The December 2022 US-Africa Leaders' Summit hosted by President Biden in Washington highlighted Africa's emerging role in global affairs, including in competition with China and Russia.
In his address to the Summit, President Biden endorsed the African Union's proposal to join the G20 and pledged $55 billion in funding and investment over three years. This bottom-up role was also evident at the November COP27 meeting in Egypt, where African countries had a much more active and forceful presence. Despite being marginal contributors to global emissions (3.8% of carbon emissions) and global trade (3% of exports), Africa has experienced severe drought conditions and negative economic and social impacts due to high energy, food and commodity prices over the past year.
An IMF report concludes that sub-Saharan Africa is "the most vulnerable region in the world to climate change". And Ghana's representatives led the G77's calls for loss and damage compensation, a facility that was agreed in principle at the last moment in the final declaration of COP27.
Energy development and investment was one of many important topics discussed at the African Leaders' Summit, which took place against the backdrop of continuing war in Ukraine, high energy and commodity prices and a serious debt problem in many countries in the region.
As was the case at the first African summit eight years ago, the US government has focused on developing renewable energy and improving energy access, noting the more than $1 billion provided so far under the Biden administration by the US Development Finance Corporation, the US Agency for International Development, and other US government agencies for African projects in these areas.
Although African leaders are embracing the transition to clean energy and the region has huge and diverse renewable energy resources, they also argue that they need to 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 on the continent, noting that even a tripling of gas production would result in a minimal increase in global CO2 emissions.
At the May 2022 Sustainable Energy for All Forum in Kigali, Rwanda, ten African countries (Democratic Republic of Congo, Ghana, Kenya, Malawi, Morocco, Nigeria, Rwanda, Senegal, Uganda and Zimbabwe) endorsed a declaration calling for international support for "Africa in the deployment of gas as a transitional fuel and the long-term replacement of gas by renewables and green hydrogen for industrial development, if financially and technically sustainable.
The war in Ukraine, high energy prices and tight supplies have encouraged international energy companies to consider oil and gas projects in Africa that did not seem viable a few years ago. Global supplies of liquefied natural gas (LNG) are widely expected to remain tight, as evidenced by analyses by 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 Russian gas are the main driver, with the EU's LNG import needs forecast by Bloomberg to increase by 44 million metric tons by 2026.
Africa is a potential source of gas diversification in the EU and globally and the EU's External Energy Engagement Strategy of May 2022 recognises this potential. New African suppliers are emerging, with the first shipment of LNG from gas-rich Mozambique taking place in November 2022.
According to the BP Statistical Review of World Energy 2022 , Africa produced about 257 billion cubic metres (bcm) of natural gas in 2021 and exported 58.5 bcm of LNG (42 million tonnes), or about 5.7% of global LNG exports. According to some estimates, African LNG exports are expected to reach 60 million tonnes in 2025 and 74 million by 2030. However, major exports from East Africa's large gas reserves are not expected until 2026 in Mozambique and 2029-2030 in Tanzania. Bloomberg forecasts an increase in LNG export capacity of 12.4 million tonnes between 2021 and 2026 from Nigeria, Mauritania, Congo, Equatorial Guinea and Mozambique.
Africa could significantly increase its LNG exports if gas supply and other bottlenecks in the utilisation of existing capacity can be overcome. According to Natural Gas World , Africa's utilisation of its 78 billion cubic metres of liquefaction capacity was only 58% 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 an example with as much as 3 trillion cubic feet (tcf) of potential gas reserves, with 1.5-2 tcf possible in Tullow Oil's offshore Jubilee and TEN fields. In Ghana, a long-standing partner of the US through its Power Africa programme, the development of domestic gas has enabled it to increase the use of gas in the power sector, replacing oil and complementing its hydroelectric generation.
The country, however, faces a serious debt situation, driven largely by the quasi-fiscal deficit in the power sector; and on 12 December the IMF announced a 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 tonnes by 2030 and has a renewable energy master plan that envisages adding 1390 megawatts of wind and solar power by 2030.
The development of renewable energy, which is still in a very nascent state, can facilitate the diversification of Ghana's electricity mix and, with the successful development of gas, reach a position where it can export gas for valuable foreign exchange.
African countries are therefore faced with the challenge of balancing energy security, climate change and sustainable development goals. It is increasingly clear that Africa is key to solving global energy problems and should, as the South African president recently argued, have additional voices in the G20 and other international fora. It is increasingly clear that natural gas is a key means of rapidly reducing global coal use, particularly in the coal-intensive Asia-Pacific region, which accounted for half of global energy-related CO2 emissions in 2021.
The expected rise in LNG prices The crisis could slow the uptake of natural gas, particularly among Asian LNG importers (i.e. Bloomberg sees possible declines in LNG import levels in 2023 compared to expected imports in 2021 in India, Pakistan, Bangladesh, Thailand, Vietnam and the Philippines).
Dr Robert F. Ichord Jr.
