The December 2022 US-Africa Leaders Summit hosted by President Biden in Washington highlighted the emerging role of Africa in global affairs, including in the competition with China and Russia. In his address to the Summit, President Biden endorsed the proposal for the African Union to join the G20 and pledged $55 billion in financing and investment over three years. This ascendant role was also evident at the November COP27 meeting in Egypt, where African countries enjoyed a much more active and forceful presence. Even though they are marginal contributors to global emissions (3.8 percent of carbon emissions) and world trade (3 percent of exports), Africa has experienced severe drought conditions as well as negative economic and social impacts from high energy, food, and commodity prices over the past year. An IMF report concludes that Sub-Saharan Africa is “the region of the world most vulnerable to climate change.” And Ghana’s representatives were leaders of calls by the G77 for loss and damage support, a facility for which was agreed to in principle at the last moment in the final COP27 statement.
Energy development and investment was one of the many important topics addressed in the Africa Leaders Summit, which took place in the context of the continuing war in Ukraine, high energy and commodity prices, and a serious debt problem in many countries of the region. As was the case in the first Africa Summit eight years ago, the US government emphasized renewable energy development and improved energy access, noting the over $1 billion provided thus far under the Biden Administration by the US Development Finance Corporation, US Agency for International Development, and other US government agencies for African projects in these areas.
Although African leaders are embracing the clean energy transition and the region has enormous, diverse renewable energy resources, they are also arguing that they must be able to develop their fossil energy resources to meet their economic development needs and provide access to modern energy for their populations. At COP27, the President of the African Development Bank supported the development of natural gas in the continent, noting that even a tripling of gas production would result in only a minimal addition to global CO2 emissions. At the May 2022 Sustainable Energy for All forum in Kigali, Rwanda, ten Africa countries (Democratic Republic of Congo, Ghana, Kenya, Malawi, Morocco, Nigeria, Rwanda, Senegal, Uganda, and Zimbabwe) endorsed a statement calling for international support for “Africa in the deployment of gas as a transition fuel and the long-term displacement of gas by renewable energy and green hydrogen for industrial development, if financially and technically sustainable.”
The war in Ukraine and the high energy prices and tight supplies have encouraged international energy companies to consider oil and gas projects in Africa that did not appear viable a couple of years ago. There is a general expectation of continued tight global liquefied natural gas (LNG) supplies, reflected in analysis of the International Energy Agency, Bloomberg, and others, including the recent statement by Exxon Mobil CEO, Darren Woods, that the world will face a shortage of LNG until 2026. Europe’s efforts to replace Russia gas are the key driver, with EU LNG import requirements forecasted by Bloomberg to increase by 44 million metric tons by 2026.
Africa is a potential source of EU and world gas diversification and the May 2022 EU External Energy Engagement Strategy recognizes this potential. New Africa suppliers are emerging, with the first shipment of LNG from gas-rich Mozambique occurring in November 2022. According to the BP Statistical Review of World Energy 2022, Africa produced about 257 billion cubic meters (bcm) of natural gas in 2021 and exported 58.5 bcm of LNG (42 million tons), amounting to about 5.7 percent of global LNG exports. Some estimates see African LNG exports growing to 60 million tons in 2025 and 74 million by 2030. Major exports from the large gas reserves in East Africa, though, are not expected until 2026 in Mozambique and 2029-2030 in Tanzania. Bloomberg sees increases in LNG export capacity of 12.4 million tons during 2021-26 from Nigeria, Mauritania, Congo, Equatorial Guinea, and Mozambique. Africa could significantly increase its LNG exports if gas supply and other bottlenecks in using existing capacity can be overcome. According to Natural Gas World, Africa’s utilization of its 78 bcm liquefaction capacity was only 58 percent last year, with Algeria, Nigeria, and Egypt all operating below capacity.
Gas development potential exists in many other African countries, including Ghana, Senegal, and Côte d’Ivoire in West Africa. Ghana is one example with as much as 3 trillion cubic feet (tcf) of potential gas reserves, with 1.5 to 2 tcf possible in Tullow Oil’s offshore Jubilee and TEN fields. In Ghana, a long-time partner of the United States through its Power Africa program, domestic gas development has allowed it to increase gas use in the electricity sector, substituting for oil and complementing its hydro generation. The country, however, faces a serious debt situation, spurred in large part by the quasi-fiscal deficit in the power sector; and, on December 12, the IMF announced staff agreement for an Extended Credit Facility of about $3 billion. The government has committed in its nationally determined contribution (NDC) to reduce GHG emissions by 64 million tons by 2030 and has a renewable energy master plan that envisions adding 1390 megawatts of wind and solar by 2030. Renewable energy development, which is only at a very nascent state, can facilitate the diversification of Ghana’s electricity mix and with successful gas development achieve a position that would allow it to export gas for valuable foreign exchange.
African countries thus face the challenge of how to balance energy security, climate change, and sustainable development objectives. It is increasingly clear that Africa is critical to addressing global energy issues and should, as the President of South Africa has recently argued, have additional voices in the G20 and other international fora. It is increasingly clear that natural gas is a key means of quickly reducing global coal use, especially in the coal-intensive Asia-Pacific region, which accounted for half of global energy-related CO2 emissions in 2021. The expected higher prices from an LNG crunch may slow natural gas adoption, especially in Asian LNG importers (i.e., Bloomberg sees possible decreases in 2023 LNG import levels over 2021 planned imports in India, Pakistan, Bangladesh, Thailand, Vietnam, and the Philippines). Although renewable energy development is certainly desirable and economically viable in Africa as well as Asia, natural gas development in Africa can in the medium term help moderate LNG prices, assist Europe in replacing Russian gas, complement intermittent renewable energy supplies, and ensure both the continued transition from coal in Asia as well as critical revenues for economic growth in Africa.
Dr. Robert F. Ichord, Jr. is a nonresident senior fellow at the Atlantic Council Global Energy Center.
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