What the Global Oil Crisis Means for Africa

Paul Sinclair, Vice President of Energy for Africa Oil Week, the continent’s leading energy conference.

What the Global Oil Crisis Means for Africa

By Africa Oil Week
Published April 10, 2022

Energy experts say the growing oil crisis across the globe is a wake-up call for the African continent to become less dependent on foreign oil supplies.

The cost of fuel has risen sharply, with Brent crude oil hitting a 14-year high in recent weeks. It remains firmly above US$100 per barrel at the time of publication.

With the military conflict in Ukraine, concerns have arisen around the world’s ability to meet its energy needs. The United States and the United Kingdom have banned Russian oil imports, with the European Union under pressure to follow suit.

“Nobody really anticipated needing to grow significantly,” Vicki Hollub, chief executive of Occidental Petroleum said during a recent conference in Texas, USA. “That’s the challenge now. If you didn’t plan for growth, you’re not going to be able to achieve growth today.”

Regardless of the outcome, the squeeze is being felt across the globe. Some governments have decided to subsidise their citizens’ energy bills, or to reduce the cost of public transport, as has been the case in New Zealand.

What about Africa?

“African countries are re-evaluating their energy mix options,” says Paul Sinclair, vice president of energy for Africa Oil Week, the continent’s leading energy conference. “There are untapped oil and gas reserves in Africa which we believe should be developed with good carbon management strategies. Oil and gas offer solutions to regional and international energy demand.”

Saying African countries are re-thinking their approach to energy, Sinclair argues that “it is imperative that Africa develop its upstream capabilities alongside renewable energy solutions [while] the world transitions to low carbon.”

He says Africa’s energy requirements need to factor in the economic imperatives of the continent.

“According to the United Nations, an estimated 490 million people live below the poverty line and less than half of African countries have experienced inclusive growth in over twenty years,” says Sinclair. “By adding an energy crisis to the mix, I have little doubt that we will see a strategic review in this sector.”

Only 18 of Africa’s 55 countries currently produce oil, led by Nigeria, Angola, Algeria and Egypt. Together, they produce less than 10% of the world’s output.

“When you study the numbers, you can see that Africa has no choice in the current circumstances to increase its energy security,” says Sinclair.

South Africa has been exploring potential gas deposits off its coastline, while the Gambia is looking to license two oil-exploration sites in coming months.

Mozambique and Tanzania have reportedly discovered crude oil, while exploration has been undertaken in some other African countries, such as Chad, Sudan, and Namibia.

Approximately 2 400 hydrocarbon deposits have been discovered in Africa, 700 of them large enough for significant exploration.

“2022 will be a significant year in the African energy sector” predicts Sinclair. “The continent knows it needs to expand its production of hydrocarbons and renewable energy production if its economies are to remain competitive. We expect this will be an area of high investment.”