The African Energy Chamber has urged African countries to take a position on energy and economic diversification post-Covid 19.
With oil prices crushing to an all-time low, the chamber believes economic crises in African oil producing countries this year will be so severe they could reach double digit economic recession.
In a release sighted by the Vaultz Magazine, the chamber said if there was one thing that the current COVID-19 and oil prices crises have demonstrated, it is that African oil-producing nations are still not economically diverse.
Despite repeated actions taken by governments over the past decade to diversify their economies, especially following the 2014-2016 African recessions, not enough has been done.
As countries like Nigeria, Angola, Gabon, Congo, Equatorial Guinea, and Ghana deal with unprecedented lows in oil prices and struggle to keep their economies afloat, the current downturn could well be the historic turning point these economies need to seriously put diversification at the top of economic policies priorities.
To be clear, diversification does not mean the end of oil, quite the contrary.
Efficient diversification goes through a better use of oil revenues to fuel other sectors of the economy, build a stronger industrial base and create jobs.
But it also means diversifying national hydrocarbons output and increasing production, monetization and valorization of natural gas.
In fact, for many African oil producers, successful economic diversification depends on their abilities to increase hydrocarbons production and make better use of flared and associated natural gas to generate power for industries, produce fertilizers for farmers and manufacture petrochemicals for their growing domestic markets.
With 188.8 Tcf of proved natural gas (BP, 2019), Nigeria has Africa’s largest discovered gas reserves and the 10th biggest in the world. In 2019, it was the world’s sixth largest LNG exporter with a 6% global market share, ahead of Algeria (3%), Angola (1%) and Equatorial Guinea (1%).
Yet, out of the 20.8 million tonnes of LNG Nigeria exported last year (IGU, 2020), 54% went to Europe, 37% to Asia, and the rest to the Americas and the Middle East. In short, none of Nigeria’s LNG goes to Africa.
The only Nigerian gas that reaches African markets is the limited, and often interrupted, supply that goes through the West African Gas Pipeline (WAGP) to Benin, Togo and Ghana.
Even then, the lack of stable gas supplies from the pipeline has forced these countries to rely on additional domestic or international sources of gas to fuel their power plants.
Chief Executive Officer of Shoreline Natural Resources, Mr Kola Karim
During an Invest Africa podcast, the Chief Executive Officer of Shoreline Natural Resources, Mr Kola Karim, said the current situation in global and African energy markets is giving tremendous opportunities for Africans to take a strong position on economic diversification.
In that aspect, he said Nigeria is the country that could take the lead position in becoming the African gas producing platform the continent needs.
He said unless the current crisis leads to serious gas-market policies and initiatives to monetize gas across Nigeria and Africa, oil dependence-related hardships will continue and only get stronger.
In Cameroon, Victoria Oil & Gas has been supporting the development of a strong industrial and manufacturing base on the outskirt of Douala by connecting several customers to natural gas.
Also in the Gulf of Guinea, Equatorial Guinea is building a regasification terminal to process its own natural gas across several industries such as power and cement on its mainland.
Further North in Abidjan, the government has been pushing for the procurement and deployment of CNG buses that also run on domestic natural gas. Success stories abound all around us, yet they need to be expanded and replicated for Africa to truly embrace the benefits of economic diversification.
“Nigeria has already taken the opportunity to maximize its gas with the West Africa Gas Pipeline. As an industry, if we are able not only to ensure stable gas supplies through that pipeline but also lay additional connections to North Africa and Europe through Niger, and to East and Southern Africa through the Central African Republic, then a country like Nigeria gives itself the opportunity to industrialize the whole continent through the production and export of its domestic gas while creating several thousands jobs,” Kola Karim added.
In that regards, incentives to be given to such critical midstream infrastructure, along with market policies to support gas valorization, form key parts of the African Energy Chamber’s Common-sense Energy Agenda released this month.