Ejekwu Chidiebere
“Energy transition is a game. It is wistful thinking therefore to ask Africa to abandon its huge petroleum resources for what it does not yet have” – Africa’s Energy Industry Think Tanks.
- Transition could be the consequence, from either product scarcity or unfavorable commodity pricing,
- Perceptions of betrayals – energy, economic and political etc
- Energy transition did not start with the Paris Agreement of 2015, it just brought into the right context what had started 40 years ago – the 1972 oil embargo,
- It could also be triggered by wars or geopolitical tensions (the ongoing Russia-Ukrainian war for instance),
- For all the players, energy vulnerability is both a social and economic pariah and no mention should be made of it,
- Africa cannot abandon what it has for what it does not have,
- She can quickly ramp up oil production to address huge energy and economic deficits staring her in the face,
- More than 640 million in Africa do not have access to electricity, and those with access can’t afford it;
- Leaders in Africa must intensify gas total projects, and optimize energy resources as part of the transition agenda,
- Africa must double her internal consumption and refining capacities,
- She must use her oil and gas resources to optimize her industrial manufacturing capacity: “What we have we must keep, what we have we must optimize”,
- Nigeria should ramp up oil production and build reserves,
- She could achieve peak oil production of 3 million barrels daily, and 30 billion barrels by 2030,
- She has to reduce par barrel production cost,
- About 82 million Nigerians lack access to electricity and,
- Nigeria can earn more from taxation driven by internal economic growth than from exporting crude oil.
…The above were deductions from the presentations made by stakeholders in the energy industry of Nigeria like, the Secretary General of the African Petroleum Producers Organization APPO Dr Umar Farouk, and the Chairman of Platform Petroleum in Nigeria but with remarkable visibility in Sub-Sahara Africa, Mr Austin Avuru, at the Sub-Saharan Africa oil and gas conference and exhibition held in Lagos earlier in the year. Austin Avuru led a panel session with the theme, “Africa and the Politics of Energy Transition”, where he as well as Dr Farouk stated unequivocally that energy transition is a game of the industrialized countries to keep Africa perpetually bound in underdevelopment and poverty.
“The game of energy transition” says Austin Avuru, “is energy security”, as he also explained that energy transition has been known for its long history – from coal and nuclear to hydro, and now petroleum, hydrogen and gas, wind, solar, and the rest of the renewables – with each epoch substantially but not entirely influenced by any strategic energy and economic, and or policy patterns, thoughts or persuasions of individual countries and continents.
Energy transition could also mean or refer, “to the time that elapses between the introduction of a new and primary energy source and its rise to claiming a substantial share of the overall energy market.” In other words “a particularly significant set of changes to the patterns of energy use in a society, potentially affecting resources, carriers, converters, and services.” And whether, (and it is important to note this), the private markets and government agencies can, or cannot “spur a transition” themselves, is an entirely different and perhaps endless debate.
Historical sources showed that transitions don’t come so swiftly, but rather sluggish and progressive, with the first global energy transition, from traditional biomass fuels (wood, charcoal, straw) to fossil fuels, reported to have taken place about two centuries ago. Then coal was more popular, overcoming wood consumption worldwide in 1900. Crude oil became dominant, and more dominant that it overtook the use of coal, (and speculatively so) in the mid-1960. Natural gas gained entry but yet to play any domineering role over crude oil – and this circle of transition, it has been argued, is yet to be completed, judging by the several billions of people worldwide who are still dependent on traditional biomass for cooking and heating, according to world opinion – all of these which can serve as clear indications that energy transition is not a programme to be driven, and successfully too, by any form of political or diplomatic evangelism of the West and the industrialized nations.
The 19th-century transition from wood to coal and hydrocarbons according to a commentator, replaced about 1.5 billion tons of wood, equivalent to 30 exajoules. Industry encyclopedia says an exajoule of energy is equal to 239 petacalories (Pcal), which is approximately 947.8 trillion British thermal units (TBtu), or 277.8 terrawatt hours (TWh), and or 23.88 million tonne(s) of oil equivalent (Mtoe), representing 34.12 million tonne(s) of coal equivalent. The commentary went ahead to reveal that the current transition will require at least 400 exajoules of new non-carbon e+nergies by 2050. And generating this amount of clean energy worldwide according to the Canadian-based energy analyst, would require the equivalent of about 22,000 projects the “size of British Columbia’s Site C or Newfoundland and Labrador’s Muskrat Falls.”
