Unlocking energy potential Oil and gas in Sub-Saharan Africa
- 10 June 2024
- Posted by: David Bamford
- Category: energy excellence
Sub-Saharan Africa is a region rich in natural resources, particularly oil and gas, minerals and both sunshine and wind. However, it is also a region that faces significant energy poverty. Approximately 600 million people in the region lack access to adequate electricity, which severely impacts economic growth, education, healthcare, and overall quality of life. The paradox of energy wealth amidst widespread energy poverty is a challenge that needs urgent attention.
The promise of deepwater oil discoveries
Recent years have seen major deepwater oil and gas discoveries in Sub-Saharan Africa, particularly off the coasts of Angola, Nigeria, Cote D’Ivoire and Namibia. These discoveries hold immense potential not only for boosting the economies of these nations but also for addressing the region’s energy deficits. The associated large amounts of natural gas found alongside oil present a unique opportunity to improve electricity access across the region.
Fast-tracking oil development
International oil companies including the “Majors,” are keen to develop these deepwater oil reserves quickly. The- preferred method involves using Floating Production, Storage, and Offloading units (FPSOs). FPSOs are efficient, allowing for rapid development and production of oil fields in deep waters. This approach aligns with the commercial interests of the Majors, who aim to capitalize on the oil market as swiftly as possible.
However, there is a tendency to delay the development of associated natural gas. While focusing on oil provides immediate returns, postponing gas development misses an opportunity to alleviate the region’s energy poverty. Gas is a crucial resource for generating electricity and can be used to power local industries, providing a sustainable energy solution for millions of people. Floating Liquified Natural Gas (LNG) is an interim solution but does not bring the gas into the local market. Gas infrastructure to bring gas into the local markets, agreeing fiscal terms, developing reliable offtakers and national grids takes time and needs careful planning.
The emerging energy landscape in Uganda
Uganda is another key player in Sub-Saharan Africa’s burgeoning oil and gas sector. The country has made significant strides in recent years, with substantial oil reserves discovered in the Albertine Graben region. These discoveries have the potential to transform Uganda’s economy, providing much-needed revenue and boosting development.
The Ugandan government, in collaboration with international oil companies, is focused on developing these resources efficiently. Central to this effort is the construction of the East African Crude Oil Pipeline (EACOP), which will transport crude oil from Uganda to the port of Tanga in Tanzania. While the project promises economic growth and improved infrastructure, it also faces challenges, including environmental concerns and the need to ensure that the benefits are broadly shared among the Ugandan and Tanzanian population. Proper management and inclusive policies will be critical to ensuring that Uganda’s oil and gas development leads to sustainable and equitable progress.
Navigating challenges and opportunities
The case of Namibia
Namibia, a relatively new player in the deepwater oil scene, is witnessing a significant uptick in exploration and development activities. Recent discoveries have drawn global attention, positioning Namibia as a potential energy hub in the region. However, the rapid pace of oil development has also sparked tensions and raised concerns among local communities and stakeholders.
The key to addressing these tensions lies in a balanced approach that ensures the benefits of natural resource extraction are shared widely. It is essential to involve local communities in decision-making processes, ensure fair distribution of revenues, and invest in local infrastructure and social programmes, but also in investing in upskilling the local labour force.
Additionally, prioritising the development of associated gas alongside oil can provide immediate and tangible benefits to the local population, reducing energy poverty and fostering long-term economic stability.
The development of Sub-Saharan Africa’s deepwater oil and gas resources presents both challenges and opportunities. The immediate focus on oil production using FPSOs is understandable from a business perspective. However, it is crucial to also recognise the transformative potential of natural gas for the region.
To strike the right balance, a comprehensive strategy that incorporates both immediate oil production and concurrent gas development is needed. This approach can help address energy poverty, foster economic growth, and ensure that the benefits of natural resource wealth are equitably shared.
Conclusion
Sub-Saharan Africa stands at a crossroads. The region’s vast oil and gas reserves offer a pathway out of energy poverty for millions. By adopting a balanced development strategy that prioritises both oil and gas, the Majors and local governments, through close cooperation, can ensure that these resources are used to build a brighter, more sustainable future for all.
Navigating the complexities of oil and gas development in Sub-Saharan Africa requires careful planning, sensitive to local contexts with a commitment to inclusive growth. With the right policies and collaborative efforts, the region can transform its energy landscape and unlock its full potential.
Future Energy Partners provides expert support to Ministries, National Oil Companies(NOCs) and Regulators in developing their the oil and gas industry through support with the development of their oil and gas assets and gas master planning whilst ensuring that the State receives maximum value through effective local workforce, businesses and supply chain, institution and community development from their oil and gas developments thereby ensuring the quality of life is enhanced for local communities.
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