6th Africa Oil Governance Summit 2020 Report
Africa is home to about 12 percent and 8 percent of the world’s oil and natural gas reserves respectively. This resource endowment holds the potential for significant revenues to finance urgent development needs in Africa and ensure energy access and security. However, the global urgency to transition to cleaner sources of energy to curb the excessive carbon emissions threatens the revenue potential and energy needs of resource rich African countries. Major oil and gas companies are revising their business and operational models to embrace net zero carbon ambitions as climate concerns mount. British Petroleum for example has declared its ambition to become a carbon neutral company by 2050. Also, countries such as the United Kingdom (UK) has legislated its commitment to achieve net zero emissions by 2050, and this commitment currently drives its foreign policy on aid and development. The sale of petrol and diesel vehicles is expected to end in the UK and Denmark by 2030 and 2035 respectively.
The global pressure to transition from fossil energy notwithstanding, oil and gas resources is expected to remain relevant to Africa’s economic development, at least for the next three decades. Fossil fuels will contribute 31% to power generation on the continent between 2020 and 2050, and thus contribute to bridging the electricity access gap for about 700 million people, who may not have access to electricity by 2040 if electrification coverage does not meet population growth. It is also important to highlight the difficulty for any oilproducing African country to immediately limit or halt the exploration, discovery, and production of oil and gas resources in pursuance of their climate targets under the Paris Agreement. Natural gas, considered a much cleaner fuel, has therefore assumed an increasing prominence as a transition fuel to power the industrialisation agenda on the content. Exploring and producing the available gas resources requires significant investments which most resource rich African countries are unable to provide. They rely significantly on the investments from international oil and gas companies. However, global financial institutions who fund these companies have indicated their intentions to phase out funding for fossil projects.