No doubt therefore the name “coal” still reverberates as one major electricity generation source in the entire power generation evolutionary process ever known to mankind. Rated for its compatibility with Industrial Revolution and Foundational Industrial Technologies like steelmaking and railroads, coal accounted for about 27 percent of global primary energy use, and 35 percent of global electricity generation in 2022, Energy Window International had gathered. It is in abundance naturally, and equally, easily accessible.
Britain started mining coal in the seventeenth century, motivated in part, (historical facts had established), by the shortage of wood for fuel. Europe and North America joined in the nineteenth and twentieth centuries, with steam engines which served as power enabler for machines at their textile mills, factories, and mines – equally signifying its enormous transformative impact in the nature of work and production within the industries.
In the development of Western military capabilities, the use of coal was prominent as it served as steam for warships and gunboats both of which were veritable instruments in the invasion and annexation of territories like Africa, while providing ample opportunity for invaders to access and loath available raw materials within their reach. Coal had served as power to the locomotives transporting natural resources from these new territories.
Of great importance in terms of electricity generation and production is nuclear energy, now said to provide about 10 percent of the world’s electricity from about 440 power reactors, providing also about one-quarter of the world’s low-carbon electricity, and serving as the world’s second largest source of low-carbon power (26 percent) of the total in 2020. In 2022, nuclear power plants generated, according to news sources, 2545 terawatt-hours (TWh) of electricity, reported as a slight decrease from the 2653 TWh produced in 2021. Findings also show that between now and 2028, new nuclear plants, located in countries like Turkey (4, 456MW net capacity), Egypt (3, 582MW net capacity), UK (3, 300MW net capacity), China (2, 234MW net capacity) among others, would be connected for operation, sources had shown.
With less than 5 percent of the world’s population analysts say, the U.S consumes 16 percent of the world’s energy and accounts for 16 percent of world GDP. In comparison, the European Union has 6 percent of the world’s population, uses 10 percent of its energy, and accounts for 15 percent of its GDP, while China has 18 percent of the world’s population, consumes 27 percent of its energy, and accounts for 19 percent of its GDP.
Records also show that each day, the US consumes, on per capita energy intake, 2.5 gallons of oil, 8.27 pounds of coal, and 261 cubic feet of natural gas, with residential daily electricity consumption left at 12 kilowatt-hours (kWh) per person, (record based on DOE estimates). And if 66 percent of U.S. energy will be coming from fossil fuels in 2050 like it has been argued, how then will it be meeting the IPCC carbon reduction goals since the figure has once been highlighted (and speculatively so) to be at variance, according to analysts?
Renewable energy consumption is projected to increase annually at an average rate of 3.1 percent between 2022 and 2050, compared to 0.2 percent growth in total energy use. Residential photovoltaics are projected to grow annually by 6.5 percent. At these rates, renewables would provide 29 percent of U.S. energy consumption in 2050, compared to 13.1 percent at the moment.
In 2022, the U.S. exported more oil (9.58 million barrels per day) than was imported (8.32 million barrels per day), and is also expected to be a net exporter in 2050.
Canada, Mexico, and Saudi Arabia are the three largest suppliers of U.S. oil imports. The Persian Gulf region accounted for 12 percent of U.S. imports in 2022. Oil from OPEC countries was 15 percent of U.S. imports in 2022, according to sources.
From the Energy International Administration’s, EIA perspective, in the US, power demand is expected to rise to 4,096 billion kilowatt-hours (kWh) in 2024 and 4,125 billion kWh in 2025, which also compares with 4,000 billion kWh in 2023 and a record 4,067 billion kWh recorded in 2022.
Total demand for electricity, including the electricity consumption of electrolysers that produce hydrogen in Europe according to market outlook, will increase significantly in the coming years. Annual Europe-wide electricity demand of over 5,700 TWh, (about 40 percent) increase from the 3, 500 TWh in 2020, representing almost a doubling of the current electricity consumption, is expected by 2050.
Electricity generation is projected to amount to 5.16tn KWh in 2024, with annual growth rate of 1.61 percent, starting from 2024 until 2029, market outlook for Europe had shown.
