Africa’s oil and gas industry is entering a new era of uncertainty and pressure as the world looks to accelerate its shift away from fossil fuels. According to a report by McKinsey, most of the continent’s oil and gas producing nations are highly exposed to the global energy transition, as their economies depend on oil and gas revenues, while their reserves both cost more to produce and are more carbon-intensive than those from other regions.
The report also warns that the ongoing invasion of Ukraine by Russia could disrupt the global natural gas market and affect the demand for African gas, especially in Europe, which is seeking to diversify its gas supplies and reduce its reliance on Russian gas. The European Commission has announced a plan to make Europe independent of Russian fossil fuels before 2030 through a combination of renewable energy and alternative gas sources.
However, the report also highlights the opportunities for Africa to rethink its energy strategy and meet the growing energy needs of its population, which is expected to increase by 30% by 2040. The report suggests that African oil and gas producing countries could consider steps to create enabling environments, improve access to capital, and attract the right skills and capabilities to develop their energy sector in a sustainable and resilient way.
Some of the steps that the report proposes include:
Investing in low-carbon technologies and solutions, such as carbon capture and storage, hydrogen, and biofuels, to reduce the emissions intensity of oil and gas production and consumption.
Diversifying the energy mix and increasing the share of renewable energy, such as solar, wind, and geothermal, to provide clean and affordable electricity for households and businesses.
Developing regional energy infrastructure and integration, such as cross-border pipelines, power grids, and gas networks, to enhance energy security and trade among African countries.
Supporting local content and capacity development, such as skills training, technology transfer, and entrepreneurship, to create jobs and value in the energy sector.
Strengthening governance and transparency, such as regulatory frameworks, fiscal regimes, and environmental and social standards, to attract investment and ensure accountability and sustainability in the energy sector.
The report concludes that Africa’s oil and gas sector has a critical role to play in the continent’s development and in the global energy transition, but it needs to adapt to the changing realities and expectations of the world. By taking proactive and collaborative actions, African oil and gas producing countries could both meet the energy needs of their people and position themselves strongly in a new energy landscape.
Source: This Day Live
