The pace of implementation of oil and gas projects in Africa is accelerating in light of the growing demand for the two vital commodities. This prompted the governments of the countries of the continent to raise investment spending related to exploration and excavation activities.
Indeed, entities outside the fossil fuel industry have begun directing their financial resources towards this pivotal sector in Africa, which shows promising prospects, especially in the aftermath of the Ukrainian war and subsequent shortage of Russian energy supplies.
In this scenario, the African Export-Import Bank “Afriximbank” and the African Finance Corporation “AFC” have invested about $16 billion in oil and gas projects in Africa, according to the British Guardian newspaper.
Afreximbank’s share in these investments amounted to $15 billion, while the African Finance Corporation’s share increased to $800 million, in addition to another additional $200 million that will be pumped soon, according to information monitored by the specialized energy platform.
Investments of $190 billion
These financings were revealed during the African Refineries and Distribution Association Conference, which was held recently in the Republic of South Africa. Investors called on companies to keep their money inside Africa to finance investments worth more than $190 billion annually in oil and gas projects in Africa.
Afreximbank’s oil and gas portfolio exceeds $15 billion; It has a pipeline on the continent, according to the bank’s global head of customer relations, René Oembing.
“Africa has not invested in its refineries or even its refining capacity; we have not invested in our storage facilities, nor have we invested in pipelines enough to meet the demand,” Oembing added.
He continued, “So with the outbreak of the emerging coronavirus (Covid-19) pandemic, and now the Ukrainian crisis, we find ourselves in a very difficult situation.”
Millions of investments in refineries
Oil and gas projects in Africa have also caught the eye of the African Finance Corporation, which has rushed to spend a total of $800 million in the continent’s refinery sector, including $210 million in a pipeline, according to the chief investment officer, Shayo Olmed.
Olmed emphasized the need to focus on the environment, sustainability, and governance in terms of financing.
Many energy companies are interested in implementing oil and gas projects in Africa, while those entities are focusing on low-carbon oil, according to Oil Price.
With increasing pressure to decarbonize their operations, many major oil and gas companies are shifting from old, carbon-intensive operating sites to developing new projects in unconventional oil regions.
During the COP27 climate summit, held in the Egyptian city of Sharm el-Sheikh in November 2022, representatives of African governments said that countries on the continent should be allowed to develop their own fossil fuel resources in order to lift their citizens out of poverty.
Golden opportunity
With the increasing global demand for oil and gas following the shift of the United States of America and Europe away from Russian energy supplies, a golden opportunity has arisen for the leaders of the countries of the continent to promote the development of oil and gas projects in Africa.
In this regard, Maggie Chino, Commissioner for Petroleum at the Namibian Ministry of Mines and Energy, said: “There are many oil and gas companies present at the climate conference because Africa wants to send a message that we will develop energy resources for the benefit of our people; our issue is energy poverty.”
This trend has helped stimulate the development of oil and gas projects in Africa, with plans to implement many of them in the current year (2023).
The annual Africa Oil Week event will be held in October (2023), which aims to promote opportunities for oil and gas projects in Africa.
70 projects are in progressy
Analysts said that there are 70 oil and gas projects in Africa that will come into operation by 2025, which could provide 2.3 million barrels of oil per day.
For example, Total Energy, the French energy giant, announced that it would invest in the Angolan Begonia field last year; This enhances its investment portfolio of oil and gas projects in Africa.
These investments could boost the company’s production in the region by 30,000 barrels of oil per day.
Total Energy is expected to start operations by the end of next year (2024), with investments worth $850 million.
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