As the global climate debate gets more intense, reaffirming the reality that the energy industry must decarbonize in order to save the earth from what may eventually become an irreversible catastrophe, meaning also that the exploitation anduse of fossil fuels must be phased out or at least phased down, the African Petroleum Producers’ Organization (APPO) has insisted that the people of Africa cannot immediately abandon the use of fossil fuels for the continent’s economic development, writes YANGE IKYAA in this feature.
According to Dr. Omar Farouk Ibrahim, who heads the continent’s 15 Member Countries Petroleum Organization, which is known as the African Petroleum Producers’ Organization (APPO), the priorities of other people cannot be imposed on Africans because our situation is different.
The APPO Secretary-General also believes that the priority of Africa as an underdeveloped continent should be considered from the standpoint that majority of its population does not have access to any other form of energy, even as nearly half of its population lacks 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.’’
After all, Ibrahim further argued, the world did not wake up in the last quarter of the last century to the realization 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 conducted by Western scientists in the 1800s had established that burning fossil fuels emit green house gases which are detrimental to the atmosphere. But because those societies were busy consolidating their industrialization and growing their national economies in order to raised 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 to-date is the most affordable, reliable and available form of energy for all these while until they largely 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 industrialize 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. This is even as the world admits that Africa, with 17% of the world’s population contributed between 2 and 3.5 of the global emissions.
The APPO SG noted that on energy transition, the developed world has defined its priorities in descending order as CRA, namely Clean, Reliable, and Affordable, whereas for us in Africa, our 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 today’s developed countries have been using fossil fuels for 150 years and the worst never happened to the world, 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.
This made Dr. Ibrahim to pose this rhetorical question “if we have contributed only two percent, and we are 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.
His belief is that if the industrialized 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 realized 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 between 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 demonization of fossil fuels begun.
It is very true 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 we end up importing petroleum products at exorbitant prices, sometimes with substandard qualities.
APPO is concerned about the future of the oil and gas industry in Africa because of the energy transition. This is because for many of our 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, we have 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. African oil and gas producing countries cannot continue to operate in silos. The countries and companies that we have for nearly a century depended on for technology, expertise and funding for oil and gas have decided to abandon the industry. Unfortunately the industry in highly capital intensive, and highly research and technology driven. It has also been highly dependent on foreign markets. As individual countries, it is going to be very difficult for our members to be able to mobilize the funding, develop the technology and create markets. But if we come together, we can scale these hurdles. Towards this end 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 is going on 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, AfTAC, 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.
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 a period of 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 to 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 Organization 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. Dr. 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 emphasized.
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 continental energy organization is also reviving the Forum of Chief Executives of National Oil Companies of its Member Countries. This is in recognition of the critical role that industry operators will play in the new dispensation. He noted that APPO recognizes the important role that operators play in the industry and that it will consider expanding the membership of the Forum to include private operators in the industry. We want to have everyone on board, regulators, policy makers, operators and service providers. That is the best recipe for success.
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.