For petroleum (fossil fuels) like it has been argued, will remain the most common fuel type and primary energy source for electricity production in the US for a very long time., hitherto accounting for about 38.4 percent, and recording, in 2022, consumption of 35.85 quadrillion British thermal units. Coal was the second most common fuel type, accounting for 21.9 percent of electricity production, while nuclear was third at 18 percent in May 2024.
China by far consumes the most electricity of any country in the world, with more than 8,000 terawatt-hours equivalent consumed in 2022.
World’s dependence on fossil fuels, according to international energy industry news agencies, has been increasing steadily and significantly over the past three decades. That by 2023, global fossil fuel consumption was 55 percent higher than in 1997, with the share of fossil fuels in global energy consumption equally reported to have only and slightly decreased, dropping from nearly 86 percent in 1997 to approximately 82 percent in 2022.
Why Africa must carve a niche for itself
One issue that took the center stage almost in all the countries and regions around the world prior to, and with the election of Donald Trump as the next US president, after Obama, was the direction of the US policy under the president-elect vis-à-vis the economic and diplomatic policies that would define the relationship of the US with other countries.
With regard to Africa, the argument had raged as to what America’s energy, trade and economic policies were likely to be, with the “Pyrrhic” victory and triumphant entry of the Republican President-elect into the historically-symbolic White House. Some said that Trump’s victory was victory for Africa especially in energy development and economic growth, while others argued that his victory portended grave danger for Africa, economically and diplomatically. But whichever direction his leadership could have gone, or can still go, in case he wins in the next and forthcoming presidential election, analysts have always believed that Africa’s energy, trade and economic development and growth, would only be dictated, and significantly too, by the strength, maturity and transparency of its internal politics, and reflexes that would attend its external political and diplomatic responsibilities. And all must be seen to be visibly represented, as lack of a visible and transparent representation had posed, for decades, a cog at the wheels of Africa’s energy, sociopolitical and economic development.
Africa is an oil and gas province with the capacity to meet its own domestic energy needs, with much more for export, serving even much longer than many would have imagined.
According to several energy industry news sources, and also from Austin Avuru’s account during the presentation in Lagos, about 23 African countries have a combined volume of gas reserve to the tune of a little under 600 Trillion Cubic Feet (Tcf), and daily production of a little above 24 Bcf, and consuming about 13.5Bcf, approximately half of this daily production.
He further explained that the 23 countries also have total oil reserves to the tune of 118 billion barrels, producing 6.1 million barrels daily, and consuming 4 million barrels daily, while adding the total refining capacity of the 23 countries as 4.83 million barrels daily. And out of the 23 countries, five of them namely: South Africa (800, 000 bbls) daily, Algeria (600, 000 plus bbls), Libya (380, 000 bbls), and Egypt (1.03 million barrels), while ascribing 1.1 million barrels of daily capacity to Nigeria – and adding them up now results in the total daily refining capacity of 4.83 million barrels.
Natural gas, once a byproduct now serves almost a quarter of the global energy needs. Analysts believe that Africa is at the moment in an advantaged position looking at the volume of gas in the continent.
In the next two years or so, statistics show, Africa’s natural gas production is expected to remain relatively flat — increasing only slightly, from 268 billion cubic meters (bcm) in 2024 to 272 bcm in 2025 — analysts of course believe there’s room for optimism about the continent’s potential, African Energy Chamber Report 2024 highlighted.
For Africa to move forward and grow its natural gas output according to the report, a two-pronged approach was required. According to that report, gas producers must not relent, but rather continue to pump from existing fields, while countries with new discoveries must get these undeveloped projects to the final investment decision (FID) stage as quickly as possible.
For example, Nigeria, Angola, and Equatorial Guinea currently account for 85% of the total gas output from the West Africa region, and volume is expected to remain the same until 2025. After that, levels will gradually decline: to 75 percent by 2030, 70 percent by 2035, and 60 percent by 2040 (African Energy Chamber). Although these fields are considered crucial for sustained production, the need for new projects to come online was also critical to prevent a stall in output, the report noted.
Adding that despite the fact that many major new gas finds have been announced in recent years – discoveries in Senegal, Mauritania, Angola, Ghana, South Africa, Namibia, and the Ivory Coast, not much has been done to show for this. Noting that In Namibia alone, Shell’s Graff discovery holds approximately 2 billion barrels of oil equivalent (BOE). These new gas discoveries will, however, remain dormant potential unless African governments and gas producers come together quickly to forge realistic actionable plans to capitalize on these vast new resources. Otherwise, new hopes will simply fade into the past as yet more symbols of lost opportunity.
