Countries such as Nigeria, Angola and Mozambique have vast reserves of oil and natural gas, but they cannot supply their own markets, let alone ramp up their global supply. Decades of war, corruption and underinvestment in local communities mean that simply opening up the taps is not as easy as it sounds.
In Nigeria, for instance, oil production has declined. The country has moved from producing an average of 2.51 million barrels a day in 2005 to an average of 1.31 million barrels a day in December 2021 – and it’s not thanks to a move towards renewables.
Far from it, in fact. It is largely because of ageing infrastructure, underinvestment, vandalism, fiscal uncertainties, policy flip-flops and industrial-scale theft of crude oil.
Dr Omar Farouk Ibrahim, secretary-general of the African Petroleum Producers’ Organisation, says Nigeria can’t even meet its Opec quota of 1.72 million barrels a day.
“The underinvestment the sector suffered over the years has not only made it impossible for Nigeria to reap maximum benefit from the export of its crude, or enjoy what you call the windfall. But the nation, with its abundance as it is, cannot serve as the alternative for the Russian gas in the interim,” he said in a recent webinar.
In Mozambique, conflict in the north of the country, where the major offshore gas reserves are, has prompted TotalEnergies and ExxonMobil to suspend the development of their multibillion-dollar gas project.
It was hoped that the abundant supply of gas would catapult the country towards faster growth and economic development.
Zaynab Mohamed, a political analyst at Oxford Economics Africa, recently commented that political, institutional and governance risks are hurdles to harnessing the benefit of these resources. “Factors such as these hinder growth and future investment on the continent,” she said.
SA, perhaps to a lesser extent, may not be able to take full advantage of the opportunities this dark war has presented either: our coal exporters cannot get their coal to – and through – our ports fast enough.
Meanwhile, in response to what was perceived as a lukewarm response to the Ukraine crisis by the Opec+ alliance, US President Joe Biden announced last week that the US would unilaterally release 180 million barrels of oil from its Strategic Petroleum Reserve. Bam!
It is the largest release from the national reserve in history and is designed as a “wartime bridge” for six months. This translates into one million barrels a day being sold each month. At the end of the six months, US oil production is expected to have risen by a roughly equal volume. Revenue from the sale would be used to restock the reserve when prices were lower, Biden said.
Russia and China may be cozying up together, but moves like this remind us that one underestimates the US at one’s peril.
I’m well aware of the hypocrisy of all of this. When push comes to shove, all the talk of “just transitions” goes out of the window. The same countries that have vowed to phase out fossil fuels in favour of renewable and clean energy are now clamouring for more oil and gas – and coming up empty.
It could prove a tipping point as many of the countries that have taken Russian oil and gas supplies for granted seem determined to end their reliance on Russia for their energy supplies. This, I am certain, will accelerate the transition to cleaner fuels.
In the midst of this transition, it is essential that Africa takes advantage of the opportunities presented. For one, it must be allowed to develop its gas resources. It is unconscionable that a continent whose contribution to global warming is minuscule is not supported in this regard.
At the same time, countries that are in a position to benefit from the longer-term green transition because of their mineral resources, such as the DRC, Gabon, South Africa and Guinea, need to ensure that they capitalise on the coming windfall and don’t squander it as many have done before them. This takes responsible and wise leadership, something that seems to be in short supply globally. DM168
This story first appeared in our weekly Daily Maverick 168 newspaper which is available for R25 at Pick n Pay, Exclusive Books and airport bookstores. For your nearest stockist, please click here.