By: Nghiinomenwa Erastus
The Secretary General of the African Petroleum Producers’ Organization, Omar F Ibrahim, pointed out that it would be a mistake for Africans to abandon their abundant petroleum resources.
He said this in a statement released by the African Energy Chamber (AEC) this week in an attempt to push back against steadily building pressure to halt new foreign investments in Africa’s oil and gas industry.
The chamber explained that as the calls to stop financing African oil and gas have only grown louder and more persistent, it proposed Africa to start its own energy bank.
“Turning our backs on approximately 130 billion barrels of proven crude oil reserves and over 15 trillion standard cubic meters of natural gas, to pursue expensive, unreliable energy sources, would not be a wise course of action,” explained Ibrahim.
In supporting African producers, the African Energy Chamber executive chairman, NJ Ayuk, stated that Africa still needs its oil and gas sector in addressing energy poverty as an urgent matter that must take priority over abandoning oil and gas.
He explained that foreign oil and gas investments generate revenue that can be used to build and improve energy infrastructure for both fossil fuels and renewables.
“By supporting natural gas projects, investors create a path for gas-to-power projects that help minimize the continent’s widespread energy poverty,” said Ayuk.
OPEC secretary general Mohammad Sanusi Barkindo also said that the unfortunate reality for developing countries is that a staggering 759 million people worldwide did not have access to electricity in 2019, with around 79% of them located in Africa.
While roughly 2,6 billion people or 34% of the global population who did not have access to clean cooking fuels and technologies includes a massive 70% of Africans who have no access.
As the chairman of the African Union, President Macky Sall of Senegal, added that African states are open to embracing renewable energy sources.
“The problem comes when we are bullied into giving up our fossil fuels, and the opportunities they represent, on others’ timetables,” explains Sall.
He further said that many African countries cannot achieve an energy transition and abandon the polluting patterns of the industrialised countries without a viable, fair and equitable alternative.
“Our countries, which are already shouldering the crushing weight of unequal trade, cannot bear the burden of an unfair energy transition.” stated Sall.
START AN AFRICAN ENERGY BANK
Most recently, during the 2021 United Nations Climate Change Conference (COP26) in Glasgow, more than 20 countries and financial institutions pledged to stop public financing for overseas fossil fuel projects.
Despite the move by global powers “the energy poverty numbers for Africa are stark, and to add in one further number, Africa accounts for only around 3% of global emissions,” OPEC secretary general Barkindo highlighted.
The move to starve Africa foreign investment in oil and gas has prompted the African Energy Chamber to call upon African states and the private sector to establish energy banks focused on funding African energy projects.
The chamber executive chairman, Ayuk explained the idea is to create funding sources for all types of African energy from oil and gas exploration to solar and hydrogen operations —that will not depend on foreign support.
“No more begging for aid that only would be awarded on the condition that we abandon fossil fuels,” said Ayuk.
He added that developing African energy banks is a way to protect African countries from those social and economic dangers.
Ayuk highlighted that Africa cannot miss not to capitalize on such recent discoveries as the light oil found offshore Angola, the oil in Namibia’s Kavango Basin, the shale gas in South Africa’s Karoo Basin, or the oil and natural gas off the coast of Côte d’Ivoire.
Some of the important discoveries that occurred in 2021, and each represents critical opportunities for everyday Africans.
“We are convinced that harnessing our oil and gas is the best way to meet some of our people’s most pressing needs. And we believe that pursuing our oil and gas opportunities is not the environmental catastrophe that some have suggested it is,” he wrote.
Afrieximbank president and chairman of the board Benedict Oramah also touched on the subject that Africa produces less than 4% of greenhouse gas.
“We are not the problem of greenhouse gasses. We are the victims. We are asking for balance,” he said.
The AEC proposes an Afrieximbank’s model to cultivate a pool of investors who understand and appreciate the importance of oil and gas to Africa.
Ayuk wrote that capital from foreign countries and companies will always be welcome as long as it isn’t based on phasing out fossil fuels on their timeline.
With the support of one or more African energy banks, local oil and gas companies will have the finances necessary to acquire assets.
They’ll have the financing to build crude and gas pipelines across Africa and to facilitate the use of natural gas (including liquid natural gas) to power Africa, minimizing energy poverty and driving industrialization.
The financing also will allow African companies to upgrade their refineries, an urgent need addressed by the Secretary of African Refiners and Distributors Association during African Energy Week last year, so they can produce cleaner fuels.
WHO WILL CAPITALIZE IT?
How can a continent that is struggling to bring many of its people out of poverty raise capital for energy projects?
AEC chairman, Ayuk explained that it starts with the state, African governments can set aside a percentage of their oil and gas revenues for new project funding.
In the Africa Energy Outlook 2021, the African Energy Chamber projected that African governments’ earnings from royalties, profit oil, and other taxes in 2021 would reach US$100 billion.
5% of that amount would produce $5 billion that could be leveraged on for exploration, development, or infrastructure, he said.
Other options are to raise capital by investing in African pension funds and in African energy projects.
According to Cape town-based investment firm RisCura, local pension funds collectively manage around US$350 billion of assets in sub-Saharan Africa, and they are actively looking for new places to invest.
“Why not encourage them to add oil, gas, and renewables projects to their list?” proposed Ayuk.
Investing pensions in the energy sector is hardly a new practice, some of America’s largest pension funds are invested in fossil fuel producers and pension funds around the globe are investing in green energy projects.
The Energy Chamber chairman added that it would not be a giveaway investing in fossil fuels, especially gas projects and developing marginal fields, provided there is a large return on investment.