Can Africa jettison fossil fuel anytime soon? The Executive Secretary, African Petroleum Producers’ Organisation believes that this will be a herculean task given the peculiarity of the continent and its drive for economic development, MUYIWA LUCAS reports
The climate change debate has become more intense. This has led to the move for the transition from fossil fuel usage to greener or cleaner energy use.
By extension, this means there is the urgent need to decarbonise to save the earth from a looming calamity. To realise this, the exploitation and use of fossil fuels, it is argued, must be phased out or at least reduced to the barest minimum. Steps taken so far in this regard include the campaign for a “polluter pay more” regime.
However, for the African Petroleum Producers’ Organisation (APPO), Africa cannot immediately abandon the use of fossil fuels if her economic development is to be adequately considered.
According to Dr. Omar Farouk Ibrahim, who heads the Africa’s 15-member African Petroleum Producers’ Organisation (APPO), the priorities of other people cannot be imposed on Africans because the situation is different.
For Ibrahim, who is APPO Secretary-General, the majority of Africa’s population do not have access to any energy. Also, nearly half of its population lack access to electricity and nearly three quarters lack access to any form of modern energy for cooking or domestic heating, forcing millions of Africans to resort to unhealthy sources. For this reason, “we cannot be rushed to abandon what we have for what we don’t have,’’ he said.
He argued that the world did not wake up in the last quarter of the last century to realise that greenhouse gas emissions were harmful to the atmosphere, as the science or the knowledge that greenhouse gas emissions are destroying the atmosphere has been known for as far back as 150 years ago.
According to Ibrahim, studies by Western scientists in the 1800s had established that burning fossil fuels emit greenhouse gases which are detrimental to the atmosphere. But because those societies were busy consolidating their industrialisation and growing their national economies to raise the quality of lives of their peoples and they needed ample energy to do these, they kept that knowledge away from the public domain.
They continued to use fossil fuels which is the most affordable, reliable and available form of energy until they succeeded in weaning their economies from heavy reliance on intensive energy use in manufacturing to knowledge production and artificial intelligence, which need little energy compared to factory production. Now that Africa is poised to industrialise and therefore shall need a lot of energy, we are being told that the same energy that propelled the economic growth of today’s developed world, is harmful to the world, and that all hands must be put on the deck to end fossil fuel use. The world admits that Africa, with 17 per cent of the world’s population, contributed between two per cent and 3.5 per cent of the global emissions.
The APPO chief noted that on energy transition, the developed world has defined its priorities in descending order as CRA, namely Clean, Reliable, and Affordable, whereas for Africa, the priorities are ARC, which stands for Affordable, Reliable, and Clean.
Yet, this is particularly where the battle line is drawn as far as the leadership and policy position of APPO is concerned.
“As far as we are concerned, our people must survive first before we can talk about degrees of cleanliness of fuels. Fossil fuels are still cleaner than a majority of the forms of fuels that most women in Africa use for cooking as well as the kinds of fuels that most people in Africa use for domestic heating. Millions of our people die yearly from respiratory diseases caused by the type of fuels they use to cook and heat their homes in the villages on our continent, he argued.
“If developed countries have been using fossil fuels for 150 years and the worst never happened to them, it is not when Africa which, by their own admission contributed little or nothing to global warming, is on the verge of breaking from its poverty cycle that you will tell us that we should abandon it,” said APPO Secretary-General.
Ibrahim contended that if Africa has contributed only two percent and is still the most backward when it comes to energy access and yet we have 125 billion barrels of proven oil, 500 trillion standard cubic feet of proven gas reserves wouldn’t it make better sense for the scientifically advanced countries to assist the developing countries develop technologies that will make fossil fuels more environmentally friendly so that the whole world can continue to benefit from what has proved to be the most affordable, reliable and available fuel? If they don’t, it is not because they cannot but because they have resolved that it is not in their long term national interests. These countries have now taken a firm decision to wean themselves from foreign energy dependence and they are determined to compel everyone to follow them.
He further argued that if industrialised nations of the world today are the ones that are blessed with abundant fossil fuels as exists in Africa and the Middle East, the story would have been different, and that what would have happened is that they would have developed the technology that will make fossil fuels more environmentally friendly.
In his own words: “When they realised that they didn’t really have this resource, and that somebody else did and they tried unsuccessfully to encourage the development of shale in America, they did everything to manipulate the market.
“That explains why oil prices started a steep climb up from $20 a barrel in 2003 to nearly $150 per barrel in mid 2008. At that time, shale oil could only break even at about $70 to $80, or so. The rise in oil prices between 2003 and 2008 had nothing to do with market fundamentals. It was pure manipulation so that the West could develop its own energy and say good bye to external or foreign energy. It was only when that strategy failed, that the resort to the demonisation of fossil fuels begun,” he noted.
Ibrahim though acknowledged that challenges of energy transition for the oil and gas producing nations of Africa are compounded, especially considering the fact that when oil was discovered on the continent, Africans did not develop oil and gas for Africa, but rather developed it for the rest of the world. Even at current estimates, over 70 per cent of the oil and 45 percent of gas produced in Africa are exported and yet, Africans still end up importing petroleum products at exorbitant prices, sometimes with substandard qualities.
The future
APPO, Ibrahim said, is concerned about the future of the oil and gas industry in Africa because of the energy transition. This is because for many of its member countries, oil and gas revenue is very crucial to their economies and social life. A quick transition away from fossil fuels could have serious impact on our national economies.