Production from pre-FID projects, from conservative assessment standpoint, is expected to double year-on-year from 2025 to 2029, with a continued gradual increase until around the late 2030s. Currently, just over 10% of Africa’s gas production comes from these pre-FID volumes and will increase to over half of the total output. Maintaining that these volumes therefore can play a critical role in the continent’s natural gas export aspirations, and in becoming a true player in international markets.
A highlight by the report on the Liquefied Natural Gas (LNG) and LNG infrastructure suggests that, “Africa LNG export infrastructure is shaping the future in a similar way to the natural gas forecast. Between the bigger producers like Algeria, Nigeria and Egypt, Algeria and Egypt are expected to maintain their existing LNG infrastructure capacity of about 29 million tonnes per annum (MMtpa) and 12.7 MMtpa, respectively. Nigeria’s plans involve increasing its LNG infrastructure capacity from the existing 22 MMtpa to 30 MMtpa via the Nigeria LNG (NLNG) Train 7 development and further marginally to just over 31 MMtpa via UTM Offshore’s FLNG project.”
Production Decline and Reasons to Act Fast
Many of Africa’s existing gas production fields, particularly those in the north and west, are maturing or in decline, meaning they are quickly reaching the end of their productive lives. For example, Nigeria, Angola, and Equatorial Guinea currently account for 85% of the total gas output from the West Africa region, and volume is expected to remain the same until 2025. After that, levels will gradually decline: to 75% by 2030, 70% by 2035, and 60% by 2040. Although these fields are considered crucial for sustained production, the need for new projects to come online is critical to prevent a stall in output.
Fortunately, many major new gas finds have been announced in recent years, including finds in Senegal, Mauritania, Angola, Ghana, South Africa, Namibia, and the Ivory Coast. In Namibia alone, Shell’s Graff discovery holds approximately 2 billion barrels of oil equivalent (BOE). These new gas discoveries will, however, remain dormant potential unless African governments and gas producers come together quickly to forge realistic actionable plans to capitalize on these vast new resources. Otherwise, new hopes will simply fade into the past as yet more symbols of lost opportunity.
These fields along with newly discovered pre-final investment decision (FID) projects have the potential to supercharge output and allow Africa to realize its enormous natural gas potential. As the AEC report notes, any new production growth expected over the next decade will come from both pre-FID potential — such as emerging upstream economies like Mozambique, Tanzania, Mauritania, Senegal, South Africa, and Ethiopia — as well as from mature producers like Nigeria, Libya, and Algeria.
At a very conservative forecast, production from these pre-FID projects is expected to double year-on-year from 2025 to 2029, with a continued gradual increase until around the late 2030s. Currently, just over 10 percent of Africa’s gas production comes from these pre-FID volumes and will increase to over half of the total output. Therefore, these volumes play a critical role in the continent’s natural gas export aspirations, and in becoming a true player in international markets.
There is also great excitement building around the growth of Africa’s liquefied natural gas (LNG) export business. As “The State of African Energy 2024 Report” asserts:
“Africa LNG export infrastructure also is shaping in a similar way to the natural gas forecast. Between the bigger producers like Algeria, Nigeria and Egypt, Algeria and Egypt are expected to maintain their existing LNG infrastructure capacity of about 29 million tonnes per annum (MMtpa) and 12.7 MMtpa, respectively. Nigeria’s plans involve increasing its LNG infrastructure capacity from the existing 22 MMtpa to 30 MMtpa via the Nigeria LNG (NLNG) Train 7 development and further marginally to just over 31 MMtpa via UTM Offshore’s FLNG project.”
How Deep is US Presence in Africa’s Liquefied Natural Gas (LNG) and (FLNG) Expansion Business?
With Africa set to dominate the floating LNG market between now and 2027, U.S. operators and contractors can play a leading role in realizing new capacity, alongside onshore developments.
As Africa looks to develop its gas for domestic and export markets, the U.S. is honing in on LNG as a critical investment avenue, alongside traditional oil exploration. In October 2023, energy research and consultancy group Wood Mackenzie stated that Africa’s $800-billion, 20-year upstream capital expenditure program would result in world-class LNG projects in Mozambique and floating LNG (FLNG) in five countries, presenting substantial gas-driven opportunities for U.S. investors, operators, project developers and service providers.
