2020 has been a year of unprecedented challenges, and the trials and tribulations have made the African Energy Chamber’s work more important now than ever. We are committed to helping Africa’s oil and gas stakeholders navigate a complex and ever-changing global energy landscape. We will continue our mission to support the dynamic private sector and unlock the continent’s remarkable energy potential.
Africa’s oil and gas industry is facing extraordinary circumstances. An ongoing energy transition and new efforts to decarbonize the world are weighing on oil demand. The shale revolution is exacerbating these pressures.
And of course, the COVID-19 pandemic has wrought havoc on markets around the world, accelerating and intensifying existing trends.
External headwinds are forcing African petroleum producers to re- examine their strategies. Conventional petroleum resources here should be globally competitive, but growth has lagged because of conditions above the ground, not below.
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Restrictive fiscal regimes, inefficient and carbon-intensive production, and difficulties in doing business are preventing the industry from reaching its full potential. As companies delay projects and cut costs, planned capital expenditure in 2020-2021 has fallen from $90 billion PRE-COVID-19, to $60 billion now. To remain competitive, African producers and governments must adapt. But how can they do it when the economic order is being remade?
We have to cut red tape to make life easier for hardworking Africans, businesses and investors to work and grow the energy sector. We know from experience this will reduce the cost of doing business, speed up approvals and make life better for Africans. We must never be ashamed of supporting an industry that has brought so much to Africa and will continue to bring people out of poverty and reduce reliance on foreign aid.
In 2021, Africa will benefit greatly if we create an investment climate that supports the development of all energy resources. At the African Energy Chamber, we believe supporting the energy industry, promoting free markets, the rule of law, individual freedoms and limited government is a duty for all Africans.
But we must not stop there, advocating for a market driven Afro-centric energy transition, with a specific focus on natural gas to expand market opportunities is something we will continue to drive. The oil and gas industry is a force for good and we must not join those forces that want to demonize hardworking people whose only crime is to work hard and play by the rules and embrace hope rather than fear mongering and embrace economic empowerment rather than development aid. That’s why we believe implementing programs like local content, economic diversification that support natural gas value chains, making fiscal terms competitive and reducing red tape and streamlining regulatory processes must be priorities in 2021.
Our African Energy Outlook 2021 addresses these challenges head-on. Building on last year’s success, our second annual report offers an even more exhaustive and comprehensive look to the year ahead for African oil and gas. The 2021 outlook details all of the major challenges facing
African oil and gas stakeholders, as well as workable solutions that will keep the industry on a strong and stable growth path. We believe the short-term outlook will improve if countries apply more competitive fiscal regimes. Emissions can be reduced by curbing flaring and monetizing gas, improving and future-proofing the carbon profile of African petroleum production.
Developing gas-to-power infrastructure will increase access to affordable energy for all sectors of the economy, offering massive knock-on benefits and making it easier to do business. Reducing lead times to limit risk premiums put on long cycle projects will further bolster the industry’s viability and growth prospects. It will not be easy, but these reforms are necessary.
Again and again, our oil and gas sector has proven its resilience and adaptability. The world still needs oil and gas, and Africa still holds enormous untapped potential. The African Energy Chamber will remain a committed partner of choice for the industry as we advance into an uncertain future.
