bpd by December of next year.

Amidst the Angolan oil and gas industry’s return to a more prosperous position, which this year saw the nation outpace Nigeria, taking the top spot among Africa’s largest oil producers, Sonangol brokered a deal with the China National Chemical Engineering Company (CNCEC) outlining the development of a refinery in Lobito. With a projected production rate of 200,000 bpd and a slated completion date in 2026, the refinery should eventually reduce Angola’s reliance on imports for gasoline and diesel.

 In Algeria, Sonatrach has been working with Italian multinational energy company Eni on natural gas production and the export of liquefied natural gas (LNG) to Europe. Since signing a Memoranda of Intent in January of this year outlining future joint projects, including upstream decarbonization and energy transition initiatives, the two companies have made progress on these efforts, meeting in Algiers as recently as October 2023 to discuss fugitive gas emission detection and flaring-down options at Sonatrach’s natural gas fields.

Other recent developments include the Memorandum of Understanding established between Norway’s largest oil and gas producer, Equinor, and Libya’s NOC. The agreement includes plans to evaluate Libya’s maritime region in the Mediterranean for its oil and gas potential and extend oil and gas sector training to local personnel.

 Oil Majors Advancing Exploration

In March of this year, in partnership with Shell and QatarEnergy, Namibia’s national petroleum corporation, Namcor, publicized a third oil discovery in the Jonker 1-X well in the Orange Basin off Namibia’s southern shore, adding to the sizeable discoveries made by Shell and France’s TotalEnergies in the Graff-1X and Venus-1X wells in 2022. Namibia expects to see first oil from these finds by 2030.

At the Angola Oil and Gas 2023 conference and exhibition in September, Melissa Bond, Managing Director for ExxonMobil Angola reported 18 new discoveries in Block 15 and plans for further drilling in the Namib Basin next year.

Numerous oil and natural gas discoveries in West Africa continue to show great promise as well. Considering just the BP-Kosmos Yakaar-Teranga discovery in Senegal, BP and Kosmos’ Orca discovery in Mauritania, and Eni’s Bailene discovery off the Ivory Coast amount to 3.6 billion barrels of oil equivalent, with additional sites in Ghana, Gabon, and Angola, this region is an exploration hot spot.

As exploration is crucial to sustainability for Africa’s oil and gas industry, the AEC is pleased to report active exploratory drilling schedules over the next two years, with oil majors operating in Algeria, Egypt, Nigeria, and Namibia as the main drivers behind these efforts.

Filling Voids and Capitalizing on Opportunities

Where international corporate divestment from Africa’s oil industry is occurring, smaller players are taking up the slack.

Whether under public pressure to decrease emissions and focus on sustainable development goals or stakeholder pressure to sell off mature fields in pursuit of higher returns, as oil and gas majors pull away from portions of their operations, INOCs and wholly independent entities remain eager to take over where they left off.

 By taking on ventures like the re-development of declining wells to boost production, these smaller companies are helping to satisfy the increasing global demand for fossil fuels while offering continued support to host communities facing the perils of abandonment otherwise, and their cumulative efforts add up to a significant percentage of Africa’s energy economy.

As documented in our 2024 outlook report, the 24-month period of 2023-2024 will see INOCs like Equinor, PetroChina, the China National Petroleum Corporation (CNPC), and several more responsible for three-quarters of all INOC liquids output in Africa. In the same time frame, we project that independents like the APA Corporation, Marathon Oil, Wintershall DEA, Perenco, Seplat Energy, Tullow, and ConocoPhillips will collectively produce the third-highest natural gas output.

As the AEC continues to advocate for a thriving African energy industry and encourage investment in our continent — just as we encourage every hydrocarbon-bearing African nation to engage in uncomplicated, mutually beneficial trade negotiations — our own optimism grows.

For the AEC, each outlook report we publish indicates that the African oil and gas industry is secure, strengthening with time, and well on its way to becoming an invaluable asset to the global energy market.

To read our 2024 outlook report, visit https://energychamber.org.

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By the Fall of 2019, NJ is releasing his new and second book, "Billions at Play: the Future of African Energy". The book will set a new foundation to discuss major issues facing Africa's energy sector.

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