While American companies are already at the helm of the continent’s booming LNG industry, there is room to grow their participation, particularly in FLNG, which offers increased flexibility, reduced time to market and suitability for smaller gas volumes. According to energy intelligence provider Westwood Global Energy, the global FLNG market is set to see $35 billion in new investment by 2027 – totaling 18.3 million tons per annum (mtpa) of additional capacity – with Africa dominating short-term investments. This increase in capacity will generate an associated engineering, procurement and construction (EPC) contract value of $13 billion. After 2027, an additional 36.5 mtpa of capacity is expected to come onstream, with an EPC value of $22 billion.
In Equatorial Guinea, U.S. operators and contractors are leading the country’s flagship Gas Mega Hub (GMH), which seeks to monetize all stranded gas fields in the Gulf of Guinea to facilitate an intra-African LNG trade.
Mozambique of course is another strategic market for US gas investments, having passed this analyst say, $1 billion in LNG exports last November. This is beside America’s ExxonMobil which was said to be leading development of the $23-billion Rovuma LNG project and anticipates a final investment decision in 2025, “utilizing a retooled, phased construction approach.” With a planned capacity of 18 million tons per year, the facility will deliver reliable, affordable energy to local customers, as well as export to global markets. The company is also reported to be undergoing a study that will determine the commercial and technical feasibility of an LNG regasification terminal to bring low-cost, reliable fuel in South Africa – all these and many more are clear indicators of Africa’s strategic importance, as long as sourcing for energy is concerned.
Energy Transition to Net Zero Emissions and its Constraints
There’s no arguing the fact that notwithstanding the ongoing global disruptions in the energy markets, as well as the war in Ukraine, which have, and ultimately so, added impetus, and providing some kind of a stronger global consensus around the campaign to push for renewable energy, the challenges toward achieving net zero are enormous and gradually becoming clearer, according to analysts.
In addition to the uncertain pace of technological development and deployment, four issues particularly may be said to stand out. It includes, the return of energy security as a prime requirement for countries, lack of consensus on how fast the transition should and can take place, in part because of its potential economic disruptions, sharpening divide between advanced and developing countries on priorities in the transition, and of course, the obstacles to expanding mining and building supply chains for the minerals needed for the net-zero objective, among others.
What then are the realizable parameters available to addressing various energy shocks and economic hardships which are at different levels within individual countries and continents at the moment? Where’s the possibility of reconciliation or consensus among world leaders on issues of skyrocketing energy prices and geopolitical conflicts? Is it impossible to assume that energy security and energy transition could be two strange bedfellows who cannot coexist – I mean to talk about the North-South cleavage? Again where are the minerals – each of which have one significant role or another to play in the determination of the direction of the transition? Is it also unlikely to think that none of these factors won’t be an easy nut to crack – as they are intrinsic in nature, and inevitably interact with one another? Is it impossible that those interactions have the potency and tendency to further compound their impacts? This is the crux, and so, recognizing them is truly imperative in promoting a deeper understanding of the issues and requirements in seeking to achieve the energy transition.
For a long time, these factors have contributed, and are still contributing to influencing governments’ decisions while reassessing their strategies, reassessment which according to analysts, now recognizes that the energy transition needs to be grounded in energy security—that is to say, adequate and reasonably priced supplies—aimed at evoking certain degree of sympathy from the public, for the purpose of checkmating economic dislocations and all its consequential political effects.
But analysts are inquisitive, wandering how easy and fast can subsuming energy transition into energy security go, looking at the pressure at the moment to “accelerate a significant part of the 2050 carbon emission targets toward 2030.” But like an analyst said, “If energy security is the first challenge of the transition, timing is the second.”
In the book “The New Map”, the author, while describing the uncertainties surrounding the ongoing global energy transition journey vis-à-vis the previous transitions said: “I looked at the previous energy transitions, and it is clear that this one is like no other. All previous transitions were driven largely by economic and technological advantages—not by policy, which is the primary driver this time. Each of the preceding transitions unfolded over a century or more, and none were the type of transition currently envisioned.
“The objective of this transition is not just to bring on new energy sources, but to entirely change the energy foundations of what today is a $100 trillion global economy—and do so in little more than a quarter century. It is a very big ambition, and nothing on this scale has ever been attempted up to now.”