Firstly, in the 50 to 100 years that Africa has been producing oil and gas, he further said, the continent has not been able to domesticate the industry technology. It has been essentially the international oil companies who are doing this for us. They bring out the oil, they sell it, they give us the money and we spend that money mostly importing goods and services from them.
Today, a few of African countries, mostly APPO members, have been able to master aspects of that technology, but none can research, design and fabricate the key machinery for the industry. Some APPO member countries have set ambitious targets for local content acquisition in the light of the energy transition. That is good. But the strategy must change.
What to do
APPO is concerned that African oil and gas producing countries cannot continue to operate in silos. This, according to Ibrahim, is because the countries and companies that the continent has for nearly a century depended on for technology, expertise and funding for oil and gas have decided to abandon the industry. Unfortunately, he said, the industry in highly capital intensive, and highly research and technology driven.
It has also been highly dependent on foreign markets. As individual countries, he is convinced that it is going to be very difficult for members to be able to mobilise the funding, develop the technology and create markets. But through cooperation, the continent can scale these hurdles. Towards this end, Ibrahim said the APPO Ministerial Council recently approved in principle the recommendations of a major study on “The Future of the Oil and Gas Industry in Africa in the Light of the Energy Transition.”
Additional work on the study, he said, is ongoing and the Report and Recommendations shall be presented to the First Summit of APPO Heads of State scheduled this year.
Most of the anticipated challenges are surmountable. For example, with 1.3 billion people, 900 million of whom do not have access to any form of modern energy, Africa can do without external markets for its fossil fuels. All it needs to do is to empower these people to be able to purchase energy. When these hundreds of millions of energy-poor people are empowered, we will come to find out that the whole oil and gas production of Africa is not enough for the continent.
“We should strive to provide the necessary infrastructure to first process and then to convey the energy from places of abundance to places of shortages. Take full advantage of the Africa Continental Free Trade Agreement, (AfCFTA), to create regional and continental energy markets. Poach some of the best researchers and scientists in the industry who are leaving the industry to come help to firmly establish tech bases for the industry in Africa,” he said.
Reluctance
Commenting on the decision of global financial institutions to end funding oil and gas projects, in the support of energy transition, the APPO helmsman said, ‘’right from my days in OPEC, I have never believed that Africa has no money. Africa is rich, Africa is blessed; it is simply that we have misplaced our priorities, and I will give you a very good example.
“Between 2003 and 2008, oil prices rose from $20 to $25 per barrel to up to $150 per barrel; continuous rise over a five-year period, and most of the African countries were, of course, increasing their production. I remember that in 2005, Nigeria’s production reached 2.5 million barrels per day. Other countries also made huge windfalls. Now, what did we do with all that money that came over five years?
“If you know that oil is the mainstay of your economy, and you know that you’ve been dependent on external funding, external technology, external markets and external expertise, why not invest a huge proportion of that windfall to adding more value to the raw materials you were producing and exporting? Why not devote up to 50 per cent of the windfall to develop the infrastructure that will sustain and grow the industry?
For instance, a number of countries in the Middle East have done that, and that is why even though African countries are not producing as much as some countries in the Middle East, the effect of a quick energy transition on the economies and societies of Africa will be worse than on those countries producing more oil and gas, but less dependent on its revenue.
This is because they have succeeded in diversifying their economies and have also been able to take better control of the energy sector of their own economies. Africa has not done well in this respect, and that is why any market volatilities will always be particularly harsh on the economies of oil and gas dependent states of Africa.
He also thinks that it’s a hoax to believe that unless Africa gets money from the developed countries, we can’t make any economic progress. What we need to is set our priorities right, to tighten our belt, to do away with frivolous imports of goods and services, focus internally for an agreed period of time, a ten year period for example, and say that we are doing all that for the next generation. This should apply to all, government officials as well as private citizens.
The APPO enumerated some of the actions taken by the 35-year-old intergovernmental energy Organisation since it’s reform a couple of years ago to address some of the challenges of the industry on the continent to include the founding of the Africa Energy Investment Corporation, AEICorp, whose mandate is to raise the capital needs to sustain the growth of the oil and gas industry in Africa in view of the decision of traditional financiers of the industry in Africa to end financing. He acknowledged the technical support that AEICorp has been receiving from the Afreximbank.
Farouk urged African investors to put their money in the AEICORP project, as it is a public private partnership with the private sector holding majority share. AEICorp shall be run as a business, he emphasised.
He also noted that the Ministerial Council of APPO had approved that the Nigeria-initiated Africa Local Content Roundtable (organized by the Nigerian Content Development and Monitoring Board, NCDMB) be upscaled to be a continental event involving all APPO Member Countries. The Africa Local Content Roundtable which is planned to be a serious exhibition of technology development in APPO member countries, shall be held biennially on rotational basis in APPO Member Countries. The modalities shall be developed at the next APPO organized CAPE VIII in Luanda, Angola in May 2022.
According to him, developments in the global energy scene calls for a new strategy of local content in Africa. While individual countries will continue to have agencies for local content development, there are areas of the industry that will require a lot of cooperation and collaboration for Africa to be able to master. The SG said that APPO is looking to have regional centers of oil and gas technology excellence.
The APPO scribe concluded by saying that neither Africa nor APPO is against energy transition. What they are against is being stampeded into abandoning what they have for what they do not have with assurances that cannot be guaranteed. He was referring to the Climate Fund established to assist developing countries to make a transition from fossil to renewable energies. He noted that since the establishment of the Fund there has not been a single year that its target has been met. He also noted that modalities for the disbursement of the funds are not so clear as to make potential beneficiaries to go for it.
